BP in crisis:
NY FUND SUES
AS HITCH HITS
CLEAN-UP p14
Issue 1,162 Thursday 24 June 2010
ENGLAND’S DREAM
LIVES ON
WORLD CUP
2010
BY JON COUCH
ENGLAND booked themselves a
World Cup showdown with
Germany on Sunday after clinching
a nerve-jangling 1-0 victory over
Slovenia in Port Elizabeth yesterday.
Jermain Defoe scored the only
SOROS: EURO IN CRISIS
EUROPEAN ECONOMY
▲
BY JESSICA MEAD
BILLIONAIRE investor George Soros
yesterday launched a blistering attack
on German fiscal policy, warning
that its unwavering pursuit of auster-
ity savings is putting the future of the
European Union and the single cur-
rency at risk.
“By insisting on pro-cyclical poli-
cies, Germany is endangering the
European Union. I realise that this is
a grave accusation, but I am afraid it
is justified,” he said during a speech
FTSE 100 ▼5,178.52 -68.46 DOW ▲10,298.44 +4.92
 
BUSINESS WITH PERSONALITY
goal of the game on 22 minutes as
Fabio Capello’s Three Lions brought
hope back to the nation with a
much-improved display.
But failure to top Group C means
England have stumbled across a last
16 date with the Germans in
Bloemfontein, in a repeat of the
1990 semi-final which they lost in a
heart-breaking penalty shoot-out.
SEE SPORT: PAGE 41-43
at Berlin’s Humboldt University.
“By cutting its budget deficit and
resisting a rise in wages to compen-
sate for the decline in the purchasing
power of the euro, Germany is actual-
ly making it more difficult for the
other countries to regain competitive-
ness,” he added.
German chancellor Angela Merkel
earlier this month unveiled plans to
slash the budget by €80bn (£65.8bn)
over the next four years.
Soros slammed the programme,
calling it “a recipe for disaster
because it pushes the debtor coun-
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www.cityam.com
tries into a deflation cycle and impos-
es stagnation and, worse, and that
creates resentment”.
In an interview published yesterday
ahead of the speech, Soros said he
“could not rule out a collapse of the
euro”.
Germany, which still runs a trade
surplus and is the Eurozone’s largest
exporter, has come under fire recently
for implementing austerity measures
that will put already-faltering domes-
tic demand and consumer confidence
at risk and for effectively imposing
wage cuts on Club Med countries.
£/$ 1.50▲+0.02
Gabriel Stein at Lombard Street
Research said George Soros was spot
on that Germany’s austerity meas-
ures were endangering the euro.
Stein said that the single currency is
inherently flawed, adding that for
the euro to survive we will need fiscal
integration. “But this will be an
anathema to German taxpayers as
long as countries like Italy are in the
union,” he said.
Economically, it would make a lot
of sense for Germany to leave the
Eurozone, Stein said, but noted that a
unilateral exit would probably break
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FREE
Picture: GETTY
the Franco-German alliance that has
been the cornerstone of Western
European policy for more than half a
century.
George Soros also warned yester-
day that the cost of the Greek aid
package and associated conditionali-
ty could send the Greek economy
into a “death circle” as economic
contraction will see tax revenues
decline and increase the budget
deficit again. “Then it becomes a
vicious cycle. I would call it a death
circle. That’s really the danger,” Soros
said. SOVEREIGN DEBT CRISIS: P18-19
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 2 Budget News
Budget won’t cause a new recession
EDITOR’S LETTER
ALLISTER HEATH
WE all know what Mark Twain
thought of the extraordinary ability of
statistics to make even the weakest of
arguments sound persuasive. In the
main, this week’s emergency Budget
was remarkably honest, especially
after years of debased Red Books from
the previous Labour government.
But there has been some confusion
about the extent of the (much-needed)
spending cuts being announced; some
readers have even written in question-
ing whether City A.M. and others are
right to describe George Osborne’s
plans as cuts. We are; and this is why.
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Editor Allister Heath
Deputy Editor David Hellier
News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
Lifestyle Editor Zoe Strimpel
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WHAT THE OTHER PAPERS SAY THIS MORNING
NISSAN’S GHOSN TOPS JAPAN PAY
LEAGUE
Nissan’s Carlos Ghosn has taken top
spot on a list of Japan’s best-paid exec-
utives after the carmaker revealed it
paid its Brazil-born chief executive
Y890m ($9.9m) last year. Nissan and
other quoted Japanese companies are
being forced to report the compensa-
tion of individual executives for the
first time under rules introduced by
the Tokyo Stock Exchange. The disclo-
sures have highlighted the gulf
between Japanese managers – whose
compensation is held down by the
fact that they rarely switch employers
– and foreigners brought in to run
local groups.
EASYJET ACCUSES ITS FOUNDER OF
FISHING
Sir Stelios Haji-Ioannou, who found-
ed EasyJet, is “fishing around for a
test” to determine whether some
Overall spending will fall substantially
year after year after adjusting for
inflation, will drop significantly as a
share of GDP and will be hacked back
especially severely in real terms in
many departments (it may have to
drop by up to 33 per cent in some, the
Institute for Fiscal Studies said yester-
day). It will also be substantially lower
than originally planned by Labour –
and lower than Alistair Darling pro-
posed at his Budget earlier this year.
However, in cash terms – in other
words, before adjusting for inflation –
spending will continue to go up every
year. It is just that the money won’t
buy as much and more of it will be
spent on interest. Take 2009-10, the
last Labour year: spending then was
£669bn, rising to £697bn in the cur-
rent financial year, £700bn in 2012-13,
£711bn in 2013-14, £722bn in 2014-15
and £737bn in 2015-16. By then, the
total cash increase will be worth
£68bn a year, or 10 per cent above the
last full Labour financial year.
However, this will be worth less in real
US base rate
held at zero
WORLD ECONOMY
▲
BY MARION DAKERS
THE US Federal Reserve said it would
hold interest rates at a record low for
“an extended period” yesterday, say-
ing it aims to aid an economic climate
that has become “less supportive”.
The Federal Open Market
Committee voted nine to one to keep
the rates at zero to 0.25 per cent after
its two-day meeting, maintaining the
historic low that has stood since
December 2008.
The committee said financial con-
ditions have become “less supportive
of economic growth”, in part due to
sovereign debt problems in Europe.
It also noted that bank lending has
continued to contract, but predicted
a gradual return to credit supply with
the pace of economic recovery “likely
to be moderate for a time”.
activities are non-core, lawyers repre-
senting EasyJet told the High Court
on the final day of a trial between
the founder and the airline. Sir
Stelios is suing EasyJet over the
terms of a brand licence agreement
that restricts the amount it can
make from “ancillary” services to 25
per cent of total income. He claims
EasyJet is overstepping that agree-
ment.
GAP TRIES CHINA FOR SIZE WITH
FOUR NEW STORES
Gap, the US clothing retailer, is to
open four stores and an e-commerce
operation in China late this year in
its most significant overseas expan-
sion in more than a decade. The
retailer said it would open two stores
in Beijing, including one on the capi-
tal’s main shopping street, and two
in Shanghai. They will sell clothing
from its adult, kids and baby Gap
ranges.
terms and so it is fair to describe this a
real terms cut.
The biggest problem for the Tories is
that departmental spending (which
excludes debt interest and benefits)
will be cut – and because foreign aid
and the NHS are being entirely pro-
tected, the spending reductions will
be severe. If one assumes that defence
and education will drop 10 per cent in
real terms, then other departments
will have to suffer 33-34 per cent cuts
in real terms. The only way to abate
this would be to make extra savings
from welfare or to renegotiate the set-
tlement with Scotland and Wales,
which gobble up disproportionate
amounts of taxpayers’ money.
One argument that many have
made is that we are all worse off as a
result of this Budget’s spending cuts.
In the aggregate, this is nonsense: gov-
ernment debt is not some sort of a
free lunch, a way of not paying for
spending. Public spending must be
financed in one of three ways: by mak-
ing the public pay straight away via
The Fed reported a rise US house-
hold spending, but said it remained
constrained by high unemployment,
modest income growth and tight
credit.
Thomas Hoenig was the only com-
mittee member who voted for a rise
in the base rate.
The long-time inflation hawk said
the current rate “could lead to a
build-up of future imbalances and
increase risks to longer-run macro-
economic and financial stability”.
US gilt yields fell slightly following
the announcement.
Inflation hawk Thomas
Hoenig was the only
Fed committee mem-
ber to vote for a rise in
the base rate
LUCOZADE FINDS THE ENERGY TO TAKE
ON POWERFUL AMERICAN RIVALS
GlaxoSmithKline is taking on the big
guns of the soft drinks industry by
launching Lucozade in the United
States, challenging the might of
PepsiCo’s Gatorade and Coca-Cola’s
Powerade sports drinks.
BELARUS GAS SUPPLIES CUT 60 PER
CENT BY RUSSIA
Russia tightened the screw on
Belarus today by cutting gas supplies
by 60 per cent in a payment dispute
that threatens to affect customers in
the European Union. The state energy
giant Gazprom said that it had cut
gas flows to Belarus for a third succes-
sive day after accusing the former
Soviet republic of doing nothing to
clear a $192m debt. Alexei Miller, the
chief executive, has threatened to
reduce supplies by 85 per cent unless
Belarus pays by Friday.
taxes, by borrowing from the markets
and then – a few years down the line –
by forcing the public to pay the debt
back; or by printing money and inflat-
ing the debt away. The fact that we are
cutting back on option two and pro-
moting option one is a good thing.
Nobody wants to lend forever to
imprudent countries; and it cannot be
right to send today’s children and
babies the bill for the cosseted lifestyle
of their parents. Racking up massive
liabilities goes against any notion of
intergenerational equity.
Now for one prediction: consumer
spending will be squeezed by the
regrettable (and avoidable) hike in Vat
and from the (necessary) cuts in
spending. But reduced debt-financed
spending will go hand in hand with
growth in private investment and
exports, partly thanks to strong global
demand, thus cushioning most of the
impact. The years ahead will be very
tough – but there will be no double
dip recession made in Downing Street.
allister.heath@cityam.com
Acting Tube Lines chief Andrew Cleaves urged RMT to pull back
Two-day Tube strike starts
TRANSPORT
▲
BY MARION DAKERS
LONDON Underground maintenance
workers began a 48-hour strike at
7pm last night, after last-ditch legal
action by employer Tube Lines failed.
A High Court judge denied Tube
Lines an injunction to stop the strike,
despite arguments that the strike bal-
lot was invalid.
“We urge the RMT to pull back
from taking this needless action
which would unnecessarily inconven-
GOLDMAN SACHS CHIEF LLOYD
BLANKFEIN ADVISED TO GO ON OPRAH
Lloyd Blankfein, chief executive of
Goldman Sachs, could have been fol-
lowing in the footsteps of Sarah
Ferguson, Duchess of York, in using
an appearance on the Oprah Winfrey
show to attempt to revitalise his and
the bank’s tarnished image. The idea –
which appears to have been just that –
has been mooted in the bank’s upper
echelons of power.
JOHN VARLEY: BARCLAYS’ LEHMAN
PURCHASE RISKIEST WEEK OF MY LIFE
John Varley described the seven days
which led up to Barclays buying
Lehman Brothers’ US brokerage as
“the riskiest week of my life” as he
defended the British bank against
charges it made a “secret” $11.2bn
(£7.55bn) “windfall” on the purchase.
Varley, chief executive of Barclays, told
a US court the deal was risky.
CITYA.M. 24 JUNE 2010
NEWS | IN BRIEF
Kerviel asked to pay €5bn
Societe Generale called for a court order
yesterday that would force rogue trader
Jerome Kerviel to pay back the near
€5bn he lost through unauthorised
trades. Jean Veil, the French bank’s
lawyer, demanded compensation that
effectively would leave Kerviel in debt
for the rest of his life.
Facebook looks east for growth
Facebook plans to expand into China,
Russia and Japan in order to become
the first social network to reach 1bn
users, founder Mark Zuckerberg said
yesterday. He told a conference the com-
pany would start to make strategic
moves after years of relying on organic
growth.
Nike posts profit but shares dip
Sportswear retailer Nike posted quar-
terly profits that jumped 53 per cent
yesterday, but shares dipped two per
cent after revenue missed analysts' goal.
The retailer said net profit rose to
$521.9m (£349m), for the three months
to 31 May. Revenue rose almost eight
per cent to $5.08bn, thanks to an
upswing in orders for sports footwear.
ience the travelling public,” said Tube
Lines acting chief executive Andrew
Cleaves.
Transport for London has insisted
that train services will not be affected
by the walkout on the Northern,
Victoria and Piccadilly lines.
However Bob Crow, general secre-
tary of rail union RMT, called the rul-
ing a “massive victory” and predicted
major disruption across the London
Underground network.
Another strike against proposed
job changes is set for 14 to 16 July.
EX-UNILEVER EXECUTIVE JOINS
BUYOUT FIRM CD&R
Vindi Banga, the former Unilever top
executive who announced his resig-
nation from the consumer-goods
giant in March, has been hired as
operating partner in the London
office of private-equity firm Clayton,
Dubilier & Rice.
Banga, who worked at Unilever for 33
years, most recently as president for
global foods, home and personal care,
resigned about a year after former
Nestlé and Procter & Gamble execu-
tive Paul Polman took over as
Unilever’s CEO.
FIAT TO RESTART UNION TALKS
Fiat will resume talks with unions
after failing to convince enough
workers to accept its demands on
working conditions in exchange for
investing €700m (£576m) in their
plant in southern Italy.
CITYA.M. 24 JUNE 2010
Sentance shatters
consensus with
call for rate rise
UK ECONOMY
▲
BY JESSICA MEAD
A LONE dissenting voice in the Bank of
England’s Monetary Policy Committee
(MPC) this month urged for a hike in
rates, the first time since August 2008
that such a call has been made.
External MPC member Andrew
Sentance, who has recently expressed
disquiet about stubbornly high infla-
tion in both MPC meetings and in the
press, voted for an increase in rates of
0.25 per cent. The other seven mem-
bers of the committee voted to keep
rates on hold at the historic low of 0.5
per cent.
The minutes said that for one mem-
ber, inflation had been resilient in the
aftermath of the recession, casting
doubt on the future dampening
impact of spare capacity on inflation.
While it was not surprising that it
Financial reform bill
close to completion
WORLD ECONOMY
▲
BY MARION DAKERS
US lawmakers came closer to hammer-
ing out legislation to regulate the
financial industry yesterday, dropping
several proposals in an effort to
finalise the new rules by tomorrow
evening.
A House-Senate panel continued
negotiations to merge two major
bank reform bills, which aim to over-
haul Wall Street and beyond in the
wake of the financial crisis.
Democrats agreed to drop rules
that would have required large banks
to ring-fence a total of $150bn
(£100bn) to cover the cost of liquidat-
ing troubled financial firms.
Australian mining tax could
be axed after PM is ousted
MINING
▲
BY MARION DAKERS
AUSTRALIAN Prime Minister Kevin
Rudd stood down this morning after
calling a surprise leadership ballot,
throwing negotiations on a new min-
ing supertax in the country into jeop-
ardy.
Rudd’s deputy, Julia Gillard, will
become Australia’s first female Prime
Minister after Rudd resigned before
the ballot of Labor party MPs at 9am
local time (midnight BST).
Gillard commands strong support
from left-wing members of the party,
was Sentance who dissented, the tim-
ing was a shock. “Given his generally
hawkish voting record, it did seem as
though he would be in favour of rais-
ing rates reasonably soon. However
we did not expect dissent at this junc-
ture, especially ahead of the Budget,”
said Investec’s Philip Shaw.
Henderson’s Simon Ward said: “It
would be understandable if some
MPC members felt wary about the
Osborne-King deal, under which the
chancellor believes he has bought off
interest rate rises by acceding to the
governor’s demands for accelerated
fiscal tightening while transferring
supervisory powers to the Bank”.
The minutes suggested little sup-
port for Sentance, said Ward, with a
minority claiming that downside
inflation risks have increased. “The
governor, it seems, exerts an iron
grip,” he added.
A proposal that would restrict
banks’ trading activities appeared
likely to remain in the bill as negotia-
tors from the Senate and the House
of Representatives said it would
encourage them to focus on lending.
“They cannot continue to do busi-
ness as they were doing,” said
Representative Barney Frank, the
Democrat who is overseeing the
process. “They have to get back in the
business of accumulating capital and
making loans to private parties.”
Members of the Senate negotiating
team still hope to block non-US banks
from expanding into the American
financial industry if they threaten
stability, reports said last night.
Senate Democrats also offered a
and has not been squeamish about
confronting the mining industry in
her role as employment minister.
The government has suffered
falling approval ratings in recent
months, and must call a general elec-
tion before the end of the year.
UK mining shares pared earlier
losses following Rudd’s unexpected
call for a vote yesterday afternoon, in
the hope that Rudd’s controversial 40
per cent resources super-profit tax
would be scrapped or altered follow-
ing the ballot.
Rio Tinto fell 1.6 per cent to £33.90,
having earlier slumped 2.8 per cent.
Budget News 3
HOW THE MPC VOTED ON RATES IN JUNE 2010
Mervyn King Paul Tucker Andrew Sentance
ANDREW
SENTANCE
EXTERNAL MPC
MEMBER
IT WAS no surprise that Andrew
Sentance was the first member of
the Bank of England’s Monetary
Policy Committee (MPC) to call for a
hike in interest rates.
Sentance had already proved very
Spencer Dale Charles Bean David Miles hawkish in an interview with the
Sunday Times, pointing to the
resilience of inflation in the after-
math of the recession, which had
cast doubt on the future dampening
impact of spare capacity on inflation.
He has repeatedly highlighted his
concerns about upward price pres-
sures for more than a year. Last June
he gave a speech, stressing the
importance of the MPC’s responsibil-
ity for low and stable inflation.
Adam Posen Paul Fisher Vacant Educated at Cambridge and the
LSE, Sentance has sat on the MPC
since 2006. He is also a professor of
sustainable business at Warwick
Business School and advises the gov-
ernment on transport policy issues.
Kate Barker ended her He was chief economist and head of
term on the MPC on 30 environmental affairs at British
May 2010. A replacement Airways. He has also held positions
has yet to be found. at London Business School and the
CBI.
@
@
tightened version of the Volker Rule,
modelled on the repealed Glass-
Steagall Act, which would limit banks
using customers’ money to trade for
their own profit.
The panel is set to look at deriva-
tives in today’s sitting. The current
form of the bill would force banks to
spin off their credit default swaps
@
operations to ensure that taxpayer-
backed deposits are not put at risk.
Democrats have suggested broaden-
ing exemptions for non-financial
companies that use derivatives to off-
set risks, such as utilities and airlines.
Participants in the House-Senate
panel face several other outstanding
issues if they are to complete their
work by their self-imposed deadline.
BHP Billiton, the world’s biggest min-
ing firm, dropped 1.9 per cent to
£19.51, after falling 2.5 per cent earli-
er in the day.
“Whilst it's too early to predict a
precise outcome, it has become
increasingly clear that there is mate-
rial opposition to the tax from within
Rudd’s own party,” said Michael
Rawlinson at Liberum Capital.
The super tax will apply from 2012
if adopted. Mining firms have lobbied MORE NEWS WWW.GANTUK.COM
ferociously for the levy to be
scrapped, with Xstrata going as far as
ONLINE BROMPTON ROAD, BOND STREET, REGENT STREET,
WESTFIELD, BLUEWATER, CANARY WHARF,
halting operations in the country www.cityam.com RICHMOND, CAMBRIDGE, BRISTOL, SOLIHULL,
MANCHESTER, EDINBURGH, GLASGOW
until negotiations are concluded.
 4 Budget News CITYA.M. 24 JUNE 2010

Moody’s joins Fitch and backs

Osborne’s austerity Budget
est credit rating possible. “The Budget confirmed the UK
▲

POLITICS
BY DAVID CROW
THE massive £113bn fiscal tightening
unveiled by George Osborne earlier
this week should ensure Britain
retains its AAA credit rating,
Moody’s said yesterday.
The comments, which follow simi-
lar remarks from fellow ratings
agency Fitch, will boost the chancel-
lor, who has staked his reputation on
ensuring Britain maintains the high-
“The UK Budget is supportive of
the country’s AAA rating and stable
outlook because it is a key step
towards reversing the significant
deterioration in the government’s
financial position that occurred over
the past two years,” Moody’s said.
Osborne unveiled the toughest fis-
cal consolidation in Britain’s peace-
time history on Tuesday, announcing
a raft of sharp tax hikes and swinge-
ing spending cuts.
government’s intention to eliminate
the structural current deficit by
2015-16,” said Kenneth Orchard,
Moody’s vice president. “Successful
implementation would return the
government’s finances to a more sus-
tainable trend.”
Standard & Poor’s, which cut the
outlook on Britain’s AAA rating to
negative in May 2009, has yet to
make a detailed response to the
Budget.

www.koreanair.com
George Osborne has vowed to protect Britain’s AAA rating Picture: REUTERS

Banks mull
measures to
avoid UK levy
UBS also looked at ways of reduc-
▲

BANKING
BY VICTORIA BATES
BANKING analysts at UBS yesterday
predicted a surge in creative account-
ing practices in the banking sector, as
firms look to manipulate their books
to minimise the impact of the govern-
ment’s new balance sheet levy.
The team at UBS, led by respected
analyst John-Paul Crutchley, has
already begun to identify possible
opportunities for individual banks to
review their structures in light of the
tax, which it expects to be replicated
across banks’ entire balance sheets in
the fullness of time as other coun-
tries follow suit.
The analysts singled out HSBC as
an institution which could benefit
from altering its accounting struc-
ture, arguing that although the bank
traditionally uses its UK bank as one
of the main trading counterparties
within the group, these trades could
be booked on the Hong Kong balance
sheet instead.
ing the cost of similar global levies,
including in Germany, which has sig-
nalled its commitment to introduc-
ing a levy similar to the UK’s.
The analysts cited as an example
Deutsche Bank, which has been sub-
ject to speculation over a possible
acquisition of Postbank, in which it
already owns a large stake. Current
estimates assume Deutsche will be
hit relatively hard by a German tax
due to the significant level of whole-
sale funding within its retail bank.
But that proportion would drop
sharply if it bought Postbank, a bank
heavy on the retail deposits which are
outside the scope of the UK tax.
Chancellor George Osborne used
the Budget on Tuesday to announce
the £2bn annual levy. Banks will be
charged at a rate of four basis points
on their liabilities from next year,
after discounting for insured
deposits, tier one capital and long
term funding. The rate rises to seven
basis points from January 2012.

Counting the cost: The impact of the banking levy

Bank Cost of tax at Estimated 2011 Estimated 2012
7 basis points earnings downgrade earnings downgrade
RBS £328m 25% 6%
Deutsche Bank £356m 8% 8%
Societe Generale £290m 7% 5%
BNP Paribas £553m 6% 5%
Credit Suisse £215m 5% 5%
Barclays £313m 5% 4%
Credit Agricole £213m 5% 4%
From departure to arrival, the world is my destination Santander £220m 3% 2%
Lloyds £171m 3% 2%
Excellence in Reach Korean Air has one of the largest global networks in the
airline industry. With 861 connecting flights to 116 cities in over 39 different countries, HSBC £196m 1% 1%
you’re granted the luxury of flying anytime. Standard Chartered £16m 0% 0%
Source: Estimates from UBS (note that estimates are calculated on the basis of each bank's global balance sheet)
 6 Budget News
Worst cuts for
the UK since
World War II
▲
BUDGET
BY JESSICA MEAD
WHITEHALL is bracing itself for the
longest, and deepest sustained period
of cuts to public service spending
since at least the Second World War,
which could see some departments
see their budgets slashed by as much
as 33 per cent by 2014-15 in real terms.
Leading think-tank the Institute for
Fiscal Studies (IFS) yesterday con-
firmed chancellor George Osborne’s
assertion that unprotected govern-
ment departments would face cumu-
lative real cuts of 25 per cent by
2014-15.
But it said that if spending on
schools and defence was only cut by
10 per cent, then other departmental
budgets would need to be slashed by
as much as a third.
Robert Chote, director of the IFS,
said: “The cut in central government
public services spending as a share of
national income now planned by the
Coalition will more than reverse the
entire increase we saw under Labour.
CITYA.M. 24 JUNE 2010
We are looking at the longest, deepest
sustained period of cuts to public
services spending at least since World
War Two.”
“We have never seen six years of
consecutive cuts to public service
spending,” said Rowena Crawford,
research economist at the Institute.
And while expenditure on the NHS
will be protected such that it
accounts for almost a third of total
public service spending, the health
budget has never had to undergo
more than two consecutive years of a
spending freeze since 1948.
Crawford’s analysis indicated that
if the government could reduce
annually managed expenditure
(AME) by £13bn in the autumn
Spending Review, then departments
would only face a 20 per cent cut to
their budgets.
However, these savings would have
to be found from a pool of just
£154bn if state pensions, council tax-
financed spending and public corpo-
ration spending were excluded from
the expenditure able to be cut. Time is ticking for government departments to find savings Picture: GETTY
CITYA.M. 24 JUNE 2010 Budget News 7

IFS rejects Budget’s Osborne’s fiscal mandate must focus

progressive claims on the long-term, warns think-tank
for a chancellor to pencil in an extra term and added that if the fiscal man-

▲
BUDGET
BY JESSICA MEAD year of fiscal squeeze in the last year date is met then the debt target is
hitting them more and more every to ensure the target was met. also likely to be achieved.
▲

BUDGET
BY JESSICA MEAD year.” TWO major pitfalls threaten the cred- However, the IFS welcomed the But Osborne plans to announce a
“The Budget looks less progressive ibility of George Osborne’s new fiscal Budget’s announcement that the debt target “once the exceptional rise
THE Institute for Fiscal Studies (IFS) – indeed somewhat regressive – mandate and debt target, the forecast horizon would shorten in the in debt has been addressed”.
yesterday rejected chancellor George when you take out the effect of meas- Institute for Fiscal Studies said yester- future. Nonetheless, it warned that
Osborne’s confident claim on ures that were inherited from the day, although it gave both a cautious the mandate should not become too Robert Chote, director
Tuesday of a progressive Budget that previous government, when you look welcome. short-term otherwise it would lose
would spread the pain across all sec- further into the future than 2012–13 While it applauded the forward- credibility. of the IFS, yesterday
tions of society but that the richest and when you include some other looking nature of the mandate to Gemma Tetlow, senior research congratulated the
would contribute more than the measures that the Treasury has cho- achieve a balanced structural current economist at the think-tank, said that government on the
poorest. sen not to model,” said Robert Chote, budget by the end of the forecast hori- the debt target was not a sufficiently Budget’s transparency
James Browne at the IFS said yes- director of the IFS, in his opening zon, it warned that it was all too easy constraining fiscal rule in the longer
terday that the fiscal consolidation remarks.

SALE
measures announced by the coali- Browne noted that neither the
tion government on Tuesday were Treasury nor the IFS account for cuts
only progressive because of reforms to housing benefit, Disability Living
announced by the previous govern- Allowance and reforms to in-year
ment. His analysis split the distribu- changes to tax credit awards. He
tional impact of the measures into added that these are all likely to hit
the reforms in the June Budget and the poorest half more than the rich-
those already announced. est half. The capital gains tax
He added: “If you look at reforms reforms, also not included, would hit
due to be introduced in 2013 and higher-rate taxpayers, but the impact
2014 – benefit cuts announced yester- would be small.
day for those years and subsequent Browne concluded: “So it is likely
years going forward – they hit the that the overall impact of yesterday’s
poorest hardest and indeed keep on measures was regressive.”

ANALYSIS l Fiscal tightening: additional measures

Additional spending cuts
Source: IFS
8 Additional tax increases

7 Labour spending cuts

Percentage of national income

Labour tax increases

10
6

5 80% 85%
ONE WAY, FROM
4 20% 15%

0
2010-11 2011-12 2012-12 2013-14 2014-15 2015-16 2016-17

ANALYSIS l Public service spending set for a squeeze

15 Current policies imply longest, and deepest sustained, period

of cuts to public service spending since (at least) WW2

Source: IFS
Annual percentage real increase

10

£
5

-5

Labour Con Lib Historic 6 year moving average

-10
1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2010-11
FLIGHTS FROM LONDON (STANSTED)
ANALYSIS l Distributional impact of tax and benefit measures to be in place
by 2012-13
0%

-1%

-2%

TRAVEL SEPTEMBER-OCTOBER
Change in net income

-3%

-4%

-5%
Yesterday
-6%
Pre - announced
-7%
Source: IFS Book until midnight 24.06.10. Subject to availability. Terms and conditions apply, see Ryanair.com for
details. Fares exclude optional fees/charges.
Poorest 2 2 4 5 6 7 8 9 Richest
Income decile group
 8 Budget News
Miles Templeman said support for the Budget was “emphatic”
Eighty per cent of directors
give Osborne the thumbs up
▲
POLITICS
BY DAVID CROW
EIGHTY per cent of company direc-
tors support George Osborne’s emer-
gency Budget, according to a survey.
The Institute of Directors (IoD) said
four out of five members backed the
chancellor’s plan for the biggest fiscal
consolidation in Britain’s peacetime
history.
Picture: REUTERS Of the 640 directors surveyed, 83
per cent said the measures would
have a positive impact on the British
economy, while 90 per cent said it
would be effective in reducing the fis-
cal deficit.
The vast majority (82 per cent) said
they were more positive about the
UK’s long-term economic outlook,
although just 61 per cent said it
would have a beneficial effect in the
short-term.
Directors particularly welcomed
Budget score
is 7 out of 10,
say our panel
PoliticsHome.com
▲
POLITICS
BY DAVID CROW
GEORGE Osborne’s first Budget
deserves a score of seven out of ten,
our unique panel of London’s finan-
ciers and business professionals said
yesterday.
The City A.M./PoliticsHome.com
Panel, which has been specially
recruited to represent a cross section
of London’s financial community, was
also asked whether they thought the
toughest fiscal consolidation in
Britain’s peacetime history would
repair the public finances.
The overwhelming majority of pan-
ellists (71 per cent) said they thought it
would be “fairly successful” in repair-
ing the public finances while a further
21 per cent thought it would be “very
successful”. Just a handful of respon-
dents said they expected the fiscal
repair job to be “very unsuccessful”
ANALYSIS l How successful or unsuccessful do you think this budget will be in
repairing the public finances?
Very successful
Fairly successful
Fairly unsuccessful
Very unsuccessful
Don’t know
0 10 20
ANALYSIS l The Chancellor announced an increase in the top rate of capital gains
tax from 18 per cent to 28 per cent, with exemptions for entrepreneurs.
Overall, do you think this measure will benefit or hurt enterprise?
It will benefit
enterprise greatly
It will benefit
enterprise somewhat
It will hurt
enterprise somewhat
It will neither benefit
nor hurt enterprise
It will hurt enterprise
greatly
Don’t know
0 10
CITYA.M. 24 JUNE 2010
plans to trim the headline rate of cor-
poration tax by one per cent a year
until it hits 24 per cent in 2014-15,
with 92 per cent backing the meas-
ure.
IoD director-general Miles
Templeman said support for the
Budget had been “emphatic” largely
because of “more competitive and
simpler taxation”, although he said
some measures would be painful for
businesses.
while six per cent said it would be
“fairly successful”.
A hike in the higher rate of capital
gains tax from 18 per cent to 28 per
cent is unlikely to hurt enterprise,
according to the vast majority of pan-
ellists (62 per cent). Many were expect-
ing the increase to be much higher.
However, a significant minority (38
per cent) said the measure would
either hurt enterprise “somewhat” or
“greatly”, in a sign that the govern-
ment has failed to win round everyone
in London’s business and financial
community.
“Tax rises are never productive. It
would have been better to differentiate
long-term versus short-term capital
gains. Also, the retention of the 50 per
cent top tax rate with no mention that
it will ever go away was very disap-
pointing for the aspiring classes,” said
one panellist.
Another said: “Some of the tax
increases were unfortunate but politi-
cally unavoidable. I am encouraged
that the right steps are being taken to
rebuild the nation’s fortunes.”
• PoliticsHome.com interviewed 358 panel-
lists by email yesterday. Apply to join the
panel at www.cityam.com/panel
21%
71%
7%
2%
0%
30 40 50 60 70
3%
16%
43%
33%
6%
1%
20 30 40
 10 Politics
PM confirms
public sector
pensions cut
▲
POLITICS
BY DAVID CROW
THE PRIME Minister yesterday con-
firmed the pensions of existing public
sector workers will be cut, as he
defended the coalition Budget in a
tetchy question and answer session
with voters.
Cameron said the bill for public sec-
tor pensions was too high and that
schemes would become
favourable for existing members of
less
staff as well as new ones.
Answering questions alongside
Deputy Prime Minister Nick Clegg,
Cameron said some public sector fat
cats retire on gold-plated pensions
worth £70,000 a year, costing taxpay-
ers “a huge amount of money”.
He said the pensions of high-paid
civil servants would be reformed first,
but warned of changes across the spec-
trum to bring them in line with
“rewards in the private sector, which
have gone down dramatically recent-
ly”.
“What’s happened in the private
sector is many people’s pensions have
changed. There are no longer final
salary schemes or they’re having to
put more money in... it’s those things
to make sure they’re affordable,” he
added.
Cameron added that accrued rights
would be safe, but that public sector
workers were likely to contribute more
and receive less in the future.
Meanwhile, the coalition leaders
were repeatedly lambasted for hiking
VAT despite indicating they had no
plans to do so in the run-up to the gen-
eral election.
Clegg, who campaigned against a
“Tory VAT bombshell” in the run up to
the election, bore the brunt of anger
over the decision to hike sales tax
Summing up the opinions of several
questioners, host Nick Robinson said:
“People from the Lib Dem manifesto
got the sense that you would raise bil-
lions from the wealthy, many more bil-
lions in a bank tax, a mansion tax,
billions in capital gains tax. Billions
more than the government has actual-
ly done.”
Mayor of London Boris Johnson plans to stand again
Boris Johnson to declare
re-election bid in weeks
POLITICS
▲
BY MARION DAKERS
BORIS Johnson is preparing to stand
for re-election as London Mayor,
according to reports yesterday.
The former Tory MP is expected to
declare his intention to stand in the
2012 mayoral election in the next few
weeks. The contest could see Johnson
and Ken Livingstone lock horns
again, after the ex-mayor has put
himself forward to the Labour selec-
Picture: Micha Theiner/CITY A.M
tion committee for consideration.
Labour will announce its candidate
shortlist today, which could include
former MP Oona King, artist
Emmanuel Okoro and Seton During,
a chartered engineer.
A spokesman for the Mayor told
City A.M. yesterday: “The Mayor has
always said that mid-way through his
term he would take stock and decide
whether to go to Londoners for anoth-
er mandate. He thinks it’s the best job
in the world.”
CITYA.M. 24 JUNE 2010
Clegg confident
he can avoid
Lib Dem revolt
▲
POLITICS
BY DAVID CROW
NICK Clegg is convinced all his MPs
will end up voting for the coalition
Budget, despite fears that some in the
Lib Dem party will balk at benefit
cuts and a thumping hike in VAT.
An aide to the deputy Prime
Minister said the leadership was con-
fident it could win round the
doubters – including renegade MP
Bob Russell, who has repeatedly
threatened to vote against the Budget.
“Bob is obviously concerned, and
that’s understandable. But he is listen-
ing to our reasoning and we think he
will end up backing us,” the aide said.
The Budget has won the support of
left winger and recently-installed
deputy Lib Dem leader Simon
Hughes, who yesterday said the meas-
ures “can be sold” to the parliamen-
tary party.
“Of course there’s unease. Because
none of us – not one single party –
wanted to put up VAT. But that has
become a choice that was inevitable.
Anything that reduces benefits for
the vulnerable, or might reduce
them, is difficult,” Hughes said.
Meanwhile, business secretary
Vince Cable yesterday insisted the
Budget reflected Lib Dem concerns.
“The key elements that we fought for
are in it,” he told MPs in the com-
mons.
 The Capitalist
12 CITYA.M. 24 JUNE 2010
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com

ACTOR KEVIN SPACEY “Spacey

ENJOYS A RETURN TO
THE TRADING FLOOR
ACTOR and Old Vic artistic director
Kevin Spacey is becoming quite the
dab hand on the trading floor, if
reports from our Stateside friends are
to be believed.
Bankers at Citigroup in New York
were astonished last week when
Spacey popped into their offices to do
a spot of research for his new movie,
Margin Call, which is set during the
chaos of the financial crisis.
According to the New York Times
Dealbook blog, Spacey spent quite a
few hours in meetings at the bank,
trying to work out what makes a trad-
er tick – how it feels to win or lose
millions of dollars in the blink of an
eye, how to deal with the moral
issues associated with selling a securi-
ty you know is worthless, you know
the drill.
Mind you, Spacey’s no stranger to
the financial markets. He is a regular
at the charity trading days of some of
Do your
Do your MBA
MBA where
where
the City’s largest firms. Just last
December, he showed off his skills on
the phones at inter-dealer broker
ICAP’s charity day, where he took to
the floor alongside fellow celebrities
including model Kelly Brook, ex-
rugby international Matt Dawson,
presenter Chris Tarrant and X Factor
duo Jedward.
CITY SLEUTHS
There’s nothing The Capitalist likes
more than a good mystery, and here’s
a particularly juicy one for readers to
get their teeth into.
The Bedfordshire and
Hertfordshire police is appealing for
the City’s help to solve a 13-year-old
cold case – namely, of a man found
dead in the woodlands of
Biggleswade. The man in question
was found in February 1997 by a cou-
ple of young boys who were bunking
Spacey, pictured here at Icap, is no stranger to the trading floor
off school, and had died from lung
and brain cancer in the temporary
shelter in which he was living rough.
Rumour around the town at the
time had it that “Old Ragbones”, as
Picture: Alex Ridley/ CITY A.M
the vagrant was known, had once
worked in the City of London – and,
upon learning that he was terminally
ill, had resigned from his job and
withdrawn from society.
The man was thought to be in his
50s when he died, and was described
as being “very well-spoken, well-edu-
cated and reserved”. He also had a
very distinctive tattoo on his arm, fea-
turing a woman’s head above a large
heart shape. The woman has dark
curly hair and the tattoo also includ-
ed part of a name, which police
believe is only four or five letters in
length and ends in a ‘Y’.
“At some point,
this man must
have had friends,
family, col-
leagues,”
detective
inspector
says
chief
Sean
spent quite a
few hours in
meetings at
Citi’s offices,
trying to
work out
what makes
a trader tick”
mates – a dedicated football fan –
named his dog after Heskey, since the
footballer had just scored an England
goal when he first got him.
“That was about three years ago,”
Brotherston quipped.
SPEAKING VOLUMES
Many City traders were officially
encouraged by their bosses not to
stray away from their desks and to
carry on working, remembering that
“not all our clients support England”.
However, it looks as if not everyone
took that sage advice from on high –
trading volumes were down substan-
tially on the average at just 928m yes-
terday...
SURPLUS STOCK
One of The Capitalist’s spies was pass-

the
the world
world does
does business
business O’Neil.
“We are asking
anyone who has
ing the household store Wilkinsons
early yesterday when he spotted a sur-
plus of St George flags and other
worked in the City England memorabilia retailing on
– do you recognise Above: The police sale for just 10p a pop. Perhaps they’ll
From
From our home in the city this man? Does photo-fit of how the be snapped up now that the team
of London,
London, we give
we give our MBA
MBA anyone recognise missing man may added a victory to its World Cup score
the tattoo design? have looked when card?
students the best overview
overview of If you can help, he was younger
the
the current
current tthinking
hinking aand
nd p practice.
ractice. please call the
Whether
Whether youyou choose
choose a 1122 m
month
onth
non-emergency POSITIVE SPIN
number 0845 33 00 222, quoting A snippet from BP’s in-house online
full-time
full-time MBA
MBA or two
two yyear
ear Operation Hermes. No matter how magazine BP Planet, which clearly
small or insignificant you might isn’t taking as dim a view of the dev-
Executive
Executive MBA,
MBA, you
you will g gain
ain think the information is, get in astating Gulf of Mexico oil spill as oth-
both the theory and practical
practical touch.” ers have.
“Much of the region’s businesses –
skills to
to do business at the particularly the hotels – have been
very
v highest
ery hi level.
ghest le vel. DIARY CLASH prospering because so many people
On to England’s World Cup victory have come here from BP and other oil
yesterday, and a spot of bad luck for emergency response teams,” one
Join
Join us on 3 JJuly
uly at our ‘MBA
‘MBA Prime Minister David Cameron, who report claims, optimistically.
Experience
E xperience d day’
ayy’ tto
o find
find out
out more
more only got to watch his
team for half of the
about
about our
our flexible
flexible study
study routes.
routes. match. The reason? PEDAL POWER
Visit
Visit www.cassmba.com
www.cassmba.com to to An ill-timed meeting Congratulations to the
with the Irish prime bunch of 600 Deloitte part-
book your
your place
place or contact
contact minister. ners, staff and clients who
aCCass
ass MBA
MBA advisor
advisor on took part in the firm’s chari-
ty “Ride Across Britain” last
+44
+44 ((0)20
0)20 77040
040 55277
277 for
for details.
details. DOG’S LIFE week, cycling 1,000 miles
Over to Harry’s Bar yester- from John O’Groats to
day for a World Cup party Land’s End to raise
hosted by Ken Brotherston, money for
The
The application
application deadline
deadline for
for the
the the chief executive of head- ParalympicsGB.
hunter Kinsey Allen The riders, who were
Women
W omen iin
nBBusiness
usiness and
and Dean’s
Dean’s International. joined by Olympic gold
Scholarships
Scholarships is
is 16
16 July
July 2010.
2010. At half time, Brotherston medallists James
was forced to stand on a Cracknell and Rebecca
chair to boom his speech over Romero and Paralympic
the room due to microphone gold medallists Sarah
problems, though the Scot did Storey and Jody Cundy,
www.cassmba.com
w ww.cassmba.com manage to elicit throaty chuck- have raised £316,000 so
les from the England fans with far this year for the event,
a dig at much-maligned striker which Deloitte is sponsoring
Emile Heskey. for four years between 2010
Apparently, one of his and 2013.
 14 Focus on BP CITYA.M. 24 JUNE 2010

Dudley to head
Gulf spill team
as accident sees
oil flow increase
BP IN CRISIS
BY EMMA SADOWSKI
BP chief executive Tony Hayward yes-
terday handed over the day-to-day
running of the firm’s clean up of the
Gulf of Mexico oil spill disaster to
managing director Bob Dudley, BP
said.
Dudley will become president and
chief executive of BP’s newly-formed
Gulf Coast Restoration Organisation
“effective immediately”.
But as Dudley took the reins oil
gushed largely unchecked from BP’s
ruptured Gulf of Mexico well after an
undersea robot collided with a cap
intended to capture leaking crude.
BP could not confirm when it
expects to replace the cap – its most
successful containment device to date.
The oil company’s shares, which have
lost £33bn since the explosion, were
roughly flat in London at 333.5p and
up one per cent in New York at $30.02.
BP faces suit
from NY fund
BP IN CRISIS
BY EMMA SADOWSKI
NEW York state’s pension fund plans
to sue BP to recover losses from the
drop in the company’s stock price fol-
lowing the worst oil spill in US histo-
ry, state comptroller Thomas
DiNapoli said yesterday.
DiNapoli, the sole trustee of the
ANALYSIS l BP $132.6bn (£88.6bn) state pension
p fund, has hired law firm Cohen
650 Milstein Sellers & Toll to represent the
333.50 fund. “BP misled investors about its
550 23 June safety procedures and its ability to
respond to events like the ongoing oil
450
spill and we’re going to hold it
accountable,” said the Democratic
comptroller, who will stand for elec-
350 tion in November.
The fund has a history of acting as
lead plaintiff in actions in which
26 Apr 10 May 24 May 7 Jun 21 Jun
investors club together to launch
claims against companies that can
BP’s Bob Dudley will take the reins in the Gulf Picture: REX run into billions of dollars.
DiNapoli said the fund owns more
than 19m shares in BP.
Dennis MacKee, spokesman for the
$104bn Florida state pension system –
one the largest in the United States –
said: “We’re monitoring the lawsuit
and all developments,” adding, “but
we have not come to any decision.”
As of 11 June, the Florida pension
system that covers nearly one million
retirees and active workers had unre-
alized losses of about $65m on its BP
investments and $21m of realized
losses since the April 20 oil-rig disas-
ter, according to MacKee.
The Illinois State Board of
Investment, which manages public
pension funds, has 1,066,132m shares
of BP but “the totality of ISBI’s expo-
sure to BP is through index accounts,”
said spokesman William Atwood.
“With the exception of statutory
requirements...the Board’s practice
has been not to issue directions to
equity managers regarding specific
securities,” he added.

Obama appeals drill ruling,

3 0 T H J U N E / 1 S T J U LY 2 0 1 0
R O YA L H O R T I C U LT U R A L H A L L S , L O N D O N
as judge reveals oil shares
tary, said that he would seek a new oil spill disaster.
BP IN CRISIS court order explaining why the Judge Feldman’s 2008 financial
BY EMMA SADOWSKI ban was essential in the first place. disclosure report – the most recent
“We see clear evidence every day, available – also showed invest-
BAHRAIN K U WA I T OMAN Q ATA R SAUDI ARABIA UA E
US PRESIDENT Barack Obama is as oil spills from BP’s well, of the ments in Ocean Energy,
lining up a legal team to fight for need for a pause on deepwater Quicksilver Resources, Prospect

Everything you need to his six-month ban on deepwater

drilling in the Gulf of Mexico as
the US faces one of the worst envi-
drilling,” said Salazar.
Salazar’s pledge came as it
emerged that Feldman has exten-
Energy, Peabody Energy,
Halliburton, Pengrowth Energy
Trust, Atlas Energy Resources,

know about investing & doing ronmental disasters in history.

On Tuesday, US district judge
Martin Feldman overturned
Obama’s moratorium on drilling
business in the Gulf States deeper than 500 feet in the Gulf
after a raft of drillers petitioned
the move.
Ken Salazar, the interior secre-
sive investments in the oil and gas
industry, according to financial dis-
closure reports.
Parker Drilling and others.
Halliburton was also involved in
the doomed Deepwater Horizon
Feldman reported holding near- project.Obama issued the ban on
ly 15,000 dollars in shares in
Transocean, the company that
owned the Deepwater Horizon
deepwater drilling in May, one
month after the explosion of the
Deepwater Horizon rig, affecting
drilling rig responsible for the BP more than 30 oil rigs in the region.

CITY VIEWS: DO YOU THINK BP WILL SURVIVE THE SPILL?

Interviews by Emma Sadowski

NICKY MITCHELL | THB GROUP

“BP is one of the largest companies in the world. It will pull through this because it is well
known and turns over a fortune every year. However, the share price will continue to take a
beating because of the Gulf catastrophe.”

NIRAJ MISTRY | POLARISOFT

• Free Exhibition • Free Seminars “The stock price has dropped so dramatically that it could become an investment opportu-
• Free Networking nity for another oil company. On the flip side, BP is a massive company and I can’t see it dis-
appearing into the sunset. I do think the biggest concern is what will happen to the
Supported by: Sponsored by:
UK pension funds?”

AARON HODSON | COVERSURE INSURANCE

Pre-Register for FREE entry at “BP should have enough finances to get through this however, we don’t know what kinds of
claims it’ll face. BP will survive but it has to start standing up to the President and the
www.gccbritainexpo.com American government.”
 yd‰…–d›…––…’˜d†‰‡…™—‰
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CITYA.M. 24 JUNE 2010 Economic News 17

Demand for new US homes sinks

May mortgage lending rises to its lowest level in over 40 years
BANKING £1.8bn in April but this was still low card lending rose by £171m in May.
▲

BY JESSICA MEAD on a historical basis. IHS Global Insight’s Howard Archer 1963, the Commerce Department said

MORTGAGE approvals rose in May to
36,709 to their highest level so far this
year but they were still far below the
27-month high of 45,758 hit last
December, fresh monthly data from
the British Bankers’ Association (BBA)
revealed yesterday.
Net mortgage lending picked up to
£2.6bn in May from a nine-year low of
Lending to non-financial compa-
nies fell by £1.3bn in May following a
decline of £1.2bn in April, slightly
below the average monthly fall of
£1.6bn over the previous six months.
The BBA figures also showed that
net consumer credit fell by a further
£71m in May after a drop of £347m in
April, the fourteenth net repayment
in consumer credit. However, credit
said: “The further net repayment in
consumer credit in May is the conse-
quence of an ongoing desire of con-
sumers to reduce their debt in a still
very uncertain and somewhat trou-
bling economic environment and the
looming major fiscal squeeze, as well
as low consumer appetite for new
borrowing and a limited availability
of unsecured credit from banks.”
▲
US ECONOMY
SALES of new US homes dropped a
record 32.7 per cent in May to the
lowest level in at least four decades as
the boost from a popular tax credit
faded, adding to worries over a slow-
ing economic recovery.
Single-family home sales tumbled
to a 300,000 unit annual Rate, the
lowest level since the series started in
yesterday.
The gloomy report suggests the
economy’s recovery from the worst
downturn since the 1930s might be
losing strength. On top of May sales
missing market expectations for a
410,000 unit-pace, figures for the prior
two months were revised down, imply-
ing the impact of the homebuyers’ tax
credit was weaker than thought.

Shop sales fall again

RETAIL ance of -18 per cent, the CBI said. Sales sales will strengthen next month. As
▲

BY JESSICA MEAD
RETAILERS have suffered another
decline in sales in June as high street
spending flagged for the second
month in a row, according to the CBI.
But the decline was slower than
expected and firms are hopeful that
spending will pick up in July thanks
to a boost from the World Cup.
A net five per cent of retailers
reported a rise rather than a fall in
sales during the first two weeks of
June. This was better than the net -15
per cent expected and an improve-
ment on the
May bal-
are expected to recover slightly next
month with a net 11 per cent of retail-
ers forecasting volumes to be higher
next month than they were in 2009.
Ian McCafferty, chief economic
adviser to the CBI, said: “Footwear
and leather goods retailers were the
worst hit, but grocers and durable
household goods enjoyed solid
growth. This may reflect consumers
gearing up for the World Cup by
stocking up on food, drink and new
televisions.”
He added:
“Retailers are
hopeful that
the survey pre-dates the emergency
Budget, news that the feared rise in
VAT will not take effect until next
January may well also encourage
some advance spending over the sec-
ond half of the year.”
But with the Budget announcing
other tax rises and spending cuts, the
overall outlook for consumer spend-
ing still looks pretty weak, said Vicky
Redwood, senior UK economist at
Capital Economics, who added that
incomes would be squeezed.

The High Street did not enjoy an expected World Cup bounce last month Picture: PA

Retailers will cheer England win but

things are about to get much worse
EVERYONE will be thrilled that
England has managed to scrape
through the knock-out stages of the
World Cup, but retailers are espe-
cially relieved. The near-term boost
from the tournament will continue
a little while longer. Those fans
waiting to see if England could
come up with the goods before buy-
ing a widescreen TV will splash out;
sales of snacks and beer will tick up.
As it stands, the picture for retail-
ers is hardly rosy: high unemploy-
ment; falling full time
employment; subdued growth in
earnings; high levels of household
debt; and expensive petrol. No won-
der sales are taking a battering.
But today’s climate will seem like
halcyon days when the big squeeze
hits with a vengeance. Cuts of up to
NEWS | IN BRIEF
D Bank equity co-head on leave
Deutsche Bank said yesterday that
Robert Karofsky, its co-head of equity
sales and trading worldwide, is taking a
leave of absence for personal reasons
for an indefinite period of time.
Garth Ritchie, the other co-head of
equity sales and trading, will oversee
the group during Karofsky’s leave,
Deutsche Bank spokesman Ted Meyer
said yesterday.
Ritchie will be aided by Barry Bausano,
Deutsche Bank’s co-head of its global
prime finance business.
Bausano is taking on an additional role
as head of global markets equity for
the Americas, Meyer said.
He would not comment further on the
reasons for Karofsky’s absence.
33 per cent in some departmental Urban Kings is a brand new
budgets mean there will be tens of
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state-of-the-art luxury mixed
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of the poorest. designer surroundings you can
But it is the thumping rise in VAT,
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finesse your physique or prepare
that poses the biggest risk to shops. for competition with our specialized
It can only send sales down further
while pushing up inflation, possi- classes and equipment. You and a
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friend can experience the gym, or your
For now, retailers should bask in choice of class, for FREE. Call 020 7837 7774
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urbankingsgym.com
Tribune bankruptcy is delayed
A court-appointed examiner has request-
ed more time to investigate the Tribune
Co leveraged buyout that some blame
for its bankruptcy, likely delaying its
stay in Chapter 11, according to court
documents filed yesterday.
Kenneth Klee, a law professor
and partner of the Los
Angeles law firm of Klee,
Tuchin, Bogdanoff & Stern,
said he needs about two
more weeks to interview wit-
nesses and review documents the art of
to prepare his report. The
request to extend the dead- fighting
line from 12 July to 27 July
must be approved by the
bankruptcy court.
 18 Sovereign Debt Crisis
Eurozone sees
weak growth
ECONOMY
▲
BY OLIVER SHAH
CONCERNS over a faltering Eurozone
recovery were stoked yesterday when
forward-looking surveys pointed
towards slower economic growth in
the second half of the year.
The flash composite purchasing
managers’ index (PMI) for the region,
a closely-watched weathervane for
wealth-creating activity, fell from 56.4
in May to 56 in June, its lowest level
for three months. Although any read-
ing above 50 indicates economic
expansion, the dip will fuel fears that
austerity measures enforced by a raft
of European Union countries are
beginning to impact on growth.
The Eurozone manufacturing PMI
dropped slightly from 55.8 to 55.6,
while the services PMI declined more
dramatically from 56.2 to 55.4.
Despite the downwards move-
ments, index provider Markit said the
numbers supported the idea GDP in
the region accelerated in the second
quarter at a robust pace of 0.6 per
NO NEED FOR HAIRCUTS
GREECE will “absolutely” be able to get through its fiscal crisis without having to restruc-
ture its debts, finance minister George Papaconstantinou said yesterday. The minister
told a German newspaper Athens still had a “credibility problem”, but insisted the coun-
try could survive without asking creditors to take a haircut to their positions. Greece is
trying to cut its budget gap to 8.1 per cent of GDP this year.
Hungary to cut deficit below 3pc
of GDP as part of financing deal
▲
ECONOMY
HUNGARY’S new government hopes
to cut next year’s budget deficit below
three per cent of GDP as agreed with
lenders and will seek IMF/EU backing
for reforms to raise the country’s
growth potential, the deputy prime
minister said.
Tibor Navracsics reiterated that the
centre-right Fidesz government was
firmly committed to this year’s 3.8
per cent of GDP deficit target and
cent to 0.7 per cent. Chris
Williamson, chief economist at
Markit, said: “Growth is led by manu-
facturing and, in particular, exports.”
Nick Kounis, chief economist at
Fortis Bank, said spending cuts by
governments would not fully bite
until next year. He added: “The sec-
ond quarter’s going to be pretty
strong, but in the second half of the
year we’ll see a clear slowdown.
Growth is going to be sluggish.”
Elisabeth Afseth of Evolution
Securities said the creep in yields on
government bonds for countries such
as Spain was more worrying than the
prospect of weakening growth.
Nations had to press on with forceful
fiscal squeezes despite the feed-
through to private sectors, she said.
Nick Kounis of Fortis
said the second half of
2010 would bring a
marked slowdown in
Eurozone growth
Picture: GETTY
wanted to negotiate an extension of a
$25.1bn (£16.8bn) financing deal with
international lenders.
“Obviously during the planning of
next year’s budget we will have to
reckon with whether we can meet
[the three per cent goal],” Navracsics
said yesterday.
“We hope we can meet this under-
taking by the [previous] Bajnai govern-
ment, which would bring the budget
deficit below three per cent,” he said
yesterday.
 Sovereign Debt Crisis
This weekend’s summit comes amid continuing economic turbulence
G20 leaders
warn against
complacency
▲
ECONOMY
BY HARRY BANKS
THE Group of 20 major economies
will warn against complacency in
tackling the global economic crisis
and say sickly public accounts could
hit long-term growth, according to a
draft document.
The draft version of the summit
communiqué, obtained ahead of a
G20 leaders meeting this weekend in
Toronto, reflected the different views
within the G20 on how to proceed
with economic policy.
The draft, dated 11 June, said the
recovery was “uneven and fragile”
with unemployment at unacceptable
levels. “There is no room for compla-
cency,” it said.
At the same time, it said “fiscal
challenges in many states are creat-
ing market volatility, and could seri-
ously threaten the recovery and
weaken prospects for long-term
growth.”
Iceland eases bank rate
while Norway holds firm
▲
ECONOMY
ICELAND’S central bank further
eased monetary policy as expected
yesterday, trimming its key rate to
eight per cent, and said it could be in
a position to further lift capital con-
trols.
Iceland took a beating during the
crisis in 2008 and its top banks col-
lapsed under a weight of debt.
Investors fled, the crown slid and the
country had to take a $10bn (£6.7bn)
bailout from the IMF and Nordic
states, including funds to repay
depositors in failed Icelandic banks in
19
Picture: GETTY
The United States has argued for
continued stimulus spending by gov-
ernments to ensure the global eco-
nomic recovery does not fizzle out.
Other countries, such as Germany,
intend to cut spending quickly in
order to bring down public debts and
deficits.
“Further actions are still required
to address the underlying causes of
the global financial crisis and pro-
mote more responsible and transpar-
ent banking sectors,” it said.
Reforms of banking around the
world, along with ways to ensure the
recovery of the global economy, are
high on the agenda of the summit.
The draft said the G20 would push
for conclusion of a long-delayed
world trade deal and would pledge to
extend a commitment not to raise
barriers to investment or trade for
three more years, through 2013.
G20 nations converge on 26 to 27
June as Europe fights a debt crisis and
the US battles high joblessness.
Britain and the Netherlands.
The central bank also took borrow-
ing costs to a record high of 18 per
cent and put in place strict capital
controls to protect its currency. It
started to ease those restrictions late
last year, but the crown is still far
from fully tradable.
Norway’s central bank, meanwhile,
held its main interest rate steady at
two per cent and signalled no upward
move after its economic recovery stut-
tered and Eurozone debt risks grew.
The central bank said it saw its key
rate in a range of 1.5 to 2.5 per cent
until October.
 20 News CITYA.M. 24 JUNE 2010

ANALYST VIEWS: WHAT DO YOU

Stagecoach is MAKE OF STAGECOACH’S RESULTS?
Interviews by Emma Sadowski

upbeat inspite MANOJ LADWA |

ETX CAPITAL

“Despite a series of one-off costs impacting

profitability, Stagecoach still managed to

of profits fall post a robust set of full-year numbers. Along

with an increase in dividend and positive
comments from Fitch, shareholders will be

”
encouraged by plans to expand
abroad.”
▲

TRANSPORT lent position to benefit from the

BY EMMA SADOWSKI
BUS AND RAIL operator Stagecoach is
positive about the next year despite
posting a 18 per cent drop in full-year
pre-tax profits.
The transport group’s profits fell
to £161.3m from £196.4m after the
group weathered a difficult year in its
increasing signs of economic recov-
ery,” said Brian Souter, the group’s
DOUGLAS MCNEILL |
chief executive. CHARLES STANLEY
Souter said the company is looking
to further expand its Megabus busi- “The numbers are down but are broadly in
ness in the US and has already added line with what was expected. It has been a
new routes.
Stagecoach, which paid out £77m difficult year on the rail side of the business
in dividends, saw a climb in revenue and the US operations have suffered from a
decline in the leisure market. However, things

”
rail and North American bus busi- across both its UK bus and rail busi-
nesses. nesses, while passenger growth CEO Brian Souter plans to expand Megabus US Picture: REX do look to be improving.”
In the year ended 30 April, remained the highest at its Virgin
Stagecoach saw its rail profits drop by Trains business, of which it owns 49 ANALYSIS l Stagecoach's full-year revenues
25.4 per cent to £41.6m, attributing per cent.
the decline to a drop off in passenger
revenue and a fall in payments to the ANALYSIS l Stagecoach UK bus UK rail AAMER NAWID |
200 p 190.80 FAT PROPHETS
Department for Transport (DfT).
The group’s North American arm,
23 Jun £875.4m £1bn North
where it operates its US Megabus UP 5.4% UP 5% America “Given that Stagecoach operates in both the
business, also took a hit from a 190
decline in the leisure market. Virgin Group £490.4m UK and the US, management should take a
great deal of credit for these results. It is
However, management at (owns 49%) DOWN 14.7%
Stagecoach remain positive about the highly likely that austerity measures here in
outlook for the year ahead.
180
£355.5m the UK will negatively impact passenger

”
“These are a good set of results and UP 10.2% numbers.”
we met the challenges of a difficult 170
trading year. We are now in an excel- 29 Mar 22 Apr 11 May 1 Jun 21 Jun
 22 News CITYA.M. 24 JUNE 2010

China’s AgBank sets

floor price for listing
the market was expecting. per cent drop in China’s stock mar-

▲
BANKING
BY HARRY BANKS
AGRICULTURAL Bank of China
(AgBank) is understood to have set a
floor price for the Hong Kong por-
tion of its $23bn (£15.4bn) stock
market listing with key investors
agreeing to buy $5.45bn of the
shares.
AgBank vice-president Pan
Gongsheng was quoted as saying the
Hong Kong offer will not be lower
than HK$2.80 a share. That would
represent a price-to-book multiple of
1.7 times, the report said. A valua-
tion at that level would be slightly
higher than the 1.5-1.6 times book
The HK$2.80 per share floor price
means AgBank plans to raise a min-
imum of $9.14bn on the Hong Kong
Stock Exchange.
Pan’s comments come as the
bank and its underwriters are final-
ising the price range for its Hong
Kong and Shanghai offering.
Like any initial public offering
(IPO) entrenched in an investor
roadshow, the top executives push
for the highest possible valuation,
while investors decide at what level
they are comfortable investing.
AgBank originally hoped to raise
up to $30bn through its IPO but
scaled back expectations amid a 20
ket in the past few months. The
news on China’s yuan policy, how-
ever, has given a boost to China’s
stock market, helping sentiment
around AgBank.
AgBank, the last of China’s four
big state banks to go public, is sell-
ing a 15 per cent stake in a dual list-
ing in Hong Kong and Shanghai,
excluding a greenshoe option, as it
looks to replenish its capital and
drive growth. As the IPO heads into
its final stretch, the bank’s ability
to raise the $23bn appears to be get-
ting further from its reach. Just
over half of the total offering will
be on the Hong Kong Exchange.

Oil supplies are

Izaki buys out Aim sufficient until
listed Atlas Estates 2015, says IEA
Izaki now has control of Atlas’ portfolio of commercial
▲

ENERGY
Izaki was advised on the deal by and residential properties in eastern Europe, includ-
▲

PROPERTY
BY OLIVER SHAH
IZAKI Group, the property firm run
by Israeli businessman Ron Izaki, has
taken over London and Warsaw-listed
Atlas Estates in a deal valuing the
Polish investment trust at £265m.
Having floated Atlas on the
Alternative Investment Market (Aim)
in 2006 with co-investors Elran
Investments and RP Capital, Izaki
upped its stake to 94 per cent this
week with an offer at an 11 per cent
premium to Atlas’ undisturbed price.
The move gives Izaki control of
Atlas’ portfolio of commercial and
residential properties in eastern
Europe, including the Warsaw Hilton
hotel. It is understood Izaki became
frustrated with the slide in Atlas’
share price since its initial public
offering and now plans to revitalise
the trust through a capital injection
or refinancing.
Excellion Capital, a boutique corpo-
rate finance house launched three
years ago by former JPMorgan
Cazenove bankers Robert Stafler and
Raffael Johnen.
Stafler said: “Izaki will be getting
its hands dirty, rolling up its sleeves
and doing some hands-on property
development. The plan is to propel
the company to the glory it aimed for
but never quite reached.”
ANALYSIS l Atlas Estates
105 p
89.00
23 Jun
95
85
75
29 Mar 22 Apr 11 May 1 Jun
ing the Warsaw Hilton hotel
EXCELLION (£3.7bn) rights issue in 2006. At the
CAPITAL time, the cash call was the largest-
ever capital raising in the UK.
Izaki’s buyout of Atlas is Excellion’s
ROBERT STAFLER fifth deal this year. Stafler said the
boutique had a strong pipeline of
work, meaning it could pick and
choose contracts.
“We are able to be very selective
EXCELLION Capital is a young bank, about the transactions we work on,”
but its founders have years of experi- he said. “Being selective is key, espe-
ence in the natural resources space. cially in volatile times when complet-
Robert Stafler and Raffael Johnen ing transactions, even good
started Excellion in 2007 after long transactions, is not always straight-
stints at JPMorgan Cazenove. Stafler forward.”
worked in the Wall Street giant’s capi- Excellion works for clients includ-
tal markets, M&A and structured equi- ing Petropavlosk, the London-listed
ty teams, advising on transactions gold miner, Kazakhmys and state-
such as mining group Xstrata’s $5.5bn backed Royal Bank of Scotland.
21 Jun
RISING oil supplies will mostly offset
higher demand over the next five
years, the International Energy
Agency (IEA) said yesterday in a report
that helped push prices lower.
IEA data showed the supply-
demand picture would be virtually
unchanged next year compared with
this year, although spare capacity
would begin to shrink by 2015.
Gas markets, which have been char-
acterised by a glut, will stay very well
supplied in the near term.
The agency raised its oil demand
growth outlook to an average 1.4 per
cent, or 1.2m barrels per day (bpd),
every year from 2009 to 2015 on the
back of robust demand from emerg-
ing markets, taking the total to 91.9m
bpd in 2015.
“The oil market is marked by more
comfortable spare capacity than
envisaged last year,” the Paris-based
IEA said in its latest report.
CITYA.M. 24 JUNE 2010
EUROPEAN RAIL NETWORK ON TRACK
LONDON and Continental Railways, the state-owned operator of the High Speed 1 rail-
way, is in talks with Germany’s Deutsche Bahn about granting access for train services,
its chief executive said yesterday. “We are discussing several options with them,” Mark
Bayley said on the sidelines of the Transfin 2010 conference in Barcelona. Deutsche Bahn
could run direct rail connections between London and the continent.
Iconic Battersea site
primed for flotation
▲
PROPERTY
BY HARRY BANKS
DEBT-LADEN property firm Real
Estate Opportunities (REO) will pur-
sue a de-merger of London’s deteri-
orating Battersea power station, it
said as it reported losses of almost
£1bn yesterday.
The landmark, Europe’s largest
brick building, has been derelict for
more than a quarter of a century
and is in need of financing for rede-
velopment.
REO said it had agreed new lend-
ing terms for Battersea with Lloyds
Banking Group and Nama –
Ireland’s “bad bank scheme” –
thereby extending the current facil-
ity and waiving all outstanding
breaches.
It said it would launch a road-
show to attract a long-term equity
partner into the project ahead of
the expected receipt of planning
permission for redevelopment, and
that it hoped to list the project
before the end of the year.
Potential partners are thought to
include sovereign wealth funds and
large real estate investors.
“Due to the quality of the devel-
opment, the location and the
strengthening real estate invest-
ment market in London, interest
has been very encouraging and we
hope to announce significant
progress in this regard later in the
year,” REO said in a statement.
Shares in REO fell 15 per cent yes-
terday to 14p, valuing the company
at just £47m.
The company made an underly-
ing pre-tax loss of £929m for the 14
months to 28 February, reflecting
an £811m fall in valuation due to
News 23
CITY MOVES | WHO’S SWITCHING JOBS Edited by Victoria Bates
pal in a small hedge fund and devote
JP Morgan more time to various real estate and
India Gary-Martin has joined the investment private equity interests.
bank as global head of location strategy and
performance metrics. Mizuho Corporate Bank
Gary-Martin was previously at the Royal The Japanese bank has appointed
Bank of Scotland, where she led the implemen- Jason Meyer as a director in the finan-
tation of the government’s asset protection cial solutions group.
scheme for the bank’s global banking and mar- Meyer joins from NM Rothschild in
kets division. She is also president of the City London, where he was a director in the
Women’s Network and a recognised champion investment banking division.
of diversity in the City. Prior to that, he held the position of
vice president in the global asset secu-
Collins Stewart Mint ritisation team at Deutsche Bank.
The financial services group has hired The agency broker has hired Paul
Alasdair Ogilvy-Stuart to its wealth Cooper, ex-head of HSBC’s emerging Bishop International
management division to join the inter- markets equity businesses in the The corporate investigations company
mediary sales team. EMEA region, as a non-executive direc- has appointed Jody Freshwater as
In his new role, Ogilvy-Stuart will tor. Cooper started his career at director of strategic intelligence.
particularly focus on independent accountancy firm Price Waterhouse. Freshwater previously worked at the
financial advisers, having previously Since then he has worked as a manag- Serious Organised Crime Agency,
been responsible for introducing retire- ing director at UBS in the European where he was involved in investiga-
ment income products to the IFA mar- equities business, leaving in 2004 to tions into organised crime, including
ket at Sun Life of Canada. He has also join HSBC. frauds, drug trafficking and people
worked for Zurich and AMP NPI. He left last year to become a princi- smuggling.
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
the troubled property market in
Ireland, where REO has extensive
holdings.
“It has been an exceptionally
challenging period for the compa-
ny,” said Real Estate Opportunities
chairman Ray Horney. “However,
the company has worked hard and
is confident that it will be able to
strengthen the balance sheet.”
ANALYSIS l Real Estate Opportunities
10.00
p
18 23 Jun
16
14
12
10
8
29 Mar 22 Apr 11 May 1 Jun 21 Jun
 24 Consumer News
Kesa back in
black despite
tough market
RETAIL
▲
BY JOHN DUNNE
COMET owner Kesa has posted an 18
per cent rise in full-year profit as
improved gross margins offset a
decline in underlying sales growth.
The electricals retailer, which also
runs market leader Darty in France,
made an underlying pre-tax profit of
£81.9m for the year to 30 April.
That was ahead of company guid-
ance of £76m and up from £69.5m
made in 2008-09. The group, which
trades in 11 countries, said revenue
rose 3.4 per cent to £5.1bn.
Comet itself saw a rise in annual
profits of almost 14 per cent.
The chain made £11.5m in the year
to the end of April, compared with
£10.1m a year earlier.
The firm is targeting internet sales
Wilkinson sees
its profit soar as
cost cuts deliver
▲
RETAIL
BUDGET chain Wilkinson has had
another strong year with profits more
than doubling in the year to 29
January.
Pre-tax profits rose from £29.5m to
£65m in the year. Like-for-like sales
increased by two per cent. Turnover
climbed seven per cent to £1.6bn. The
retailer said it was “particularly
pleased with progress on profit”.
Operating profits grew from £31.6m
to a new company record of £62.9m.
The retailer opened 17 new stores
last year but reined in spending.
to match the level of market share it
has in its retail stores and plans to
open about 25 stores a year, half of
which will be in its developing busi-
nesses in Italy, Turkey and Spain.
Kesa’s shares have fallen 23 per
cent over the last six months after
being hit by a weaker euro and com-
petition from supermarkets.
ANALYSIS l Kesa Electricals
p
119.00
130
23 June
120
110
100
9 Apr 29 Apr 20 May 10 Jun
Capital Pubs toasts Waitrose to acquire five
boost from real ale stores in Channel Islands
LEISURE
CAPITAL Pub Company has seen a
rise in profit – fuelled by real ale
sales during the World Cup.
The group – which has 28 pubs
and has plans to own up to 50 within
three years – yesterday reported a 32
per cent profit jump to £2.7m.
Revenues rose by 11 per cent to
£22m in the year to the end of March,
and the company said it was relieved
there had been no duty hike on alco-
hol in the Budget.
Chief executive Clive Watson attrib-
uted the strong figures to booming
The fall in Kesa shares
over past six months
£11.5m
Comet made in the year to the end of April
11
Number of countries the group trades in
Comet has found the going tough with more competition
▲
sales of real ales, saying central
London pubs have been packed with
football fans following teams from
around the world.
He said: “Real ales have been very
popular with our customers. We
think the gastro-pub thing was
overblown.
“We are concentrating on provid-
ing something a bit different for our
customers and the real ales provide
that. The World Cup has been good
for London pubs because it is so mul-
ticultural. It’s not just England games
where there is an interest.”
THE WORLD CUP
AT BOISDALE OF
BISHOPSGATE
Enjoy the World Cup in style with
a 72” screen & air-conditioning in
the Champagne & Oyster Bar
BOISDALE OF BISHOPSGATE SWEDELAND COURT,
202 BISHOPSGATE,
EC2M 4NR 020 7283 1763
INFO@BOISDALE-CITY.CO.UK
WWW.BOISDALE.CO.UK
18%
Rise in full-year
profit at Kesa
23%
Picture: NEWSCAST
RETAIL
WAITROSE is buying five supermar-
kets in the Channel Islands.
Local chain Sandpiper CI has sold
the stores to the UK supermarket
giant.
The deal is subject to the approval
of the Jersey Competition Regulatory
Authority.
It is not expected to complete
before the end of October.
It will include the three Checkers
supermarkets in Jersey and Admiral
and two in Guernsey.
The stores will continue to be run
by Sandpiper CI until the end of
January next year and will then be
CITYA.M. 24 JUNE 2010
NEWS | IN BRIEF
Rank puts cost on tax rises
Leisure group Rank yesterday became
the first major public company to put a
total on how much extra the emergency
Budget would cost it. The Mecca bingo
and Grosvenor casinos operator said the
rise in the standard rate of VAT and
changes to the National Insurance
regime would result in a net cost
increase of about £2.5m from 2011.
Rank said it would try to minimise the
impact of the rise. Last month, the com-
pany received £42.5m in overpaid VAT
back from Her Majesty’s Revenue and
Customs, although HMRC is still appeal-
ing the case. The repayment relates to
£16.1m overpaid on games of bingo
between 2004 and 2009 and £26.4m to
amusement machine revenues between
2002 and 2005. If the HMRC appeal is
successful Rank will be forced to return
the payment plus interest.
Sainsbury’s school uniform push
Sainsbury’s has launched its biggest ever
“Back to School” range in a bid to boost
profit – giving mums 500 uniforms to
“road test”. The latest range offers 12
Back Tu School products. Sainsbury’s is
the eighth largest schoolwear retailer by
volume, and has the fastest growing
range on the high street with a 3.1 per
cent share, according to Kantar data.
Meanwhile 500 mums from the online
campaign group mumsnet were given
free uniforms to try out to make sure
they were tough enough for their chil-
dren.
handed over to Waitrose over a six-
week period.
Waitrose intends to offer employ-
ment to all staff in the five stores.
Details on how much the deal has
cost – have not been disclosed.
Sandpiper CI will continue to operate
its 28 other food and drink stores
under its own Checkers Xpress/Island
Shopper and Wine Warehouse
brands. Waitrose managing director
Mark Price said: “People in the
Channel Islands have been telling us
for years that they want a Waitrose.
Our supply relationship with
Sandpiper CI shows there’s strong
demand for Waitrose quality food.”
 26 News CITYA.M. 24 JUNE 2010

Chip maker
Imagination
iPHONE 4 ARRIVES IN THE UK
Polar Capital eyes
more than Asia as fund flows
triples profits
pick up post-crisis
▲

TECHNOLOGY
GRAPHICS chip designer HEDGE FUNDS to £1.7bn. Improving investor confi-

Imagination Technologies more
than tripled its full-year pretax prof-
it to £10.2m after it shipped 126m
chips in smartphones, netbooks and
set-top boxes.
The company, whose designs are
used by Apple and Intel – both share-
holders – said yesterday its pipeline of
licensing prospects, growth in design
wins and momentum in chip vol-
umes gave it confidence about the
year ahead.
It also predicted the number of
devices sold using its chips would
quadruple over the next five years.
Imagination, which also deploys its
own technology in its loss-making
PURE-branded digital radio business,
reported a 26 per cent rise in group
revenue to £80.9m in the year to the
end of April and a 55 per cent rise in
adjusted earnings per share to 7.3p.
▲
BY OLIVER SHAH
POLAR Capital, the FTSE 250-listed
hedge fund, is planning to launch
strategies targeting Asia to capture
some of the growing flow of clients’
cash into the region.
Chief executive Tim Woolley said
the firm would look to double the
number of funds it runs to 12, and
would hire two more teams this year,
after largely missing out on the rush
of capital into the Far East due to its
focus on Europe and Japan.
His comments came as Polar
revealed full-year profits of £3.1m –
down from £12.1m a year earlier but
at the upper end of expectations.
APPLE ran out of white iPhone 4s yesterday on the eve of the launch of the hot-selling Following a torrid 2008, when
next-generation smartphone, the latest hiccup in the gadget’s global roll-out. The compa- Polar’s assets under management
ny moved 600,000 units of the $199 iPhone 4 in its first day of pre-sales in the US. The plunged from £2.7bn to £1bn, Polar
iPhone 4 goes on sale today in five of the world’s biggest economies including the UK. said fund levels recovered 71 per cent
dence meant flows of new money
outbalanced losses from the Mayfair-
based outfit’s flagship macro fund.
Despite the healthier state of
Polar’s business, chairman Tom
Bartlam’s outlook was cautious. He
said: “As recent weeks have shown
with the fallout from the Greek debt
crisis and the consequent concern
about the stability of the euro, there
remain substantial economic and
political issues for the markets to deal
with and further weaknesses in mar-
kets cannot be ruled out.”
Woolley was bullish on company
fundamentals, however. He said: “At
the bottom-up level valuations look
quite attractive and we can probably
expect more corporate takeover activ-
ity as people capitalise on that.”
Shares in Polar fell 0.8 per cent to
296.5p as investors took profits.

One more late meeting?

One more decision to make?
Who is taking you home tonight?
C4 scrapes a profit
Trust Atlas, the name The City depends on... despite downturn
We have been offering transport solutions in MEDIA with E4, More4, Film4 and 4Music from £668.7m to £575.1m, plung-
▲

The City of London for over 2 decades and take BY STEVE DINNEEN
great pride in our strong and committed team CHANNEL 4 survived the worst
advertising downturn in its history
to record a modest profit last year.
Come and join us on: The broadcaster offset a loss of
0207 247 7000 more than £60m on its terrestrial
station with swingeing cost cuts
Or pre-book your car online and strong advertising perform-
ance in its digital offerings to fin-
www.atlascarsonline.co.uk ish the year £300,000 in the black.
The firm’s profit was significant-
ly down on 2008’s £1.8m but the
Whether it is a Corporate, Departmental or a Personal account, our station believes it has now passed
executive will be happy to design a package to suit your needs. the worst of the downturn.
Revenue at the broadcaster was
10% discount on your first journey, just quote “City AM”
down eight per cent year-on-year to
£830m.
all major credit cards accepted But the broadcaster saw record
performances in its digital stations,
seeing revenues jump four per cent
to £181.3m and pushing profits up
an astonishing 43 per cent to
£53.4m.
Advertising through its video-on-
demand service 4oD was up, driven
by a 60 per cent rise in the number
of full programme views over the
year.
Overall advertising revenue on
its eponymous terrestrial channel
dropped 14 per cent year-on-year
Channel 4 chief
exec David Abraham
says the broadcaster
is well positioned to
move forwards.
ing it in to a £61.6m loss.
The broadcaster’s total viewing
share dipped three per cent to
claim 11.5 of the total TV audience.
Chief executive David Abraham
said: “We have created a stable
financial base that allows us to
commit to a fresh round of creative
and commercial innovation, and
position ourselves to take advan-
tage of the ongoing convergence of
television and other media.”
Meanwhile the broadcaster has
been forced to defend its executive
pay structure after outgoing chief
executive Andy Duncan was award-
ed £731,000, taking total boardroom
pay to nearly £4m last year.
Chairman Lord Burns said the com-
mitments dated back several years.

ANALYSIS l How Channel 4

performed last year
Profit
2009: £300,000
Travel in Luxury 2008: £1.8m
Save Time, Money & Stress Revenue
2009: £830m
2008: £896m
Continuing costs
2009: £778.7m
2008: £846.9m
Advertising revenue
on Channel 4
2009: £575.1m
2008: £668.7m
ALISON CARNWATH IS READY.ARE YOU?
Alison Carnwath, Chair of Land Securities and Non-Executive Director of Barclays

Alison Carnwath is ready to judge entries to the inaugural CITY A.M. Awards –
the new financial business awards from the UK’s leading, free, business daily.
And, like CITY A.M. itself, all entries are free to companies, teams and
individuals working in the financial business. Entry is online and there are
15 company awards recognising corporate excellence and 6 awards
that celebrate the individual or team stars of the financial
community. Start thinking about your entries and nominations now.
The deadline for entries is 22 July 2010
For full details and helpful contact points please visit
the Awards website: www.CityAMAwards.com
For information on becoming a sponsor of the City A.M. Awards
contact Harry Owen: 020 7015 1241/ harry.owen@cityam.com
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 28 News
Sage in line for
£41m takeover
of Polish firm
▲
TECHNOLOGY
ACQUISITION hungry software giant
Sage Group has bid £41m for Polish
firm Teta.
The offer is a 15 per cent premium
on the Poland and Hungary-based
firm’s average three month share
price. Sage says the acquisition of the
firm, which reported revenue of
£21m and Ebitda of £3m last year, will
compliment its existing east
European operations.
Sage, which is valued at £3.4bn and
which sells accounting software and
services to 6.1m small and medium-
sized businesses worldwide, reported
a full-year pre-tax profit of £177.5m.
However, revenue of £270m from
the US and Europe – Sage’s two
biggest markets – fell six per cent and
four per cent respectively. Revenue of
£122m in the UK was flat year-on-year.
The Newcastle-based firm’s long-
standing boss Paul Walker said in
April he will leave the business he
first joined in 1984 within the next 12
months.
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9 terday fined 17 bathroom fittings


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CITYA.M. 24 JUNE 2010
BEST OF THE BROKERS
ANALYSIS l British Airways
p
212.40
BRITISH AIRWAYS
Citigroup said that the pension deficit
Jobs market hots
up in Asia-Pacific
250
240 23 Jun agreement at British Airways (BA) appears
230
220
210
positive for the share price. Citi has given
the airline group a “buy” rating and said
that the agreed recovery plan takes into
200
190
account the £2bn increase in the value of
as pay leaps ahead
its pension assets since the deficit valua-
180
29 Mar 20 Apr 11 May 1 Jun 21 Jun tion date as of the end of March 2009.
ANALYSIS l Whitbread WHITBREAD
p
1,600 1521.00 Bank of America Merrill Lynch (BoAML)
23 Jun RECRUITMENT Half Hong Kong.
▲
argues that Costa Coffee gains few tangi- BY HARRY BANKS He said most financial services pro-
1,500
ble benefits from being part of the fessionals such as investment bankers,
Whitbread Group. BoAML reiterates its LARGE numbers of finance profes- retail bankers and hedge fund man-
1,400
sionals in Hong Kong have seen their agers expect their annual bonuses to
“buy” rating on Whitbread and said recent pay jump between 20 and 40 per cent jump this year.
1,300 growth means Costa is getting to the point in the past six months as competition “The bonuses are unlikely to match
that it could be spun off with proceeds for top talent heats up, a study showed pre-crisis levels but the expectations
1,200 yesterday. in some cases are that they could be as
29 Mar 20 Apr 11 May 1 Jun 21 Jun used to fund the hotels business.
Average salaries across the Asia- high as six months salary,” he added.
ANALYSIS l Vedanta Resources VEDANTA Pacific financial sector, which is the The hot Asia-Pacific job market
p region’s highest paymaster, have risen means two of every three employers
2385.00 JP Morgan Cazenove calculates that or remained resilient in 2009/10 com- surveyed were anxious about losing
2,800 23 Jun Vedanta shares are trading closer in line pared with the previous year, and their best talent.
2,600 with the net present value of its asset base expectations for higher pay are on the “Employers need to get onto the
prompting JP Morgan’s “overweight” rat- rise. front foot and act fast to retain top
2,400
ing and £40 price target. Earnings per The annual 2010/2011 salary guide performers,” Morris added.
released by Robert Half International He said most finance professionals
2,200 share upgrades are driven by the tariffs surveyed about 3,500 finance profes- in Hong Kong got a bonus in 2009
secured in the power business, according sionals in the region. despite the economic downturn, and
2,000
29 Mar 20 Apr 11 May 1 Jun 21 Jun to JP Morgan. “It is the first salary increase since over 80 per cent expect that they will-
the downturn of the job market,” said get a bonus payout this year as well,
To appear in Best of the Brokers email your research to notes@cityam.com Andrew Morris, a director of Robert according to the study.
Bathroom cartel in
hot water with EU
REGULATION Ideal Standard, which makes it was the first to provide informa-
▲
BY HARRY BANKS and sells American Standard bath- tion about the cartel, the
EU COMPETITION regulators yes-
room ceramics and other products,
received the biggest fine at
Commission said.
“The cartel will have harmed
€326m – a penalty that had been businesses such as builders and
companies a total of €622m
(£511m) for fixing prices, with five
reduced by 30 per cent because the
company cooperated with the regu-
plumbers and, ultimately, a large
number of families,” Competition
receiving lower penalties because lator. The other companies include commissioner Joaquin Almunia
of the economic crisis. Artweger, Cisal, Dornbracht, said in a statement. He said the
The European Commission, the Duravit, Duscholux, Grohe, Hansa, Commission had not softened its
European Union competition Kludi, Mamoli, Roca, RAF, Sanitec, fining policy despite the reduced
watchdog, said the companies Teorema, Villeroy & Boch and penalties.
operated a cartel between 1992 and Zucchetti. “We consider a positive reaction
2004 in Germany, Austria, Italy, Masco, a US company whose to an inability-to-pay request as an
Belgium, France and the main subsidiaries are Hansgrohe exception, not a rule”, Almunia
Netherlands. and Hueppe, received immunity as told a news conference.
4HEIRCHA
LLENGEx
NEW BUSINESS ORIGINATOR Toyota aims to
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A unique opportunity has arisen to join a leading
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AUTOMATION
TARGETTIMEOFHOURS
of £25m+ with approximately £3m+ funds in use.
TOYOTA’S lawyers were expected to
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• A proven track record of sales success within this market neys in US court yesterday over rules
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CITYA.M. 24 JUNE 2010
New forms of finance will drive UK’s growth
CITY COMMENT
BEN GRIFFITHS
T
HE need to restructure corporate
debt and find new sources of
financing is germinating a new
breed of so-called “equity solu-
tions” that, it could be argued, will be
absolutely vital to the UK in the next
year or so as we get to grips with the
O2 owner sells stake in PT
▲
TELECOMS
BY STEVE DINNEEN
O2 OWNER Telefonica yesterday sold
an eight per cent stake in Portugal
Telecom (PT) to other PT shareholders
in a deal worth up to €800m (£659m).
The sale has been seen as evidence
of an increasingly strained relation-
ship between the two Iberian tele-
coms giants, centering around their
battle to dominate the lucrative
Brazilian mobile market.
new economic environment.
According to a report from City law
firm Berwin Leighton Paisner (BLP)
published ahead of this week’s emer-
gency Budget, these innovations are
driving growth as equity providers
respond to renewed demand from
companies for financing that is both
difficult to find and costly.
It once again highlights the creative
potential of the City of London with
alternative lenders including hedge
funds, private equity firms and large
investment funds starting to offer debt
for equity funding. It represents a
handy alternative to rights issues and
initial public offerings when it is
tough to win support for such tradi-
tional fund-raising mechanisms.
The deal comes ahead of a meeting
next week at which PT shareholders
will decide whether to accept a
€6.5bn offer by Telefonica to buy out
PT’s stake in Brazil’s largest mobile
phone company Vivo, which is a joint
venture between the two.
Critics had argued Telefonica
would have a conflict of interests if it
was allowed to vote on its own offer.
The sale represents almost all of
Telefonica’s estimated 10 per cent
stake in PT. A Telefonica spokesman
Nevertheless, BLP’s Driving UK
Growth report notes that the major
force behind corporate financing in
the short term will be the need for
companies to restructure their debt
packages – a view which echoes that of
this column two weeks ago.
Tamara Box, head of international
structured finance at Berwin Leighton
Paisner, says: “Major corporates and
their financial institution lenders are
under enormous pressure to amend
and extend current debt packages
against a backdrop of continuing liq-
uidity constraint which means that
the options available for refinancing
are painfully limited.
“However, the credit crisis is stimu-
lating innovation by the debt and equi-
declined to comment and PT was not
immediately available to comment.
Shares in PT closed 0.6 per cent
higher at €8.99 while Telefonica
closed 0.2 per cent lower at €16.320.
The two firms are already involved
in a legal dispute over the Portuguese
government’s stake in PT, which gives
it a “golden share”, allowing it to
block an attempted takeover. The
European Court of Justice is expected
to strip the government of its rights
to do this.
ty markets alike and as a result we’re
seeing new sources and forms of debt
and equity emerging that are helping
to rebalance the pre-crisis dependence
on cheap debt and meet the need for
finance to support growth as the UK
economy recovers.”
The research found a third (33 per
cent) of those surveyed believe the
need to restructure debt will be the
major driver of corporate activity in
the coming 12 months. And equity
rather than debt will be the most pop-
ular form of raising finance for corpo-
rates over the same period according
to 61 per cent of respondents.
The main hurdles to all this growth,
the BLP report argues, are impending
regulatory reforms that could damage
German chemicals giant BASF to
snap up Cognis in a €3.1bn deal
▲
CHEMICALS
CHEMICAL industry giant BASF has
agreed to buy Cognis in a long-tout-
ed €3.1bn (£2.6bn) deal, including
debt, betting on the cosmetic addi-
tives maker to protect it from eco-
nomic turbulence.
In the largest European chemical
industry takeover this year, BASF will
pay Cognis’ private equity owners
News 29
the UK’s competitiveness. In interview-
ing 50 senior executives from blue
chips and major financial institutions,
BLP found regulatory reforms were
one of the biggest causes for concern.
Yet days after the report was pub-
lished, big changes to the way banks
are regulated were announced by
George Osborne in his Mansion House
speech which will see more powers
handed to the Bank of England. On top
of that we saw a new bank levy includ-
ed in the chancellor’s Budget which
will see a £2bn tax on banks’ balance
sheets – another unpopular move with
the BLP respondents.
Let’s hope the new measures do not
make those worst fears come true.
ben.griffiths@cityam.com
Permira and Goldman Sachs Capital
Partners an equity price of €700m.
BASF chief executive Juergen
Hambrecht said: “We are strengthen-
ing our portfolio with cyclically
robust and profitable businesses.”
The German chemicals bellwether
emerged as the sellers’ favourite as
early as May, even though rival suitor
Lubrizol’s bid was slightly higher
than BASF’s bid.
 30 News | Interview
The Scrooge of Wall Street who
says we should blame Americans
Michael Lewis thinks
that cutting pay is
the way to prevent
future crashes, writes
Jeremy Hazlehurst
E
VEN though it is over 20 years since
Michael Lewis worked for Salomon
Brothers in London and New York –
an experience that he recorded in his
classic book of the excesses and greed of
the 80s, Liar’s Poker – and even though he
has spent much of the intervening time as
a keen Wall Street observer, he is still
amazed. Amazed at what he sees as the
excess, amazed at the way the financial
sector just keeps on growing, but most of
all he is amazed at its seemingly never-end-
ing ability to inflict injury on itself.
He has revisited his old stomping
ground for his latest book, The Big Short:
Inside the Doomsday Machine, a highly
readable look at the financial system of
mortgage-backed derivatives that so spec-
tacularly imploded in 2008, told through
the eyes of the hedge funds, investors and
mavericks who saw that the whole thing
was built on sand.
On the day we spoke, Goldman Sachs
were being criticised by the SEC, and the
sovereign debt crisis was still raging. So,
having turned his microscope on the
financial collapse and followed the fallout,
who does this seasoned Wall Street-watch-
er blame for the debacle? Pretty much
everyone, it seems: “the insane system of
incentives”, “ the people who ran the big
firms”, “the people who ran the CDO
machines”, “ the stupid investors”, and
then “the average American; millions of
people were willing to lie on their mort-
gage forms.” In fact, he says, “it’s easier to
mention people who weren’t to blame”.
“There was a lot of behaviour that was
probably not illegal, but morally wrong.
It’s like the creation of pollution.”
The root of the problem, he says, is sim-
ple: pay, and the way that having large
amounts of money disassociates you from
reality. “It’s not so much that people on
Wall Street are greedy, they always have
been – you don’t go and work on Wall
Street unless you are interested in making
money – it’s that the expectations of what
was a handsome pay-check have grown out
of all proportion to sanity,” he says. “People
who work on Wall Street lack a sense of
CV | MICHAEL LEWIS
Born: 1960
Lives: In California with his wife and three
children.
Education: Princeton, where he studied for
a BA in Art History, and then LSE, for a
masters in economics.
Work: Took a job as an investment banker
in New York for Salomon Brothers, before
moving to the firm’s London HQ.
Books: Liar’s Poker (1989), the classic
account of the excesses of Wall Street in
the 80s. This was followed in 1999 by The
New New Thing, about the dotcom boom
in Silicon Valley. He has also written about
the business of baseball in
and The Blind Side.
their own absurdity. The people who are
running big firms don’t sit back and say:
‘This is crazy! This is not that useful to soci-
ety, it’s crazy that we are paid by a factor or
10 times or more than our fathers were for
doing the same job’. There is nothing in
your brain to regulate your material ambi-
tions, and once that happens then you
start doing things like creating CDOs so
that you can short them, you take that
extra step to screw the customer. If you had
some realistic constraint you just wouldn’t
do that.” He’s been called the scourge of
Wall Street, but this makes Lewis sounds
more like a Scrooge.
The unravelling of the system killed off
one Wall Street institution in Lehman
Brothers, and Lewis thinks that there
could still be at least one more high-pro-
file casualty. “This is a prediction that is
going to come back and haunt me, but I
think that Goldman Sachs is doomed. I
don’t think that in its current form it can
survive. We could be looking at four to five
years, but the proprietary activities will
split off, those people will end up in their
own hedge fund – that is if new regulation
doesn’t forbid it anyway.” The PR prob-
lems, Lewis thinks, will just be insur-
mountable. “Their relationships with
customers on every front are poisoned,
and they can’t function as an investment
consultant if they have this problem of
honesty.”
Whatever happens in its US lawsuit, the
reputational damage was done long ago,
and it was a result of the bank’s success.
“Their problem is that they made money.
With the others you think: ‘How crooked
could they be if they lost $40bn?’ Goldman
Still amazed after all is exposed because it is more successful.”
these years. So how would Lewis change things?
Reducing pay would be the first priority.
“If the financial firms were properly regu-
lated they would be much less profitable,
duller and there wouldn’t be money to be
made like that. It makes sense to ban pro-
prietary trading in a deposit-taking institu-
tion, and if you do that you will reduce pay.
Take away a lot of the upside and down-
side, make the business much less volatile.
If you forced everything to be traded on
screens, you would dramatically reduce
the profits. If I was in Washington, think-
ing: ‘What’s my goal here?’ I’d be thinking
to myself that if I didn’t make these places
less profitable then I’d screwed up.”
This anti-corporate attitude certainly
informs The Big Short. Some reviewers
have complained that he was all too ready
to picture the few people who saw that
Wall Street CDO machine was flawed as
“Goldman heroes, gunslingers with MBAs, when in
fact all they did was short the mortgage-
Sachs is backed derivatives and enrich themselves.
It’s true, he says, that they are “complicat-
doomed, the ed” heroes, but is still perplexed by the
reaction.
proprietary “I thought there would be some, but it
would be the normal hostility to short-sell-
activities will ers. But they went to the SEC, to the news-
papers, they wrote letters and they blew
split off. In the whistle, but nobody wanted to listen.
I’m not sure what more they could have
four or five done. Abstain from the market? That
would have been absurd. When markets
years it won’t work and you are shorting, you are helping
them work better. Their activity was so
exist as it is” small that they were not able to drive
prices, but that’d not their fault. The prob-
CITYA.M. 24 JUNE 2010
“People on
Wall St lack a
sense of their
absurdity.
They should
be looking at
thier pay and
saying: “This
is just crazy!”
lem was that there weren’t enough of
them if there had been more then this
might not have happened.”
AMERICANISATION
But what of the UK’s woes? Lewis, who
studied at the LSE, thinks that they stem
directly from our desire to Americanise
our society. “I don’t understand why the
British people don’t just hate us,” he says.
“We introduced this system in the 80s and
we changed the tone of your society and
made acceptable all sorts of behaviour that
you previously condemned – the overt pur-
suit of dough, thinking that this is an
acceptable way to structure your life and
being so bold about it. It’s the sense of
financial entitlement that used to be alien
to you. We made it normal to be sitting in
Oxbridge and thinking: ‘I’ll get a job in
Goldman Sachs and it will guarantee me
millions a year.’”
When he was here in the 80s, he says
that he saw the change happen first-hand.
“The first time I heard a British person say
‘learning curve’ I thought: ‘Oh my God,
we’ve ruined these people.’ I was dis-
traught watching us financialise you, it
seemed like comedy and it seemed like
tragedy. But I never get any sense that peo-
ple in Britain associate all this with us.
When they are thinking ill of the City,
they don’t naturally hate us, and they
should. I’m amazed that there’s not a
movement in Britain to ban American
banks, or Americans. I think we owe you
an apology, and I’m surprised nobody has
demanded it.”
The Big Short: Inside the Doomsday Machine is
out now, priced £25
 Markets&Investment 31

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .289.30* –8.10 314.80 216.75 Cobham . . . . . . . . . . . . . . . . . . .225.60* –3.40 278.60 165.90 Investec . . . . . . . . . . . . . . . . . . .485.10 –11.00 565.00 309.75 Sainsbury(J) . . . . . . . . . . . . . . . .330.90* +0.20 373.00 307.00
3i Infrastructure . . . . . . . . . . . . . 114.20* –0.30 114.90 87.50 COLT Group . . . . . . . . . . . . . . . .135.10 –0.40 144.20 101.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .57.00 –0.15 71.75 31.75 Schroders . . . . . . . . . . . . . . . . .1297.00 –22.00 1450.00 764.00
A.B. Foods . . . . . . . . . . . . . . . .1003.00* –11.00 1045.00 742.50 Compass . . . . . . . . . . . . . . . . . .550.00 — 574.50 307.75 Jardine Lloyd Thompson. . . . . . .563.00 –12.00 604.50 393.00 Schroders N/V. . . . . . . . . . . . . .1062.00 –9.00 1185.00 643.50
Aberdeen Asset Man . . . . . . . . . .135.00 –1.00 155.60 111.00 Cookson . . . . . . . . . . . . . . . . . . .449.60 –12.90 616.00 220.00 Johnson Matthey . . . . . . . . . . .1587.00* –43.00 1814.00 1077.00 Scot. & Sthrn Energy. . . . . . . . .1108.00 –11.00 1206.00 357.50
Admiral. . . . . . . . . . . . . . . . . . .1405.00 –12.00 1441.00 850.50 Croda Intl . . . . . . . . . . . . . . . . .1022.00 –18.00 1047.00 498.50 Kazakhmys . . . . . . . . . . . . . . . . 1169.00 –27.00 1634.00 567.50 Scottish Mortgage. . . . . . . . . . . .584.00* –7.50 623.50 376.00
Aegis . . . . . . . . . . . . . . . . . . . . . 113.00* –1.30 137.30 81.50 CSR . . . . . . . . . . . . . . . . . . . . . .418.10 +3.10 524.00 330.50 Kesa Electricals . . . . . . . . . . . . . 119.60 +2.20 162.00 98.45
Afren . . . . . . . . . . . . . . . . . . . . . .90.50 +0.30 111.00 38.50 Daily Mail ‘A’ . . . . . . . . . . . . . . . .472.30* –6.40 539.00 264.50 .LQJÀVKHU . . . . . . . . . . . . . . . . . .228.40 — 255.00 171.40 SEGRO . . . . . . . . . . . . . . . . . . . .262.30 –8.20 403.10 250.00
African Barr Gold . . . . . . . . . . . .632.00 –5.00 685.00 520.50 Dana Petroleum . . . . . . . . . . . .1265.00 +71.00 1549.00 968.50 Ladbrokes . . . . . . . . . . . . . . . . .139.70 –0.50 174.29 114.60 Serco . . . . . . . . . . . . . . . . . . . . .619.00 –3.00 656.50 394.30
Aggreko . . . . . . . . . . . . . . . . . .1476.00 –14.00 1496.00 476.25 Davis Service . . . . . . . . . . . . . . .377.20 –3.10 442.30 307.50 Lancashire Hldgs . . . . . . . . . . . .499.70 –2.30 540.00 416.70 Severn Trent . . . . . . . . . . . . . . .1230.00* — 1310.00 921.00
Alliance Trust . . . . . . . . . . . . . . .317.70 –5.80 352.70 260.25 De La Rue . . . . . . . . . . . . . . . . . .958.50 –4.00 1021.00 808.50 Land Securities . . . . . . . . . . . . . .597.00 –14.50 743.50 415.25 Shaftesbury . . . . . . . . . . . . . . . .371.00* –1.00 426.50 285.00
AMEC . . . . . . . . . . . . . . . . . . . . .857.00* –4.00 891.00 603.50 Debenhams . . . . . . . . . . . . . . . . .61.05 +1.15 91.95 53.75 Legal & General . . . . . . . . . . . . . .82.50 –2.35 94.40 49.37 Shire. . . . . . . . . . . . . . . . . . . . .1425.00 –17.00 1526.00 811.00
Amlin . . . . . . . . . . . . . . . . . . . . .380.20 –5.30 428.50 291.00 Derwent London . . . . . . . . . . . .1303.00 –19.00 1490.00 844.00 Lloyds Banking Gp . . . . . . . . . . . .58.70 –0.30 75.58 40.42 SIG . . . . . . . . . . . . . . . . . . . . . . . 110.20 –3.60 146.60 84.25
Anglo American . . . . . . . . . . . .2621.00 –61.50 3015.50 1557.50 Dexion Absolute . . . . . . . . . . . . .138.00 –0.50 148.00 109.00 Logica . . . . . . . . . . . . . . . . . . . . 115.10 –2.90 149.10 74.50 Smith & Nephew . . . . . . . . . . . . .646.50 –16.50 700.50 435.25
Antofagasta . . . . . . . . . . . . . . . .878.50 –21.00 1100.00 546.50 Diageo . . . . . . . . . . . . . . . . . . .1088.00 –21.00 1176.00 857.00 London Stk Exchange . . . . . . . . .610.50 –29.50 949.50 588.00 Smiths . . . . . . . . . . . . . . . . . . . 1126.00 –14.00 1186.00 662.00
Aquarius Platinum . . . . . . . . . . .384.10 –10.70 490.00 172.75 Dimension Data . . . . . . . . . . . . .101.10 –1.10 105.00 54.75 Lonmin . . . . . . . . . . . . . . . . . . .1637.00 –54.00 2198.00 950.00 SOCO Intl . . . . . . . . . . . . . . . . . .421.20 +0.40 444.60 380.60
ARM Holdings . . . . . . . . . . . . . . .284.90 –4.60 362.40 108.00 Domino’s Pizza . . . . . . . . . . . . . .377.30 –5.60 387.80 199.25 Man . . . . . . . . . . . . . . . . . . . . . .256.50 –1.80 373.60 199.60 Spectris . . . . . . . . . . . . . . . . . . .789.50* –12.50 928.00 495.00
Arriva . . . . . . . . . . . . . . . . . . . . .764.50 –1.50 782.50 378.50 Drax . . . . . . . . . . . . . . . . . . . . . .375.70 –2.00 496.50 321.50 Marks & Spencer. . . . . . . . . . . . .350.90* +2.50 412.70 291.00 Spirax-Sarco Eng . . . . . . . . . . .1359.00 –40.00 1591.00 769.00
Ashmore . . . . . . . . . . . . . . . . . . .255.80 –1.30 311.20 183.25 DSG Intl . . . . . . . . . . . . . . . . . . . .27.50 +0.08 39.75 19.25 Meggitt . . . . . . . . . . . . . . . . . . . .316.70 –3.90 331.00 151.75
Astrazeneca . . . . . . . . . . . . . . .2996.50 –51.50 3136.00 2631.50 Dunelm . . . . . . . . . . . . . . . . . . . .344.60 –5.50 438.40 202.00 Melrose . . . . . . . . . . . . . . . . . . .231.40 –1.00 251.50 89.25 Spirent Comms . . . . . . . . . . . . . . 110.40 –1.10 127.80 54.50
Atkins(Ws) . . . . . . . . . . . . . . . . .695.50 –4.50 747.00 532.50 Easyjet . . . . . . . . . . . . . . . . . . . .418.30 +5.00 499.90 260.00 Mercantile IT . . . . . . . . . . . . . . . .910.50 –6.50 1002.00 720.00 Sports Direct Intl . . . . . . . . . . . . . 112.40 –2.60 134.00 72.50
Autonomy Corp . . . . . . . . . . . .1900.00 –43.00 2012.00 1121.00 Edinburgh Inv Tst . . . . . . . . . . . .388.60* –10.90 412.40 297.50 Michael Page Intl. . . . . . . . . . . . .401.40 –4.90 461.50 218.50 SSL Intl . . . . . . . . . . . . . . . . . . . .821.00 –19.00 893.50 506.00
Aveva . . . . . . . . . . . . . . . . . . . . 1173.00 –33.00 1237.00 661.00 Electrocomponents . . . . . . . . . . .224.00 –6.60 245.00 134.25 Micro Focus . . . . . . . . . . . . . . . .527.50 –14.00 550.00 300.90 St James’s Place . . . . . . . . . . . . .215.60 –9.40 296.90 172.25
Aviva . . . . . . . . . . . . . . . . . . . . .340.00 –8.00 474.00 274.75 EnQuest . . . . . . . . . . . . . . . . . . .104.80 –2.80 112.70 87.35 Millen & Copthorne . . . . . . . . . . .443.00 –3.60 496.30 226.50 Stagecoach. . . . . . . . . . . . . . . . .190.80 +0.20 204.90 114.75
Babcock International . . . . . . . . .573.00* +12.50 660.50 448.50 Essar Energy . . . . . . . . . . . . . . .464.00 –0.20 475.00 358.50 Misys . . . . . . . . . . . . . . . . . . . . .251.00 –3.80 281.70 165.00 Standard Chartered . . . . . . . . . .1757.50 –27.00 1847.00 1115.00
BAE Systems . . . . . . . . . . . . . . .320.00 –1.80 389.90 294.20 Eurasian Nat Res . . . . . . . . . . . 1011.00 –19.00 1276.00 582.00 Mitchells & Butlers . . . . . . . . . . .300.20 –0.80 343.90 228.30 Standard Life . . . . . . . . . . . . . . .183.40 –4.60 237.00 172.60
Balfour Beatty . . . . . . . . . . . . . . .244.50* –6.20 328.85 238.50 Euromoney Inst Inv . . . . . . . . . . .598.50* –4.00 630.00 197.00 MITIE . . . . . . . . . . . . . . . . . . . . .222.40 –0.30 281.70 204.25 TalkTalk . . . . . . . . . . . . . . . . . . .128.20 +1.30 147.10 106.60
Barclays . . . . . . . . . . . . . . . . . . .300.80 –9.95 394.25 255.00 Experian . . . . . . . . . . . . . . . . . . .614.00 –16.00 664.50 434.00 Mondi . . . . . . . . . . . . . . . . . . . . .416.40 –10.50 488.00 182.00 Talvivaara Mining . . . . . . . . . . . .388.30 –6.90 501.50 315.00
Barratt Development . . . . . . . . . .108.00 –0.40 193.31 93.70 F&C Comm Prop . . . . . . . . . . . . . .92.90* –0.65 96.80 73.50 Monks Inv Tst . . . . . . . . . . . . . . .292.60 –3.90 321.20 222.00 Tate & Lyle . . . . . . . . . . . . . . . . .465.60 –22.60 509.00 284.75
BBA Aviation . . . . . . . . . . . . . . .192.70 –3.30 220.00 105.00 Ferrexpo . . . . . . . . . . . . . . . . . . .282.80 –1.80 396.20 112.00 Morrison Wm . . . . . . . . . . . . . . .265.30 –2.80 306.30 234.25 Taylor Wimpey . . . . . . . . . . . . . . .31.26 –1.22 54.90 27.40
Beazley. . . . . . . . . . . . . . . . . . . . 119.00 –2.90 124.80 91.00 FirstGroup . . . . . . . . . . . . . . . . .394.90 +4.60 448.80 322.75 Murray Intl Tst . . . . . . . . . . . . . . .839.00 –12.50 893.50 575.00 Telecity . . . . . . . . . . . . . . . . . . . .409.50 –2.70 455.00 272.00
Bellway. . . . . . . . . . . . . . . . . . . .659.00* — 927.50 591.50 Foreign & Col Inv Tst. . . . . . . . . .270.90 –3.10 297.20 210.25 National Express. . . . . . . . . . . . .238.00 –3.30 256.80 135.08
Berkeley . . . . . . . . . . . . . . . . . . .796.50 +1.50 989.50 735.00 Fresnillo . . . . . . . . . . . . . . . . . .1059.00 +7.00 1115.00 438.00 National Grid . . . . . . . . . . . . . . .500.00* –4.50 607.65 469.37 Templeton Emrg Mkts . . . . . . . . .551.00 –14.00 598.00 346.50
BG . . . . . . . . . . . . . . . . . . . . . .1092.50 +8.50 1248.00 966.90 G4S . . . . . . . . . . . . . . . . . . . . . .280.60 –0.20 285.70 197.90 Next . . . . . . . . . . . . . . . . . . . . .2190.00* +20.00 2360.00 1415.00 Tesco . . . . . . . . . . . . . . . . . . . . .396.50* +3.50 454.90 347.40
BHP Billiton . . . . . . . . . . . . . . .1951.00 –37.00 2346.00 1274.50 Genesis Emerging Mkts Fd . . . . .461.60 –7.90 484.00 370.00 Northumbrian Water . . . . . . . . . .304.30 +4.30 311.50 219.90 Thomas Cook . . . . . . . . . . . . . . .195.40 –1.70 277.20 189.70
BlackRock Mining . . . . . . . . . . . .575.00 –14.50 654.50 346.00 GKN . . . . . . . . . . . . . . . . . . . . . .129.70 –1.70 155.00 71.75 Old Mutual . . . . . . . . . . . . . . . . . 111.00* –2.70 127.20 71.00 Tomkins . . . . . . . . . . . . . . . . . . .248.60 –9.00 261.10 135.00
BlueBay . . . . . . . . . . . . . . . . . . .291.00 –3.80 393.00 188.00 GlaxoSmithKline . . . . . . . . . . . . 1164.00* –24.50 1347.00 1058.00 Partygaming . . . . . . . . . . . . . . . .257.00 –3.00 339.70 213.30 Travis Perkins . . . . . . . . . . . . . . .805.50 +8.50 915.00 464.00
Booker . . . . . . . . . . . . . . . . . . . . .41.90* –0.11 49.50 32.75 Great Portland Estates . . . . . . . .294.40 –3.40 332.10 203.75 Pearson . . . . . . . . . . . . . . . . . . .940.00 –13.50 1069.00 574.00 TUI Travel . . . . . . . . . . . . . . . . . .224.00 +1.50 313.90 213.80
BP . . . . . . . . . . . . . . . . . . . . . . .333.50 –0.70 658.20 328.40 Greene King . . . . . . . . . . . . . . . .407.50 –2.00 504.00 359.50 Pennon . . . . . . . . . . . . . . . . . . . .547.50 –3.50 567.00 434.40 Tullett Prebon . . . . . . . . . . . . . . .336.50 –3.50 436.20 261.20
Brit Insurance . . . . . . . . . . . . . . .935.00* –19.00 970.00 709.00 Halfords . . . . . . . . . . . . . . . . . . .550.00 +10.00 562.50 302.75 Persimmon . . . . . . . . . . . . . . . . .383.40 +1.80 534.50 340.25 Tullow Oil . . . . . . . . . . . . . . . . . 1134.00 –6.00 1375.00 834.50
British Airways . . . . . . . . . . . . . .212.40 –2.00 255.80 117.30 Halma . . . . . . . . . . . . . . . . . . . . .272.40 –3.10 279.60 182.00 Petrofac . . . . . . . . . . . . . . . . . .1251.00 –5.00 1294.00 580.00 UK Commercial Prop. . . . . . . . . . .79.40 — 84.90 60.50
British Amer. Tob . . . . . . . . . . .2153.00 –21.00 2335.50 1664.00 Hammerson . . . . . . . . . . . . . . . .361.20 –3.80 460.30 277.00 Petropavlovsk . . . . . . . . . . . . . .1330.00 +5.00 1370.00 515.00 Ultra Electronics . . . . . . . . . . . .1578.00 –3.00 1678.00 1064.00
British Empire Tst . . . . . . . . . . . .424.80 –3.80 467.90 338.50 Hargreaves Lansdown . . . . . . . .342.90 –6.00 387.00 197.25 Premier Farnell . . . . . . . . . . . . . .235.10* +1.40 252.60 121.25 Unilever . . . . . . . . . . . . . . . . . .1858.00 –43.00 2024.00 1419.00
British Land . . . . . . . . . . . . . . . .446.00 –6.80 532.00 353.00 Hays . . . . . . . . . . . . . . . . . . . . . . .94.95 –1.55 119.00 80.00 Premier Oil . . . . . . . . . . . . . . . .1217.00 +4.00 1431.00 984.00 United Utilities . . . . . . . . . . . . . .521.50* –0.50 575.00 429.00
Britvic. . . . . . . . . . . . . . . . . . . . .477.30* –1.60 497.70 253.25 Henderson . . . . . . . . . . . . . . . . .127.90 –2.30 157.80 83.75 Provident Financial . . . . . . . . . . .874.50 –22.00 986.00 763.00
Brown(N.) . . . . . . . . . . . . . . . . . .272.10 –8.20 284.30 204.25 Heritage Oil. . . . . . . . . . . . . . . . .425.70 –12.70 587.00 409.80 Prudential . . . . . . . . . . . . . . . . . .560.00 –11.50 665.00 350.25 Utd Business Media . . . . . . . . . .520.00 –5.00 579.50 364.75
BSkyB . . . . . . . . . . . . . . . . . . . .702.00 –1.00 732.00 431.25 Hikma Pharma . . . . . . . . . . . . . .691.00 — 730.00 430.00 PZ Cussons . . . . . . . . . . . . . . . .324.90 +7.00 332.30 181.00 Vedanta Resources . . . . . . . . . .2385.00 –33.00 2967.00 1262.00
BT . . . . . . . . . . . . . . . . . . . . . . .135.30 –0.20 151.00 99.50 Hiscox . . . . . . . . . . . . . . . . . . . .346.30 –7.70 369.30 279.50 Qinetiq . . . . . . . . . . . . . . . . . . . . 117.00 –2.20 179.10 113.90 Victrex . . . . . . . . . . . . . . . . . . . 1152.00* –8.00 1193.00 498.50
Bunzl . . . . . . . . . . . . . . . . . . . . .715.00* –14.00 784.50 481.75 Hochschild Mining . . . . . . . . . . .319.50 –4.00 370.60 220.00 Randgold Resources. . . . . . . . .6420.00 –50.00 6590.00 3351.00 Vodafone . . . . . . . . . . . . . . . . . .141.05* –1.05 153.80 111.90
Burberry . . . . . . . . . . . . . . . . . . .794.00 –5.00 815.50 372.75 Home Retail . . . . . . . . . . . . . . . .233.10* –5.00 336.50 224.80 Reckitt Benckiser . . . . . . . . . . .3135.00 –84.00 3667.00 2686.00 VT . . . . . . . . . . . . . . . . . . . . . . .758.50 +8.50 777.50 416.00
Cable & Wire Comms . . . . . . . . . .59.15* –1.05 150.00 53.00 Homeserve . . . . . . . . . . . . . . . .2035.00 –1.00 2190.00 1336.00 Reed Elsevier . . . . . . . . . . . . . . .502.00 +8.60 548.00 403.75 Weir . . . . . . . . . . . . . . . . . . . . . 1102.00 –23.00 1183.00 437.50
Cable & Wire Wwide . . . . . . . . . . .92.00* +0.80 94.80 68.60 HSBC Hldgs . . . . . . . . . . . . . . . .651.80* –7.40 766.80 487.00 Regus . . . . . . . . . . . . . . . . . . . . . .79.90 +0.05 125.50 59.50 WH Smith . . . . . . . . . . . . . . . . . .432.90 –2.10 551.00 405.25
Cairn Energy. . . . . . . . . . . . . . . .433.30 +0.30 448.60 306.80 Hunting . . . . . . . . . . . . . . . . . . .453.60 –3.70 659.50 377.00 Rentokil Initial . . . . . . . . . . . . . . . 117.80 –3.10 140.20 82.25 Whitbread . . . . . . . . . . . . . . . . .1521.00* –10.00 1645.00 778.50
Caledonia Invs . . . . . . . . . . . . .1597.00 –30.00 1759.00 1459.00 ICAP . . . . . . . . . . . . . . . . . . . . . .424.70 –7.60 478.30 291.70 Resolution . . . . . . . . . . . . . . . . . .60.30† — 99.15 58.45 William Hill . . . . . . . . . . . . . . . . .183.10 –0.60 217.80 160.50
Capita . . . . . . . . . . . . . . . . . . . . .770.00 –9.00 829.50 643.50 IG . . . . . . . . . . . . . . . . . . . . . . . .439.90 –4.20 458.20 261.00 Rexam . . . . . . . . . . . . . . . . . . . .318.00 –2.70 331.20 222.50 Witan Inv Tst . . . . . . . . . . . . . . . .436.10 –1.90 487.00 329.50
Capital & Counties . . . . . . . . . . .105.90 –0.10 125.40 99.60 Imagination Tech Gp . . . . . . . . . .295.00 –5.00 311.60 103.75 Rightmove . . . . . . . . . . . . . . . . .675.00 — 729.00 334.00 Wolseley . . . . . . . . . . . . . . . . . .1481.00 –81.00 1742.00 1001.00
Capital Shopping Centres . . . . . .332.00 –5.80 580.00 300.20 IMI . . . . . . . . . . . . . . . . . . . . . . .723.50 –11.00 756.50 275.25 Rio Tinto . . . . . . . . . . . . . . . . . .3390.00 –55.00 4104.00 1822.00
Carillion . . . . . . . . . . . . . . . . . . .322.50 –4.50 361.90 236.75 Imperial Tobacco. . . . . . . . . . . .1914.00 +1.00 2159.00 1547.00 RIT Capital Partners . . . . . . . . .1143.00 –23.00 1200.00 876.00 Wood Group (John). . . . . . . . . . .322.90 –1.60 411.70 231.25
Carnival . . . . . . . . . . . . . . . . . .2377.00 –47.00 2937.00 1562.00 Inchcape. . . . . . . . . . . . . . . . . . .279.10 –3.80 347.00 253.20 Rolls Royce . . . . . . . . . . . . . . . .589.00* –12.00 631.50 335.00 WPP . . . . . . . . . . . . . . . . . . . . . .691.50 –12.00 744.00 380.50
Catlin . . . . . . . . . . . . . . . . . . . . .363.50 –5.20 380.50 284.75 Informa . . . . . . . . . . . . . . . . . . . .390.00 –3.10 439.40 216.00 Rotork . . . . . . . . . . . . . . . . . . .1333.00 –36.00 1482.00 779.50 Xstrata . . . . . . . . . . . . . . . . . . .1018.00 –30.00 1344.50 555.10
Centamin Egypt . . . . . . . . . . . . .167.00 –0.50 174.75 77.86 Inmarsat . . . . . . . . . . . . . . . . . . .750.00 –6.50 831.00 491.00 Royal Bank Of Scot . . . . . . . . . . . .46.72 –0.36 58.95 28.25 Yell Group. . . . . . . . . . . . . . . . . . .29.12 –0.72 86.00 20.25
Centrica . . . . . . . . . . . . . . . . . . .299.00 +1.10 320.00 212.50 Intercontl Hotels . . . . . . . . . . . . 1173.00 –11.00 1244.00 584.50 Royal Dutch Shell A . . . . . . . . .1806.50 –37.00 2068.50 1431.00 LONDON TOP 250 BY MARKET CAPITALISATION
Charter Intl . . . . . . . . . . . . . . . . .698.50 –15.50 855.50 406.50 Intermediate Capital . . . . . . . . . .259.60 –4.30 332.00 170.25 Royal Dutch Shell B . . . . . . . . .1728.50 –33.00 1997.50 1437.00
Chemring . . . . . . . . . . . . . . . . .3087.00 –24.00 3711.00 1993.00 Intertek . . . . . . . . . . . . . . . . . . .1499.00 –5.00 1576.00 1002.00 RSA Insurance . . . . . . . . . . . . . .120.90 –2.50 142.00 113.10 * Ex-Dividend † Suspended
Chloride Group . . . . . . . . . . . . . .349.80 +1.80 349.80 129.00 Intl Power . . . . . . . . . . . . . . . . . . 311.80* –4.50 354.00 228.00 SABMiller . . . . . . . . . . . . . . . . .1970.00 –42.00 2090.00 1210.00
Close Bros . . . . . . . . . . . . . . . . . 711.50 –15.50 806.50 623.00 Invensys . . . . . . . . . . . . . . . . . . .274.70 –7.80 350.30 212.25 Sage . . . . . . . . . . . . . . . . . . . . . .244.60 –0.90 260.50 167.20 www.interactivedata.com

Two-week low for the FTSE Fed spooks stocks

as metals and miners tumble with grim outlook
ers, hurt by weak metals prices, and Sales of US existing homes unex- The Dow Jones industrial average
THELONDON with moves by Morgan Stanley to cut
target prices in the sector weighing
pectedly fell in May, sparking worries
that the Federal Reserve may offer a THENEW YORK edged up 4.92 points, or 0.05 per cent,
to finish at 10,298.44. But the

REPORT on sentiment.
Lonmin stood out, down 3.2 per
cent, while Xstrata shed 2.9 per cent,
less upbeat economic outlook after
its two-day meeting.
British retail sales improved less
REPORT Standard & Poor’s 500 Index dipped
3.27 points, or 0.30 per cent, to close
at 1,092.04. The Nasdaq Composite
and BHP Billiton lost 1.9 per cent. than economists expected in June, Index fell 7.57 points, or 0.33 per cent,

B U
RITAIN’S top share index hit a Some losses in the sector were but retailers were upbeat about S stocks mostly fell in a volatile to close at 2,254.23.
near two-week closing low yes- pared in the afternoon, following the prospects for July, thanks in part to session yesterday after the After the closing bell, shares of Dell
terday as retreating metals news that Australian prime minister the World Cup, a survey by the Federal Reserve downgraded its rose 2 cents to $13.84 after giving a
prices and downbeat broker Kevin Rudd, responsible for a pro- Confederation of British Industry sug- assessment of the economic full-year outlook.
sentiment pressured mining stocks posed mining “supertax” in the coun- gested yesterday. recovery as it vowed to keep cheap Paychex fell 3.6 per cent to $26.43
and with investors' moods darkened try, may lose his job. Meanwhile, the Bank of England's money flowing. in extended-hours trading after the
by weak US homes sales data. Integrated oils were down as a sec- Monetary Policy Committee was split The market bounced between posi- company reported its fourth-quarter
The FTSE 100 index closed down tor, with crude down by about 2 per 7 to 1 on its decision to leave rates tive and negative territory as investors results.
68.46 points, or 1.3 per cent, at cent. Royal Dutch Shell was down 2 unchanged this month after one wrestled over the implications of the Nike lost 2.1 per cent to $71.02
5,178.52, its lowest close since 11 June, per cent, and peer BP, which hit a member called for a rate rise, min- Fed's statement in the afternoon on after its results.
having lost one per cent on Tuesday. fresh 13-year low on Tuesday, off 0.2 utes of the Bank's June 9-10 meeting the economy and interest rates. The Bed Bath & Beyond shed 6.5 per
The index traded at 75.4 per cent of per cent amid fallout from the Gulf of showed yesterday. S&P 500 and Nasdaq finished lower, cent to $38.78 after the bell, after it
the 90-day average daily volume as Mexico spill. This was the first call for a UK rate while the Dow eked out a tiny gain. forecast a lacklustre second-quarter
millions of England fans cheered Sales of new US single-family rise since August 2008, and came as a The Fed renewed its vow to hold profit.
their team in its final qualifying homes tumbled more than expected surprise to economists. benchmark interest rates exceptional- Earlier in the day, the Commerce
match against Slovenia in the soccer to a record low in May as the boost ly low, but its less bullish statement Department said that sales of new
World Cup. from a popular tax credit faded. ANALYSIS l FTSE hurt a broad range of stocks. Banks homes fell to their lowest level ever in
At 1400 GMT, “we had England Banks were out of favour, with were among the day’s weakest. The May. Homebuilders’ shares, however,
starting to play, so all eyes moved investors jittery about a slowing eco-
6,000 5,178.52 KBW Banks index dropped 0.7 per rebounded after initial weakness on
23 Jun
from trading screens onto TV screens, nomic recovery. Barclays was the 5,800 cent while Bank of America Corp lost the news on the assumption that the
and at the same time we had a bad, worst off, down 3.2 percent, while 5,600 0.9 per cent to $15.43. worst was over for the crippled sector.
bad number out of the US with the HSBC, Lloyds Banking Group, Royal “There was definitely a more nega- Some analysts speculated the weak-
new home sales,” said Matthew Bank of Scotland and Standard 5,400 tive tone,” said Dan Cook, senior mar- ness in sales could prompt the gov-
Brown, sales trader at ETX Capital. Chartered fell 0.5 to 1.5 per cent. 5,200 ket analyst at IG Markets in Chicago. ernment to renew the home buyer's
“Without the volume being there Plumbing supplies firm Wolseley “The Fed doesn’t have a great outlook, tax credit.
to support the FTSE, we’ve just seen was the top FTSE 100 faller, down 5.2 5,000 but that wasn’t totally unexpected The S&P home builders ETF rose 1.2
the FTSE come off.” per cent, unsettled by the weak US with the housing and labour market per cent after falling to a four-month
Miners were the top blue-chip fall- new homes sales data. 29 Mar 29 Apr 1 Jun data we’ve seen lately.” low after the data.
 Investment
32
Equity indices
have lost their
momentum to
rise further
The market is now
at a tipping point,
says Jessica Mead
D
ESPITE continued fears of an eco-
nomic slowdown, global equities
had proved somewhat resilient
over the last fortnight with traders
jumping on any piece of good news as an
excuse to buy.
But the 10-session winning streak in
the MSCI World Index snapped on
Tuesday and the index of global stocks
has now shed 1.4 per cent in the past two
days alone. Having hit resistance at 5,300
on Monday, the FTSE 100 has since fallen
back to close at 5,178.52 yesterday while
the Dow Jones Industrial Average slipped
Expand beyond developed countries
Target emerging market growth
using commodity and currency
ETPs, writes Juliet Samuel
W
ITH growth in advanced
economies forecast to be sclerot-
ic for the near future, investors
should look to capitalise on the
more dynamic prospects of emerging mar-
kets (EM). The International Monetary
Fund is forecasting that developed
economies will shrink overall by 3.12 per
cent this year versus developing
economies’ growth of 6.14 per cent.
One of the simplest ways to benefit
from EM growth is to invest in a regional
or country-based ETF. You should be sure
to evaluate how the ETF gains its exposure
– whether it is through tracking various
national indices or manually choosing
equities. Nizam Hamid at iShares reports
that the past 12 months have seen signifi-
cant asset flows into EM country-based
ETFs, the most popular being India at
€500m, followed by Brazil at €400m and
Russia at €380m. The advantage of basing
your investment on countries is that you
get exposure to the full range of growth,
from infrastructure to raw materials to
service industries.
Country-based ETFs do, however, carry
the normal risks associated with equities.
Another way of targeting EM growth is
instead to look at currency-based prod-
ucts. Just this week, ETF Securities
launched exchange-traded currencies that
track the renminbi. With the yuan
unpegged (though still carefully managed)
and China likely to see significant medi-
CITYA.M. 24 JUNE 2010
| Listed Products
from 10,450.64 to 10,301.16.
While the falls themselves may not be
particularly significant, does it signify
that the markets are starting to lose their
upward momentum and that traders
should be expecting further downside in
the days and weeks to come? Or are the
markets simply consolidating their earli-
er gains in preparation for another leg
higher?
One strategist who unsurprisingly falls
into the former camp is Gluskin Sheff’s
uber-bear David Rosenberg. “After suc-
cessfully testing support at the key
Fibonacci retracement level of 1,040, the
S&P 500 has since bounced up to the 200-
day moving average of 1,115 – and this Difficult times for the First, he thinks that even if the econo- omy, is still in a fragile state. US housing
failed to hold. Resistance prevailed.” The stock markets my manages to avoid a double-dip reces- starts data yesterday was particularly
S&P was down at 1,090.07 yesterday Picture: REUTERS sion – which most analysts think is abysmal and China’s moves to put the
evening. He adds: “My sense is that the probably likely – the market has still not brakes on could also cause global growth
market will break to the downside, and been priced for a relapse in growth. The to waver in the near-term.
for three reasons.” US economy, and indeed the world econ- Second, Rosenberg believes that the
Infrastructure will
boost emerging
market demand
Picture: REUTERS
um-term growth, its currency is ripe for Pimco thinks that in response, there will ent on export demand. They learned this
long-term appreciation. ETF Securities’ be a greater effort to stimulate domestic lesson from the difficulties of their best
Nicholas Brooks says: “It would be some- EM consumption: “Leaders of emerging ‘customers’ – the developed nations. This
thing one would invest in and put aside nations now realise their economies are is why we expect emerging nations to
on the assumption that it will be a good vulnerable if they remain largely depend- facilitate domestic demand over the next
proxy for the high growth one will see in
China versus some Western countries.” ANALYSIS l commodity prices have fallen but should rise on emerging market demand
But if forex ETCs also seem too risky or 400 105
insubstantial, try looking at commodities. Source: Reuters, SG Cross Asset Research
Hamid highlights that while 12 months 350 95
ago, 85 per cent of commodity ETF asset
flows involved gold, these days precious 300 85
metals account for less than half of flows,
250 75
with 30 per cent now involving diversified
commodity and agriculture funds. 200 65
The global downturn has seen commod-
ity prices plummet since 2008 (see chart) 150 S&P GSCI Industrial Metals Index (ER) 55
because global trade was arranged around S&P GSCI Agricultural Index (ER)
developed-country demand and emerging 100
market exports. But Brigitte Posch of Jan 06 Jan 07 Jan 08 Jan 09 Jan 10
CITYA.M. 24 JUNE 2010
intense volatility in the major averages
over the past three months is consis-
tent with the onset of a bear phase.
And third, he subscribes to the view of
ex-Merrill Lynch investment guru Bob
Farrell, who thinks that a test of the
March 2009 lows is likely. “I don’t think
anyone is in a position to debate five
decades of experience, not to mention
his track record,” says Rosenberg.
FUTURE RETURNS
But past performance is no indicator of
future returns, as investment product
providers are fond of telling us. And
there are reasons to be positive on glob-
al equities – first, emerging Asia is still
experiencing strong growth relative to
the developed world even it is at a slow-
er pace than before the financial crisis,
second, the austerity
announced by chancellor George
Budget
Osborne did not hit UK businesses as
badly as had been feared and was wel-
comed, albeit cautiously, by the market.
It is clear that the market is at a crit-
ical juncture. Traders have noted some
minimal buying activity in the past
couple of days as investors capitalise on
cheaper equity prices but with volumes
light – and expected to stay light over
the summer months – it will be hard to
judge true sentiment in the market.
However, the risk of another move
lower is far from negligible. For retail
traders worried about their exposure to
risk but who want to stay invested in
global equities, there are some distinct
advantages to using products such as
exchange-traded funds (ETFs) or covered
warrants.
ETFs give you inherently diverse expo-
sure to stocks and can be tailored to suit
your needs – for example, you can track
the S&P 500 or the FTSE 100. And with
covered warrants, the limited downside
will suit risk-averse investors concerned
about the potential for losses to stack
up. You might well be hoping for the
stock market to carry on rising over the
summer but unless you are certain, or
protected, don’t put your money where
your mouth is.
three to five years.”
Basic commodities like industrial
metals will be key both to facilitating
this demand through infrastructure
(schools and roads) and to supplying it.
Most investors looking for exposure to
commodities opt for broad thematic
ETFs: Brooks reports asset inflows to ETF
Securities’ base metals basket of $325m
in the last year and of $382m into their
agricultural equivalent.
Investors in certain commodity-based
ETFs, however, should be wary that they
are not missing out on significant extra
returns when prices shoot up. You won’t
get direct access to spot prices through
ETFs, meaning that if demand suddenly
takes off in a particular area, you will
gain less than you might otherwise have
done. If this is a concern, consider an
ETF that tracks futures that are a few
months ahead, which should signifi-
cantly alleviate the problem.
Overall, don’t expect smooth and
immediate returns from EM invest-
ment: it is very hard to time macroeco-
nomic growth precisely. Growth will
take political reform and time so you
are best off making your investment
and sitting back to let it grow.
LISTED PRODUCT NEWS
JULIET SAMUEL
Europe has seen a raft of new ETFs launched
ANALYSIS l MSCI World Index over the past six months
800
750
700
650
2010 Feb Mar Apr
AMUNDI LAUNCHES SEVEN NEW ETFS
Exchange-traded fund (ETF) provider Amundi
has launched seven new fixed income ETFs on
the Paris stock exchange, of which four are
the first of their kind. One ETF will replicate
the performance of the EuroMTS ex-AAA
government index, which is composed of debt
securities issued by the Eurozone states with
a rating lower than AAA. There are also six
ETFs tracking Markit iBoxx US Treasury bond
indices – one to three years, three to seven
years and seven to 10 years. Three short ETFs
will give you a daily inverse performance to
Picture: REUTERS these three indices.
Investment | Listed Products
Source: Bloomberg
May Jun
SOURCE ASSETS SOAR PAST $6BN
Source, the exchange-traded product
provider, has seen its total assets under man-
agement soar past $6bn after just 14 months
of existence. 86 per cent of the increase has
come since January through flows into its
emerging market ETFs and physical gold-
backed fund. Source’s emerging market
AUMs now total over $1.1bn, a similar
amount to its Eurostoxx 50 ETF which has
seen inflows of €575m since the beginning of
June. Its gold-backed ETF now totals $451m.
The company reports high liquidity among its
products.
33
Kesa Electricals’ Comet may suffer Picture: PA
THE
TIPSTER
TARGET A UK STOCKS
RALLY ON THE FTSE 250
Y
ESTERDAY’S sell-off could be another
opportunity for investors to add to
long positions of more UK-centric
stocks. Following a Budget that was
beneficial for UK companies, expect to see
further gains, particularly given the
announcement of a gradual reduction in cor-
poration tax to 24 per cent over four years.
The FTSE 250 represents more UK-based
companies as opposed to the FTSE 100,
which is full of more global stocks, so the
250 index could be the way forward if you
want to concentrate your exposure to
domestic equities. Capital Spreads quotes a
price of 9,880-9,910 for the FTSE 250 index.
The Swiss franc reached a record high
against the euro after the Swiss National
Bank’s vice president Thomas Jordan explic-
itly called for an end to forex intervention
on Tuesday night. It fell to as low as
SFr1.3586 during New York afternoon trad-
ing. Protection of a major option position at
SFr1.3575 helped stop the slide but a break
of that level could see it reach SFr1.35
before long. Spread Co offers a spread on
euro-Swiss franc of SFr1.3608-SFr1.3611.
Following mediocre full-year results
which showed a slim return to profits, Kesa
Electricals has underlined the weak market
conditions for consumer goods and retaliat-
ed with promises of more aggressive pric-
ing. The rise in the share price that
immediately followed the announcements
may well reflect an overvaluation of the
company and whether they will be able to
take the VAT hike on the chin remains
doubtful: the company’s P/E ratio looks like-
ly to remain down on last year. Cantor
Index offers a September Kesa Electricals
spread of 117.10p–118.20p.
Tomorrow sees the full-year announce-
ment from Keller Group, which is expected
to be symptomatic of the struggle within
the construction industry. A profit warning
published last month hinted that profits
would be hit not only by the economic
downturn, but also by its own investment
diversification. Cantor Index offers a daily
spread on Keller Group of 553.07p–555.43p.
Juliet Samuel
S&P 500 TRACKER ETF NOW IN EUROPE
With the S&P 500 licence now open to
European ETF providers, EasyETF has
launched a brand new ETF tracking the index
listed on the NYSE Euronext in Paris. This
enables European investors to directly target
one of the US economy’s most important
indices. The S&P 500 covers nearly three
quarters of American equities and EasyETF’s
Danièle Tohmé-Adet therefore sees it as “an
ideal gateway to the US market” giving
Europeans access to “the benchmark for the
US equity market, as proven by the number of
funds using it”.
 City Focus
34 CITYA.M. 24 JUNE 2010

| Law

New watchdog
won’t scare City
Unless it has more all too common with UK crime initiatives,
the reality may not match the rhetoric.
resources, the ECA A number of immediate questions arise,
not least: who will lead the ECA? In recent
will be more toothless months both the FSA and the SFO have
engaged in something of a media turf war
seemingly in an attempt to position them-
than its predecessor selves as the “toughest” agency and so the
natural lead for the new ECA. Leaving
aside the unedifying nature of enforce-
ment agencies trying to litigate through
the press, can either body really claim to
be any more effective than the other? The
SFO has secured a number of high profile
plea deals over the last year but is still to
show that it can successfully prosecute a
major corporate at trial.

LACK OF CONVICTIONS
JEREMY SUMMERS The FSA has secured convictions after trial
RUSSELL JONES & WALKER LLP in a number of reasonably straightfor-
ward insider dealing prosecutions but

I
T IS only just over a year since Hector
Sants, head of the Financial Services
(FSA), told the City in no uncertain
terms that he wanted business to be
“very frightened” of his organisation.
Central to that warning ran the theme of
“credible deterrence” through increased
criminal prosecution, particularly in rela-
tion to insider dealing.
Despite the tough talk, and significant
investment, the government last week con-
firmed that the FSA will be disbanded by
2012 and in the process its enforcement
function will be ceded to a new Economic
Crime Agency (ECA) that is still to be
formed.
Specific details of the ECA are noticeably
thin. The present thinking appears to be
that it will involve merging the SFO, FSA
enforcement and the Office of Fair Trading
into one agency that will tackle bribery,
fraud and insider trading. However, it is
also possible that other agencies such as
the City of London police fraud unit could
similarly be included. The creation of an
overarching agency, akin in some respects
to the US Department of Justice, is in prin-
ciple a sensible one. However, as is perhaps
failed recently in a more complicated case.
In fact the trial judge initially ruled that
the defendants had no case to answer
before the Court of Appeal sent the matter
back to the jury, which then promptly
returned not guilty verdicts.
Leadership aside, critical to the effective-
ness, or otherwise, of the ECA will be the
resources that it is given. If the existing
agencies are simply combined without
being given additional funding the ECA
could struggle to make any discernible
impact. Even if it is given extra funding it
may well find that many senior enforce-
ment officers currently at the FSA do not
move to the ECA.
Because the FSA is industry funded it has
been able to recruit staff at pay levels that
broadly reflect City rates and so significant-
ly above the remuneration offered by gov-
ernment agencies such as the SFO. It is no
accident that the FSA has been able to The FSA’s Detail as to how and when the ECA will cated cases. The ECA is therefore likely to
recruit a number of staff from the SFO; will Hector Sants. operate is still awaited, but history has fre- need something beyond the sum of all
those same staff be willing to return to gov- quently shown that progress is not made three agencies to succeed as an effective
ernment employ and the almost certain Picture: REX by simply rebranding organisations. The anti-fraud weapon. In the interim the City
pay cut that will follow? If not, then despite SFO, FSA and most recently the OFT, with might not be as afraid as Mr Sants had
the government’s good intentions, the ECA the collapse of the BA/Virgin price fixing hoped.
may be inadequate from the outset. trial, have struggled to prosecute compli- j.summers@rjw.co.uk

In-house lawyers should defend themselves

certain of these papers were covered by
legal privilege, which meant that the com-
mission could not have access to them. The
commission disagreed, and now the GC100
group of leading general counsels (GCs) has
voiced concerns about the Akzo case.
When leading the defence team respond-
ing to the raid I never thought this would
still be making waves. But regulatory risks
JONATHAN SINCLAIR are now top of the agenda for general coun-
STEWARTS LAW LLP sels for businesses, particularly those with
a global reach. The sanctions for non-com-
This at least is the US and UK perspective
based on long experience of affording priv-
ilege to in house lawyers. But it contrasts
with traditions in many continental juris-
dictions, which place great emphasis on
the status of the independent bar associa-
tion. Arguably EU enlargement has
increased the number of states taking that
line. The EU Commission adopts their view
in arguing that in house lawyers are sub-
ject to the influence of the companies that
employ them to a degree that impinges on
unavailable, like environmental compli-
ance, money laundering and bribery.
There is a concern that English law could
be affected as it becomes increasingly inter-
woven with EU law. There seems to be little
imminent risk of that, but the attraction to
regulators is obvious. At present the OFT
will provide most of the manpower and
assistance for commission antitrust raids
in the UK, but also leads its own domestic
raids where in-house privilege must be
respected. Regulators in all jurisdictions

A
RECENT opinion handed down by
the advocate general in Brussels
rejecting privilege for communica-
tions with in-house counsel threat-
ens the status and future of in-house
solicitors, and has caused significant con-
cern to major companies and City lawyers.
The background to the case was a dawn
raid carried out by the Office of Fair
Trading and the European Commission in
February 2003, at the premises of Akzo
Nobel Chemicals and Akcros Chemicals in
Eccles, Manchester. During the investiga-
tion the commission took copies of a large
number of documents. Akzo claimed that
pliance – not just in fines but also personal
liability for senior management – now
make it imperative that legal advice can be
obtained without the risk of it being used
as adverse evidence.
In-house legal teams are embedded in
the businesses they serve and are generally
best placed to ensure swift, effective com-
pliance and to do so cost efficiently. Giving
advice verbally or constantly turning to
outside advisors simply for privilege protec-
tion or to avoid disclosure risks is not prac-
tical. It can actually restrict the ability of
companies to understand and work
through complex areas of law.
the objectivity of their advice and therefore
the protection it should merit. The battle
for GCs is therefore about professional
recognition as well as business imperative.
The debate has focused on antitrust
investigations, the main sphere in which
the EU Commission exercises its enforce-
ment powers. In most other areas regulato-
ry enforcement is largely carried out at
national level and the approach to privilege
in the relevant jurisdiction will apply. An
additional spectre for GCs is that EU inves-
tigations and regulatory activity could
develop in other areas in which privilege,
based on EU case law, could also then be
including the UK and US have in recent
years pressured companies to give “volun-
tary” waivers of privilege, suggesting where
their ambitions lie.
The crusade for in-house lawyers’ privi-
lege sparked the formation of the
European Corporate Lawyers Association,
and also worries the American Corporate
Counsel Association. The European Court
of Justice is expected to give its judgment
on Akzo within months. If, as expected, it
follows the advocate general’s opinion, in-
house lawyers in the City and elsewhere
will be keeping up the pressure.
jsinclair@stewartslaw.com
CITYA.M. 24 JUNE 2010
How to deal with missing
out on your big promotion
ASK THE EXPERTS
I have been passed over for pro-
motion – I think unfairly – and it is
becoming clear to me that my future
at my current firm is not going to be
as I hoped. My area is fairly spe-
cialised, and I am not entirely sure
that I can easily find work else-
where. What can I do?
CERI RODERICK
PSYCHOLOGIST, PEARN KANDOLA
B
EING passed over for promotion
will have a very different impact
depending on our personality
type, so it is hard to generalise,
but it is very difficult for any of us not
to take things personally. At the very
least we can expect to feel frustration
and inequity in such a situation – the
psychological contract we thought we
had with our employer has been bro-
ken and our confidence will have been
bruised. At worst we can feel anger
and even depression.
The effect of all these is to reduce
our work performance; research
shows a clear link between feelings of
well being and how well we perform
so we can expect to be working sub-
optimally in such circumstances, so
letting these feelings fester runs the
risk of our behaviour (ironically) con-
firming the boss’s decision. (You can
imagine the conversation: “You see, I
told you he/she was too emotional for
that job, this reaction just proves it”.)
What do we do? The challenge is
that in the immediate aftermath of
such a decision our emotional
response will get in the way of think-
ing objectively about our options, so
take time to consider – best not to
burn any boats. The best response is
to talk to someone, a colleague or
your boss – ideally with a spirit of
genuine enquiry (though bitter ran-
cour may be what we are feeling!) to
make sure that we understand how
and why the decision was made and
to fully understand what options for
personal development and future
promotion exist.
It is surprising how often bosses
fail to notice the de-motivating
effects of decisions like this, so
explain how you are feeling – it is a
much better option than brooding.
Even if you decide to leave to seek
opportunities elsewhere, this conver-
sation can set you up to leave well
rather than under a cloud – always
the better option.
NEIL OWEN
DIRECTOR, ROBERT HALF
T
HE first thing you should do is
talk to your manager about
how you are feeling. They may
not be aware of your
aspirations and could provide you
with internal opportunities that you
were not aware of.
If this strategy doesn’t present a
solution you are happy with then it is
time to think about the next step in
your career development. Moving on
to a new job can seem daunting, espe-
cially if you feel your skill-set is quite
specific, but there are steps you can
take in order to make the process eas-
ier and more successful.
City Focus | Careers 35
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Firstly, it’s essential to set objectives, to negotiate severance terms. If this fails [VIVVR`V\YWSHJL]PZP[
[VIVVR`V\YWSHJL]PZP[
and build an action plan to establish try again to negotiate severance terms I\ZPULZZRPUNZ[VUHJ\RL]LU[Z
I\ZPULZZRPUNZ[VUHJ\RL]LU[Z
your career priorities. Ensure you cap- after you’ve left. Only if this is
italise on opportunities, like volun- unsuccessful consider bringing legal pro-
teering for jobs to gain experience in ceedings. Litigation is always a last resort.
other areas; this will show initiative to
potential employers, and will also help
to expand your network and make
new contacts. Another important step
to take is to stay abreast of new devel-
opments in your field to ensure you
can offer the latest and most up-to-
date insights for potential employers
in your chosen profession.
Most industries and trade associa-
tions have their own websites, which
makes it easier for you to read rele-
vant materials regularly and stay
ahead of the game. Speak to a recruit-
ment consultant – they’ll be able to
support and facilitate your job search
by giving you a first look at new posi-
tions, and explore the niche and spe-
cific sectors that may be hard for you
to get to grips with independently.
Finally, utilise your network; make
it known that you’re on the look out
for new opportunities as you never
know when an ex-colleague or friend
might be looking to recruit within
their own company. Business net-
working sites also provide a key way
to both develop relationships with
new business contacts. These sites are
a great way in which to share infor-
mation and learn about job opportu-
nities quickly.
JANE MANN
EMPLOYMENT LAWYER, FOX
WILLIAMS LLP
F
IRSTLY, consider your objective.
Do you wish to resolve this mat-
ter and stay at the firm? Or do
you no longer want to work for
the firm at all? You should try to
find out why you have not been pro-
moted by asking your line manager.
Was there actually a good reason
why someone else was preferred? If
you are not given a good reason or
are met with a wall of silence, keep a
cool head. The last thing you want to
do is over-react and give the firm a
reason to discipline you.
If you consider that the real reason
may have something to do with your
gender, age, sexual orientation, race,
religion or a disability you might
have a discrimination claim and a
claim for unfair constructive dis-
missal if you leave. If you feel that
these factors have nothing to do with
it, but the decision is the culmination
of bullying or unreasonable treat-
ment you might have a claim for
unfair constructive dismissal.
If you think you might have a legal
claim, you now have a really difficult
decision. Should you start to pursue
it by bringing an internal grievance
(which you must do quickly) or do
you look for a new job with a view to
resigning quietly? Your decision will
depend upon your prospects of new
employment and the extent of the
unfairness experienced by you. You
have to assess coolly which is most
likely to be in your best interests.
If you bring a grievance and the
result is not what you hoped for then
you will probably have to resign and
claim constructive dismissal in order
to obtain redress. Before resigning try
 Lifestyle
36 CITYA.M. 24 JUNE 2010

| Technology

N
Samsung NX10

S APHAPPY
A hybrid camera
combining com-
pact dimensions
with digital SLR
tech, the NX10
includes a 14
megapixel detach-
able lens, HD
movie recording,
and a very high
quality, 3 inch
viewing screen.
£599
Timothy Barber selects the best cameras to www.jessops.com

take away to beautiful holiday destinations

Canon Ixus
Leica V-Lux 20 300HS
Taking a camera on your travels is one thing, but how As luxury com-
about one that can record exactly where you took pact cameras go,
each picture? German company Leica’s new compact the 10 megapixel
uses GPS technology to do just that, tagging pictures IXUS 300 HS is
with exact geographical coordinates. an impressive
£495 www.leica-storemayfair.co.uk proposition.
Smoothly mini-
malist to look at,
easy to use and
the images are
excellent quality.
£300
www.canon.co.uk

Olympus Pen
EPL1
This 12 megapixel
beauty is notice-
Nikon Coolpix DSLR able for its very
This 10-megapixel camera, including a powerful 26x cool, retro stylings
zoom lens, full HD movie recording and slow-motion and its clutter-
video, is a good entry point for those wanting to step free display which
up from common-or-garden compacts to something is thankfully free
rather more special. of much of the
£349.00 www.nikon.co.uk/wheretobuy confusing settings
and symbols you’ll
often find. Takes
nice pictures too.
£499
www.jessops.com

Toshiba unveils groundbreaking new portable devices

Sony NEX-5
Very small, very light and very
good, Sony’s new, 14.2 megapix-
el camera is just about as close
to digital SLR quality as you’ll
get in a compact camera. It has
a funky interchangeable lens
system and a solid feel despite
its snug proportions.
£550 www.sony.co.uk
IT may be all about the iPad at the the Android 2.1 platform with Wi-Fi and
moment, but Toshiba has shown this Bluetooth built in – a very useful machine
week that companies other than Apple for those who need to work on the move.
are still out there breaking new ground The screen is 10.1 inches with built-in web-
in the world of things portable, per- cam and microphone, and you also get a
sonal and touchscreen. On Monday it variety of connection ports for docking
unveiled three pieces of kit that will with other devices.
have tech fans drooling. First off is Also launched was
the rather beautiful looking a new ultra-light lap-
Libretto W100 (right), the first top aimed specifically
dual touchscreen device to run at business users, the
Windows 7. Fold its two 7-inch Portege R700, with
screens out flat and you can a hyper-efficient air-
split content across both cooling system
screens horizontally or vertically. and a body
In clamshell form the lower screen can weigh-
bring up virtual keyboards or Toshiba’s ing just
nifty Lifespace programme. 1.3kg.
Meanwhile, the sleek AC100 (far right) That’s due in July
is a stylish notebook cleverly incorporating while the Libretto and the AC100 should
smartphone tech. It weighs just 870g with be in shops in August. Prices are yet to be
a body that’s just 14mm thick, and runs on confirmed. www.toshiba.co.uk. TB

OUT OF OFFICE
TIMOTHY BARBER
Detail from Dante MASTER DRAWINGS LONDON
Gabriel Rosetti’s The Celebrating its 10th anniversary this
Annunciation, which year, Master Drawings London is a chance
will be on display as to pick up high quality works by artists
part of the Master stretching from the Renaissance to the
Drawings London fair. present day. 21 dealers specialising in
drawings will be joining together to
mount a series of exhibitions around St
James’s, Mayfair and Bloomsbury, with
collectors and amateurs alike invited to
come and have a browse. 3-9 July, various
venues. www.masterdrawingsinlondon.co.uk
WELCOME TO THEBES
In Moira Buffini’s updated ver-
sion of the story of Thebes, the
poor, newly democratic
nation relies on the rich
superpower state of Athens
and profit-motivated Theseus
to maintain peace. Did some-
one say metaphor? Richard
Eyre directs. Until 19 Aug,
Olivier, National Theatre.
www.nationaltheatre.org.uk
HOLIDAY SNAPS WORKSHOP
To make the most of the cam-
eras above and others like
them, John Lewis Oxford
Street is running workshops to
show people how to achieve
the best visual memories of
their holdiays. Go if you don’t
know your megapixels from
your multizoom. Send email to
events_oxford_street@johnlewis.co.uk
to book a slot.
CITYA.M. 24 JUNE 2010
Thriller machine Patterson
is back with another gripper
The new series takes
on the glamour and
peril of a private
investigator in trouble,
says Zoe Strimpel
PRIVATE
BY JAMES PATTERSON
Century £18.99
hhhii
IT’S fair to say that James Patterson is to
thrillers what McDonalds is to food: a fast-
paced outlet for easy, tasty matter. Except,
unlike the fast food chain, Patterson is a
brand associated with sophisticated fare,
as well as one that nourishes the mind
and the human appetite for suspense.
Fans – and there are many of them
given that Patterson is among the world’s
best-selling authors (his novels account for
one in seventeen of all hard-cover novels
sold in the US) – will be best acquainted
with hero Alex Cross, the DC-based foren-
sic psychologist. But Private marks the
launch of a new series that revolves
around a Los Angeles-based private investi-
gation firm called Private, run by Jack
Morgan, an Afghanistan war hero. His
father, Tom, owns the company, but is in
prison for extortion and murder.
Tom wants Jack to make the company
great again and gives him a $15m account
in the Cayman Islands with which to do it.
Within five years he’s turned Private into
a global business, with much sought-after
service and a client base loaded with
celebrities and politicians. Jack badly
wants to keep everything above-board and
legal, and to avoid being trapped in mob
antics like his father was. Still, the mob
isn’t easy to resist and when his school
friend Abbie calls to say his wife’s been
murdered, things start getting grisly. If
Morgan can’t get to the bottom of this
seemingly senseless murder, bodies will
continue to pile up.
With numerous plot strands – includ-
ing a school-girl murderess – this is yet
another fine outing from the master of
thrillers and it is guaranteed to keep you
busy on the beach.
THE SECOND LIFE OF BREE
TANNER
BY STEPHANIE MEYER
Atom, £11.49
hhiii
WHETHER you’re a fan of the Twilight
series of books and films that has stolen
the hearts of millions of teenage girls, or
just interested in social phenomena,
checking out the first piece of fresh mate-
rial in nearly two years from best-selling
vampire queen Stephanie Meyer is really
rather obligatory.
Within one day of being released, the
book shot to the top of the UK’s bestseller
charts, and was the third-fastest selling
book of all time, after JK Rowling’s last
Harry Potter and Dan Brown’s The
Solomon Key.
As the name suggests, Second Life takes
us away from the sweltering romance of
Bella Swan and her vampire lover Edward
Cullen to the short-lived story of Bree, one
of an army of new vampires created by an
arch-enemy of Bella’s. Her mission is to
take down the Cullens (the beautiful,
civilised vampires at the core of Twilight)
and the human in their midst (Bella).
Much of the story concerns Bree’s day-to-
day life – biting off her vampire friends’
limbs before reattaching them courtesy of
a special saliva, the music she listens to
sulkily, and her beau Diego.
The problem with the whole set-up of
this book is how vanilla – and non-vamp-
ish – the vampires are. Meyer has been crit-
icised for her reluctance to make any of
her characters – including the bad ones –
truly dark. And the result here is some-
thing oddly dull, PG rather than Cert 18,
which would be not only more appealing
but also more appropriate. Her fans could
probably handle a little bit more genuine
darkness, but since this is Stephanie
Meyer, no doubt they’ll put up with it and
happily, erm, devour the next one too.
THE VINTAGE CAPER
BY PETER MAYLE
Quercus, £12.99
hhhii
PETER MAYLE hit the big time 20 years ago
with his romantically oenophile A Year in
Provence, about a trip to Luberon to
restore an old house. Since then, France,
food and wine have been at the core of
Mayle’s classic collection. Now he’s back
Lifestyle | Books
James Patterson: with a thriller that, bien sur, incorporates
master of the thriller. as much Bordeux as it does crime.
Dan Roth is a rich entertainment lawyer
in LA and, among his numerous costly pos-
sessions – including a young blond wife
and homes in New York and Aspen – he has
a massive $3m wine cellar with all the best
vintages. No shy and retiring sort, Dan feels
his vinous splendour is under-appreciated
and goes on a publicity drive, pulling
strings to get a full-page interview in the
International Herald Tribune, headlined
The Grapes of Roth.
Not the cleverest move, it turns out. After
the piece runs, all his Bordeaux is stolen
while he’s on holiday in Aspen. Roth rages;
meanwhile, his insurers hire a private
investigator called Sam Levitt. The ten-
sion soars as a suspect list is born – was it
the property’s caretaker, rival collectors,
or possibly even Roth himself after the
insurance payout? Not likely, and so it’s
off to Paris, Bordeux and Marseilles for
Levitt (and his glamorous colleague
Sophie) to continue the investigation. At
this point, readers used to Mayles’ way
with wine and food will find themselves
in familiar territory as the prose becomes
increasingly gatronomic – you’d be hard-
pressed to find another crime novel in
which the dishes ordered in restaurants
gets as much attention as the case.
An evocative blending of wine and crime
and a book that is sure to please Mayle fans
and newcomers alike.
37
VEXED IN THE CITY
SOLVING YOUR
WORK-LIFE
I can’t take any
PROBLEMS
more of my
football-mad
partner’s antics
DEAR VEXED: My boyfriend is a massive
England fan. That’s all very well, but
he’s been on one big bender throughout
the World Cup and now that England is
going through I don’t know how I’m
going to be able to live with him. He’ll
be up all night partying and I’m worried
he isn’t working properly. More to the
point, I’m living with someone who reels
in off his face every night at 2AM which
makes my life difficult. What should I
do? Marie, 27, auditor
O
H, the highs and lows – or perhaps
more accurately the lows – of being
an unofficial WAG. You’re certainly
not the first woman to be driven to
her wits’ end by a football fan boyfriend.
They’re good as gold (well, sort of) most of
the time but all bets are off (apart from
those made at William Hill) when the team
is playing.
The duress of being a WAG goes in
waves. Some waves you can ride by put-
ting your foot down: in the early stages of
the Champions League, for example, it is
possible to overturn a boyfriend’s decision
to forget you entirely while he watches the
football all day long and to do it without
fear of being labelled a nag.
But with the World Cup, there is simply
no way you can press that argument. It is
scientifically proven that trying to limit
your boyfriend’s football-related social
activity during the tournament is impossi-
ble and leads to nothing but extreme frus-
tration for you.
However, just because you can’t argue
him out of his behaviour, you can still show
him the rules. Go suspiciously quiet and let
him do his thing. But get a lock and pad-
lock your bedroom door so that when he
comes in, expecting to crawl in next to you
breathing his beery breath all over you
then promptly ruining your night’s sleep
with heavy snoring, he finds that he can’t.
In short, that his actions lead to conse-
quences. He’ll soon realise that if he wants
to ignore you entirely, he gets to sleep on
the sofa, alone.
Another approach, if the padlocking
doesn’t appeal, is to remove yourself from
the situation. You can’t take the football
away from the fan, but you can take the
WAG away from him. Go watch the match
yourself with some mates and arrange to
spend the night at one of their houses. Or
forget the match entirely and go out for
cocktails with the girls. Sleep at their
place, though, or somewhere even more
tranquil like your parents’ if
you’re really concerned about
sleep and work.
But I want you to think
carefully. How often does he
ride roughshod
over your
sensibili-
ties in the
name of the
football and his
mates? If it is fre-
quently, I’d be
inclined to tell you to
give him the boot, as it
were. The World Cup is
one thing: weekly bad
behaviour is quite anoth-
er. vexed@cityam.com
 38 Lifestyle | TV& Games CITYA.M. 24 JUNE 2010

BBC1 BBC2 ITV1 CHANNEL4 FIVE

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm Match of the Day Live:
2010 FIFA World Cup:
Cameroon v Netherlands
(Kick-off 7.30pm).
10pm BBC News
10.25pm Regional News
10.35pm Question Time:
Topical debate from Canary
Wharf, London.
11.35pm This Week: The past
seven days in politics.
12.25am Sign Zone: Panorama
12.55am Sign Zone: Countryfile
1.55am Sign Zone: Cracking
Antiques 2.25am Sign Zone: Food
Fighters 3.10am Sign Zone: Food
Fighters 3.55am-6am BBC News
5.50pm Wimbledon 2010:
Further live coverage from the
All England Club.
8pm Today at Wimbledon: A
round-up of the fourth day’s
play.
9pm Gareth Malone Goes to
Glyndebourne: The choirmaster
takes the teenagers to see a
performance of Puccini’s La
boheme.
10pm Mock the Week
10.30pm Newsnight: Weather
11.20pm Match of the Day:
2010 FIFA World Cup
11.50pm CHOICE The Culture
Show
12.50am BBC News
3.55am-6am Close
6pm London Tonight
6.30pm ITV News
7pm Emmerdale
7.30pm William and Harry –
The Brother Princes: Tonight:
8pm Emmerdale
8.30pm Coronation Street
9pm Taggart: Two bodies are
found in a disused coal mine.
10pm ITV News at Ten
10.30pm London News
10.35pm World Cup Highlights:
11.35pm Isle of Wight Festival
Highlights
12.35am The Zone; ITV News
Headlines
2.35am British Touring Car
Championship Highlights 3.55am-
5.30am ITV Nightscreen
6pm The Simpsons: Grampa
inherits $100,000.
6pm Home and Away
6.25pm Live from Studio Five:
TV PICK
6.30pm Hollyoaks: Suzanne Topical reports.
and Darren fear their affair is 7.30pm CHOICE Fifth Gear:
about to be exposed. Five News Update
7pm Channel 4 News 8pm Britain’s Greatest
8pm Location, Location, Machines with Chris Barrie:
Location: Helping house- Five News at 9
hunters in Kent. 9pm FILM Before You Go:
9pm Big Brother: Coverage of Family drama, starring Julie
events from the final series of Walters. 2002. THE CULTURE SHOW
the show. 11pm Forensic Files BBC2, 11.50PM
10pm Kerry and Me 11.30pm Cricket on Five The show re-evaluates Michael
11.05pm CHOICE Skins 12.30am SuperCasino Jackson’s impact on modern music,
12.10am Dirty Sexy Money 4.05am Wildlife SOS 4.30am and assesses his position in African-
1.05am Big Brother: Live 4.45am Wildlife SOS 4.55am County American culture.
Dispatches: How to Save Secrets 5.10am The New Tomorrow
£100billion 5.40am-6.25am 5.35am-6am Michaela’s Wild
Countdown Challenge

SKY SPORTS 1 1.30am Golfing World 2.30am- Crime Scene Investigation 2am Purpose 10.30pm Alan Carr: DISCOVERY HOME &
SATELLITE & CABLE

2pm Live International Cricket:
England v Australia. 10.30pm
IAAF Athletix Weekly 11pm
Time of Our Lives 12am
Football’s Greatest 12.30am
Premier League World 1am
International Cricket 3am
Football’s Greatest 3.30am
Premier League World 4am-
6am International Cricket
SKY SPORTS 2
7pm NRL Fulltime 7.30pm Live
Championship Rugby League
9.30pm Super League’s
Supermen 10pm World Cup
Report 10.30pm Football’s
Greatest 11pm Race World
12am NRL Fulltime 12.30am
Championship Rugby League
2.30am-3.30am Race World
SKY SPORTS 3
5.30pm Live LPGA Tour Golf
8pm Live PGA Tour Golf 11pm
European Seniors Tour Golf
12am European Tour Golf
5.30am PGA Tour Golf
BRITISH EUROSPORT
7pm Eurosport Flash 7.05pm
Soccer City Flash 7.15pm Fight
Club 9.30pm Strongest Man
10.25pm Eurosport Flash
10.30pm Soccer City 11.05pm
Eurosport Flash 11.10pm
MotoGP 12.05am-12.35am
Soccer City
ESPN
5.30pm Down the Barrel
7.30pm Basketball: FIBA World
Magazine 8pm NBA Classics
10pm MMA Live 10.45pm Talk
of the Terrace 11pm South
Africa Nightly 11.30pm Baseball
Tonight 12am Live NBA
Basketball 4.30am-5am Press
Pass 2010
LIVING
7pm Four Weddings 8pm Drop
Dead Diva 9pm Grey’s Anatomy
10pm Private Practice 11pm
Criminal Minds 12am CSI:
Exposed: Girls Aloud 3am The
Fresh Prince of Bel-Air 3.50am
Maury 4.40am Nothing to
Declare 5.30am-6am Home
Shopping
BBC THREE
7pm Match of the Day Live:
2010 FIFA World Cup 9.30pm
The Real Hustle Around the
World 10.30pm Lee Nelson’s
Well Good Show 11pm Family
Guy 11.45pm Peckham Finishing
School for Girls 12.45am The
Real Hustle Around the World
1.40am Match of the Day: 2010
FIFA World Cup 3.20am Lee
Nelson’s Well Good Show
3.50am England’s Worst Ever
Football Team 4.50am-5.05am
World Cup’s Most Shocking
Moments
E4
7pm Hollyoaks 7.30pm Friends
9pm The Big Bang Theory
9.30pm How I Met Your
Mother 10pm Accidentally on
Chatty Man 11.20pm Rude Tube
11.50pm-6am Big Brother: Live HEALTH
7pm Baby Tales 8pm Jon
HISTORY and Kate Plus 8 9pm Hospital
7pm How the Earth Was Made 10pm Hospital Emergency
8pm Ancient Discoveries 9pm 11pm Dr G: Medical Examiner
SKINS
Warriors: Napoleon 10pm Egypt 12am Hospital 1am Hospital CHANNEL4, 11.05PM
11pm How the Earth Was Made Emergency 2am Dr G: Medical
Examiner 3am Jon and Kate Following his violent behaviour at the
12am Warriors: Napoleon 1am
Plus 8 4am Bringing Home Baby party, Cook finds himself in court
Clash of the Gods 2am
Submarine Mission Impossible 5am-6am Mum’s the Word facing a charge of GBH. With Jack
3am Battle 360 4am-5am The O’Connell and William Long.
Hindenburg Disaster SKY1
7.30pm Futurama: The gang’s
DISCOVERY dreams come true. 8pm
8pm How Do They Do It? Pineapple Dance Studios: Fly-on-
8.30pm How It’s Made 9pm the-wall documentary. 9pm A
Heli-Loggers 10pm Man vs Fish League of Their Own: With
with Matt Watson 11pm World’s Claudia Winkleman and Dara O
Toughest Tribes 12am Deadliest Briain. 9.30pm Modern Family
Catch 1am Bear Grylls: Born 10pm Lie to Me 11pm A League
Survivor 2am How Do They Do of Their Own 11.30pm Border
It? 2.30am How It’s Made 3am Invasion USA 12.30am NCIS: FIFTH GEAR
Extreme Engineering 3.50am Los Angeles 1.30am The Real FIVE, 7.30PM
The History of Britain from the World: Key West 2.30am Tiff Needell drives an Aston Martin
Air 4.40am The First World Caprica 3.25am 24 4.20am Rapide, and Jason Plato pits two of
War 5.30am-6am How It’s Tru Calling 5.10am-6am Sell Me the most powerful saloon cars on the
Made the Answer market against one another.

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

QUICK CROSSWORD
   

SUDOKU KAKURO
15 5 29 4 18 21 
7 11 17
14 20 6  
45
Place the numbers from 1 to 9 in each empty cell so that each
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 12 10
20 13
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 12 5
   
above or to the left of it. 14 30 16
You can only use the digits 1-9 23 16 
    and you must not use the
17
8 24 14   
same digit twice in a block. 35 26
 The same digit may occur 15 16
11
    more than once in a row or
column, but it must be in a 16 7
9 28
  
17 3
  separate block.
9 12 8 
45
    13 6 10
 

  ACROSS DOWN
1 Consciousness of one’s 1 Begin a journey (3,3)
   
 WORDWHEEL I B
own identity (4)
3 Agree to (6)
6 Manufacturer of
2 Intense burst of
radiant energy (5)
3 Mature (3)
Using only the letters in the Wordwheel, you have
    ten minutes to find as many words as possible,
E A
toy bricks (4) 4 Sports trainer (5)
7 Roman cloak (4) 5 Implore (5)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters M 8 Time of celebration in
the Christian calendar (6)
10 A pair of (3)

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
E H 9 Paternity (10)
11 Legendary bird (3)
12 Be in possession of (3)
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
V S
14 Sense of right and
wrong (10)
13 Stinging plant (6)
14 Series of linked
QUICK CROSSWORD 9 6 7 9 7 4 2
17 Any of various small objects (5)
& ' 2 8 7 & 2 0 (
2 4 5 8 6 7 5 9 SUDOKU         
breeds of fowl (6)
19 Painful inflammation of
15 Place at intervals (5)
$ / 2 2 ) 2 $
3 8 5 6 4 1 2          16 Showing impatient
9 1 2 3 1 1 5 the big toe and foot (4)
1 6 $ ) ( * 8 $ 5 '          expectancy (5)
9 , 6 7 $ * 7 3 2 4 7 2 5 3 1 20 Manage, make do (4)
$ , / 8 1 $ & < 8 5 3 9
         18 Vehicle test (inits) (3)
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 Sport
I’ll give Murray a scare, says Nieminen
WIMBLEDON
2010
BY JON COUCH
JARKKO NIEMINEN plans to spoil
Andy Murray’s date with royalty and
prove a Wimbledon party pooper.
The Finn takes on the British No1
in front of the Queen this afternoon
when they walk out on Centre Court
for their second round match-up at
the All England Club.
Nieminen is no stranger to keeping
the partisan British crowds on edge
Federer made
to sweat by
unsung Croat
WIMBLEDON
2010
BY FRANK DALLERES
WORLD No1 Roger Federer admitted
his relief after surviving another
scare against an unfancied opponent
before booking his place in the third
round.
Federer was made to battle by
Croatian qualifier Ilija Bozoljac and
needed two tie-breaks before prevail-
ing 6-3, 6-7 (4-7), 6-4, 7-6 (7-5).
It continued the top seed’s unex-
pectedly tricky start to the champi-
onships, following his five-set
comeback against Colombian
Alejandro Falla on Monday.
“It was a tough match,” said
Federer. “He was playing really well
and served incredibly, at key
moments. Both my opponents played
great matches, but the good sign is I
came through them. I wish they were
straight sets but as long as you’re mov-
ing on, I’m a happy man.
“It just shows how deep the men’s
Johnson riled by bitter finish
N. ZEALAND MAORI 35
ENGLAND 28
▲
RUGBY UNION
BY FRANK DALLERES
ENGLAND manager Martin Johnson
admitted his frustration after his
side twice squandered a healthy lead
to end the tour Down Under on a low
note.
Johnson’s men stormed into a 13-0
advantage after Steffon Armitage
crossed early on, only to be pegged
back by two New Zealand Maori tries.
having taken the opening two sets off
Tim Henman in 2005 before the for-
mer British No1 mounted one of his
famous comebacks.
And the 28-year-old believes he can
give the world No4 a similar scare on
the big stage. “I understand Andy’s a
big favourite,” Nieminen said. “I’m
going to enjoy the situation. I have
nothing to lose. I’m just going to go
out there and give my best and still
believe I can challenge him.
“I like playing on big courts. I was
close to beating [Andy] Roddick on
the centre court at Roland Garros and
game is. I always think players play
better against me because they have
nothing to lose – maybe people will
start to realise that today.”
The six-time champion will contin-
ue his quest for a record-equalling
seventh Wimbledon singles title
tomorrow when he meets
Frenchman Arnaud Clement.
Third seed Novak Djokovic also
ensured his progress to round three
with a straight-sets triumph over
American qualifier Taylor Dent.
Dent set a new record for the
fastest ever serve at the tournament
in a closely-fought first set, but
Djokovic came through the tie-break
and soon found his stride, winning 7-
6 (7-5), 6-1, 6-4.
Last year’s beaten finalist Andy
Roddick recovered from a shaky start
to see off Michael Llodra, winner of
last week’s warm-up event in
Eastbourne. Roddick, seeded fifth,
struggled with his serve early on but
rediscovered his edge in the second
set, and then swept to a 4-6, 6-4, 6-1, 7-
6 (7-2) victory over the Frenchman.
Then after further scores from Danny
Care and Chris Ashton sent them in
at the break 28-17 to the good, they
failed to register a single point in the
second half as the hosts roared back
in Napier.
Maori wing Hosea Gear
plundered a hat-trick
with Liam Messam also
on the scoresheet, as an
England side featur-
ing 14 changes
failed to build on
Saturday’s Test tri-
umph over
Australia.
“It rankles los-
ing that game
because there
“YESTERDAY EVENING THEY
DRANK BEER BEFORE THE GAME”
FABIO CAPELLO REVEALS THE
SECRET BEHIND ENGLAND’S
WORLD CUP SUCCESS: P42-43
I had two sets to love against Henman
here. Then I played against [Rafael]
Nadal in the quarter-finals in 2006. In
all the slams I have played in the
biggest arenas, so it’s nothing new for
me.”
l In the women’s draw, five-time
champion Venus Williams powered
into the third round with a 6-0, 6-4
victory over Ekaterina Makarova,
while the two Belgian comeback
queens, Kim Clijsters and Justine
Henin, remain on collision course as
they both eased to straight sets victo-
ries in round two.
59-59! MARATHON MATCH GOES ON
JOHN ISNER and Nicolas Mahut tore up the record books as they played out the longest
match in tennis history at Wimbledon. The match was locked at 59-59 in the deciding
fifth set before it was suspended for bad light – 10 hours after it started. Both Isner (98)
and Mahut (95) both set records for the most number of aces, while the six-hour final set is
longer than the previous longest Wimbledon match in itself.
was a definite chance to win it,” said
Johnson. “I am a bit grumpy. We said
international rugby is brutal and at
times people didn’t do their jobs well
enough in the second half for us to
be able to win.
“If you don’t handle their powerful
runners you get what we got, which
is a couple of tries conceded and a
good lead lost. I should be more
upbeat about the whole tour but it
annoys me to chuck away the game.”
Johnson will name his 32-man
elite squad next month and he
admitted the tour had been
food for thought. “That is what
we came for,” he added. “To
play at a high level so we could
find these things out.”
ORDER OF PLAY | TODAY
CENTRE COURT
J Nieminen (Fin) v A Murray (GBR) (4)
C Wozniacki (Den) (3) v K-C Chang (Tpe)
R Haase (Ned) v R Nadal (Spa) (2)
COURT ONE
I Olaru (Rom) v M Sharapova (Rus) (16)
R Soderling (Swe) (6) v M Granollers (Spa)
I Dodig (Cro) v S Querrey (USA) (18)
Picture: ACTION IMAGES
SPORT | IN BRIEF
United pull out of Cole race
FOOTBALL: Arsenal remain favourites to
sign Joe Cole this summer after
Manchester United reportedly pulled out
of the race to sign the England midfielder
yesterday.
The 28-year-old will become a free
agent when his Chelsea contract expires
on 1 July after the Blues refused to offer
him a new deal.
Tottenham are also in the hunt.
Haddin out for Test series
CRICKET: Wicketkeeper Brad Haddin has
been forced out of Australia’s two-Test
series with Pakistan on English soil next
month after failing to recover from an
elbow injury.
Haddin has been replaced in the squad
by Tim Paine, who has also taken the
gloves for the NatWest one-day series
with England.
39
Results
WORLD CUP GROUP C
Slovenia.........................(0) 0 England ................................(1) 1
Att: 36,893 Defoe 22
USA...................................(0) 1 Algeria.................................(0) 0
Donovan 90 Att: 35,827
USA
P W D L F A GD Pts
3 1 2 0 4 3 1 5
England
Slovenia
3 1 2 0 2
3 1 1 1 3
1
3
1
0
5
4
Algeria 3 0 1 2 0 2 -2 1
GROUP D
Australia.......................(0) 2 Serbia...................................(0) 1
Cahill 69 Pantelic 84
Holman 73 Att: 38,836
Ghana..............................(0) 0 Germany.............................(0) 1
Att: 83,391 Ozil 60
P W D L F A GD Pts
Germany 3 2 0 1 5 1 4 6
Ghana 3 1 1 1 2 2 0 4
Australia 3 1 1 1 3 6 -3 4
Serbia 3 1 0 2 2 3 -1 3
TENNIS
ALL ENGLAND LAWN TENNIS CHAMPIONSHIPS
(Wimbledon)—M Men’s Singles Rnd 1: T De Bakker (Ned) bt S
Giraldo (Col) 6-7 (4-7) 6-4 6-3 5-7 16-14, N Mahut (Fra) is
tied with (23) J Isner (USA) 4-6 6-3 7-6 (9-7) 6-7 (3-7) 59-
59. Men’s Singles Rnd 2: (1) R Federer (Swi) bt I Bozoljac
(Ser) 6-3 6-7 (4-7) 6-4 7-6 (7-5), A Clement (Fra) bt P
Luczak (Aus) 6-7 (4-7) 6-3 6-3 6-4, (22) F Lopez (Spa) bt R
Berankis (Ltu) 7-5 4-6 6-3 6-4, (16) J Melzer (Aut) bt V
Troicki (Ser) 6-7 (5-7) 4-6 6-3 7-6 (8-6) 6-3, (12) T Berdych
(Cze) bt B Becker (Ger) 7-5 6-3 6-4, D Istomin (Uzb) bt R
Schuettler (Ger) 6-3 7-6 (7-5) 4-6 4-6 6-1, (31) V Hanescu
(Rom) bt M Ilhan (Tur) 6-4 6-4 3-6 6-3, D Brands (Ger) bt
(7) N Davydenko (Rus) 1-6 7-6 (7-5) 7-6 (10-8) 6-1, (3) N
Djokovic (Ser) bt T Dent (USA) 7-6 (7-5) 6-1 6-4, (28) A
Montanes (Spa) bt B Evans (USA) 3-6 6-3 6-7 (5-7) 6-1 6-4,
(21) G Monfils (Fra) bt K Beck (Svk) 6-4 6-4 6-7 (4-7) 6-4,
(15) L Hewitt (Aus) bt E Korolev (Kaz) 6-4 6-4 3-0 ret, F
Mayer (Ger) bt M Fish (USA) 6-7 (2-7) 6-3 6-4 6-4, Y Lu
(Tpe) bt M Przysiezny (Pol) 6-4 7-6 (9-7) 6-3, (29) P
Kohlschreiber (Ger) bt T Gabashvili (Rus) 7-6 (8-6) 5-7 2-6 7-
6 (7-5) 9-7, (5) A Roddick (USA) bt M Llodra (Fra) 4-6 6-4 6-
1 7-6 (7-2). Women’s Singles Rnd 1: (24) D Hantuchova (Svk)
bt V King (USA) 6-7 (4-7) 7-6 (7-4) 6-3. Women’s Singles Rnd
2: (8) K Clijsters (Bel) bt K Sprem (Cro) 6-3 6-2, (27) M
Kirilenko (Rus) bt S Perry (USA) 6-1 6-4, (17) J Henin (Bel)
bt K Barrois (Ger) 6-3 7-5, (12) N Petrova (Rus) bt Y Chan
(Tpe) 6-3 6-4, (15) Y Wickmayer (Bel) bt K Flipkens (Bel) 7-6
(11-9) 6-4, (21) V Zvonareva (Rus) bt A Hlavackova (Cze) 6-1
6-4, (28) A Bondarenko (Ukr) bt V Lepchenko (USA) 4-6 6-4
6-3, (4) J Jankovic (Ser) bt A Wozniak (Can) 4-6 6-2 6-4, T
Pironkova (Bul) bt V Dushevina (Rus) 6-3 6-4, R Kulikova
(Rus) bt (30) Y Shvedova (Kaz) 6-2 6-4, G Arn (Hun) bt A
Molik (Aus) 7-5 6-4, (11) M Bartoli (Fra) bt P Martic (Cro)
w/o, A Kerber (Ger) bt (13) S Peer (Isr) 3-6 6-3 6-4, J Groth
(Svk) bt (33) M Oudin (USA) 6-4 6-3, (26) A Kleybanova
(Rus) bt A Kudryavtseva (Rus) 6-4 6-2, (2) V Williams (USA)
bt E Makarova (Rus) 6-0 6-4.
TODAY’S DIARY
World Cup Group E
Cameroon v Holland (7.30)......................................................................................
Denmark v Japan (7.30) ..........................................................................................
Group F
Paraguay v New Zealand (3pm)............................................................................
Slovakia v Italy (3pm) ..............................................................................................
CRICKET
2nd ODI: England v Australia (The SWALEC Stadium).
Friends Provident T20 - North Division: Yorkshire v
Nottinghamshire (Headingley Carnegie). South Division:
Middlesex v Kent (Lord’s).
Asia Cup: Sri Lanka v India (Dambulla).
GOLF
USPGA Tour: Travelers Ch’ship (Cromwell, Conn. US).
BMW International Open (Munich, Germany).
SPORTS EDITOR JON COUCH
email sport@cityam.com
Double boost for Leeds
RUGBY UNION: Leeds Carnegie have bol-
stered their squad for next season’s
Premiership campaign with the signing
of two props on 12-month contracts.
Spanish international Jesus Moreno
Rodriguez, 24, arrives from Bordeaux,
while Miguel Alonso, joins fellow new boy
Sean Hohnecks from Viadana.
Newcastle, meanwhile, have signed
Bristol flanker Redford Pennycook.
Daley’s back strain not serious
DIVING: Tom Daley’s coach Andy Banks
insists the 16-year-old is not suffering
from a serious back injury despite being
forced to pull out of this weekend British
Gss Diving Championship.
Daley sustained the injury is training
and is now being rested for the European
Championships in August and
Commonwealth Games in October.
 40 Sport | Football
City workers
succumb to
football fever
WORLD CUP
2010
BY VICTORIA BATES
WITH the Budget out of the way in
good time, the City’s thoughts yester-
day turned to the beautiful game,
and England’s crucial third group
clash against Slovenia.
As the crucial hour approached,
bars and pubs filled to bursting point
and the employees of more generous
firms gathered in communal areas to
watch Capello’s squad clinch their
nailbiting victory. The biggest out-
door screening took place at
Broadgate Circle, one of just four
giant screens in the whole of London,
where well over a thousand people
gathered to watch the game. As the
crowd sweated and heaved down in
the arena, they were watched over by
well-heeled senior bankers at nearby
UBS, who were entertaining clients in
the Corney & Barrow bar spanning
the circumference of the circle.
Other banks also caught on to the
occasion’s considerable schmoozing
potential. Blessed with blue skies and
a burning sun, Bank of America
Merrill Lynch’s global markets team
Ozil stunner sets up date with England
GERMANY 1 meant Ghana also joined the
GHANA 0 Rustenburg on Saturday.
WORLD CUP 2010
BY JON COUCH
MESUT OZIL’S stunning second half
strike sent Germany to the top of
Group D and earned a last 16 clash
with England.
Playmaker Ozil, one of the stars of
the tournament so far, settled an
entertaining game at Soccer City with
a sublime dipping volley from outside
the box.
But Australia’s shock win over
FOOTBALL TRADER BEN CLEMINSON TAKES A LOOK AT ITALY’S
FINAL GROUP MATCH AGAINST SLOVAKIA
C
HAMPIONS Italy have played
nothing like their title sug-
gests at this tournament and
they are very lucky that they
are still in with a decent chance of
qualifying from Group F.
Marcello Lippi’s side have lacked
ideas but with Paraguay likely to
beat New Zealand in the other
game, a draw could feasibly be
enough for the Azzurri to progress
to the second round, where they
would be likely to meet Holland.
Slovakia have had a pretty poor
tournament, drawing with New
Zealand in their opener and then
hosted favoured clients up on their
roof terrace overlooking St Paul’s
Cathedral, complete with a giant out-
door screen and hog roast. And RBS,
which has made a virtue out of refus-
ing to send its top brass out on costly
corporate hospitality jaunts to South
Africa, made use of its purpose-built
third-floor viewing “stadium”.
Investment bankers entertained con-
tacts while lounging on their indoor
pitch under a giant canopy.
Legal eagles at Taylor Wessing and
Eversheds also jumped on the hospi-
tality bandwagon, laying on beer,
wine and traditional pub grub – fish
‘n’ chips, bangers ‘n’ mash and steak
and ale pies – for clients.
Elsewhere, accountants relaxed the
rules to allow their staff to watch the
game, with both PwC and Deloitte
hosting screenings in the canteens at
Embankment Place and Athene Place.
Canary Wharfers milling around
outside trying to catch a glimpse of
the footy on the enormous screens at
Canada Square park, however, were
in for a disappointment. Judging that
there were enough bars showing the
game, the powers that be took the
controversial decision to show the
tennis instead.
Serbia in the other group game
Germans in the second round
and will now face the USA in
England need be wary as
Germany, needing a win to be
sure of qualification after their
surprise defeat to Serbia, played
with great tempo from the off
– Cacau and Lucas Podolski
both testing keeper
Richard Kingson early on.
But the Black Stars
were no easy pickings
and the African side
slowly worked their way
into the match, counter-
attacking with pace and
purpose with Asamoah
being comfortably beaten 2-0 by
Paraguay last time. They would have
to win this and hope Paraguay beat
New Zealand to have any chance of
qualifying.
Goals have been a problem for the
Italians in recent seasons and I
wouldn’t expect them to win any
game at this World Cup comfortably.
However, they should have too much
firepower for the Slovaks and are
worth backing at 4/7 with Paddy
Power to arrest the slide of the poor
performing favourites at this year’s
tournament. I was initially interest-
ed in the HT draw / FT Italy result,
Above l-r: Workers watch nervously at Leadenhall Market, the City Bar near Liverpool Street Station and at law firm Berwin Leighton
Paisner, which showed the match in its staff canteen
Gyan should have taken his
tournament tally to three on
more than one occasion – in
particular which was
cleared off the line by
Philipp Lahm.
But it was the Germans
who took the lead on the
hour when Thomas Muller
found Ozil in space outside
the area and the highly-
rated midfielder smashed
a fine left-footed effort
past the helpless Kingson.
Ghana, however,
almost hit back immedi-
ately but Prince Tagoe’s
header drew a fine block
from Manchester City’s
new £11m defender
but 10/3 is just too skinny for me.
The correct score market is always
difficult to predict, but I can see this
being a tight, nervy encounter and
there is a little value in backing the 1-0
Italy win at 5/1 on Betdaq. It doesn’t
look like being a thriller by any stretch
of the imagination, so spread bettors
should also look to sell Sporting
Index’s goals prediction at 2.5.
POINTERS...
Italy to win at 4/7 with Paddy Power
Italy to win 1-0 at 5/1 on Betdaq
Sell total match goals at 2.5 with Sporting Index
CITYA.M. 24 JUNE 2010
The City cele-
brates Jermain
Defoe’s goal for
England at
Broadgate Circle
Pictures: Micha Theiner/City A.M.
Serbia miss out
with Pantelic miss
Jerome Boateng, who was playing
against his half-brother Kevin – the
first time that has happened in a
SERBIA striker Marco Pantelic
missed a sitter from six yards out
World Cup. in the dying seconds to deny his
Lahm saved Germany again with a
clearance over the bar from Andre
side a place in the last 16.
The substitute somehow fired
Ayew as Ghana pressed for an group- over the bar from Zoran Tosic’s
topping equaliser, but Joachim Low’s cross as Australia held on for a 2-1
side held on to book their date with win, which still wasn’t enough
destiny with England in for them to qualify.
Bloemfontein on Sunday. Tim Cahill headed the
Socceroos in front on 69 minutes
GROUP D before Brett Holman made it 2-0
four minutes later with a 25-yard
TEAM PLD W D L F A PTS effort.
Germany 3 2 0 1 5 1 6 Pantelic pulled one back for
Ghana 3 1 1 1 2 2 4 the Serbs with six minutes left
but his late miss was to prove
Australia 3 1 1 1 3 6 4 costly.
Serbia 3 1 0 2 2 3 3
Henry to meet President Sarkozy
as French begin debacle inquest
WORLD CUP prime minister and sports minister
to begin the inquest, after the
2010 France squad arrived home to a bar-
BY FRANK DALLERES rage of scathing criticism.
“Thierry Henry called the presi-
FRENCH president Nicolas Sarkozy dent from South Africa and told
will today meet striker Thierry him he wanted to see him as soon as
Henry to dissect the nation’s disas- possible after his return to France,”
trous World Cup campaign.
Henry called Sarkozy himself to
said a government spokesman.
Former captain Patrice Evra, who
request a meeting after the team was dropped for the final group
crashed out at the group stage amid game, is planning to reveal the
bitter in-fighting. extent of the behind-the-scenes con-
Sarkozy yesterday met with his flict at a press conference this week.
CITYA.M. 24 JUNE 2010
England set to
get Maradona
grudge match
WORLD CUP
2010
BY FRANK DALLERES
TWENTY-FOUR years ago he dumped
England out of the World Cup as a
player; now he could be set to inflict
the same heartbreak as a manager.
For if Fabio Capello’s team can nav-
igate their way past old rivals
Germany and into the quarter-finals,
they look likely to meet the familiar
form of Diego Maradona.
Argentina meet Mexico in the last
16, with the victors drawn to meet
the winners of England’s tie, and
Maradona’s men are the hot
favourites to progress.
Indeed, they are highly fancied full
Donovan’s last-gasp strike
earns Americans top spot
USA 1 and means they now take
ALGERIA 0
WORLD CUP 2010
BY JON COUCH
LANDON DONOVAN struck a dra-
matic injury-time winner to fire
the USA into the last 16 of the
World Cup as Group C winners.
Watched by former president Bill
Clinton, the Americans were on the
verge of exiting the competition
when the LA Galaxy man rifled the
ball home after Algerian keeper
Raid Ouheb M’bolhi had kept out
his initial 92nd-minute effort.
It was no more than Bob
Italy pin hopes
on Pirlo to help
seal last 16 spot
▲
WORLD CUP
BY JON COUCH
ITALY hope to be boosted by the
return of midfielder Andrea Pirlo
for this afternoon’s must-win
Group F decider with Slovakia in
Johannesburg.
Much like England, the Azzurri
suffered disappointing draws in
their opening two games and need
a victory to guarantee their place in
the last 16.
Experienced playmaker Pirlo has
stop, having stormed through Group
B, plundering nine points and seven
goals from their three games.
A rematch with Maradona might
offer one of the toughest contests pos-
sible, but few would whip up the
same level of excitement.
England’s players will not need
reminding of the potential for exact-
ing revenge over the former
Argentina captain, whose brazen
handball sent Bobby Robson’s team
home from Mexico in 1986.
Many of the squad may even recall
it as being among their first memo-
ries of watching football, going by the
ages of much of Capello’s party.
And although Maradona has
already enjoyed a colourful tenure as
national coach, he is sure to relish fac-
Bradley’s men deserved
on Ghana in Saturday’s second
round match in Rustenburg.
But for poor finishing and an
impromptu assistant referee’s
flag, the Americans would have
been out of sight by the break –
Hercules Gomez and Jozy
Altidore were both denied
before Donovan, inset, had the
ball in the back of the net on 20
minutes, only to be harshly
penalized for offside.
Algeria has earlier rat-
tled the crossbar
through Rafik Djebbour
but showed precious
little thereafter as the
Americans dominat-
ed, only to be
thwarted in
been ruled
out of the tournament so far with a
calf injury, but coach Marcello Lippi
is hoping the AC Milan man will
make a timely return.
The Italians have also been boost-
ed by the return to light training of
injured goalkeeper Gianluigi
Buffon, but the experienced stop-
per is not ready to play.
Similarly, Slovakia hope to wel-
come back ex-Chelsea midfielder
Miroslav Stoch to the side after
recovering from a knee injury.
Maradona is on course to face England again.
ing the country that has demonised
him most.
England have a history of highly-
charged clashes with the two-time
winners. In France in 1998 David
Beckham was sent off for kicking out
the final third.
In a desperate bid for a winner,
Bradley threw on attackers
Edson Buddle and Benny
Feilhaber, and they even-
tually got their reward
in their third minute of
added time when
Altidore crossed for
Dempsey, whose point-
blank effort was par-
ried by the goalkeeper,
before the ex-Everton
loanee rolled the loose
ball into an empty net.
Algeria finished the
match with ten men
after captain Anthar
Yahia was sent off for a
second booking.
TODAY’S MATCHES
Slovakia v Italy
Johannesburg, ko 3pm, ITV1
Paraguay v New Zealand
Polokwane, ko 3pm, ITV4
Denmark v Japan
Rustenburg, ko 7.30pm, BBC3
Cameroon v Holland
Cape Town, ko 7.30pm, BBC1
Sport | Football 41
WHO COULD ENGLAND FACE?
Quarter-finals
Argentina seem the most likely opponents
should England reach the last eight, setting up a
potentially titanic clash. Mexico, the other possi-
ble opponents, have impressed withe their lively
attacking style, but Capello’s men beat them in a
pre-tournament friendly and would fancy their
chances of repeating that feat.
Semi-finals
The likely opponents include Spain, Portugal,
Paraguay, Denmark and Japan, although Italy,
Holland, Ivory Coast and Switzerland could yet
be in that part of the draw. European champions
Spain and the classy Dutch look to be the two
Capello would most like to avoid, while a clash
with his home country Italy, the current holders,
would be intriguing.
Final
Barring a surprise Portugal win tomorrow,
England could not face Brazil until the final.
TOP HALF OF THE DRAW
Uruguay v South Korea
Port Elizabeth, Saturday, ko 3pm
Pictures: ACTION IMAGES/PA
USA v Ghana
at Diego Simeone in a 2-2 draw, Rustenburg, Saturday, ko 7.30pm
before England lost on penalties. Germany v England
Beckham settled the scores four years Bloemfontein, Sunday, ko 3pm
later in Japan by scoring the only goal Argentina v Mexico
from the penalty spot in a group Johannesburg, Sunday, ko 7.30pm
stage victory over their old foes.
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 42 Sport | Football
HOW THEY RATED
ENGLAND
OUR MAN IN PORT ELIZABETH
TREVOR STEVEN
David James
He didn’t have too much to do,
7
but what he did was pretty decent.
Looks in pole position to stay No1
Glen Johnson 7
Made a crucial block to stop a
goal and generally did well, getting
up and down and working hard
John Terry 7
It’s been a difficult few days
for him but, one or two slack passes
aside, he looked comfortable
Matthew Upson 7 tion games. I am really happy with
West Ham man got his
chance at last and did well coming
in, that tackle late on in particular
Ashley Cole 7 FABIO CAPELLO saw his England
Left-back did not do anything
spectacular but once again he
worked hard
James Milner 8 has been questioned over the last
Made the goal and got his
crosses in by doing what Beckham
does: get half a yard and hit it early
Frank Lampard 7 up a showdown with the Germans
A good solid peformance in
the centre, although should have hit
the target when the goal beckoned
Gareth Barry 7 The performance was really good
His match-fitness, lacking
against Algeria, is coming back and
he showed more energy this time
Steven Gerrard
Excellent. The captain’s engine
9
was firing, his touch was good and
he led by example
Wayne Rooney 6 watch out for is Mesut Ozil, who pulls
Still struggling and seems to
be using up energy by getting frus-
trated. Below average for him
Jermain Defoe 8 RAY PARLOUR
He was bright and got into
goalscoring positions. Performance
only worth 7, but goal bumped it up
Substitutes
J Cole (Rooney, 72) 7, Heskey (Defoe, 86) 7
Fabio Capello 8 vulnerable to pace and weren’t as
Stuck to his guns and made
right call in putting Milner on right,
but I’m not sure about two up front
Capello gives
England a beer
and a cheer
SLOVENIA 0 ber when we played in the qualifica-
ENGLAND 1 played hard, we attacked the ball
WORLD CUP 2010
BY JON COUCH
side rediscover their missing spirit –
after allowing his players to drink
beer the night before they booked a
last 16 tie with arch-rivals Germany.
Capello’s strict disciplinary code
fortnight after rumours of unrest,
and let his squad enjoy a pre-match
drink before yesterday’s must-win
game with Slovenia.
And it worked a treat as Jermain
Defoe fired a first-half winner to set
in Bloemfontein on Sunday.
“Yesterday evening they drank
beer before the game,” the Italian
explained. “And I saw the team play
with the spirit that we lost in the
games we played before this game.
and we created a lot of chances to
score a second goal.
We’ve nothing to fear from Germans
EXPERT VIEW
TOOK a long, hard look at the
I
Germans in their final group
game against Ghana last night
and, to be honest, I really don’t
think England have anything to fear.
I thought Bastian Schweinsteiger
and Lucas Podolski looked off the
pace, while the defence, for me, were
organised as you would expect a
German back four to be.
Indeed, but for better Ghanaian fin-
ishing, the result would’ve been a
“This is the spirit that I remem-
the performance of the team. We
and this is important if we want to
win.”
But despite the timely victory,
there remained a sense of what
might have been as a series of
missed chances denied England the
chance to top Group C.
Instead, an injury-time winner
from Landon Donovan for the USA
against Algeria in Pretoria, meant
the Americans went through as
group winners, thus claiming the
easier half of the draw.
While England lock horns with
old foes Germany with the possibili-
ty of Argentina to come in the quar-
ter-finals, the USA take on Ghana in
Rustenburg on Saturday night in
the knowledge that either they, the
Ghanaians, Uruguay or South Korea
are guaranteed a place in the last
four.
Capello must now hatchet a plan
to beat the Germans on Sunday –
and he wasn’t helped by the sight
of star striker Wayne Rooney limp-
ing off midway through the second
half with a recurrence of an ankle
whole lot different.
One player England will have to
the strings in the midfield and is
their main man going forward.
Capello will need to find away to stop
him but, if we can do that, then I can
see England marching further
onwards in Bloemfontein on Sunday.
After a highly-charged week, it was
refreshing to see England put in a pos-
itive performance in Port Elizabeth
yesterday. They looked more focused,
played with passion and gave it a real
go.
We looked slick with our passing
and carved the Slovenian defence
open on numerous occasions, in the
first half especially, before nerves
seemed to kick in as the game went
on.
James Milner was a major plus
point. He gives the side tremendous
energy and work ethic on that right
hand side, while floating in a number
injury. “I substituted Wayne
because his ankle was not so good,
he has some problems,” the boss
admitted.
Pressed on how serious the
injury was, Capello added: “I don’t
know. I have to wait for the doctor
but I think it will be okay for the
next game on Sunday.”
Despite coming under pressure
to change formation after a dismal
start to the campaign, Capello stuck
to his tried and tested 4-4-2, intro-
ducing Defoe and James Milner to
his starting line-up, at the expense
of Emile Heskey and Aaron Lennon.
And he got his immediate reward
on 22 minutes when Milner broke
free on the right and delivered an
inch-perfect cross for Defoe to bun-
dle home from six yards.
Confidence then seeped from
every England pore as they drove
of dream crosses for the strikers to
attack.
It was a performance in the ilk of
David Beckham, giving England that
quality outlet they lacked in the open-
ing two games.
UNDERSTANDING
The one down side of the
afternoon was the sight of
Wayne Rooney limping off,
but the signs are that the
knock to his ankle is not
that serious and that he
should be fine to play the
Germans on Sunday. You
try keeping him away,
in fact.
Wayne, inset,
looked like he was
gaining in confi-
dence all the
time, linking up
well with Steven
Gerrard and
CITYA.M. 24 JUNE 2010
forward with purpose – Frank
Lampard firing high over the bar
before keeper Samir Handanovic
pulled off a fine save to deny cap-
tain Steven Gerrard.
Defoe then came within a
whisker of doubling England’s lead
just after the break before
Handanovic brilliantly kept out
John Terry’s bullet header and
tipped a Rooney effort onto the post.
But Slovenia were by no means
out of it and as the game went on,
the nerves began to kick in. Milivoje
Novakovic and Zlatko Dedic were
both foiled by heroic England
blocks from Terry and Glen
Johnson before Matthew Upson
made the tackle of the match to
deny Dedic a free run on goal in the
dying seconds as England held on.
USA AND GERMANY REPORTS:
SEE PAGES 40-41
Jermain Defoe and twice going close
to getting on the scoresheet himself.
Such was the overall performance, I
can’t see Capello making any changes
for the Germany game. John Terry
was immense at the back and showed
a good understanding with
Matthew Upson, while Milner and
Defoe gave us a dynamic and
inventive look at the other end.
There’s still more to come
from this England side, that’s
for sure – and what better game
than a knockout tie against the
Germans to show it!
Ray Parlour, the ex-
Arsenal and England
star – on behalf of
Spirit Events, tel:
01268 281725 – is
opening the new
Paddy Power
bookmakers’ in
Canary Wharf
at 11am today.
CITYA.M. 24 JUNE 2010 Sport | Football 43

John Terry puts

his head where it
hurts as Slovenia
threaten to level
late on.

England cele-
brate as Defoe
puts the Three
Lions in front.

Capello bellows out instructions, as David

Beckham shows his nerves. But a relieved
Steven Gerrard cheers the final whistle.
Pictures: ACTION IMAGES/PA

Belief was always there, insists Defoe

▲

WORLD CUP spirit and it showed tonight. But while Defoe was the hero at had to make decisions and there
BY JON COUCH “We won the game and that is the one end of the pitch, another World was always something to think
MATCH-WINNER Jermain Defoe most important thing. At the end of Cup full debutant stole the plaudits about. It was just the reaction that
hailed the spirit of his England the day, it was a Cup Final – a must at the other after Matthew Upson was pleasing.”
team-mates after firing the Three win game – and all the lads were produced a perfectly-timed last- Meanwhile, Slovenia boss Matjaz
Lions into the last 16. fired up in the dressing room. We ditch tackle to deny Zlatko Dedic a Kek is tipping England to go all the
The Tottenham striker was given felt the pressure but to get the goal clear route to goal. way in the competition after he was
GROUP C the nod for his first World Cup start
ahead of Emile Heskey and Peter
early on was brilliant.
“We had fantastic support and I
“It was just a reaction really, the
ball got played into the box and it
impressed with their display in Port
Elizabeth. “I hope England win at
TEAM PLD W D L F A PTS
Crouch and repaid his manager’s am delighted four our fans. We was flicked on to the inside of me the World Cup and I think England
USA 3 1 2 0 4 3 5 faith with a predatory 22nd-minute proved ourselves tonight as the fans and I just took the opportunity,” the are a favourite,” he said. “They
England 3 1 2 0 2 1 5 finish to fire England through to were a bit disappointed with us West Ham defender said modestly. played well but at the end we could
Slovenia 3 1 1 1 3 3 4 the knockout stages. after the Algeria game. “It had to be timed right and I was have levelled and made a draw.
Algeria 3 0 1 2 0 2 1 “The belief was always there,” “I am lost for words about scoring really pleased I was able to. Sport is very unpredictable.
Defoe explained. “It was always the winner – it’s something you “There were lots of opportunities “I am proud that I have come so
going to be difficult but we kept the dream about.” in the game and every minute we far with with this Slovenia side.”