BUSINESS WITH PERSONALITY
PRESSURE
DEUTSCHE BANK PROFITS
DISAPPOINT AS COSTS SURGE
ACKERMANN TO RETIRE IN 2013 P3
Issue 1,312 Tuesday 1 February 2011
Egypt yesterday endured its seventh day of street protests over the three-decade long rule of President Hosni Mubarak
OIL HITS $100
DUE TO SUEZ
SUPPLY FEARS
OIL
▲
BY KATIE HOPE
OIL surged over $100 a barrel for the
first time in more than two years yester-
day as investors feared the turmoil
engulfing Egypt could disrupt ship-
ments passing through the Suez canal
and impact supply.
Brent crude for March, the global
benchmark, leapt by $1.59 to settle at
$101.01 a barrel – the highest since
Lehman Brothers’ collapse in
September 2008 – as the protests
against President Hosni Mubarak’s
regime intensified.
While Egypt is not a major oil-pro-
ducing country, its Suez Canal is a cru-
cial passageway linking the Red Sea
and the Mediterranean through which
an estimated two million barrels of oil
pass through each day – roughly equiv-
alent to the daily oil output of Iraq.
FTSE 100 ▼ 5,862.94 -18.43 DOW ▲ 11,891.93 +68.23 NASDAQ ▲ 2,700.08 +13.19 £/$ ▲ 1.61 +0.02 £/¤ 1.17 unc ¤/$ ▲ 1.37 +0.01
Oil cartel OPEC secretary general
Abdullah Al-Badri yesterday tried to
reassure markets by saying it would up
supply if there was a real shortage, but
reiterated that the Suez, which is
patrolled by armed guards, remains
open with shipping uninterrupted.
“We are trading on fear,” said Tom
Bentz, a broker at BNP Paribas
Commodity Futures in New York.
Analysts said that the main concern
was that the unrest in Egypt, which fol-
lows upheaval in Yemen and Tunisia,
could spark turmoil in the Middle East
and crucial oil producing regions such
as Saudi Arabia – the world’s largest oil
exporter.
“2011 is already turning out to be a
year when it would be risky to get heav-
ily involved in the oil market without
maintaining a fairly strong focus on the
key geopolitical developments,” said
BarCap in a note.
www.cityam.com
Stock exchanges were also rattled by
Egypt’s woes with major markets in
Asia and Europe falling. Japan’s Nikkei
fell 1.1 per cent, London’s FTSE 100
dropped 0.31 per cent to 5,862.94, and
Germany’s DAX slipped 0.36 per cent to
7,077.48. The Bank for International
Settlements data showed yesterday that
French banks were the most exposed to
Egypt, being owed £11bn in total by the
Egyptian government and companies,
with UK banks owed £6.7bn.
Violent clashes saw the death toll in
Egypt reach over 100 yesterday and
local and foreign travel companies have
suspended all outgoing trips as tourists
rush to evacuate the country.
HSBC, which has a total of 100
branches in 13 cities in Egypt, said yes-
terday it will remain under lockdown
for a third day today, maintaining cus-
tomer access via the Internet and
phone. MORE ON EGYPT: P12-P13, P20
ON BANK PAY
Football clubs in record
£215m transfer frenzy
▲
SPORT
BY FRANK DALLERES
ENGLAND’S top football clubs last
night defied the downturn by
embarking on a record-breaking
£215m transfer spending spree.
Chelsea’s £50m signing of
Fernando Torres and Liverpool’s £35m
purchase of Andy Carroll were the
day’s biggest deals as sides raced to
recruit before the 11pm cut-off – their
last chance to do business until the
summer.
Deadline-day spending which
exceeded £100m boosted the total for
the entire January transfer window to
around £215m, smashing the previ-
ous winter high of £170m in 2009.
The frenzied activity was in stark
contrast to last January, when Premier
League teams spent a meagre £30m.
Chelsea were the biggest spenders,
shelling out more than £70m as bil-
lionaire owner Roman Abramovich
abandoned his recently acquired taste
Chelsea shell out £50m to capture Liverpool striker Fernando Torres
TYRIE CALLS ON
FSA TO PUBLISH
TOP SALARIES P2
FREE
for caution and returned to the
largesse that followed his takeover in
2003. In addition to Spain striker
Torres, the league champions agreed
to pay Portuguese outfit Benfica £21m
for the Brazilian defender David Luiz.
The departure of Torres from
Liverpool prompted the Merseyside
club to launch a dramatic final-day
bid for Newcastle forward Carroll,
who is now the most expensive British
player of all time despite being just 21.
Experts said the “ripple effect” of
clubs selling players and then plough-
ing money back into the market, as
well as the unusually close nature of
this season’s league, had contributed
to the record outlay.
Dan Jones, of Deloitte’s sport busi-
ness group, told City A.M.: “A couple of
big deals can really move the needle.”
Jones added: “If people are trying to
make that next step or hold onto their
current status that definitely makes
an impact on how much they’re will-
ing to spend.” SPORT: P26-P27
Picture: GETTY
Certified Distribution
29/11/10 till 02/01/11 is 98,444
 2 News
A smaller state means faster growth
EDITOR’S LETTER
ALLISTER HEATH
THERE are many reasons why the
coalition is losing the public debate
on austerity – but one of them is that
it is conceding too much intellectually
to its opponents. Neither Tories nor
Lib Dems made the positive case for a
smaller state and a stronger, larger pri-
vate sector during the bubble years,
and this legacy continues to neuter
their arguments today. Their post-cri-
sis conversion to reducing spending
has been entirely framed in terms of
staving off national bankruptcy,
implying that ever-more state spend-
ing would still be a good thing in dif-
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Editor Allister Heath
Deputy Editor David Hellier
News Editor David Crow
Night Editor Katie Hope
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Sports Editor Frank Dalleres
Art Director Craig Gaymer
Pictures Alex Ridley
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Commercial Director Harry Owen
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WHAT THE OTHER PAPERS SAY THIS MORNING
WARNING AS BRIBERY LAW DELAYED
British companies have been warned
that they could be put on an export
“blacklist” by the Organisation for
Economic Co-operation and
Development if the government con-
tinues to delay tough new anti-cor-
ruption laws. The warning came after
Ken Clarke, the justice secretary, sig-
nalled on Monday that the imple-
mentation of the Bribery Act had
been pushed back because of intense
business lobbying.
KCA DEUTAG SALE COULD BE SHELVED
A sale of KCA Deutag is expected to be
shelved as its owners have secured
the backing of a key group of lenders
for a plan to recapitalise the
Aberdeen-based oil services group. A
group of lenders holding about 50
per cent of the company’s senior
ranking loans, including Royal Bank
of Scotland, HSBC and Lloyds Banking
ferent circumstances. There was some
sense in this strategy – but it should
have been accompanied by another
message: with public spending at 51
per cent of GDP, it is economically
right to reduce the size of the state –
and would be so even in the absence
of a spiralling national debt.
There is plenty of academic
research that highlights how bloated
states impoverish countries, regard-
less of whether or not they are techni-
cally affordable. The latest comes from
two Swedish economists, Andreas
Bergh and Magnus Henrekson, pub-
lished by the Research Institute of
Industrial Economics. It reports that
an increase in government size of 10
percentage points of GDP is associated
with a 0.5 to one per cent lower annu-
al growth rate in rich countries. This
suggests that the rise in spending
from 36.6 per cent of UK GDP in 2000
to 51 per cent in 2010, to use the OECD
measure, has been disastrous. This
14.4 percentage point increase in the
public sector’s share translates into a
Directors face
salary freeze
EXECUTIVE PAY
▲
BY ALISON LOCK
CHAIRMEN and non-executive direc-
tors are facing a second year of frozen
pay this year despite bearing bigger
workloads and greater personal
responsibility.
Almost 80 per cent of chairmen
believe they will receive no pay rise in
2011 – the second year without a rise
for most, as 85 per cent received no
increase in 2010, according to a new
survey by remuneration consultancy
MM&K and recruitment firm Russell
Reynolds Associates, led by chief exec-
utive Matthew Wright.
Board fees are expected to rise just
over two per cent in 2011, but 65 per
cent of non-execs believe they will see
no fee rise this year and more than 80
per cent had fees frozen last year.
Only FTSE 100 boards saw some
Group, have agreed to support a
restructuring proposed by Pamplona
Capital Management, the Russian-
backed private equity firm that owns
the group, according to people close
to talks.
CASH MOUNTAIN FOR BHP INVESTORS
Iron, coal, copper and oil form the
bedrock of BHP Billiton’s value and
are the reason that the Anglo-
Australian miner is now the fifth-
largest company in the world,
surpassing General Electric by market
value.
HIGH SPIRITS LIFT CHINESE LIQUOR
Spirits are running high before this
week’s Chinese New Year holiday as
prices of a popular grain liquor soar.
Moutai, the fiery official liquor for
state banquets since the Communist
revolution, has been variously
described by foreign dignitaries as
“liquid razor blades” and “smelling
like a barnyard and tasting like tur-
pentine”.
reduction in the growth rate of the
British economy of between 1.4 per
cent and 0.7 per cent a year. Paychecks
and living standards are thus much
lower today than they would other-
wise be. Had spending been
restrained, we would be living in a
substantially wealthier country today,
regardless of the recession, with more
jobs and resources at our disposal.
All the tightening to date has come
from higher taxes – current spending
hit a fresh record in November, and
only capex has so far come under pres-
sure – so it is no wonder growth
remains weak. We need less spending,
not just because we cannot afford to
borrow as much, but because proper
growth is impossible as long as the
state sector, with its low productivity,
high wastage and limited ability to
innovate, remains this large.
Bergh and Henrekson find that the
only way high tax and spending can
co-exist with decent growth, at least
temporarily, is if other policies are pro-
market: low regulation, low inflation
benefit – on average, chairmen’s fees
have risen seven per cent annually
since 2005, and non-exec fees have
increased by five per cent each year.
Yet a raft of new corporate gover-
nance regulation including a
revamped Combined Code, and an
increased focus on board responsibil-
ity after the financial crisis, mean
many feel more burdened by their
work. And with many chairmen of
listed companies earning just £1,500
per day, rising to £4,500 for FTSE 100
firms, their day rate looks cheap for
the responsibility they bear.
Matthew Wright CEO
at executive search
firm Russell Reynolds
said directors may face
a pay freeze in 2011
PARISIAN FASHION LURE FOR M&S
Marks & Spencer is close to return-
ing to Paris, a decade after it closed
its European stores. The retailer
endured a storm of criticism from
French workers when Luc
Vandevelde, its chairman at the
time, announced the closure of its
stores on the Continent, including
its flagship on Paris’s Boulevard
Haussmann.
DUTCH APPROACH TO PENSION PROBLEM
An investigation into private sector
pensions is to look at whether a con-
tinental-style approach could pro-
duce higher retirement incomes in
Britain. Lord McFall, the former
chairman of the Treasury Select
Committee, will head an independ-
ent commission set up by the
National Association of Pension
Funds to examine why the system
fails so many workers.
and the maximisation of other kinds
of economic freedom. Sweden com-
bined high (though falling) public
spending as a share of GDP with
decent growth because it liberalised
many other parts of its economy in
the 1990s (the modern Swedish model
is no longer semi-communist). Again,
the UK is going the wrong way: mar-
ginal tax rates on income and capital
are rising, as is the overall burden of
regulation, foreign investors are being
frightened away, and inflation is out
of control. The research also finds that
high-trust societies are good for
growth and cancel out some of the
problems of bloated welfare states –
but even if true, that observation is of
limited use to George Osborne. Rather
than being so defensive over the size
of the cuts, he should confront his
critics with the findings of these and
other economists. Smaller govern-
ments are better for growth than larg-
er ones – it is that simple.
allister.heath@cityam.com
Follow me on twitter: @allisterheath
Andrew Tyrie wants bank pay to become more transparent.
Tyrie calls for clarity on pay
BANKING
▲
BY RICHARD PARTINGTON
UP TO nine Lloyds bankers earn more
than the £3.4m per year paid to chief
executive Eric Daniels, it was revealed
yesterday by the bank.
The development comes after the
chair of the Commons Treasury Select
Committee, Andrew Tyrie, demanded
more transparency over bank pay.
Tyrie made his call in a letter to the
chief executive of the Financial
Services Authority Hector Sants, urg-
GSK SETTLES AVANDIA LAWSUIT
Drug maker GlaxoSmithKline has
agreed to settle a US lawsuit over its
disputed diabetes drug Avandia on
the eve of the case going to court. The
company said it had resolved the suit
brought in Philadelphia by the family
of Avandia-user James Burford, who
died in 2006. Glaxo declined to give
details of the settlement.
USA TODAY HAILS IPAD TO FIGHT DROP
America's biggest newspaper pub-
lisher hailed the iPad as a 'real posi-
tive' for its flagship newspaper, USA
Today, as it fights to counter a drop
in the paper's circulation. Publishing
group Gannett, which is also the
largest owner of local newspapers in
the US, has radically restructured
USA Today as it cuts costs and tries to
dedicate more resource to the pro-
duction and distribution of news
digitally.
CITYA.M. 1 FEBRUARY 2011
NEWS | IN BRIEF
WTO rules against Boeing
The World Trade Organisation yesterday
ruled that US aircraft manufacturer
Boeing benefited from illegal American
government subsidies, which distorted
market competition. The case against
Boeing was brought by the European
Union in a tit-for-tat dispute after the
United States challenged European
Union subsidies for Airbus. The ruling,
which is not going to be published for
several weeks, found Boeing’s much
delayed flagship 787 Dreamliner to have
benefited from the subsidies.
Android outstrips Nokia platform
Google’s Android smartphone operat-
ing system has overtaken Nokia to
become the most popular platform in
the final quarter of last year. Research
group Canalys found that shipments of
smartphones using Android, such as
the HTC Desire, outstripped those con-
taining Nokia’s Symbian platform.
Canalys estimated 33.3m Android
smartphones and 31m Nokia smart-
phones running Symbian were shipped
during the last three months of 2010,
up 30 per cent on the same period a
year earlier.
ing him to provide the pay details of
any bank executives earning more
than £1m at Britain’s six main banks.
The Commons committee’s influ-
ential chair also encouraged Sants to
aggregate the information provided
by each of the banks, rather than pro-
vide individual details in a move that
could help to address competition
concerns.
Tyrie also wants the number of
employees who receive more than
the highest paid board director to
be revealed.
EU TACKLES STOLEN CARBON CREDITS
About €7.5 million in carbon dioxide
emissions allowances stolen in a
hacking attack in Austria are being
returned to an Austrian national
emissions registry from foreign
accounts, the state prosecutor's office
said Monday. The imminent retrieval
of 488,141 emissions certificates from
Liechtenstein and Sweden comes as
leading energy traders Monday urged
registries to reopen quickly following
a series of thefts under the EU's
Emissions Trading System that have
led the EU to shut the spot market
until security is improved.
THE DOW’S ROCKIN’ NEW YEAR
Blue-chip stocks kicked off the new
year with their strongest January in
14 years, as a boom in corporate rev-
enues and robust economic readings
gave investors confidence that the US
economy has turned a corner.
CITYA.M. 1 FEBRUARY 2011 News 3

Broughton’s new company is

through to final Tote round
“Sports Investment Partners is very Sources close to the bidders say the

Sir Martin Broughton is in the running for the Tote
▲
LEISURE
BY DAVID HELLIER
A new sports investment group
formed by Sir Martin Broughton, the
former British Airways and Liverpool
Football Club chairman, has made it
through to the final round of bidding
to take over the Tote, the govern-
ment’s bookmaker.
Broughton’s son Michael, of Sports
Investment Partners said yesterday:
Picture: REUTERS
pleased to have been selected to go
through to the next round. We
believe our bid is closely aligned with
Racing’s interests.”
Also through to the final six is
BetFred, the Warrington-based book-
maker, and Gala Coral.
Definitely not in the running,
despite rumours of a late bid, is
William Hill, the giant bookmaking
group.
Tote is likely to attract a sale price of
around £200m, well below the asking
price of the previous government
which ended up being unable to com-
plete a sale.
Also thought to be in the final
round is Andy Stewart, formerly the
head of Cenkos, who has proposed a
stock market option for the Tote. A
decision is expected by mid to late
April.

Consolidation
hits Deutsche
Bank profits
▲

BANKING
BY RICHARD PARTINGTON
GERMAN lender Deutsche Bank has
revealed a fourth-quarter pre-tax profit
well below estimates as a result of
restructuring costs.
The bank reported pre-tax profits of
approximately €700m (£598.5m) for
the last three months of 2010, down on
its €756m posting for the same period
the year before.
Released in a surprise preliminary
statement last night, the bank also said
it was set to post a net income of just
€600m, less than half of the €1.3bn
recorded for the same period in 2009, a
figure influenced by a tax credit.
Analysts had anticipated a 70 per
cent increase to approximately €1.3bn
in pre-tax profits and around €889m in
net income for the bank.
However, Deutsche Bank said it had
recorded total net revenues of approxi-
mately €7.4bn, up from €5.5bn record-
ed for the same period in 2009.
Germany’s biggest lender said the
acquisition of Deutsche Postbank had
hit profits, as it worked to realign its
business.
Deutsche Bank secured a 21.48 per
cent stake in the Bonn-based lender in
November, adding to its existing 30 per
cent holding at a combined cost of
€6.3bn.
The bank said it had “accelerated
investments made to realign the bank”
through the consolidation of Postbank
and its wealth manager Sal.
Oppenheim.
Chief executive Josef Ackermann
had set an ambitious target of €10bn in
pre-tax profits for this year and may
have viewed accelerated consolidation
of the bank’s acquisitions over the final
period of last year as a means to max-
imise profits in 2011.
Ackermann told German magazine
Focus that he would not extend his
contract beyond 2013, when he turns
65.
In an issue published yesterday, he
said: “Prolonging one’s term indefinite-
ly until one falls off the chair is not a
solution.”
Deutsche Bank is due to publish its
full fourth-quarter results on Thursday
this week.

Sanofi-Aventis Chrysler on the

deal progresses road to profit
▲

PHARMACEUTICAL
FRENCH pharmaceutical firm Sanofi
Aventis has moved closer to a deal
with US biotech company Genzyme
in a proposed $18.5bn (£11.5bn)
takeover.
The US company has signed a non-
disclosure agreement with the Paris-
based firm, as the two discuss the
details of a deal.
Genzyme said in a regulatory
statement filed with the US
Securities and Exchange
Commission: “The discussions are
continuing, and Genzyme will be
sharing certain non-public informa-
tion with Sanofi Aventis.”
MANUFACTURING
US CARMAKER Chrysler took a step
closer to profit in its fourth quarter
results, despite losses of $199m (£125m).
The firm narrowed its losses from
October through December last year
from the $2.7bn deficit it recorded for
the same period of 2009.
Chrysler, which is controlled by
Italian carmaker Fiat, also predicted it
would return to profits of between
$200m and $500m this year.
The US and Canadian governments
propped up the firm during the finan-
cial crisis and could sell a 10 per cent
stake in the company this year in an
initial public offering.
 4 News

UK subprime mortgages
vulnerable to shocks

▲
PROPERTY
REPOSSESSIONS could begin to grow
again in the UK due to a stubborn
core of subprime mortgage-holders
who are still falling behind on their
payments, according to research by
Standard and Poor’s.
Despite an overall improvement
among subprime mortgage-holders,
TRADE IN... those with the lowest credit ratings,
accounting for around £7bn’s worth
of mortgages overall, show little
progress.
“The proportion of borrowers in
severe arrears remains stubbornly
high,” say the report’s authors,
Andrew South and Mark Boyce.
“Nearly 60 per cent of those in
severe arrears in September 2009
were in the same position a year
later,” they say, showing that those
at the very bottom of the property
ladder are struggling to get back on
track after the financial crisis.
They predict that with austerity
cuts, unemployment growth and the
possibility of interest rate rises at the
end of this year, the UK could see a ...MORE CORNERS...
rise in repossessions.
“An economic shock to borrowers
in severe arrears could result in a
spike in new repossession cases,”
said the report.

Ex-Citi man in NEWS | IN BRIEF

ProLogis and AMB agree tie-up
AMB Property struck a deal to buy rival
ProLogis for $8.7bn (£5.4bn) in stock,

insider probe combining the two largest US owners of

warehouse and distribution centres in
one of the biggest real-estate transac-
tions since the financial crisis. The
agreement comes as ProLogis, the larg-
er company, has struggled with debt.
While both companies operate in the US,
December, which charges a technolo- the deal will give AMB, which also oper-
▲

REGULATION
BY ALISON LOCK
A FORMER Citigroup hedge fund
manager was the latest figure to be
identified as a co-conspirator in the
US authorities’ probe into insider
trading yesterday.
Samir Barai, a Citi managing direc-
tor who founded Barai Capital
Management in 2008, was the fund
manager referred to in court papers
who allegedly took inside informa-
tion on technology stocks from 2006
gy consultant, Winifred Jiau, with
insider trading.
Jiau was charged with sharing pri-
vate information about companies
including Marvell and Nvidia in a
number of telephone conversations
with a hedge fund manager.
In two such calls made in May
2008, Jiau told hedge fund portfolio
managers confidential information
about Marvell’s quarterly revenues,
margins and earnings per share,
before the public announcement.
ates in China and Brazil, a large presence
in the UK and Eastern Europe.
Travelex wins Japanese deal
Travelex Global Business Payments, the
Coalition minister David Gauke wants to clamp down on tax evaders Picture: PA cross-border payment services provider,
has commenced international payments
services for Rakuten Bank, part of the
Tax fines to rise sharply Rakuten Group and one of Japan’s lead-
ing e-commerce companies, through its
GEO international payments platform.
Travelex GEO offers customers, like
Rakuten Bank, access to an international
TAX
▲

to 2008, a Wall St Journal report said.
Barai’s involvement is the first time
a hedge fund manager has been
implicated in the case, which is inves-
tigating whether technology firm
employees passed information to
funds. A number of employees have
been arrested and charged but no
hedge funds had been implicated
until now.
Barai has not yet been charged
with any wrongdoing.
Barai’s involvement centres on a
complaint filed by the US Attorney in
But the recordings of those conver-
sations were seized by US law
enforcers after a raid on Barai’s
offices, reports said.
The complaint alleges that Barai’s
firm made profits of more than
$820,000 (£517,000) from the tips. Jiau
received more than $200,000 from
the funds as a consultant with an
“expert networking firm,” Primary
Global Research.
Eight employees of the networking
firm have now been arrested in the
probe.
BY ALISON LOCK
OFFSHORE tax evaders will see the
penalties they face double under new
rules announced by HM Revenue &
Customs.
HMRC’s decision to raise the penal-
ty from 100 to 200 per cent of the
amount evaded from 6 April this year
is designed to push offshore money
into more transparent and coopera-
tive jurisdictions.
The penalty for under-reporting
income or capital gains tax by mov-
ing money to places that share infor-
mation with the UK only on request
has also gone up from 100 to 150 per
cent.  “The game is up for those going
offshore to evade tax,” said David
Gauke, exchequer secretary to the
Treasury. “With the risk of a penalty
worth up to 200 per cent of the tax
evaded, they have a great incentive to
get their tax affairs in order.”
Barbados, Monaco and Mauritius
are among the jurisdictions hit with
the biggest increase in fine.
payment capability which allows pay-
ment in 67 currencies via an online plat-
form.
INEOS reveals $1bn China deal
Chemicals firm INEOS yesterday
unveiled the details of its plan to offload
a 50 per cent stake in its oil refineries to
PetroChina. The deal, announced during
the Chinese vice premier Li Ke Qiang’s
visit to the UK in January, will see
PetroChina pay $1bn for the stake. The
joint venture is due to begin in the sec-
ond quarter of 2011.

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GREENCORE successfully postponed
Northern Foods’ shareholder meet-
ing yesterday, giving it more time to
put together an improved offer to
rival Boparan’s £342m takeover.
Northern Foods and Greencore,
which agreed to merge in November
before Boparan intervened, held
meetings with the Takeover Panel
over the weekend to decide whether
to cancel their planned votes on the
all-but-defunct merger deal.
Northern had hoped to hold its
EGM to allow its shareholders to deci-
sively reject Greencore as a partner,
leaving it clear to press on with
Boparan’s plan.
The shareholder votes were
der M&A rules. If you want to deal
Meanwhile, Greencore’s annual
general meeting went ahead yester- on the world stage,
day without a vote on the tie-in. Barclays Stockbrokers
Greencore’s management said it
was continuing to examine its International Trader
options to improve upon Boparan’s
all-cash bid, which is thought to will take you
include adding a cash sweetener to further.
its earlier no-premium merger pack-
age.
Greencore chairman Ned Sullivan
told investors in Dublin that the firm
managed to increase revenues from
convenience foods by 7.6 per cent
compared to last year in the three
months leading up to Christmas, and Barclays Bank Trust Company Limited, Registered No. 920880. Registered
VAT No. 243 8522 62. All companies are registered in England and the
that it is on track for a strong per- registered address is: 1 Churchill Place, London E14 5HP. All companies are
formance in 2011. authorised and regulated by the Financial Services Authority.
CITYA.M. 1 FEBRUARY 2011
Exxon posts a
surprise 53pc
rise in profits
▲
ENERGY
BY HARRY BANKS
EXXON Mobil reported a better-than-
expected 53 per cent increase in quar-
terly profit yesterday, helped by a lower
tax rate and a surge in natural gas pro-
duction in the US and Qatar.
The oil company’s results and the
spike in crude oil price past $100 a bar-
rel helped push Exxon shares to their
highest in two years in US trading, in
turn propelling the Dow index up.
Exxon, based in Texas, reported a
fourth-quarter profit of $9.25bn
(£5.78bn), or $1.85 per share, compared
with $6.05bn or $1.27 per share in the
same quarter a year earlier.
Oil demand rose last year and the US
government expects another 1.5 per
cent gain this year.
“The global economy appears to be
stabilising with signs of modest
growth in the United States and
Europe and continued strong growth
in the developing world, mainly in the
Asia-Pacific and Latin America
regions,” David Rosenthal, Exxon’s
head of investor relations, told analysts
on a conference call.
Exxon’s exploration and production
results were also lifted by higher oil
prices, which climbed 12 per cent from
a year earlier to average around $85 per
barrel in the fourth quarter.
Exxon said its fourth-quarter tax rate
was about 43 per cent, down from 45
per cent in the third quarter due to
changes in where taxes were collected
and on what products, the company
said on its earnings call.
Exxon also saw higher profits in its
chemicals and refining units.
ANALYSIS l Exxon Mobil
78 $ 80.46
31 Jan
76
72
68
1 Nov 19 Nov 9 Dec 31 Dec 21 Jan
TNK-BP chief executive Mikhail Fridman may block $1.8bn in interim dividend Picture: GETTY
TIME LINE | BP IN RUSSIA
1997: BP pays $571m (£357m) to
acquire a 10 per cent stake in
SIDANKO, Russia's fifth largest oil
company at the time.
2003: BP establishes its Russian joint-
venture, TNK-BP, the largest foreign
investment in Russia, after a merger
between TNK, SIDANKO and Onako
and most of BP's Russian oil assets.
March 2008: Russian police raid the
offices of BP and TNK-BP in Moscow
and question managers. Officials say
they were investigating a $40m tax
evasion involving SIDANKO.
July 2008: TNK-BP’s Russian share-
holders AAR threaten BP with legal
action over director powers.
July 2008: Russian authorities say
TNK-BP boss Bob Dudley can no longer
stay in the country on his temporary
visa. Dudley leaves a month later, blam-
ing a campaign of harassment.
January 2009: BP relinquishes TNK-
BP board authority to the AAR group
January 2011: BP announces $16bn
share swap with Russia’s state-owned
oil group Rosneft.
News 5
BP’s Russian
partners plot to
block dividends
ENERGY
▲
BP’s RUSSIAN partners are attempting
to derail the payment of the firm’s
final dividend payment of last year in
a row over exploration contracts.
AAR, a vehicle for the billionaires
who own half of Russian venture TNK-
BP, said at an extraordinary board
meeting yesterday that it plans to
block TNK-BP interim dividends
amounting to $1.8bn (£1.1bn), which
are due to be paid this month.
The issue threatens to undermine
BP’s full-year results, which are
announced this morning.
AAR called for the block after BP
signed a $16bn share swap deal and
exploration contract with Russian
state-owned oil firm Rosneft without
its participation in the project.
The TNK-BP board, led by chief exec-
utive Mikhail Fridman, will meet on 18
February to decide whether to with-
hold dividend payments.
Alfa Petroleum, a subsidiary of AAR,
will also today learn whether it has
been granted an injunction in the
London High Court to stop BP pro-
gressing further with the joint ven-
ture. A BP spokesman said: “The
normal time for discussing dividends
is at regular board meetings. In the
meantime, we’re trying to resolve this
matter, in as businesslike manner, as
soon as possible.”
 6 News CITYA.M. 1 FEBRUARY 2011

WHAT DO YOU THINK OF RYANAIR’S RESULTS? By Marion Dakers

DAVID BUIK | BGC CAPITAL GREG SMITH | FAT PROPHETS

“ I thought the results were good.

Ryanair is excellent at cutting costs when sales
are lower, and the fact that the firm has hedged
its fuel costs for the next year is pretty smart.
The company does what it does very well, and
under the circumstances of the snow and other
“ While some of the figures are disap-
pointing, the fact that the overall transaction
rates have gone up is an advantage for Ryanair.
The firm’s policy of ancilliary charges might not
be popular with everyone, but it’s a way of push-
ing up its profit per seat. It has also hedged near-

” ”
disruption the balance sheet looks fairly ly all of its fuel costs next year, avoiding
strong. what could have been a huge problem.

GERT ZONNEVELD | PANMURE GORDON

“ Solid third-quarter numbers. Next year will provide some challenges as economic conditions remain uncertain.

”
Over the medium term, the capacity growth deceleration [and eventual standstill] should translate into attractive and sus-
tainable profit growth. Cash generation should be strong, possibly around €1bn [£854m) per annum once aircraft
deliveries come to an end, making further returns of capital likely in the coming years.

Ryanair chief executive Michael O’Leary saw the snow hit turnover

Ryanair posts
quarterly loss
due to snow
called the rules requiring airlines to
▲

TRANSPORT
BY MARION DAKERS
RYANAIR blamed its €10m (£8.5m)
quarterly loss yesterday on strikes, fuel
costs and disruption caused by the
weather yesterday, and pledged to take
its fight against flight compensation
rules to the European courts.
The budget airline said it still
expects to make a net profit for the
year to March towards the top of its
€380m (£325m) to €400m target.
Ryanair said it grew total revenue by
22 per cent to €746m during the quar-
ter benefiting from a six per cent
increase in passenger numbers to 17m
and a 13 per cent rise in revenue per
passenger.
The company said it had been on
track to break even during the quarter
before the snow knocked out many
services for close to a week.
Ryanair did not reveal how much
damage the snow has done to its bot-
tom line, but said it will contest
European rules on compensation in
the courts.
The Irish carrier has previously
provide food and accommodation for
passengers waiting for delayed flights
as “absurd and discriminatory”.
The firm’s fuel bill soared 37 per
cent to €283.7m as the price of oil con-
tinued to climb, though it has insulat-
ed itself against further rises by
hedging 90 per cent of its fuel needs
for 2011 at $750 per tonne.
“Ourselves and easyJet are the only
two carriers of any size and shape
growing this year and next year. The
flag carriers have stopped growing
and are continuing to retreat,” said
finance director Howard Millar.
ANALYSIS l Ryanair
4.1 € 3.64
31 Jan
3.9
3.7
3.5
1 Nov 19 Nov 9 Dec 31 Dec 21 Jan

RYANAIR VS COMPENSATION LAW

Q. WHAT RULES ARE RYANAIR

CHALLENGING?
A. Passengers flying within or into
the European Economic Area
can claim compensation if their
flights are cancelled, and are also
entitled to meals, two telephone calls
and accommodation while awaiting
a later flight. The rights also apply if
a long-haul flight is delayed by more
than four hours, or less for shorter
journeys, under the EU regulation
261/2004.
with the airline,
which Ryanair argues
Q&A
is unfair since the air-
port has more control over whether
flights are delayed or cancelled.
Q. CAN RYANAIR SUCCEED IN
CHALLENGING THIS LAW?
A. EU-261 has been in force for
seven years without any success-
ful legal challenges, so it’s unlikely
that Ryanair can persuade the EU to
rip up the entire rulebook. In 2005,
the European Court of Justice threw

Q. WHY DOES RYANAIR OBJECT TO

THESE RULES?
out a case brought by a group of low
cost airlines including Ryanair that

A. The regulation places the cost or

caring for stranded passengers
claimed the rules discriminated
against budget carriers.
 Why Risk BA?
easyJet has over 7 million seats
still available this spring, including
half term, Easter and Royal occasions

Half term

Easter Royal Wedding Bank holidays

Worried about more possible BA strikes upsetting your

travel plans this spring? We’ve over 100 destinations,
friendly crew and flight times to suit you. So why not
fly with easyJet, the favourite UK airline.

Why risk BA? Make a date with us.

Over 7 million UK departing seats correct as at 31 January 2011. Available to book now for travel between 1 February and 31 May 2011. Favourite UK airline claim based on total number of
passengers flown by a UK registered airline as published in latest financial reports as at 31 January 2011.
 8 News
Towergate in £200m injection
INSURANCE
▲
BY STEVE DINNEEN
ADVENT International has agreed
to invest £200m in insurance inter-
mediary Towergate Partnership.
Advent, a global private equity firm,
will acquire separate shareholdings
in both Towergate and Cullum
Capital Ventures as part of the deal.
The deal, conditional upon
Towergate raising new debt facili-
ties through the bank and bond
markets, is expected to be complet-
ed in mid-February.
Towergate says refinancing of its
existing debt facilities will reduce
its total borrowings and “establish a
Introduction
to Bribery
laws delayed
LEGAL SERVICES
▲
BY ELIZABETH FOURNIER
GOVERNMENT guidance on the
Bribery Act will not be released this
week as expected, pushing back imple-
mentation until at least May.
A Ministry of Justice spokesman told
City A.M. that the guidance had been
delayed to allow “more time ... to make
sure the Act is fit for purpose and as
comprehensive as possible,” directly
addressing accusations levelled at the
law earlier yesterday by incoming
director-general of the CBI, John
Cridland. “The regulation is not fit for
purpose,” said Cridland, speaking on
Radio 4’s Today programme. “None of
the definitions have been properly
defined.”
Once the government’s revised
guidance is released there will be a
three-month gap before the legislation
comes in, pushing implementation
beyond the planned April deadline.
long-term capital structure on more
favourable terms”. Towergate will
also use the cash to pursue its
acquisition-led growth strategy.
Towergate is the largest inde-
pendent insurance intermediary in
Europe, generating more than £2bn
of gross written premiums a year.
Andy Homer, chief executive of
Towergate, said: “This transaction
Towergate chief exec
Andy Homer says the
transaction follows a
strong year for the
insurance intermediary
Business groups have been lobbying
hard for the government to review the
Act, with concerns raised over how cor-
porate gifts will be treated under the
rules.
Hospitality has been a particular
sticking point for City firms, which
want detailed guidance on exactly
what will be acceptable to offer to
clients. Concern is likely to gain
momentum as summer sports timeta-
bles get underway, with corporate
packages to the London Olympics in
2012 high on the list of gifts that com-
panies are keen to get clarity on.
But despite the temporary reprieve
offered by the delay advisers are warn-
ing that businesses should still be
preparing now for the Act.
“Companies are ill-advised to delay
their preparations,” said
PricewaterhouseCoopers partner
Andrew Gordon. “Putting adequate
procedures in place takes longer than
companies realise.”
follows a strong year for Towergate
despite the ongoing tough economic
conditions. We will continue to
invest across our business and main-
tain a strong focus on acquisitions, a
strategy which has delivered signifi-
cant value over the last decade.”
Peter Cullum, chairman and
founder of Towergate, said: “This
marks an important milestone for
Towergate and I am delighted to be
working alongside Advent as our
new private equity partner.
“Advent’s investment provides
real firepower as the group
reignites its acquisition programme
as part of our ambitious growth
strategy.”
Ian Cheshire to join the
DWP board as non-exec
▲
PROFILE
BY STEVE DINNEEN
IAN Cheshire has been appointed as
the lead non-executive member on
the Department for Work and
Pensions (DWP) board.
The outspoken Kingfisher chief
executive is no stranger to politics.
He threw his weight behind a
high profile campaign by the Tories
to reverse a hike in National
Insurance, proposed by Labour
before their election defeat.
His role in govern-
ment will involve
working with the
executive board
on issues includ-
ing performance
indica-
tors, the
d e ve l -
IAN CHESHIRE
ANDRES SIBBALD
LEXICON
ANDREW Sibbald was the lead banker
on the Towergate transaction.
Sibbald is senior partner at Lexicon
Partners, a corporate finance adviso-
ry business that he founded with oth-
ers in 2000.
Lexicon Partners focuses on pro-
viding M&A, capital markets and
strategic financial advice to compa-
nies in the financial services, utilities,
infrastructure and energy sectors.
Since establishment, Lexicon has
advised on over 225 transactions
from its offices in London, New York
opment of business plans and the
recruiting and appraisal of senior
executives.
However, it is understood he does
not have the authority to directly
instruct civil servants – a power that
is seen by analysts as crucial in driv-
ing through change within govern-
ment.
The role offers a salary of £20,000
a year but Cheshire has waived his
entitlement to these payments.
He has guided B&Q owner
Kingfisher through a difficult peri-
od on the high street.
Last week he announced he will
also join Whitbread as a non-execu-
tive director to replace Philip
Clarke, who will step down when he
replaces Terry Leahy as Tesco boss in
March.
Cheshire has also worked at Sears
and Guinness and he was a non-
executive director of Bradford &
Bingley from 2003 to 2008.
His appointment to the DWP
board is part of a wider scheme to
hire non-execs to each government
department, with the aim of
improving governance across
Whitehall and overhauling depart-
mental boards.
CITYA.M. 1 FEBRUARY 2011
and Hong Kong.
Lexicon deals in just the last four
months have included advising
Lloyd's insurer Brit Insurance on the
£900m recommended offer by
Apollo and CVC; fund manager
Borealis Infrastructure with the
Teachers' Pension Plan on their
£2.1bn acquisition of the Channel
Tunnel Rail Link from the UK
Government; US utility Nstar on its
$6.9bn merger with Northeast
Utilities and Russian oil firm TNK-BP
on its $1.8bn takeover of certain of
BP's Vietnamese and Venezuelan
operations.
Also on the advisory team for
Lexicon was Nick Chapman, a part-
ner at Lexicon.
DLA was also listed as advisers on
the £200m investment by Advent
International in Towergate
Partnership.
MPs line up to
support fiscal
education for all
FINANCIAL
LITERACY CAMPAIGN
BY ELIZABETH FOURNIER
MORE than 140 MPs signed up to the
first all-party political group (APPG) in
support of compulsory financial edu-
cation in schools yesterday, with
members hoping to push the group’s
agenda to the forefront of curriculum
reform.
The APPG was launched by MP
Justin Tomlinson with the Personal
Finance Education Group (PFeg), and
Martin Lewis, founder of mon-
eysavingexpert.com.
PFeg chief executive Wendy Van
Den Hende said that progress on a
government financial literacy pro-
gramme had been “painfully slow”,
and called on MPs to use their influ-
ence across all political parties to
“campaign and be champions for the
cause”. Martin Lewis said the best way
to tackle the UK’s financial illiteracy
was to start from a young age with
personal finance taught in schools.
“It’s the cheapest way you’ll ever get
it done,” he said. “Far cheaper than
more financial regulation.” The APPG
will hold its annual meeting on 4
February, and is planning a series of
workshops to develop its aims further.
 The Capitalist
10 CITYA.M. 1 FEBRUARY 2011
EDITED BY
JULIET SAMUEL
GOT A STORY? EMAIL
thecapitalist@cityam.com

FROM CITY Can the

HIRING TO
RURAL PIG
FARMING
WITH the CBI issuing an invocation to the
government to sow the green shoots of
new growth in the economy, some City
folk are taking the order rather literally.
Mike Ogilvie, managing director of City
executive search firm Ogilvie Search, will
be pulling on a pair of wellies along with
his wife to take part in a new BBC series
airing tonight called “It’s a Farmer’s Life
for Me”.
The series combines reality TV with pig
farming – surely a far cry from finding
top-class bankers for clients, whatever
colourful metaphors Vince Cable might
dream up.
The programme takes eight couples
from urban jungles and throws them into
rural Suffolk to be coached by self-made
pig farmer Jimmy Doherty, who will
The BBC farming reality show is fronted by pig farmer Jimmy Doherty (left)
decide who has to leave the show each
week. Think of it as a kind of outdoors Big
Brother. With pigs.
The winning couple will have to con-
vince Doherty that they can use their cho-
sen plot of land to turn a profit, a task that
even the contents of Ogilvie’s extensive
Common
Agricultural
Policy save
City slicker
Mike Ogilvie
in his bid to
become a
farmer?
Picture: BBC
contacts book might find a challenge.
BETTING ON A FLUTTER
Ever searched in vain for a way from mak-
ing back some of your losses at the races?
Kempton Park races is now offering any
punter their money back – if they can
show that the day doesn’t set their heart
racing.
Race-goers interested in taking part get
to have their skin conductance (ie, sweati-
ness) and heart rate monitored to check
whether they’re sweating or have been set
a’flutter, with those showing little-to-no
change getting a full ticket refund.
The organisers are banking on the fact
that watching horses churn up turf auto-
matically gets us hot and bothered: they’ve
even done research to measure how many
beats per minute racing adds to your
pulse: supposedly, it ups it by eight per
minute. Formula One comes a close sec-
ond at 77.6. Which means that watching
sport is almost like going for a run, right?
AIR NANNIES
You might think the City throws a fair
number of odd characters your way, from
the pedantic fund managers to the hyper-
active traders, but according to a Virgin
Atlantic survey of 3,000 of its cabin crew,
nothing beats being an air steward.
The airline has just released the top
seven weirdest requests stewards have
encountered on their rounds. In at sev-
enth, the nervous fantasists: “Can the cap-
tain please stop the turbulence?”
Others include queries as to whether
there’s a McDonald’s on board, requests to
turn the noisy engine volume down a bit
and a demand for help finding a passen-
ger’s glass eye (a bit beyond the call of
duty).
But the top spots are reserved for the
truly odd, including, “Can you take my
children to the playroom?” (what is this? A
Victorian dollhouse?) and “Can I have a
cup of tea and book a massage for my
Barbie doll?” Of course, if it’s first class, the

@
cent to an average of 79.7 beats per answer is surely “yes”.

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CITYA.M. 1 FEBRUARY 2011
Plan to extend
Greek debts
gathers pace
▲
EUROZONE CRISIS
BY HARRY BANKS
SUPPORT is growing in the Eurozone
for the idea of giving Greece more
time to pay back its EU bailout in an
effort to avoid a default, although
details still have to be pinned down.
Greek finance minister George
Papaconstantinou said yesterday that
there was no official proposal on the
table, but added:
“It is clear, however, that there are
thoughts on how to improve the debt
sustainability of countries like Greece
with a longer repayment period.”
His comments come hot on the
heels of similar sentiments from
German finance minister Wolfgang
Schaeuble, whose country is pivotal
to any solution as Europe’s strongest
economy.
“Most market participants expect
this problem to be tackled in a
responsible way,” Schauble said when
asked whether Athens would be
forced to restructure its debt.
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German central bank chief Axel
Weber, frontrunner to be the next
president of the European Central
Bank, has suggested transforming
international rescue loans to Greece
and Ireland into 30-year loans in a bid
to draw a line under the euro area’s
debt crisis.
Weber floated his idea in closed-
door talks with finance ministers, cen-
tral bankers and private bankers at
the World Economic Forum in Davos.
The plan resembles the so-called
Brady bonds, which rescued Latin
America from bankruptcy in the
1980s.
A German source said Berlin has
long been open to the idea of looking
at Greece’s repayment schedule “with
a view to stretching it”, but would not
comment on the specifics of the plan.
The source said the negotiation
involved more than just Greece and
Ireland, which received bailouts last
year, and would have to take into
account Portugal, seen as next in the
firing line.
HERE COMES THE SUMMER
News 11
European
financial stocks
rise in January
FINANCIAL MARKETS
▲
FINANCIAL stocks across Europe
staged a remarkable rebound in
January as the Eurozone stabilised.
Progress on sovereign debt issues
and the success of the €5bn (£4.3bn)
European Financial Stability Fund
bond issue last week proved a power-
ful driver for financial stock indices,
Greek finance minister George Papaconstantinou yesterday floated the idea of a longer which outperformed all other sectors.
repayment schedule for the country’s debt Picture: REUTERS The FTSE Eurofirst insurance index
gained 9.53 per cent and its bank
index was up 7.6 per cent, while its
THE EUROZONE’S SOVEREIGN DEBT CRISIS financial services index also added
6.74 per cent. Europe platform’s
ANALYSIS l 2011 share of Eurozone ANALYSIS l 10yr government bond insurance index gained 9.4 per cent
spread over bunds -bps
gross government debt Greece and its bank index climbed 8.3 per
4% 1,000
Spain cent in January – their best perform-
1.8% Ireland ances since at least 1998.
1.7% Portugal The gains beat January’s overall
9% 800 trend. The FTSE Eurofirst climbed just
0.81 per cent as key sectors such as
food and beverages posted declines of
600 up to 6.96 per cent, and the Stoxx
23% Europe 600 gained just 1.2 per cent.
“The financials have followed the
61%
400 sovereign debt markets much more
closely than others in the corporate
space,” said Evolution Securities ana-
200 lyst Elisabeth Afseth. “The perceived
stability has allowed them to perform.”
Other Europe Greece But fund managers said stocks
Italy Portugal
0 could still fall as investors digested
Spain Ireland S N J M M J S N J more regulation or stress tests. “It’s
2009 2010 2011 going to be a volatile year,” one said.
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 12 Focus on Egypt
UK firms hit
as tensions in
Egypt mount
MARKETS
▲
BY STEVE DINNEEN
THE FTSE 100 closed down 0.2 per cent
yesterday at 5,862.94 after a day of jit-
ters fuelled by the escalating tensions
in Egypt.
The death toll reached over 100 as
violent clashes in Egypt continued
into their seventh day, with protesters
calling for President Mubarak to stand
down.
Travel firms were hit hardest, with
their share prices dented across
Europe. Thomas Cook sank almost
three per cent to 190.6p, despite
attempting to calm the market by say-
ing it would continue to fly holiday-
makers to the Red Sea, Egypt’s hottest
tourist destination. It cancelled stays
in Cairo for holidaymakers booked on
round trips of Egypt.
The newly merged British
Airways/Iberia airline holding compa-
ny, International Consolidated Airlines
Group suffered, with its shares sliding
almost 1.8 per cent. TUI Travel was also
hit hard, dropping 2.62 per cent and
Intercontinental Hotels fell by one per
cent. Both TUI and Thomas Cook can-
celled UK flights to the Egyptian city of
Luxor after government warnings
against inessential travel to Cairo,
Alexandria, Luxor and Suez.
Foreign secretary William Hague
has not followed the lead of countries
ANALYSIS l International Consolidated Airlines
p p
300
256.40
31 Jan
280
260
8 Nov 22 Nov 6 Dec
CITYA.M. 1 FEBRUARY 2011
including the US, Turkey, Saudi Arabia
and Canada in evacuating citizens and
says travel to the Red Sea area remains
safe. British Airways said it sent an
extra plane to evacuate tourists yester-
day and a BMI flight to Cairo carrying
64 passengers and six crew returned to
London after turning back in mid-
flight, a spokesman for the Lufthansa-
owned carrier said. The firms will be
counting on tourism bouncing back
strongly after the troubles recede.
When gunmen killed 58 tourists
and four Egyptians at an ancient tem-
ple in Luxor in 1997, tourism slumped
but picked up fairly quickly and since
then has weathered disruptions rela-
tively well. The resumption of normal
tourism is vital for Egypt, with the sec-
tor accounting for more than 11 per
cent of GDP and employing one in
eight people.
Egypt’s stock market will remain
closed today – the third straight day
without trading. It shut last week after
recording a 16 per cent fall in just two
days.
FAST FACTS | EGYPT
● Tourism accounts for 11 per cent of Egyptian
GDP and employs around one in eight people.
● The Egyptian stock exchange will remain
closed today for the third straight day after los-
ing 16 per cent in two days last week.
ANALYSIS l Thomas Cook Group ANALYSIS l TUI Travel
190.60 253.00
31 Jan 280 p 31 Jan
205
260
195 240
185 220
20 Dec 10 Jan 1 Nov 19 Nov 9 Dec 31 Dec 21 Jan 1 Nov 19 Nov 9 Dec 31 Dec 21 Jan
CITYA.M. 1 FEBRUARY 2011 Focus on Egypt 13

WHAT HAPPENS
AFTER MUBARAK? Q&A Moody’s cuts rating
Q. ISGOODOVERTHROWING
by a notch as fears
MUBARAK A
THING?
A. While the democratic leadership called for by
international leaders including David
Cameron and Barack Obama seems likely, the

over economy grow

overthrowing of Mubarak is not that simple. As
history has proved, an orderly transition is often
difficult to achieve and the next Egyptian govern-
ment could view the West with animosity – a real
issue given its position as a major oil transporter.

Q. WHO ARE THE OPPOSITION PARTIES AND

WHAT DO THEY THINK OF THE WEST? level of budgetary expenditure on wages

A. The main opposition party is called the
Muslim Brotherhood. It has long opposed
Mubarak and, despite its militant beginnings in
the 1920s, is a staunch advocate of peaceful, demo-
cratic protest. However, the Brotherhood’s succes-
sion of Mubarak is not necessarily in the best
interests of the West. Its foreign policy is likely to
be antagonistic, especially with the US, which is
unpopular among young Egyptians.
▲
FINANCIAL SERVICES
MOODY’S Investors Service cut its rating
on Egypt’s sovereign debt yesterday, say-
ing the government might damage its
already weak finances by increasing
social spending to calm mass protests.
It announced a one-notch down-
grade, to Ba2 with a negative outlook
from Ba1.
The news follows a similar move by
and subsidies.”
Egypt’s budget deficit in the fiscal
year to June 2010 was 8.1 per cent of
gross domestic product (GDP). It aims to
keep the deficit at 7.9 per cent of GDP
this fiscal year, falling to between three
and 3.5 per cent in 2014/15.
There is rising unease among rating
agencies at the impact of political ten-
sions across swathes of North Africa.

Q. DOES ANYBODY ELSE HAVE A CHANCE OF

SUCCEEDING MUBARAK?
Fitch Ratings, which cut the outlook on
Egypt’s BB+ country ceiling to negative,
Standard and Poor’s says political and
fiscal uncertainty is weighing on the sov-

A. The next government is far from decided, but

the dice are heavily loaded in the
Brotherhood’s favour. Mubarak tolerated the
group because of its religious affiliations while
stamping out more radical groups, meaning there
is little other organised opposition. However, the
group has often co-operated with other fringe
groups, such as those fronted by Nobel peace prize
winner Mohamed ElBaradei (below).
saying the political turmoil would likely
undermine the country’s economic
reform programme.
A Moody’s spokesman said: “There is a
strong possibility that fiscal policy will
be loosened as part of the government’s
efforts to contain discontent.
“A background of rising inflationary
pressures further complicates fiscal poli-
cy by threatening to increase the high
ereign ratings of several Middle Eastern
and North African countries, with
Algeria and Jordan most vulnerable to
unrest similar to the protests in Tunisia
and Egypt.
Fitch says it will decide in three to six
months whether to cut its rating on
Tunisia, following weeks of unrest that
forced a change of government and hit
economic growth.

Q. WHO IS MOHAMED ELBARADEI AND WHAT

ROLE MIGHT HE PLAY?
A. He is a former director general of the
International Atomic Energy Agency
(IAEA), an inter-governmental organisa-
tion under the auspices of the United
Nations. He was given the Nobel peace
prize for helping ensure nuclear
power is not used for military pur-
poses. He is highly respected and
could help form a government of
Protests in Egypt continued yesterday as President national unity along with the
Mubarak continued to cling to power. The death Brotherhood. It is likely he
toll stands at over 100 people, with some foreign would be a moderate influence
citizens being airlifted out of the danger zones. in terms of foreign policy.

French banks have highest exposure

to turmoil, sparking worries over losses
▲

BANKING provisions...especially seeing as $10.7bn from the UK, $6.3bn from

FRANCE’S banks are more exposed
to Egypt than European and US
peers and may see losses on bad
loans rise as the country is plunged
into political crisis, analysts said
yesterday.
Protests against Egyptian
President Hosni Mubarak’s 30-year
rule have led to the closure of the
country’s banks and rattled
European financial markets.
“It is very possible that we will
see a rise in loan-loss
Egypt up until now had pretty
weak loan provision levels,” said a
Paris-based bank analyst.
French banks such as Societe
Generale and Credit Agricole pro-
vide over one third of all interna-
tional loans to Egypt, according to
the most reliable data on cross-bor-
der lending.
SocGen’s Egyptian subsidiary
has 140 branches accounting for
€148.6m (£127m) in pre-tax profit.
Overall, lending from French
banks totals $17.6bn, versus
Italy and $5.4bn from American
banks.
Also, UK bank Barclays added its
network of branches in Egypt
closed yesterday, following advice
from the Egyptian central bank in
the wake of ongoing political
unrest in the country.
Egypt has proven a fast-growing,
attractive banking market because
of its low loan penetration rate
and is Africa’s second-largest econ-
omy, according to Citigroup ana-
lysts.

Fear index shoots up 24 per cent as

investors rush for safe-haven assets
▲

MARKETS
HEIGHTENED instability in the
Middle East drove up the Chicago
Board Options Exchange (CBOE)
volatility index yesterday, as
investors scrambled for less risky
assets to ride out the turmoil.
As a result, stocks suffered their
biggest one-day loss in nearly six
months.
The Vix – often dubbed the fear
index or the fear gauge measure –
attempts to measure the volatility
of S&P 500 stocks over a 30-day
period. It settled up 24.1 per cent
at 20.04. The percentage gain was
the largest since 20 May last year.
US treasuries prices and the dol-
lar – assets considered safe com-
pared to stocks – rallied as a
result.
Thomas Nyheim, portfolio man-
ager for Christiana Bank & Trust
said: “The market hates uncertain-
ties, especially geopolitical ones,
and based on how that shapes up
throughout the weekend, next
week’s trading will be impacted”.
Crude futures rose 4.4 per cent
to $89.43 (£55.78) a barrel as the
protests in Egypt threatened
Middle East stability.
 14 Consumer News
Greene King buys Cloverleaf
LEISURE
▲
BY JOHN DUNNE
GREENE King has bought the pub
restaurant group Cloverleaf for £56m.
Chief executive Rooney Anand (pic-
tured) said the acquisition, combined
with a planned investment of around
£25m to open ten new Cloverleaf
premises within two years, would
utilise the remaining balance of its
rights issue proceeds.
The deal has added another 12
restaurants to Greene King’s existing
pub estate.
Carrefour in
share rise on
split rumours
RETAIL
▲
BY JOHN DUNNE
SHARES in Carrefour, the world’s sec-
ond-largest retailer, rose yesterday
after speculation that it is consider-
ing listing stakes in its real estate and
Dia discount businesses.
Shares in the French group surged
5.3 per cent to close at €35.78 follow-
ing suggestions that a provisional
agreement with key investors could
be reached at a board meeting on 2
March.
The split could boost the value of
the company, which has been hit
hard in the consumer downturn.
Carrefour declined to comment.
Europe’s biggest supermarket
chain might look to sell or spin off
assets in an attempt to revive its share
price after two profit warnings last
year, according to analysts.
Colony Capital and Groupe
Arnault, which hold 13.5 per cent of
Carrefour, are still down on their
2007 investment, which was made at
about €50 a share.
*"'-+ ,**+ #&'/
-,"'& "+ "%(*,".
It already has the Hungry Horse
carvery chain, as well as Loch
Fyne sea food restaurants,
Scottish business
Belhaven and the Old
English chain.
Cloverleaf was
founded in 2004 by for-
mer Whitbread execu-
tives Gary Douglas and
John Winder and oper-
ates across the north and
midlands.
Meanwhile Greene King
yesterday said that trading had
“Board members, advised by BNP
Paribas are working on a simultane-
ous spin-off of Dia (discount) and
Carrefour Property (real estate),
which would both be listed in Paris,”
a source told French newspaper Le
Figaro.
RBS analyst Justin Scarborugh said:
“There could be some value creation
(for shareholders from spinning off
the two businesses). But these rumors
have been around for some time, and
so it’s hard to know how much of this
is already in the price ... Plus, there
would be some earnings dilution.”
ANALYSIS l Carrefour
40 € permarché – with its counters of
35.78
31 Jan
36
32
1 Nov 19 Nov 9 Dec 29 Dec
CITYA.M. 1 FEBRUARY 2011
Waitrose hits £5bn sales
been solid despite sales being hit by
in record year at grocer
the weather.
Like-for-like sales rose
3.9 per cent, across its our industry.
▲
RETAIL
Greene King retail “Achieving this milestone is a trib-
estate in the 38 weeks WAITROSE has surpassed £5bn in ute to the hard work and dedication
to 23 January. Food sales for a year for the first time ever of the 44,000 partners who work at
sales rose 8.2 per cent. it said yesterday. Waitrose.”
“The short-term out- Total sales growth for the 12 The company passed the land-
look for the UK con- months starting 1 February 2010 mark on Saturday after seeing a 6.4
sumer is unclear, but now stands at almost ten per cent. per cent year-on-year increase in
we are confident we Waitrose managing director Mark sales during the previous seven days.
will... meet our expecta- Prices said yesterday: “Five billion is Waitrose increased its market share
tions for the financial a fitting finale to a year of growth by 0.3 per cent over the last year to
year”, Greene King said. and consistent outperformance of 4.4 per cent.
TOP SUPERMARKET CHAINS IN THE WORLD BY REVENUE 2009-10
Rank REVENUE MARKET CAP
1 Walmart $408bn (£255bn) $202bn (£126.8bn)
2 Carrefour €85.379bn (£73.2bn) €24bn (£20.5bn)
3 Tesco £62.5bn £32.3bn
French giant has started to lose edge
CARREFOUR’S executives certainly that something has gone wrong at ness could take better advantage of
need to do something to revive the the French supermarket in recent opportunities in emerging markets
retailer’s flagging fortunes. Anyone years. like Turkey, Brazil and Argentina.
who has holidayed in France regu- The numbers tell a similar story. Analysts at RBS reckon a sale of 49
larly over the last few years will have Carrefour posted revenue growth of per cent of Carrefour Property and
noticed that the supermarket giant 5.8 per cent last year, or 1.6 per cent Dia would raise €5bn (£4.29bn),
is losing its edge. It used to be that when you strip out fuel sales, com- while an IPO of 49 per cent of each
one of the pleasures of hopping pared to 7.6 per cent for Tesco. business would raise €7.8 a share.
across the channel was a trip to l’hy- The markets certainly think there That is certainly more attractive
is more value in the British leader. than management’s strategy of cut-
fresh cheeses and meats – which put Even though Tesco has lower annual ting costs while maintaining €1.5bn
most British supermarkets to sales (£62.5bn in 2009-10 compared of investment in Carrefour’s French
shame. That’s not true any more: to £73.2bn for Carrefour), it still has stores.
the best branches of Tesco and J a higher market capitalisation The sum of the parts is likely
Sainsbury can take on Carrefour any (£32.33bn against £20.5bn, and worth much more.
day. Of course, they aren’t strictly that’s with a weaker pound).
competing for the same customers A flotation or sale of around half
in their domestic markets, except in
Calais, perhaps. But it does show
of Carrefour’s discounter Dia is an
idea worth pursuing: a leaner busi-
BOTTOMLINE
18 Jan
Analysis by David Crow
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CITYA.M. 1 FEBRUARY 2011
All eyes on ECB as
Eurozone inflation
hits 27-month high
EUROZONE ECONOMY
▲
BY JULIAN HARRIS
THE euro jumped to a session high
against the dollar yesterday, after sur-
prisingly high inflation data increased
the risk of a hike in interest rates.
Consumer price inflation across the
Eurozone hit 2.4 per cent in January,
according to a “flash” estimate by
Eurostat, the EU’s statistics office.
Inflation in the single currency area
had exceeded the European Central
Bank’s (ECB) target of “just under two
per cent” in December, reaching 2.2
per cent.
January’s rate was the highest since
October 2008, when it was 3.2 per cent.
The euro rose around 20 basis
points versus the dollar to trade at
$1.3662, up around 0.3 per cent on the
day. While ECB president Jean-Claude
Trichet has said the Eurozone’s histor-
Treasury hits back
after attack on cuts
UK ECONOMY
▲
BY JULIAN HARRIS
DEFICIT cuts for this year are “too
tight” and will slow down growth
by over half a per cent, a leading
think tank said yesterday.
The claims, from the National
Institute of Economic and Social
Research (NIESR), provoked the
Treasury into response, with a
spokesperson insisting the cuts are
“a vital pre-condition to growth.”
And a separate study, released
today by the Centre for Policy
Studies, endorsed the fiscal austeri-
ty measures. Deficit cuts are “less
risky and definitely a great deal
more morally honest,” said author
Jon Moulton – chairman of Better
Capital.
House prices still falling
yet London defies trend
▲
HOUSING
HOUSE prices in England and
Wales fell for the fourth consecu-
tive month in December, yet in
London prices ticked up sharply,
official data showed yesterday.
Overall house prices dropped by
0.2 per cent compared to
November, yet in London month-
on-month prices were up by one
per cent, and 6.2 per cent higher
than in December 2009.
The average house price in
London now stands at £342,325,
the Land Registry said, compared to
ically low levels of rates are “appropri-
ate,” his comments this year have
widely been interpreted as more hawk-
ish than usual.
“We are permanently alert [about
the threat of inflation],” he said in
January. “We are never pre-committed
not to move interest rates.”
However, some economists say the
inflationary pressures are coming
mainly from higher commodity
prices, and are likely to be temporary.
“We suspect that January’s uptick in
inflation was mainly driven by higher
food price inflation,” said ING’s Martin
van Vliet. “Unless commodity prices
continue to surge, inflation is still set
to fall back again later this year.”
“Although we continue to expect
hawkish rhetoric from the ECB, they
are still unlikely to pull the trigger on
interest rates until the fourth quarter
of this year,” van Vliet added.
However, NIESR accused the
coalition government of slashing
spending for political, rather than
economic, reasons.
“Plans based on spending are not
necessarily more credible and
effective, but some politicians have
an appetite for a slimmer state,”
said acting director Ray Barrell.
And NIESR also criticised chan-
cellor George Osborne’s VAT hike,
describing the measure as infla-
tionary and likely to cause more
economic contraction than direct
taxes. However, reductions in the
deficit have to happen at some
point, NIESR admitted.
“Deficits transfer income from
our children to us -- a deficit reduc-
tion plan is essential, but you need
to keep an eye on the economy,”
an average of £163,814 across
England and Wales -- down 1.9 per
cent (£3,219) from a peak of
£167,033 in August.
In its most recent data on the
number of sales, the Land Registry
reported that 55,964 properties
were sold in October.
Today the Bank of England will
release figures on the number of
mortgage approvals made in
December – expected to slip to
45,000, which would be a 20-month
low. “Housing activity remains in
the doldrums,” said Howard Archer
of IHS Global Insight.
Economics 15
FED EASING SET TO CONTINUE: LOCKHART NEWS | IN BRIEF
Ireland slashes growth forecast
Ireland’s central bank yesterday more
than halved its growth forecast for 2011
following the austerity budget in
December. The central bank’s latest
quarterly economic forecast, published
yesterday, expects gross domestic prod-
uct to grow this year by one per cent,
compared with the 2.3 per cent predict-
ed in its October forecast.
Consumer spending up in the US
American consumer spending jumped
higher than expected in December, offi-
cial data showed yesterday. Spending
was up 0.7 per cent, while personal
income grew by 0.4 per cent. “This rep-
resents a very solid end to the year,”
commented Peter Newland of Barclays
Capital. With spending increasing at a
greater rate than income, the savings
rate fell by 0.2 per cent, to 5.3 per cent
of disposable income.
Shock drop for German retailing
German retail sales posted a surprise fall
in December. Economists had expected a
strong rise in retail sales of two per
cent, yet the federal statistics office
posted a fall of 0.3 per cent compared to
November. On an annual basis, sales
UNEMPLOYMENT in the US is “nowhere near acceptable levels,” a senior Federal Reserve declined by 1.3 per cent against expecta-
policy-maker said last night. “Accommodative Fed policy is still required,” said Dennis tions for a 1.1 per cent increase. For the
Lockhart CEO of the Federal Reserve Bank in Atlanta, suggesting that the Fed’s $600bn year as a whole, however, retail sales
(£375bn) asset-purchasing scheme (QE2) will continue, along with historically low inter- pushed up 1.2 per cent, their strongest
est rates. Joblessness in the US is currently at 9.4 per cent, despite the economic recovery. annual gain since 2005.
NIESR said, suggesting that the
recovery was too fragile for cuts to
begin.
While predicting that growth
will bounce back in the first quar-
ter of this year, the figure will be
“flattered” due to a rebound in
activity that was delayed by
December’s freezing weather con-
ditions, said NIESR economist
Simon Kirby.
Growth for 2011 will come in at
just 1.5 per cent, Kirby forecast.
Labour used the report to attack
chancellor George Osborne’s han-
dling of the economy. “This report
is yet another warning sign to a
Conservative chancellor who
seems to be in denial,” they said.
“He needs a plan B and he needs
one quick.”
Debt concerns
business heads
WORLD ECONOMY
▲
Over 60 per cent of business execu-
tives in the UK and the US believe
their governments’ debt is growing
at an unsustainable rate, a survey
revealed yesterday.
Respondents in the UK were
among the most pessimistic about
government debt, ranking along-
side troubled Eurozone economies
such as Ireland, Portugal and Spain.
“The debt that hangs over individ-
ual countries is casting a long shad-
ow in the minds of corporate
executives and investors,” said Marc
Harris of RBC Capital Markets,
which conducted the poll.
 16 News CITYA.M. 1 FEBRUARY 2011

Phone chip boost for Toshiba Strong US recovery helps

December, Toshiba reported a the start of the financial year, as
Honda get back on track
▲

COMPANIES
37.5bn (£286m) yen profit, com- profit margins improve after sag-
BY HARRY BANKS pared with 14.5bn yen a year ging in the third quarter,
JAPAN’S Toshiba more than doubled ago. In the quarter, elec- Fumio Muraoka, a senior But a convincing recovery in the US

its quarterly operating profit on
booming sales of NAND flash mem-
ory chips and robust demand for
LCD panels used in smartphones
and tablets.
But the sprawling conglomerate
cut its full year sales forecast and
left its operating profit outlook
unchanged for the year to March,
citing a strong yen and uncertain
demand for some of its other prod-
ucts, which include everything
from home appliances to nuclear
power plants.
For the three months to 31
▲
AUTOMOTIVE
tronic devices, including executive at Toshiba said car market – Honda’s biggest – is the
LCDs and flash memory, yesterday. HONDA MOTORS is on track for its main factor that has stoked optimism
generated 17.2bn yen in But the overall out- strongest earnings in three years after among investors, sending its shares
operating income after look is less certain, the raising its outlook above market up nearly a fifth over the past three
a loss 6.6bn yen a year company said in a expectations thanks to a recovery in months.
ago. statement, with the the US, where improving profitability Honda, which fell behind Nissan
Overall performance, market for system is countering a strong yen and sliding Motors to become Japan’s third-
however, was not as chips weak. Japanese sales. biggest automaker last year, raised its
strong as analysts had Toshiba chief executive Robust sales growth in emerging operating profit forecast for the year
expected with the profit Norio Sasaki (pictured), markets has helped global automak- to 31 March to 620bn yen (£4.7bn)
coming in lower than the aver- who took the helm 18 months ers weather a fall in mature markets from 500bn yen. A survey of 20 ana-
age forecast of 50.2bn yen. ago, has vowed to sharpen the focus such as Europe, and Honda has espe- lysts by forecasts profit of 594bn yen.
Toshiba’s full year profit on of the company and has taken a cially benefited from its lucrative and Honda lifted its net profit forecast,
NAND chips is expected to be more hard line on costs, with rival dominant motorcycle business in which includes earnings from China,
than the company had foreseen at Samsung firmly in his sights. developing countries such as India. to 530bn yen from 500bn yen.

Telenor seeks BEST OF THE BROKERS

ANALYSIS l Smiths Group
p
ANALYSIS l Serco
p
ANALYSIS l Renewable Energy
p

to block deal
1,350 1,360.00 551.00
31 Jan 580 31 Jan 52 52.00
31 Jan
1,250
560 48

by Vimpelcom
1,150 540 44

19 Nov 9 Dec 31 Dec 21 Jan 19 Nov 9 Dec 31 Dec 21 Jan 15 Nov 6 Dec 29 Dec 24 Jan

SMITHS GROUP SERCO RENEWABLE ENERGY GROUP

RBS rates the technology group as a “buy”, The front-line service provider is rated as a Evolution Securities rates the on-shore
Altimo are no strangers to conflict, and raises its target price from 1,300p to “buy” by Killik & Co, which says the group is wind farm developer as a “buy” following
▲

TELECOMS
BY HARRY BANKS
NORWEIGAN communications
group Telenor is taking mobile
group Vimpelcom to arbitration
over its planned $6bn (£3.8bn) pur-
chase of telecoms groups Wind and
Orascom, a move likely to mire the
deal in a lengthy legal tussle.
Telenor, which owns nearly 40 per
cent of Russia’s Vimpelcom, said yes-
terday it had requested an arbitra-
tion tribunal over a part of the deal
that prevents it from exercising pre-
emptive rights over a share issue.
Vimpelcom announced a $6bn
cash and shares deal to buy Italy’s
Wind and control of Egypt’s
Orascom from Egyptian tycoon
Naguib Sawiris last month, which
could create one of the world’s
biggest telecoms operators.
Telenor has vowed to fight the
transaction – which it says is too
risky and will reduce its influence
over the company – putting it at log-
gerheads with Mikhael Fridman’s
Alfa group.
Telenor and Alfa’s telecoms unit
having fought a series of legal dis-
putes over Vimpelcom’s strategy
before a truce was called in 2009.
Telenor’s shares were down 0.9
per cent in early trade, in line with
wider global markets.
Telenor spokesman Dag Melgaard
said the company had appointed an
arbitrator – a private legal method
not decided in public courts – and
the tribunal will be based in
London.
Altimo said in a statement it
would “vigorously contest” the
claims and was confident of victory.
ANALYSIS l Telenor
98 89.10
p 31 Jan
94
90
8 Nov 22 Nov 6 Dec 20 Dec 10 Jan 24 Jan
1,600p. The broker says that if the Group
was broken up and its businesses sold, it
would estimate a value of 1,804p in the
absence of any tax liabilities. It therefore says
that a break-up valuation is the best way to
proceed, and raises its pricing accordingly.
NEWS | IN BRIEF
CNOOC reaches $1.3bn shale deal India approves Posco mill
CNOOC will pay $1.3bn (£817m) in its
second shale deal with America’s
Chesapeake Energy, the latest move by
China’s top offshore oil producer in its
aggressive drive for overseas acquisi-
tions. In line with CNOOC’s strategy to
expand into the oil-rich shale deposits
in North America, the state-owned
company will buy a 33.3 per cent stake
in Chesapeake’s leasehold acres in
northeast Colorado and Southeast
Wyoming for $570m, the US natural
gas producer has said.
well placed to win government contracts as
investment in infratructure and pubic servic-
es increases. As shares have performed poor-
ly in recent month due to uncertainty over
public sector cuts, Killik & Co sees a good
opportunity to buy at a target price of 557p.
To appear in Best of the Brokers email your research to notes@cityam.com
India’s environment ministry yesterday
approved plans by South Korea’s Posco
to build a $12bn (£7.5bn) steel mill, a
boost for the foreign investment cli-
mate in Asia’s third-largest economy
after several setbacks for big-ticket
industrial projects. The long-delayed
clearance for India’s biggest foreign
direct investment follows a year in
which environment minister Jairam
Ramesh has blocked several projects,
drawing criticism that he was jeopar-
dising India’s growth story.
its rejection of a 67.7p per share bid, which
the broker says undervalues its operational
assets and developmental pipeline. It
expects REG’s value to rise everytime it
announces a planning win, and assigns it a
target price of 82p.
Hearst bids for Lagardère
French conglomerate Lagardère is to
sell over 100 magazine titles to the
publisher of Cosmopolitan for €651m
(£560.6m), part of a turnaround strat-
egy for the aerospace-to-media group.
Yesterday’s deal with US-based Hearst
came as Lagardère shares fell more
than three per cent on news of a for-
mal investigation into an insider trad-
ing scandal, and as chief executive
Arnaud Lagardère sought to reassure
investors the row would not deflect
him from his recovery plan.

CITY MOVES | WHO’S SWITCHING JOBS Edited by Steve Dinneen in association with

HSBC
HSBC today announces the appointment of
Richard Jablonowski as managing director and
head of investment counsellors to its private
banking division. Based in London, he will report
to Daniel Ellis, managing director and head of the
investment group at HSBC private bank.
Jablonowski joins from Merrill Lynch Global
Wealth Management where he spent 11 years,
most recently as Business Director for the
Discretionary Investment business across EMEA.
Hawkpoint healthcare division. For the last seven
Hawkpoint has appointed Antony years he has been corporate develop-
Mannion as managing director of its ment director of SSL, prior to its
£2.5bn takeover in late 2010 by Reckitt
Benckiser. Antony’s earlier career
included working as a solicitor with
Freshfields and then in corporate advi-
sory with Citicorp and subsequently
with Standard Chartered Merchant
Bank, Asia.
Transactions for which Antony was
responsible at SSL included acquisitions
such as those of Medcom, a Russian
distributor of condoms and medical
gloves and Qingdao London Rubber
Company, a Chinese medical goods dis-
tributor.
Barclays Corporate
Barclays Corporate has appointed Ian
Ball to the Northern region Real Estate
team to further support Barclays Real
Estate’s commitment to the property
lending market, demonstrating that
they are very much open for business
for new and existing clients. Ball joins
the team as Relationship Director and
will be responsible for larger corporate
clients with a turnover in excess of
£5m.
A qualified Chartered Surveyor, Ball
has held a number of real estate roles
having previously worked with JP
Morgan and private equity fund
Doughty Hanson, and most recently
with the Royal Bank of Scotland. His
experience includes working for pan-
European real estate funds, including
UK, Italian, Finnish and Belgium acqui-
sitions..
PwC
PwC has appointed Richard Gane as the
new head of its UK automotive group,
responsible for leading and co-ordinat-
ing PwC's services to the industry
across the country. Gane, a
Birmingham-based director, will take
up the role with immediate effect.
Gane is a qualified, chartered engi-
neer by background, who has worked in
and around the automotive, transporta-
tion and related industries for over 35
years.

To appear in CITYMOVES please email your career

SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
updates and pictures to citymoves@cityam.com morganmckinley.com
CITYA.M. 1 FEBRUARY 2011
Government
savings boost
outsourcers
SUPPORT SERVICES
▲
BY HARRY BANKS
CONSTRUCTION and facilities man-
agement firm Mitie said it was well
placed for profitable growth as the
cash-strapped UK government looked
to outsourcers to help it cut costs.
Mitie, which provides cleaning,
security and maintenance services for
banks and law courts, said it expected
earnings for the year ending 31
March to be in line with its estimates.
“Budgetary pressure in the public
sector is beginning to create substan-
tial opportunities for outsourcing
and this is evident in both the
increasing use of framework agree-
ments and in our growing sales
pipeline,” the company said in a state-
ment.
The FTSE All Share Support
Services Index has gained 12 per cent
since the coalition came to power in
May last year.
Mitie shares, which have risen 14
per cent since the company in
November posted a 12 per cent
growth in first-half pretax profit,
closed five per cent lower at 218.3p
yesterday.
Fears over turmoil in Egypt Markets lifted by
weigh on FTSE as banks fall bullish US economy
THELONDON
REPORT
W
ORRIES over the impact of
the political unrest in
Egypt saw Britain’s top
share index fall yesterday,
but losses were limited by gains
from heavyweight energy issues as
the crude price firmed.
At the close, the FTSE 100 index
was 18.43 points, or 0.3 per cent
lower, at 5,862.94, having shed 1.4
per cent on Friday when worries
over the situation in Egypt intensi-
fied.
“Unsurprisingly, the situation has
hit travel firms hard, with both TUI
Travel (-2.69 per cent) and
International Airlines Group (-2.30
per cent) among today’s losers. Right
now December’s rally seems to be a
distant memory and market confi-
dence is fragile. While the situation
in Egypt has taken attention away
from the Eurozone crisis, we should-
n’t forget that this is still out there,
with figures released today showing
Eurozone inflation in January has
jumped more than the ECB’s initial
forecast, giving rise to speculation
that the ECB will have to raise inter-
est rates sooner than later,” said Will
Hedden, sales trader at IG Index.
Protesters further stepped up
their campaign yesterday to force
Meanwhile, support services firm
Carillion said it had signed a memo-
randum of understanding with the
British government, which is trying
to get its suppliers to cut costs and
pass on the savings.
It said it was changing “the scale
and scope of outsourced services
across a number of... existing con-
tracts” that are worth about £200m,
but that it was not changing market
guidance. Analysts at RBS said the
announcement was negative but not
entirely unexpected.
The firm also announced £350m of
contract wins, including a £45 deal to
build accommodation for the armed
forces at Whittington Barracks.
ANALYSIS l Mitie Group
p The firm also said it was reshuffling
250 218.30
31 Jan
240
230
220
210
200
1 Nov 19 Nov 9 Dec 31 Dec 21 Jan
Egypt’s President Hosni Mubarak to
quit as world leaders struggled to
find a solution to a crisis that has set
a fire under the Middle East’s politi-
cal map.
Travel firms were big fallers, with
traders citing worries over the disrup-
tion caused by the protests in Egypt
and the impact of a strong crude
price. Tour operator TUI Travel shed
2.6 per cent, with mid cap peer
Thomas Cook down 3.1 per cent, and
International Consolidated Airlines
Group losing 1.8 per cent.
Risk-sensitive banks were a drag on
the blue chips as investors remained
nervous about the global picture,
with RBS falling.
BG Group rallied after sharp falls
on Friday as it said it has suspended
drilling in Egypt but gas production
remained normal.
Traders highlighted the greater
impact of BG’s recent new oil discov-
ery in the Santos Basin, offshore
Brazil.
“BG Group remains a dark horse
among leading FTSE 100 oil & gas
explorers even though the ongoing
exploration developments in the mas-
sive Santos Basin should be upper-
most on trader's radar,” said Andrew
Gibson, head of research at Galvan.
“Rising tensions in Egypt set the
tone for the FTSE as an early drift
lower saw the UK index slide over one
per cent. Investors seemed spooked
by the scale of the protests and the
increasing uncertainty over the lead-
ership in Egypt,” said Giles Watts,
CHIPS DOWN FOR INTEL
INTEL, headed up by chief executive Paul Otellini, cut its first quarter revenue forecast by
$300m yesterday due to the costs associated with correcting a design flaw it discovered
in one of its chips. Intel said it has stopped shipments of the chip and has implemented a
fix. It will begin delivering an updated version of the chip to customers in late February.
Total cost to repair and replace the chip is expected to be around $700m, it said.
head of equities at City Index speak-
ing yesterday.
But BP bucked the firmer oil sector
trend, shedding 0.4 per cent, ahead of
its fourth-quarter results due today.
There were concerns over BP’s divi-
dend, as Russian shareholders in its
TNK joint venture convened to con-
sider withholding the $1.8bn pay-
ment.
Miners rallied led by Xstrata, up 2.2
per cent, excited by merger activity
among US coal miners.
Massey Energy agreed to a $7bn
takeover offer from Alpha Natural
Resources.
US blue chips were 0.2 per cent
higher by London’s close as merger
activity, and solid earnings from
Exxon Mobil, helped offset concerns
about the unrest in Egypt.
Among individual gainers in
London, Rexam added 2.1 per cent
after the can maker signed a contract
in North America and a long-term
deal with its largest customer in
Brazil.
ANALYSIS l FTSE
6,100 5,862.94
31 Jan
5,900
5,700
5,500
1 Nov 19 Nov 9 Dec 31 Dec
THENEW YORK
REPORT
S stocks rose yesterday on
U strong earnings and signs of a
strengthening economy, even
as a surge in the price of oil
highlighted the potential for increased
political risk in the Middle East to
upset markets.
Egyptian Vice President Omar
Suleiman said on Monday that
President Hosni Mubarak has asked
him to start a dialogue with all politi-
cal forces, while Egypt's armed forces
pledged not to fire on peaceful demon-
strators.
The latest news calmed markets
after stocks suffered their biggest fall in
nearly six months on Friday. The
improved sentiment helped the Market
Vectors Egypt Index rise 7.9 per cent,
indicating investors' appetite for risk in
the region had recovered somewhat.
"It's creating a great opportunity to
step up and increase exposure to
emerging markets and other areas of
the international markets," said Robert
Lutts, president and chief investment
officer at Cabot Money Management in
Salem, Massachusetts. "I'm optimistic
that this will be resolved and blow
over."
Relief that the turmoil appeared not
to be escalating allowed investors to
21 Jan focus on data showing stronger US per-
News 17
National Grid
expects jump in
annual profits
ENERGY
▲
BRITAIN’S biggest utility National Grid
said it expects to report a significant
increase in full-year profit, boosted by
favourable weather conditions and
growth at its US operations.
“The strong momentum seen in the
first half has continued and has fur-
ther improved, driven by cold winter
weather following the hot weather in
the US in the summer,” the gas and
electricity transmission company said
in a statement.
The performance also prompted the
company to recommend an eight per
cent increase to its full-year dividend.
Separately, National Grid said it
would reduce about 1,200 positions
across the US, or about seven per cent
of its direct workforce in that country,
resulting in annual cost savings of
about $200m.
The news comes hot on the heels of
suggestions the firm was poised to cut
400 British jobs, after an email outlin-
ing the redundancies was sent to rank
and file staff in error.
its executive team.
Nick Winser is to become executive
director in the UK, with responsibility
for the UK gas distribution business,
while Mark Fairbairn, executive direc-
tor of gas distribution, will step down
from the board and leave the firm at
the end of March.
Shares in National Grid added 1.2
per cent to close at 552.5p.
sonal spending and regional manufac-
turing, while better-than-expected
earnings from Exxon Mobil sent the
company's shares up more than 2 per
cent.
Exxon Mobil gained 2.1 per cent to
$80.68 after the world's largest publicly
traded oil company reported a 53 per
cent increase in quarterly profit. Its
shares closed up at $80.68 after earlier
in the day hitting a two-year high of
$80.82.
M&A activity also helped lift stocks.
Massey Energy rose 9.8 per cent to
$62.86 after Alpha Natural Resources
agreed to a $7.1bn deal to create the
second largest US coal miner by market
value.
On the economic front, the
Commerce Department said US con-
sumer spending rose in December for a
sixth straight month, while a separate
report showed business activity in the
US Midwest grew more than expected
in January.
In other M&A action, CNOOC will
pay $1.3bn in its second shale deal with
America’s Chesapeake Energy, the lat-
est move by China's top offshore oil pro-
ducer in its aggressive drive for
overseas acquisitions.
Chesapeake advanced 8 per cent to
$29.53.
The Dow Jones industrial average
gained 68.23 points, or 0.58 per cent, to
11,891.93. The Standard & Poor’s 500
Index rose 9.78 points, or 0.77 per cent,
to 1,286.12. The Nasdaq Composite
Index added 13.19 points, or 0.49 per
cent, to 2,700.08.
 Wealth Management
18 CITYA.M. 1 FEBRUARY 2011

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CITYA.M. 1 FEBRUARY 2011
FED HAS DONE
A GOOD JOB ON
US EQUITIES
DAVID MORRISON
CFD MARKET STRATEGIST, GFT
T
HE Federal Reserve has so far done an excellent
job of goosing US equities through its ongoing
asset purchase programme. As Fed chairman
Ben Bernanke has intimated, boosting stock
prices is now one of the Reserve’s aims, on top of its offi-
cially mandated dual role of ensuring price stability and
full employment. So investors were cheered by last
week’s statement from the Federal Open Market
Committee (FOMC). This pretty much said that there
was no need for concern over the state of the economy.
However, as unemployment and the housing market
were still a bit flaky, the Fed would continue to reinvest
the proceeds of maturing mortgage-backed securities,
and buying back $600bn of Treasuries.
This quantitative easing programme is the starter-
motor for Ben Bernanke’s “virtuous circle”. In theory, it
should ensure long term interest rates fall, so lowering
mortgage rates allowing struggling homeowners to
refinance. Lower corporate bond rates will also encour-
age investment and this investment should lead to high-
er equity prices. These in turn boost consumer wealth
and confidence, so spending picks up, raising incomes
and profits that support economic expansion.
But even assuming this works, there are other conse-
quences from quantitative easing. There can be little
doubt that rising prices of food, fuel and other com-
modities have lifted inflation around the world. Also, as
Japan found out last week, endlessly increasing public
debt can damage your credit rating. The news that
Moody’s is taking a closer look at the US has rattled
investors. Government debt is soaring, while tax rev-
enues were sliding even before the extension of the
Bush tax cuts at the end of last year. Of course, if
Moody’s, Fitch or Standard & Poor’s do bite the bullet
with a downgrade for the US, they will only be follow-
ing what China’s Dagong Credit Rating Co. told us last
summer.
But the stock market gains associated with quanti-
tative easing are as much about expectations as liquidi-
ty. The effects can be clearly seen as the New York
Federal Reserve begins its near-daily permanent open
market operations. Trading programmes kick in to tar-
get those equities and indices which are seen as most
susceptible to the momentum trade. But there are
recent signs of diminishing returns from this activity,
and it may not prove to be a perpetual one-way bet. If
recent geopolitical events escalate, they could end up
being the trigger for a nasty downside correction.
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Wealth Management | CFDs 19
Trichet’s hawkishness
appears to be a bluff
It is unlikely that the
European Central
Bank will raise rates
this Thursday, writes
Donata Huggins
W
AS Jean-Claude Trichet’s hawk-
ishness on inflation earlier this
month a bluff? He sounded
tough until the market react-
ed, but then rolled back the strength of
what he said, leaving us hanging in sus-
pense. Now with European inflation rates
hitting 2.4 per cent in January – the high-
est level for more than two years (see
chart) – many are asking if the European
Central Bank (ECB) will raise interest
rates sooner than expected. The prospect
of the change will be weighing on the
minds of investors.
Should they fear a rise and reconsider
their trades before Thursday’s rate
announcement?
Traders should always be cautious
when it comes to the ECB and interest
rates. As RBS’s equity specialist Graham
Bishop jokes: “There are three things the
ECB hates: one – inflation, two – inflation Frankfurt needs to accept that inflation is on the cards Picture: ALAMY
and three – inflation. The old
Bundesbank is historically paranoid rates either, arguing that it will be taking to go for highly leveraged investments
about it.” the market’s current expectations into such as real estate, food and utilities
But it is important to get this into per- consideration. Five-year forwards on stocks to take advantage of the inflation
spective: Eurozone inflation is only run- German bonds, they explain, “look – avoiding companies with large cash
ning 0.4 per cent above the target. through the near-term cyclical distor- balances.
Whereas the British inflation rate is run- tions” and show us that the market out- But maybe that is advice only for the
ning at 3.7 per cent and – apart from two look is fairly stable and that inflation will most confident of investors. Regardless,
rather large hawks – the Bank of only creep up slightly. traders could well benefit from calling
England’s Monetary Policy Committee Bishop goes as far as to advise traders Trichet’s bluff.
doesn’t seem to care too much.
Not to mention that the ECB’s hatred ANALYSIS l Inflation in the Euro-area since 1996 (HICP harmonised index of consumer prices)
of inflation will need to be reconciled 4
with its hatred of bailing out the periph-
ery. As CMC Market’s market analyst 3
Michael Hewson says: “If they [the ECB]
raise rates anytime soon they might as 2
well take a gun and blow the heads of the
peripheral economies. The euro is 1
already too strong for the weaker
economies. If Germany raises rates it will 0
find itself signing another round of
-1
bailout checks.”
RBS doesn’t think the Bank will raise 1997 1999 2001 2002 2005 2007 2009 Source: ECB
BONUS
SPREAD BETS | CFDs | FOREX
REBATE free phone 0800 358 0864
gftuk.com
EDUCATION GFT Global Markets UK Ltd. is autho-
rised and regulated by the Financial
Services Authority. CD03UK.141.012711.
 20 Wealth Management | Contracts for Difference CITYA.M. 1 FEBRUARY 2011

Desert sands
blowing into
the gears of
the economy
Egypt’s revolution the world’s economy. Egypt remains rela-
tively small, oil poor and unconnected
is vexing markets, economically to the rest of the world. So
traders might well ask, why all the fuss?
The primary concern is oil. Egypt is not
but it isn’t yet 1973, a major oil supplier, but the Suez Canal
handles 8 per cent of the world’s trade
says Daniel Knowles and over 2m barrels of oil a day. If the dis-
ruption led to a closure of the canal,
which has remained open since 1975, that

T
HE LAST time Egypt unsettled inter-
national markets this badly was in
1973. On 6 October of that year, the
Egyptian army mounted a shock
assault on the Israeli occupied Sinai
Peninsula. After initially losing ground,
the Israeli army rapidly recovered,
fighting back until a ceasefire was agreed
on 25 October.
The war, though relatively small,
sparked off the Arab oil embargo, which
increased the price of oil fourfold in a
little less than a year. The result was fuel
rationing in much of the West, as well the
inflation that brought to an end the pros-
perity of the previous twenty years.
This week’s disturbances are not at all
comparable to the events that started the
energy crisis of 1973 – at least not yet. But
they have injected a dose of uncertainty
into the world’s economy just as things
seemed to be settling.
The FTSE 100 declined by 0.3 per cent
yesterday, after losing 1.4 per cent on
Friday. Though oil companies gained, the
travel company TUI lost around 3 per cent
of its value while British Airways lost
around 2 per cent. The French bank
Societe Generale lost 2.26 per cent of its
value. BP conversely was up 1.17 per cent,
while the price of Brent crude oil briefly
hit $100 a barrel for the first time in over
two years.
And yet gold prices – which of late have
had a habit of jumping during crises – fell,
while most tourists in Egypt are reported
to be continuing their holidays safely. If
they are successful in toppling the 30 year-
old Mubarak regime, Egypt’s protesters
will have achieved a remarkable geopoliti-
cal feat, but they will not necessarily upset
could lead to an impressive hike in the oil
price, as well as significant disruption to
the broader economy.
More worrying even than that are the
implications for other Arab nations. Until
last week, Egypt’s regime was considered
relatively stable and unlikely to be threat-
ened. The frank dismissal of that notion
has led to worries that other regimes,
including the Saudi Arabian one, could
also be at risk. Middle-Eastern countries
are less important to the oil market now
than they were in 1973, but they still
account for 30 per cent of global oil pro-
duction – so if the Egyptian instability
spreads, it could well lead to an oil price
panic.
RELATIVELY LOW RISK
However, few are predicting either of
those events at the moment. As analysts at
Barclays Capital report, the closure of the
Suez Canal would likely require the
Egyptian military to undertake, which
Middle East experts consider unlikely. The
analysts also observe that with a much
greater proportion of African and Middle
Eastern oil now consumed in Asia, a clo-
sure of the canal would be less devastating
than it was.
So what should traders do to limit their
exposure and even to make a profit? As
Manoj Ladwa, senior trader at ETX Capital
argued: “Markets are overdue a correction
anyway – Egypt is just a catalyst towards
that.” Goldman Sachs called the markets
reaction to the Egyptian crisis overblown,
but nonetheless gave a bullish outlook for
the oil price. For the moment then,
traders would seem well advised to go
short on stocks then and long on oil.
EGYPT’S HISTORY OF DISRUPTION
● 1882 - THE ANGLO-EGYPTIAN WAR
In 1881, an Egyptian Army Officer called
Abdul Urabi launched a coup against the
Ottoman Khedive. Fearing a loss of control
over the Suez Canal as well as losses on the
debt used to finance its construction, Britain
mounted an invasion, starting an occupation
that lasted until 1952.
The Suez Canal still Companies with large exposure to Egypt
carries 8 per cent of such as TUI, Societe Generale or France’s ● 1956 - THE SUEZ CRISIS
the world’s trade Lafarge, are unlikely to see their share
prices recover while unrest lasts. Given
Britain was kicked out of Egypt in 1952 by a
Picture: Getty the possibility of a much deeper crisis in group of army officers led by the Arab
Egypt, they may yet fall further. nationalist Nasser. In 1956, Nasser nation-
But no-one is sure what will happen at alised the Suez Canal, leading Britain and
the moment. Consequently, the most France, together with Israel, to mount an
important thing is to keep watching the invasion. The war was stopped by American
news. The lesson of Middle-Eastern geopo- pressure on Britain.
litical history is that things can go badly
wrong very quickly. ● 1967 - THE SIX DAY WAR
In June 1967, fearing an attack by Egyptian
ANALYSIS l Net freight of oil tankers through the Suez canal (mb/d) and other Arab troops, Israel launched a pre-
3.9
emptive air attack that crippled the Egyptian
air force on the ground. The war established
3.4
Israel as the region’s pre-eminent military
power, but it also led to the shutting down of
2.9 the Suez Canal for the next eight years.
2.4
● 1973 - THE YOM KIPPUR WAR
The Yom Kippur war followed the six day war
and was the last time Arab armies attempted
1.9 to take on Israel on the battlefield. It led
directly to the 1973 energy crisis and to per-
1.4 manently higher oil prices ever since.
02 04 06 08 10

THE pany that designs chips for smartphones and

tablets including Apples iPhone and iPad,
Ted Baker is still
bringing in the
TIPSTER reports today. The company is expected to
reveal full-year pre-tax profits of about
customers

£160m compared to £96m a year ago. The

TED BAKER shares are currently sitting on some support
Picture: REX

OFFERS GOOD at around 515p, but the price could soon

resume its uptrend towards the 550p high.
POTENTIAL Spread Co offers a spread on Arm Holdings
of 514.1p–515.4p.
The markets reaction to the Egypt situa-

I
N JUST under two years the fashion
designer Ted Baker has seen its share
price more than double. It has also sur-
passed its 642p high of 2007 to reach a
record 673p in December 2010. Since the
firm was floated in 1997, earnings have grown
by 10 per cent each year, which is always a
promising sign for any company. With these
projections, a strong balance sheet, and plans
for greater international expansion, Ted Baker
may prove to have good potential over the
medium term. Capital CFDs quotes 654.6p–
675.4p.
Arm Holdings, the Cambridge-based com-
tion on Monday was less dramatic than
some feared, with most markets retracing
Friday’s movements. Crude oil though contin-
ues to rally as the protests continued to top
the news agenda. US Crude added a further
2 per cent on top of the 4 per cent it gained
on Friday to hit $91.30 as the dollar fell
across the board. With this sort of momen-
tum it might be foolish to sell short until we
reach the $93 area or we get clearer signs of it’s still in favour with investors despite hav- day’s bounce coincided with the share price
the rally topping out. Spread Co offers a ing lost as much as 10 per cent in the last having hit its upward trend line. Further
spread on March US Crude of $91.26- couple of weeks. Its share price benefitted gains could be around the corner. Capital
$91.30. from news that Greece will be allowed more CFDs quotes 63.3p-63.6p for Lloyds.
Lloyds Banking Group showed signs that time to pay back its EU bailout and yester- Daniel Knowles
 Take a position from any position.
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 Lifestyle
22 CITYA.M. 1 FEBRUARY 2011

| Health

It’s time
to take BY LAURA WILLIAMS
FIT IN
THE CITY

insomnia
FITNESS & DIET EXPERT

A washboard
seriously stomach in
five steps...
Don’t assume sleeplessness is
simply a symptom of other
Y
OU glance down and your tummy
resembles a washbag more than a
problems, writes Timothy Barber washboard... Don’t fret – the task
ahead isn’t as daunting as you think.

BREAK INTO A SWEAT

L
YING in bed and grimly watching the
hours tick by as your body and mind
refuse to shut off is a horrible sensa-
tion, but one most people will have
experienced on occasion. However, a new
report published by the Mental Health
Foundation has revealed just how pervasive
a force insomnia can be, suggesting that
over 30 per cent of the population suffers
from sleeplessness or a sleep disorder.
The Sleep Matters report, which surveyed
5,300 people and is believed to be the
largest of its type in the UK, blows away the
notion that insomnia is merely a symptom
of other problems like stress. Instead, says
Dr Andrew McCulloch, chief executive of
the Foundation, it’s a primary ailment in
itself, and needs to be recognised as such in
the way it’s treated.
“People are not really aware about sleep
and sleep disorders, and it’s not really built
into mental health promotion or physical
health promotion,” he says. “GPs will often
say that factors like depression or alco-
holism are behind it, but often this sleep
disturbance is part of the initial pattern
that led to the problem in the first place.”
The report also suggests that sufferers of
insomnia are more likely to suffer relation-
ship difficulties, depression and other
health problems. It can also be linked to
diabetes and cardiovascular problems,
since the failure to sleep can put extra
stresses on the heart.
Of course, sleeplessness can be just a
symptom – and it is important to manage
one’s life and sleeping patterns sensibly to
avoid it (see below) – but McCulloch’s point
is that this is not always the case.
For some people, a psychological barrier
to sleep – which may be inspired by genetic
issues, by early learning, life traumas or
other factors – can in itself bring about
other physical and mental disorders due to
There are ways to
address the plague of
modern city living.
the sleep deprivation. It’s a medical chick-
en-and-egg situation, frequently involving a
complex network of causes and symptoms.
McCulloch argues that a more therapeutic
approach to treatment, involving cognitive
behavioural therapy (CBT), can be the key to
untangling this.
“This can look at how you think and feel
about sleep, at whether you’re anxious
about it, and about what kind of sleep pat-
tern you need,” he says. “A lot of CBT is
about self-acceptance – some people need
to go to bed earlier than others, some peo-
ple are naturally larks, but you need to
understand yourself and embrace it.”
STEPS TO TAKE TO AVOID INSOMNIA
Keep regular hours: It sounds obvious but
very few of us manage to stick to a regular
daily pattern. If we did, it would help pre-
vent insomnia, says Jessica Alexander of
not-for-profit group the Sleep Council.
“Sleep is a habitual thing, which is why
changing sleep patterns is not an instant
thing and takes time.” If you can get into a
regular pattern, it helps the habit of sleep
bed in (if you’ll forgive the pun).
Create a restful environment: Take the TV
out of the bedroom, leave the iPad and
iPhones downstairs and don’t even think
about having a computer there.
Shimmering screens, visual movement and
the constant drip drip of emails and social
network communiqués stimulate the brain
rather than help it relax. Instead, read a
book to help you settle and become drowsy.
“It helps you switch out those thoughts
that keep you awake and calm you,” says
Alexander.
Consider separate beds: If your fidgety or
snoring partner is keeping you awake, con-
sider separate rooms. “Your relationship
will be far better for you being well slept
and rested than if you’re irritable and
stressed out as a result,” says Alexander.
Don’t, however, forego sex in the process.
“It releases endorphins, makes you feel
relaxed and content and helps you wind
down physically and mentally.”
Cut down on caffeine and booze: It stands
to reason that anyone who spends their day
downing several cups of coffee may well
find it harder to get to sleep. However alco-
hol is also a stimulant, and the idea that a
little boozy nightcap helps one drift off is
bogus. If you’re drinking enough of it to
knock you out, then you really have prob-
lems and need help.
Mind your temperature: A hot room will
keep you awake, so have the window ajar.
The body’s temperature falling a bit can
help it to fall asleep, which is one reason
why eating a big meal immediately before
bed can keep you awake – digesting a lot of
food can keep the temperature up. Instead,
Alexander recommends a hot bath to raise
the body temperature – as you cool, you’ll
become drowsy.
You do have a washboard stomach really –
it’s just that it’s currently hiding beneath at
least one layer of fat. Lowering your overall
levels of body fat is achieved by taking more
aerobic exercise such as running, spinning or
swimming and by counting your calories
(yawn).
GET MUSCLE SAVVY
It’s time to know your internal obliques
from your transversus abdominus – you
have all sorts of abdominal muscles that
need to be trained in a variety of ways to
tackle everything from that stubborn pot
belly to your love handles.
PILATES ISN’T JUST FOR GIRLS.
Once you discover those deep abdominal
muscles, you’re laughing. The closest thing
to a quick fix for your tum, Pilates targets
the deep abdominal muscles, which act as a
corset among other things (so you don’t
need to resign yourself to Spanx For Him
just yet).
DON’T COMMIT THE SIX-PACK SINS
Doing crunches wrong, failing to ramp up
your abs routine and making the mistake of
thinking you can eat what you like will give
you a tum any darts player would be proud
of, rather than Brad Pitt’s “Troy” abs.
PERFECT YOUR POSTURE
Look slimmer in an instant by adjusting the
way you stand. Stand tall from the waist
with your pelvis in its neutral position (not
tucked under so you’re slouching, or arched
so your bum’s sticking out) and your tum
gently pulled in. Relax your shoulders and
keep your chin parallel with the floor (check
your reflection sideways on in the mirror to
see if you’re getting it right).
www.laurawilliams.co.uk

OUT OF OFFICE
TIMOTHY BARBER

One of Bridget Riley’s paintings.
BRIDGET RILEY AT THE NATIONAL GALLERY
The exhibition of works by the British painter gives
an overview of the recent work of one of the most
pioneering living artists. Riley has been a corner-
stone of the modern art scene for many decades,
and is still going strong. Famous for her highly pat-
terned, optical works Riley is nevertheless highly
influenced by classic art of the Old Masters, as this
exhibition demonstrates. As well as her own works
(including two painted directly on the wall) several
works which inspired her are included. Until 22 May,
free to enter. www.nationalgallery.org.uk
SIMON MUNNERY AT THE SOHO THEATRE
Munnery is one of the more imaginative, original and
downright bizarre comedians around, whether
inhabiting his characters like Alan Parker the Urban
Warrior or the League Against Tedium, or mesmeris-
ing with his strange musings on life, language and
the universe. In his new show at the Soho Theatre,
the star of TV shows including Attention Scum and
Stewart Lee’s Comedy Vehicle is performing his lat-
est routine, simply called Self-Employed. 31 Jan-5
Feb, Soho Theatre, Dean Street, W1D 3NE. £10-
£17.50. www.sohotheatre.com
NEW SEASON AT THE NATIONAL THEATRE
The National has announced another feast of upcom-
ing shows this year. A couple of picks: in May, Zoe
Wannamaker will star in Chekhov’s the Cherry
Orchard, directed by Howard Davies, who has made
directing Russian plays of every hue into a true art.
Artistic director Nicholas Hytner will be on directori-
al duty himself for a new version of Goldoni’s The
Servant of Two Masters, set in 1960s Brighton, and
starring James Corden. Booking opens on March 8,
and more details of the other show announced can
be found at www.nationaltheatre.org.uk
CITYA.M. 1 FEBRUARY 2011
Eastern promise: a lesson in meat
Actually, the menu at
this hipster’s paradise
has a good deal more
than meat to offer
people with appetite
Brawn
49 Columbia Road, E2 7RG
Tel: 020 729 5692
FOOD hhhhh
SERVICE hhhhh
ATMOSPHERE ihhhh
Cost per person without wine: £35
W
ALK past Terroirs on King
William IX Street any night of
the week and it’s stuffed to the
rafters with what would once
have been called Bohemians. Now they’re
just Bohemian-looking: hipsters with a
good taste in food; theatre executives with
bright red lipstick and thick glasses and
their menfolk. There’s something about
this concept of well-executed, honest
French food served in small plates that the
glitterati (or is that that the theatre-ati)
just love. Just look a few doors down the
road at Les Deux Salons for quite a differ-
ent picture. Good food, but not small
plates and the result is a distinctly “bridge
and tunnel” crowd (the term snotty
Manhattanites use to describe their New
Jersey neighbours who journey into the
city for a touch of big-time razzle dazzle).
So it’s hardly a surprise that Terroirs’
new outpost, located on trendy Columbia
Road in Bethnal Green, is already so popu-
lar with the region’s numerous coolsters
and taste-makers that it’s difficult to get in
even on a Monday night.
Still, it’s a challenge worth surmount-
ing, and so I found myself there last
Monday. At first, the taxi drove past, nei-
ther of us seeing it. It’s an unmarked room
(signs are so not cool) that looks like a
branch of the Breakfast Club or Byron’s
WHERE SMALL PLATES RULE
ZOE STRIMPEL
KOPAPA, COVENT GARDEN
From the same Kiwi genius behind Providores on Marylebone High Street,
this is a hodgepodge of Asian-fusion and – despite not being a trendy con-
cept anymore – it seems to be going down a treat. If you fancy a plate of
coconut sticky ribs, some beautiful smoked duck magret and grilled
aubergine with tamarind caramel all at once, this is your place.
BAR BATTU
Nestled in the heart of the City on Gresham Street, Bar Battu does what
Terroirs does, almost as well. Small plates of rillettes, terrines, potted this
and that and some delicious meat (we loved the bavette and the ox cheek)
are accompanied by an exciting, biodynamic wine list. Naturally sparkling
white wine was a standout.
WORDS BY
ZOE STRIMPEL
Lifestyle | Restaurants 23
From pig we had pork rillettes which, I
can’t help but think, always taste of tuna
fish and mayonnaise. Onwards and
upwards we went, though, with some
beautiful mackerel (so very “clean”); a
plate of sensationally tender, almost
Turkish-style quail with pomegranate; a
bowl of astounding sausage and sauer-
kraut that triumphed even over the great
one at the Wolesley, and the dish whose
violent garlicky character that stayed with
me long afterwards: mushrooms baked
with marrow. These mushrooms were so
intense we couldn’t finish them. They
exploded concentrated juice of salt and
fat, garlic and herb and mushroomy gravy.
They were a spectacular lesson in how to
make a vegetable into a meaty showstop-
per; how to think outside the box (or the
mushroom).
Both of us feared the onset of gout, so
refrained from desserts and cheese, lovely
as they looked. Still, this was probably the
best meal I’ve had in an establishment so
hip – never has food exploded with so
much expertly-wrung flavour on tables so
bare and with a crowd so, well, East
London. Hipness aside, the serious energy
of Brawn radiates from the kitchen, and
its well worth braving the wilds of the East
to soak up its warmth.
The diner-style look of Burgers – boxy, diner-style, hard wood
Brawn. chairs.
But inside it feels different; far better
than some wannabe-cool chain. Pot
plants, records and books give the bar a
Parisian feel, and the snacks we kicked off
with – saucisson and shards of parmesan-
like hard cheese – were the perfect way to
enjoy what became our only wine of the
night: a delicious, fruity but dry Viognier,
lots of layers and punch. We had vaguely
asked for something dry and along came
this beauty. The wine list is one of Brawn’s
strong points, so the oenologically adven-
turous should find a good deal of succour
in exploring it.
Dinner was beautiful: maximally rich,
meaty and expert. The menu is divided
into Taste Ticklers, Pig (terrines, saucisson,
some cooked pork), Plancha (clams and
some fish), Clean (mostly vegetarian, some
fish) and Slow-Cook (stews, slow-cooked
meat and game, the likes of tete de veau).
FOOD & BOOZE
NEWS
ZOE STRIMPEL
AMARANTO OPENS AT FOUR SEASONS
All the grandeur of the Four Seasons’ new
London property comes together in its new top-
of-the-line Italian restaurant. Think sea bass
carpaccio with shaved raw artichoke salad,
warm Amalfi citrus tart of white chocolate with
and lime with passion fruit sorbet and great
cocktails set in a glossy, high-ceilinged bar with
a massive chandelier, baquettes and a “hand-
WWW.KOPAPA.CO.UK moulded sculptural wall”. The chefs have top-
drawer credentials, having worked at the
superb Semplice and Locanda Locatelli. As a
lounge, bar and restaurant in one, Amaranto
promises none of the stuffiness associated with
grand hotel restau-
rants. Four
Seasons, Park
Lane, W1J 7DR.
Tel: 020 7319
5206.
COLLAGEN MENU
AT GILGAMESH
This mega-restau-
rant is now offering
a “beauty” menu in
the form of collagen-
WWW.BARBATTU.COM infused food – think
wheatgrass and sea-
weed. It’s farmore
tempting than it
sounds. www.gilga
meshbar.com
 24 Lifestyle | TV& Games CITYA.M. 1 FEBRUARY 2011

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show:
7.30pm EastEnders: BBC News
8pm Holby City:
9pm Silent Witness:
10pm BBC News
10.25pm Regional News
10.35pm Film 2011 with
Claudia Winkleman:
11.15pm FILM The Hoax:
Premiere. Drama, with Richard
Gere 2006; Weatherview
1.10am Sign Zone: See Hear
1.40am Sign Zone: Human Planet
2.40am Sign Zone: Dambusters
Declassified 3.40am Sign Zone:
Wanted Down Under 4.25am-6am
BBC News
6pm Eggheads:
6.30pm Great British Railway
Journeys:
7pm Natural World: The lives
and work of conservationists
Joy and George Adamson.
8pm CHOICE A Farmer’s Life
for Me: New series. Nine
couples try to make their
dream of living off the land a
reality.
9pm Do We Really Need the
Moon?
10pm How TV Ruined Your
Life:
10.30pm Newsnight: Weather
11.20pm Mad Men:
12.05am BBC News
4am-6am BBC Learning Zone
6pm London Tonight
6.30pm ITV News
7pm Emmerdale:
7.30pm Grimefighters:
8pm The Betty Driver Story:
The life of the 90-year-old
Coronation Street actress.
9pm CHOICE Taggart: Three
children and their father are
found dead.
10pm ITV News at Ten
10.30pm London News
10.35pm FILM Half Light:
Supernatural thriller, starring
Demi Moore. 2006.
12.35am The Zone; ITV News
Headlines
2.40am Crossing Jordan 3.25am-
5.30am ITV Nightscreen
6pm The Simpsons: 6pm Home and Away:
6.30pm Hollyoaks: 6.25pm Live from Studio Five:
7pm Channel 4 News 7pm Five News at 7
7.55pm 4thought.tv: 7.30pm Extraordinary Dogs:
8pm Gok’s Clothes Roadshow: Five News Update
Gok Wan heads for Harrogate 8pm Gladiators: Rome
in North Yorkshire. Unwrapped: Five News Update
9pm Big Fat Gypsy Weddings: 9pm CSI: Crime Scene
10pm CHOICE Shameless: Investigation:
11.05pm Derren Brown: Behind 10pm CSI: Miami:
the Mischief: 11pm CSI: NY: A FARMER’S LIFE FOR ME
12.10am European Poker Tour 11.55pm CSI: Crime Scene BBC2, 8PM
1.10am Bull Run 1.40am World B- Nine would-be farmers compete to
Boy Series 2.05am FIS World Investigation:
12.50am SuperCasino: Live make their dream of living off the land
Championships 2.35am Basketball
3.30am KOTV 3.55am Triathlon interactive gaming. a reality. The contest begins as the
ITU World Championship Series 4.05am The FBI Files 4.55am competitors choose their plots.
4.50am Bear Grylls: Born Survivor Rough Guide to Activity Holidays
5.45am-6.10am Wogan’s Perfect 5.10am Wildlife SOS 5.35am-6am
Recall House Doctor

SKY SPORTS 1 BRITISH EUROSPORT 2.40am Charmed 4.20am 2.55am Skins 3.50am Life 5.30am-6am How Does That
SATELLITE & CABLE

7pm Sky Sports News at
Seven 7.30pm Soccer Special
10.30pm Football Asia 11pm
Copa Del Rey Football 1.30am
International One-Day Cricket
3am-6am Live International
One-Day Cricket: Australia v
England.
SKY SPORTS 2
6pm International One-Day
Cricket: New Zealand v
Pakistan. 7.30pm Live Football
Special: West Bromwich Albion
v Wigan Athletic (Kick-off
8.00pm). 10.30pm Football
First 3am-4.30am Poker
SKY SPORTS 3
7pm Kings of the Snow
7.30pm Live Copa Del Rey
Football: A semi-final second-
leg match. 10pm Poker
11.30pm Premier League
Bowls 12.30am Cricket World
Cup 1.30am Basketball
3.30am-4am Football Asia
7pm Boxing: Vinny Maddalone
v Tomasz Adamek. 10pm
Extreme Sports: Freeride Spirit
10.15pm Ski Jumping
11.15pm-12.30am Football
ESPN
7pm ESPN Kicks: Scottish
Premier League 7.15pm Live
Scottish Premier League
Football 10pm Serie A
11.45pm ESPN Kicks: Serie A
12am Live College Football
2am Live College Football 4am
ESPN Press Pass 4.30am
Bundesliga Review Show
5.45am-6am ESPN Kicks:
Serie A
SKY LIVING
7pm Ghost Whisperer 8pm Let
the Stories Begin 9pm World’s
Youngest Daredevils 10pm
FILM 40 Days and 40
Nights 2002. 11.50pm
Celebs 24/7 12am CSI:
Crime Scene Investigation
Four Weddings 5.10am-6am
Maury
BBC THREE
7pm Michel Roux’s Service
8pm Snog, Marry, Avoid?
8.30pm Hotter Than My
Daughter 9pm Sun, Sex and
Suspicious Parents 10pm
EastEnders 10.30pm Coming
of Age 11pm Family Guy
11.45pm Snog, Marry, Avoid?
12.15am Hotter Than My
Daughter 12.45am Sun, Sex
and Suspicious Parents 1.45am
Coming of Age 2.15am Ready
Steady Drink 3.15am Michel
Roux’s Service 4.15am-5.15am
Is Oral Sex Safe?
E4
7pm Hollyoaks 7.30pm Friends
9pm 90210: Jen searches for a
new assistant. 10pm The
Cleveland Show 11.05pm
Shameless 12.10am Skins
1.15am Scrubs 2am Shameless
Unexpected 4.30am-6am Work?
Switched
DISCOVERY HOME &
HISTORY HEALTH
7pm Heir Hunters 8pm 7pm A Baby Story 8pm 10
Warriors 9pm Ancients Years Younger 9pm Chopper TAGGART
Behaving Badly 10pm Battles Rescue 9.30pm A&E: Outback ITV1, 9PM
BC 12am Ancients Behaving 10pm Hospital 11pm Last Three children and their father are
Badly 1am Warriors 2am Chance Surgery 12am Chopper found dead in a tenement flat, but what
Cities of the Underworld 3am Rescue 12.30am A&E: Outback initially appears to be an open-and-
Dinosaur Secrets 4am UFO 1am Hospital 2am Last Chance shut case becomes far more sinister.
Files 5am-6am America’s Surgery 3am 10 Years Younger
Toughest Jobs 4am Bringing Home Baby
5am-6am A Baby Story
DISCOVERY
8pm How Do They Do It? SKY1
8.30pm How It’s Made 9pm 8pm Let the Stories Begin
Swords: Life on the Line 10pm 9pm Got to Dance 10.30pm A
Extreme Engineering 11pm League of Their Own 11pm Lie
Aircrash Confidential 12am to Me 12am Mental 1am Road
Bear Grylls: Born Survivor 1am Wars 1.50am Border Invasion
Deadliest Catch 2am Mystery USA 2.40am Justin Lee SHAMELESS
Investigator: Olly Steeds 3am Collins: West End Star 3.30am CHANNEL4, 10PM
How the Universe Works The 4400 4.20am Don’t Micky and his family face ruin when the
3.50am Chris Barrie’s Massive Forget the Lyrics 5.10am-6am police are alerted to his new money-
Engines 4.40am Mystery Are You Smarter Than Your 10 making venture, and Libby worries
Investigator: Olly Steeds Year Old? Frank no longer wants to marry her.

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

QUICK CROSSWORD
   

SUDOKU KAKURO
3 13 29 40 12 7 36 28
26 25

15 11
Place the numbers from 1 to 9 in each empty cell so that each 8
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 18 10
9 43 10
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 15 10
  
above or to the left of it. 36
You can only use the digits 1-9 15 35 
   and you must not use the
6 23
15 13   
same digit twice in a block. 22
    The same digit may occur 33 16
30 10
  more than once in a row or
column, but it must be in a
19
7
34

8 16
   separate block.
10 4 17
27 16
    12 14
 

   ACROSS DOWN
1 Articulation (5) 1 Go to see (5)
 
    WORDWHEEL A N
3 Grinds (5)
6 Natives of Madrid,
2 Long, narrow strip
of water (5)
Using only the letters in the Wordwheel, you have for example (9) 3 Only, just (6)
   ten minutes to find as many words as possible,
D N 7 Part of an animal (4) 4 Morals, examples (7)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters A 9 Arm joints (6) 5 Reveals (5)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
B O 10 Unspecified object 8 Copy (7)
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
E D
or degree (3)
9 Put a stop to (3)
11 Amigo (6)
QUICK CROSSWORD 1 2 4 9 5 8
10 Yearly (6)

C H A P S E K I N G
7 9 3 5 6 1 2 4 8 SUDOKU         
12 Region regularly
afflicted by 11 Confronts bravely (5)
9 8 4 6 7 1 2 7
O J O E U         
N A M A N D A T E
1 8 1 9
        
monsoons (4) 12 Cognisant (5)
F A R C E G R 7 2 9 7 4 9
E L O U S E I 8 6 5 7 4 2 1 3 9
         14 Copiousness (9) 13 Broker (5)
        
R A Y O N
L S E I
U R
N E
B A N
I
3 1
2 1
9 5
3 1
5 3
WORDWHEEL          15 Carapace (5)
C E R E S I N         
R O S S I N I O E
9 4 2 8 7 5 6 9 The nine-letter word was 16 Brute (5)
V E S F T 8 5 1 2 9 4 3 7 6         
B E R T H E N T R Y 8 6 9 1 2 5
NEWSFLASH         
 Sport
25
CARROLL MOVES FOR £35M AS
CLUBS GO TRANSFER CRAZY
TOP FLIGHT SPENDING SMASHES
JANUARY RECORDS: PAGES 26-27

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▲

TENNIS
until he was 12, is a regular spectator :fcZ_\jk\i#;X^\e_XdI\[Yi`[^\m9i\ek]fi[#<o\k\im
BY FRANK DALLERES Jflk_Xdgkfe#?l[[\ij]`\c[m:Xic`jc\#C\pkfeFi`\ekm9i`^_kfe#
at courtside and she too lends her not
Fc[_Xdm?Xikc\gffc#G\k\iYfifl^_mJ_\]]`\c[N\[e\j[Xp#
BRITISH No1 Andy Murray is facing inconsiderable wisdom. KiXed\i\mIfZ_[Xc\#P\fm`cmGcpdflk_%C\X^l\Knf1
fresh calls to overhaul his coaching Yet there are observers who feel 8ZZi`e^kfeJkXec\pmDfi\ZXdY\#8c[\ij_fkm9Xie\k#9iX[]fi[
team after his grand slam final heart- Murray (inset) could take his game to mC`eZfce:`kp#DXZZc\j]`\c[m9lip#Efik_Xdgkfem:i\n\#Gfik
break continued at the Australian the next level if he brought in more MXc\mIfk_\i_Xd#J_i\njYlipm9likfe8cY`fe#Jflk_\e[m
Open. specialist help. Fo]fi[Lk[#Jk\m\eX^\m>`cc`e^_Xd#JkfZbgfikm:_\jk\i]`\c[#
KfihlXpm?\i\]fi[#NpZfdY\m:_\ck\e_Xd%
Murray was swept aside by Darren Cahill, the Australian :cp[\j[Xc\9XebJZfkk`j_Gi\d`\iC\X^l\18Y\i[\\e
Novak Djokovic on Sunday, who has coached Lleyton m:\ck`Z#JkAf_ejkfe\m?Xd`ckfe%
earning him the dubi- Hewitt and Andre
ous distinction of Agassi, has been tout- email sport@cityam.com
becoming the first ed as a possible addi-
man to play three tion to the Murray
major finals with- entourage. Cahill is
out winning a set. thought to be an
The Scot has admirer of the grit- SPORT | IN BRIEF
ploughed on with- ty 23-year-old and
out a full-time specialises in help-
coach since sacking ing defensive players Southgate lands FA position
Miles Maclagan after hit more winners. FOOTBALL: Former England defender
last year’s Wimbledon Anyone who saw Gareth Southgate will take on the
– some six months ago. Murray surrender the ini- newly-created role of head of elite devel-
Murray works part time tiative to the more attacking opment for English football. His main
with Alex Corretja, a clay court Djokovic on Sunday would be responsibility will be to develop more
specialist, and practices with his best hard pushed to argue he could not young players. “As a former England
friend Dani Vallverdu, who also pro- use assistance in that area. With five player I’m committed to helping develop
vides some background information months until the next grand slam, a greater number of high-quality inter-
on opponents. His mother, Judy, a for- this might be the perfect time. national players,” Southgate said.

NEARLY MEN | THREE MORE GREAT BRITISH ALSO-RANS Doran-Jones set for Gloucester
RUGBY UNION: Northampton have con-
firmed that England prop Paul Doran-
Jones will join them from Premiership
rivals Gloucester in the summer. The 25-
year-old, who can play on both sides of
the scrum, won his only international
cap against Argentina during the 2009
autumn internationals.

Bangalore to host England game

CRICKET: England’s World Cup group
Eight times European Order He made six world snooker A proto-Murray, Tim match against India will now take place
of Merit winner and Ryder championships, but Jimmy Henman reached the semis ENGLAND have called up Liam Plunkett to ease their bowling injury crisis ahead of the in Bangalore on 27 February. Kolkata’s
Cup legend – but a Major’s White lost them all, most at Wimbledon four times, remaining one-day internationals in Australia. The Durham paceman is set to leave the Eden Gardens had been set to host the
eluded Colin Montgomerie agonisingly in 1994 but never won a slam Lions’ tour of the Caribbean and fly Down Under, but will not arrive in time for tomor- fixture, but an ICC inspection team last
row’s sixth ODI. England trail 4-1 in the best-of-seven series. Picture: GETTY week said it would not be ready in time.

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26 Sport CITYA.M. 1 FEBRUARY 2011

DEADLINE
Chelsea land
Torres and
Luiz for £71m
joining a club he sees as a significant
▲

FOOTBALL

SPORT
BY FRANK DALLERES
CHELSEA’S newest recruit Fernando
Torres toasted his arrival at “one of the
improvement on the transitional
Anfield outfit.
“I’m a Chelsea player, I’m really
happy and I’m sure I’m making a big
step forward in my career,” said Torres.

TENNIS
top clubs in the world” after complet-
ing a £50m move from Liverpool to
become the most expensive signing
ever by a British club.
Torres last night clinched a five-and-
a-half-year contract thought to be
“Everyone is expecting a lot of good
things for me and I’m prepared and
ready for the challenge. They’re the
kind of team I like to play for because
it’s always very tough against them –
they are one of the biggest teams in

TEAM worth £175,000-a-week as Premier

League clubs threw caution to the
wind and took January trans-
Europe, always fighting for everything.
“After that there is no step for-
ward; this is the top level and

MURRAY fer window spending to a

record £215m.
The Blues also
this is the target for every
footballer, trying to play
for one of the top clubs

FAILING wrapped up a £21m

deal for Benfica
defender David Luiz
in the world – and I
can do it now.”
The fee makes

ANDY? as they returned to

their extravagant
ways of old in spectac-
ular fashion, shelling
out a combined £71m
Briton facing calls before the 11pm deadline.
Incredibly, Chelsea’s enor-
to hire full-time mous outlay came just hours
after the club announced an operating
loss of more than £68m for the last
coach: page 25 financial year.
Spain striker Torres is in line for an
emotionally charged debut when
Liverpool, the team he asked to leave
having grown disillusioned by their
decline, visit Stamford Bridge on
Sunday. But the 26-year-old World Cup
winner showed no mixed feelings last
night when he declared his delight at
Torres the fourth
most expensive play-
er in history and oblit-
erates the previous
highest paid by a British
club, when Manchester
City paid Real Madrid £32m
for Robinho in August 2008.
Such extravagance reaffirms faith
that owner Roman Abramovich retains
enthusiasm for the club, and will pro-
vide a huge boost as they look to hold
onto their top-four status.
Brazil international Luiz (inset) has
signed until summer 2016 in a deal
that will see midfielder Nemanja Matic
move to Benfica. Chelsea also let young
striker Daniel Sturridge join Bolton on
loan until the end of the season.

Have European financial fair play rules gone out of the window?
▲

ANALYSIS
EUROPEAN chiefs may want clubs to
start breaking even, but that did not
stop a huge Premier League spree yes-
terday. With so-called Financial Fair
Play (FFP) rules on the horizon, City
A.M. asked Dan Jones, of Deloitte’s
Sport Business Group, to explain.
TIMELINE
Q: Are clubs ignoring FFP rules?
A: Liverpool are shipping out a high-
wage earner and bringing in a not-so-
high-wage earner, so they’d be edging
towards break even. And though
Chelsea have brought in Torres you’d
expect a high-wage earner to leave in
due course. Clubs do have a couple of
years to get their financial house in
order and reach break-even. I think
we’re starting to see some impact of
FFP, but that impact will snowball as
time goes on.
Q: With FFP rules taking effect from
next season, are we seeing one of
the last big spending windows?
A: The transfer window will always be
a busy time but clubs will have to have
one eye on breaking even. The whole
transfer fee does not go through the
profit/loss account in one go. And FFP
is about the profit/loss account and
paying creditors on time, it’s not
about debts and balance sheets.
Q: If FFP rules don’t apply until
2012, will deals done yesterday
have any impact?
A: If you’re signing a player now on a
three-year contract then the deprecia-
tion of his transfer fee and his salary
will still have an effect into next year’s
account. Decisions made yesterday
will be affecting accounts for two or
three years down the line.

Newcastle’s Andy Carroll is
reported to be the subject of a
£30m bid from Liverpool. Paul
Konchesky, not Fernando
Torres, is the first Anfield exit
of the day. The former Fulham
left-back joins Nottingham
Forest on loan until the end
of the season.
9AM
Tottenham manager Harry
Redknapp doesn’t expect any
new faces at White Hart Lane.
Another avenue of opportuni-
ty closes for Spurs as Sergio
Aguero signs a new contract
at Atletico Madrid. Aston Villa
say Liverpool target Ashley
11AM Young is not for sale (left).
Is it a bird? Is it a plane? No,
it’s reportedly Fernando
Torres in a helicopter on his
way to Chelsea after a fee is
agreed with Liverpool. Andy
Reid and James Beattie are
both off to Blackpool on loan,
but will Charlie Adam be
1PM there when they arrive?
Aston Villa make a shrewd
loan signing in the shape of
USA star Michael Bradley.
Midlands rivals Birmingham
bring Obafemi Martins back
to the Premier League on loan
and Manchester United are
said to be in the race to sign
3PM Blackpool’s Adam (right).
CITYA.M. 1 FEBRUARY 2011 Sport 27

DAY DRAMA Reds tie up shock deal for £35m Carroll

Liverpool make striker 26

Sport
CITYA.M. 18 JANUA

most expensive British

RY

Premier Leagu
e
footballer of all time and January spen ’s
ding
set to top £10
Scudamore broadly
financial guidelin supports Uefa’s new
es for clubs
Pic: PA

0m
Scudamore has

he’s joined by Suarez no fear over fair

play regulations FOOTBALL

▲
BY JAMES GOLDMAN Januar y 2010
ASTON VILLA’S ing window – followed big-spend-
FOOTBALL s
2009 (£170m in 2008 (£150m) and

▲
bid for Sunder club record £24m ).
Bent looks land striker But with sides
PREMIER LEAGU set to trigger Darren tion jockeying for
Richard Scudam E chief executi transfer window a flurry of in one posi-
ore insists no ve pels top flight activity that pro- flight season of the tightest top
clubs will be English
£100m mark. spending past the points separas for years – only six
competition banned from Europe tes bottom
for contrav an Ham and side West
soon to be impose ening Uefa’s Hard-up Premie 12th
d new financi spent just r League clubs chairmen appearplaced Everton –
play laws. al fair
Januar y but £30m in total last sanction signing more willing to
The rules are s that could
ensure clubs being introdu
ced to would take Bent’s proposed move a vital differe
nce. make
around £65mthis month’s total to
▲

FOOTBALL
money than do not spend more Villa have
with £7m already shelled
introduced they earn and will weeks of trading almost two full on Camer out
be The 26-year left. Makoun and oon midfielder Jean
offences could gradually. Extrem could be lookin
-old underw recoup
the Championssee teams banned frome medical in
the Midlan ent a offload some of that moneyg to
Big-spending League from 2014. ahead of a
move though
ds yesterday
Englan
ing one, or
both,
by
Manchester English sides worth an initial t to be and d wingers, Stewar of their
City and Chelsea such as

BY JAMES GOLDMAN
be forced to ther £6m in £18m, with Ashley Young, t Downing
tighten their may well incenti a fur- Liverpo who are on
result, but Scudam belts as Bent’s switch ves. ol’s radar.
have no problem ore is sure they willa directly or
indirec
is expected The
to tionall Merseysiders are tradi-
accordingly. in cutting their eral other deals, tly facilitate sev- y conservative
cloth with Villa tipped in Januar y, spende rs
“I don’t to balance but
players and the books by selling for Ajax striker a £15m move
where any of see any circumstances Sunder Luis Suarez
our clubs could use their windfa land likely has been mooted
to exclusion,” get near
sible. It’s not he said. “Uefa is too sen- while, were ll. Liverpool, to Meanwhile, .
mean- end at
in its interes ready to spend,already believe of the table, the other

LIVERPOOL last night made Andy

“It’s more about ts to do so. d
out of the system taking the look likely while Tottento be League chasin Champions
ham hoped g Chelsea had
bump rather and acting as steam to
Pienaar after sign Everton’s Steven to gazum
than about a speed having a bid Spurs over Pienaa p rivals
In general we’re barring clubs. last night. accepted r by offer-
supportive.” Last year’s ing Everton
more mome already outline
£7m was theshortage of big deals – but Spurs agreed y, d his determ

Carroll the most expensive British foot- highest fee around £2m. a fee of to sign a central ination Sunderland could

City A.M. join

paid in for Thomas defender to bank
Arsene Wenge Verma cover £24m if Bent’s
r has keeper Anders elen, while goal- move to
Villa goes through
joined Manch Lindergaard

with the Epsosmforces

ester United has
.
Picture: GETTY

baller of all time after they paid

Shahzad: Colly
Newcastle an astonishing £35m for the HORSE RACIN
Derby was a wake up ax e

▲
c ll
G

services of the England striker. BY FRAN D

The St James’ Park club rejected two

offers from Liverpool earlier in the day,
as Kenny Dalglish attempted to com-
pensate for the departure of Fernando
Torres to Chelsea, before the 22-year-
Clubs smash
old handed in a transfer request and
was given permission to open talks
with the five-time European champi-
ons.
Jan records
The deal was eventually concluded
just before the 11pm deadline and took

Torres is the fourth most
expensive player ever
Picture: GETTY
Liverpool’s spending during the trans-
fer window to £57.8m after the club
confirmed Ajax’s Uruguay striker Luis
Suarez would wear their famous No7
shirt and form the other half of their
new look forward line.
A Liverpool statement read: “Andy
Carroll has tonight completed his
transfer from Newcastle United to
Liverpool FC and signed a five-and-a
half-year deal that will keep him at
Anfield until 2016.
“The deal was subject to the comple-
tion of a medical, which the player has
now passed. Andy Carroll will wear the
No9 shirt for Liverpool.”
The Anfield club’s late splurge could
have been even greater had Blackpool
not successfully fought tooth and nail
to keep hold of midfield schemer
Charlie Adam, while Manchester City
rebuffed the Merseysiders’ approach
for their right-back Micah Richards.
Carroll’s shock move to one of
England’s elite clubs marks a remark-
able rise for a player who this time last
year had scored just four goals in
Newcastle’s push for promotion from
the Championship.
The powerful centre forward has
scored 11 goals in this, his first full sea-
son in the Premier League and won his
first full England cap in November.
▲
FOOTBALL
THE £215m spent by Premier League
clubs before last night’s deadline set
a new record for the January win-
Carroll joins Suarez dow – and fulfilled one of City A.M.’s
in a new look Anfield predictions.
forward line More than £130m was spent yester-
day alone – four times the entire sum
Picture: PA shelled out in January 2010 and top-
ping the previous best of 2008.
Six deals topped £20m – those for
Fernando Torres, Andy Carroll, Luis
The fee eclipses the £31.1m paid by Suarez, Edin Dzeko, Darren Bent and
Manchester United to Leeds for David Luiz – while the fees for Torres
England captain Rio Ferdinand in July and Carroll both eclipsed the previ-
2002 and is more than double what ous record of £32m Manchester City
Newcastle paid for Alan Shearer, the paid for Robinho in August 2008.
man who Carroll inherited the Aston Villa’s £24m move for Bent
Magpies’ No9 shirt from, in 1996. earlier last month prompted City A.M.
Carroll is currently recovering from to project that the domino effect
a thigh injury and flew to Sweden last would see the total amount exceed
week to see a specialist. £100m. It did – and then some.

Blues lose £68m – and that’s without yesterday SPEND REPORT

This year’s January spending obliterated
the previous record, set in 2009
which they won the Double. down from £15.5m to £4.2m, with operating loss on amortisation – the
▲

FOOTBALL 2008 £150m

CHELSEA’S £71m deadline-day
splurge came as the club announced
losses of more than £68m for last
year. The Blues yesterday released
their results, which had been expect-
ed last month, for the financial year
ending June 2010, the season in
Despite their success they made an
operating loss of £68.6m, slightly
down from the previous year’s
£72.3m, and a total loss of £70.9m.
Chelsea’s group turnover grew to
£205.8m, from £203.3m, thanks to
Premier League and FA Cup wins,
while net capital expenditure was
the drop attributed to player sales.
The losses cast doubt on the club’s
ability to meet European rules, set to
be activated next season, designed to
force clubs to break even.
But Chelsea cited its “positive cash
inflow” of £3.8m and blamed the vast dis-
crepancy between that figure and their
declining value of a player on a balance
sheet as their contract elapses.
Chief executive Ron Gourlay said: 2009 £170m
“The club is in a strong position to
meet the challenges of ‘financial fair 2010 £30m
play’ initiatives which will be rele-
vant to the financial statements to be
released in early 2013.” 2011 £215m

Carroll has a transfer
request accepted by
Newcastle. Torres, helicop-
ter or no helicopter, under-
goes a medical at Chelsea.
Busy Kenny Dalglish fails
with a cheeky bid for
Manchester City right-back
Micah Richards.
As news comes through of an
agreement between Chelsea and
Liverpool, so the first footage of a
flaming Torres shirt (right) is
aired by Sky Sports News.
Redknapp, conspicuous by his
absence, is reported to have
made a £28m bid for Villarreal’s
5PM Italy striker Giuseppe Rossi.
Not content with Torres, Chelsea
agree a £21m fee for Benfica’s
David Luiz. Newcastle take
Stephen Ireland on loan from
Aston Villa as Carroll is spotted in
Liverpool with a £35m fee having
been agreed. Blackburn sign
Argentine Mauro Formica and
7PM Barca striker Ruben Rochina.
Bolton welcome Daniel Sturridge
to the club on loan by posting a
picture of Danny Welbeck on
their website. Eidur Gudjohnsen
will play for a third London club
after agreeing a loan deal with
Fulham. No strikers for Spurs
though and Redknapp also fails in
9PM bids for Phil Neville and Adam. 11PM
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