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BUSINESS WITH PERSONALITY

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BUSINESS WITH PERSONALITYwww.cityam.comIssue 1,293 Wednesday 5 January 2011 FREE

FTSE 100 6,013.87 +113.93 DOW 11,691.18 +20.43 NASDAQ 2,681.25 -10.27 /$ 1.56+0.01 / 1.17+0.01 /$ 1.33 -0.01 Certified Distribution1/11/10 - 28/11/10 is 113,348

VAT Focus:

THE IMPACT

OF THE TAX

RISE p10

POSITIVE economic news from acrossthe globe saw a sharp rise in Londonstocks, with the FTSE jumping abovethe psychologically-important 6,000

barrier.It finished the day up almost two

per cent at 6,013.87 its highest closesince the start of June 2008.

And US markets also reacted posi-tively after being reassured by theminutes of the Federal ReservesDecember meeting, which showedcautious optimism for the economicoutlook. The Dow Jones Industrial

Average closed 0.18 per cent higher at

11,691.18 after the announcement.With the recent data on produc-tion and spending stronger, on bal-ance, than anticipated, the staff

revised up its projected increase inreal GDP in the near term, the min-utes said.

Conditions in the labour marketappeared to be improving on bal-ance, the Fed also recognised.

However, the Fed still viewsprogress towards its goals of maxi-mum employment and price stabilityas disappointingly slow and showsno signs of reversing its programmeof quantitative easing (QE2).

While the economic outlook wasseen as improving, members general-ly felt that the change in the outlook

was not sufficient to warrant anyadjustments to the asset-purchaseprogramme, the minutes said

Several members said they had afairly high threshold for makingchanges to the programme.

In the UK, exceptionally strong

manufacturing data spurred marketsentiment earlier in the day.Economists were predicting a declinein Decembers factory activity, but itsoared to a 16-year high.

The manufacturing sector ended2010 in really good shape and made ahealthy contribution to fourth quar-ter GDP growth, said Howard Archerof IHS Global Insight, commentingon the purchasing managers index(PMI) results.

Economists had expected the win-ters blizzards to hamper the resur-gent UK manufacturing sector.

Even the British housing marketreceived some rare good news, asmortgage approvals unexpectedly

increased in November to over48,000, the Bank of England said.The stockmarket boost came after

similar rises on Monday in the US,

Europe and Asia, when London wasclosed for the Bank Holiday.

Meanwhile, US data yesterdayshowed that American factory ordersrose in November, surprising econo-mists who had expected stagnationor even a fall in US manufacturing.

US auto sales were also up inDecember, reaching their highestlevel for 16 months far outperform-ing Wall Street expectations and indi-cating a strong recovery in thecoming year. Vehicle sales exceeded13m in the 12 months to December,closing a year in which car sales rose

by 11 per cent -- a strong turnaroundfor the formerly beleaguered industry.

The stream of positive economic

reports came ahead of the publica-tion of the minutes of the FederalReserves (Fed) December meeting.

ECONOMICS: P13

FTSE BOUNCES INNEW YEAR RALLY

BY JULIAN HARRISWORLD ECONOMY

Ben Bernankes Federal Reserve has revised up its short run growth projections for the US economy, after a series of optimistic data releases and stock market surges

Oberthurplays nastywith De LaRue offer

FRENCH money-printer OberthurTechnologies tried yesterday to stir up

a row among shareholders of itstakeover target, De La Rue.

On the first day for De La Rues newchief executive Tim Cobbold, Oberthursaid the company had lost its largestclient, the Reserve Bank of India, andcalled on the board to inform share-holders. The tender for the supply of16,000 tons of currency paper by theReserve Bank of India has been award-ed to four competitors of De La Rue,Orberthur said.

The four competitors in question areArjo Wiggins, Louisenthal, Crane andFabriano, said an industry source. Theperson also said that Oberthur hadlearned of the contract decisionthrough the grapevine in the money-printing community.

In response, De La Rue stated its con-tract with the client in question is stillup in the air, with negotiations ongo-ing. But RBIs decision not to invite itsformer printer to pitch for the newcontract suggests that it is keen toreplace the company.

The likely loss of RBI is a severe blowfor De La Rue, meaning it is wouldmiss out on several thousand tons of

business a significant proportion ofits annual banknote production ofaround 15,000 tons. However, since itscontract with RBI was suspended in

July last year, it has won new contractsto put volumes for 2010 on a par withthose in the previous year.

Shareholders will now be on thereceiving end of a campaign ofphonecalls from both Oberthur andDe La Rue as they attempt to persuadethem of the pros and cons of the 905p

bid. De La Rues board is said to be seton a price over 10.

The privately held Oberthur, whichapproached De La Rue in early

December with a bid, has been court-ing shareholders ever since its offer of905p was rejected as opportunistic.

ANALYSIS: P4

BY JULIET SAMUEL

MANUFACTURING

11,630

11,640

11,650

11,660

11,670

11,680

11,690

11,700

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ANALYSIS lDow

11,691.184 Jan

ANALYSIS l FTSE

6,020

5,980

5,940

5,900

6,060

08:00 10:00 12:00 14:00 16:00

6,013.874 Jan

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News2 CITYA.M. 5 JANUARY 2011

Morgan Stangets new COOMORGAN STANLEY has appointed itshead of technology as chief operat-ing officer.

The bank yesterday named JimRosenthal to succeed Tom Nides, who departed late last year to jointhe US State Department underHilary Clinton as deputy secretaryfor management and resources.

Rosenthal will handle the integra-tion of the New York investmentbanks brokerage joint venture withCitigroup Smith Barney, of which itholds a 51 per cent stake.

He will also oversee humanresources, corporate communica-tions, marketing, community affairsand corporate services.

Rosenthal joined from commer-cial real estate business Tishman

Speyer in 2008, where he had worked as chief financial officersince 2006.

The Harvard Law School graduatehas worked for Lehman Brothers andMcKinsey & Co, the consulting firmwhere he and Morgan Stanley chiefexecutive and president JamesGorman got their Wall Street starts.[Rosenthal is] a talented and sea-soned executive who will continueto provide broad leadership to ourFirm as [a] member of the OperatingCommittee, said Gorman in aninternal staff memo.

BYRICHARD PARTINGTON

BANKING

We are barking up the wrong tree

ANOTHER day, another set of strongglobal economic figures. UK manufac-turing is expanding at its fastest ratesince 1994, according to a key survey.US factory orders are accelerating andthe Fed upped its growth outlook lastnight. The world is undergoing anemerging-markets led rebound; bar-ring an implosion in the Eurozone orsome other geopolitical catastrophe,2011 ought to be another decent year,including for the UK, as I argued inthis space yesterday. Im more con- vinced than ever that Britain willexpand by around two per cent.

But decent should not be goodenough. This ought to be a new gold-en age, just as it is in Asia, LatinAmerica and many other parts of theworld. The continued hangover from

the unwinding of the bubble is onlypart of the reason why we are still suf-fering so much and failing to graspthe opportunities that ought to be inour reach. The biggest problems aremore deep-seated in nature: years ofblunders on public spending, tax, reg-ulation, education, welfare and infra-structure. Bogged down by the needto sort out the mess left by the previ-ous government, and opposition tocuts from a public which has got usedto living beyond its means, the coali-tions welfare and education reformagenda is faltering.

Britains commentariat and politi-cal classes have been barking up the wrong tree for months, obsessingwith short-term growth figures thatwere always going to turn out betterthan they thought (and over whichthey have no control) and waging a

misguided and destructive waragainst the City, rekindling the poli-tics of envy. The result is that the realissues facing the country how to tryand cash in better on the emerging

markets boom and the technologicalrevolution by tearing up failed 20thcentury institutions; and how toreform policy to prevent another bub-ble have been woefully overlooked.

So far, the coalition has semi-suc-cessfully undertaken emergency sur-gery on the UK, preventing it fromgoing the way of Greece, though cen-tral government spending was still upan absurd 10.8 per cent in the year toNovember. But while fiscal policy ison the mend, tax policy is increasing-ly damaging to enterprise, monetarypolicy is much too loose and failing tocontrol inflation, and the attack onthe City is costing jobs.

Part of the problem is that theworld remains enthralled to intellec-tually bankrupt ideologies. The worstis the belief that central banks canand should act to prevent all econom-

ic fluctuations or even stock marketslumps by cutting interest rates orbuying bonds; this has been pushedto a new extreme since the late 1990sand was one of the main drivers of

moral hazard and excessive risk-tak-ing during the bubble. Americasrenewed QE policy is a perfect exam-ple of such extreme monetaryactivism; as a result, the global bondsmarket is in a dangerous bubble. Another idiotic belief is that debtholders should never have to bear anylosses and that financial institutionsshould not be allowed to fail; again,this is fuelling moral hazard andthreatening to bankrupt weaker gov-ernments, who are bailing out thecredit markets.

So not only are we failing to cap-ture enough of the benefits of theglobal boom but we are yet again lay-ing the seeds for another bust at somepoint. Just think how good thingscould be today if policy-makers didntkeep getting it wrong.

[email protected]

SUPERMARKET Asda said yesterdayits chairman Andy Bond stood downon 1 January after less than a year inhis part-time role.

Bond, who left the chief executivejob in April 2010, will also leave par-ent company Walmart once its 16.5bnrand (1.5bn) purchase of a majoritystake in South African supermarketMassmart goes through. The firmsaid this was likely to take place by

the end of March.Walmart president Doug McMillon

said in an internal email to staff thatBond has been and will continue to be instrumental in our efforts toacquire a majority interest inMassmart.

Asda chief executive Andy Clarkesaid Bond had made the handoverprocess smooth and seamless.

Bond worked for Asda for 16 years,five of those as chief executive. Hesaid yesterday he is leaving to pursuenew challenges.

BYMARION DAKERS

RETAIL

Asdas Bond steps down Asda chairman Andy Bond is leaving to pursue new challenges Picture: REX

NEWS | IN BRIEF

Ocado shares top float priceShares in online grocer Ocadorocketed past their 180p float price forthe first time yesterday, hitting196.7p ahead of its first update since

joining the stock market last July. Thecompany, which is yet to post a profit,gained 10 per cent in trading, its steep-

est rise in more than a month. It willupdate investors on Monday on its per-formance since going public in a369m float, when it was forced toslash its initial price from a range of200p to 275p down to 180p.

AIG sued by former employeeA former employee of AIG is suing heremployers and PwC, claiming that audi-tors were negligent in checking theinsurers financial strength and that AIGhas failed to pursue a claim. WandaWimms has brought a case in the NewYork Southern District Court on behalfof the AIG Inventive Savings Plan,which lost out when the insurer col-lapsed in 2008. She has argued thatPwC should have known that AIGsshare price was inflated by inaccuratefinancial statements. PwC and AIGdeclined to comment last night.

EDITORS LETTER

ALLISTER HEATH

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EditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowNight Editor Katie HopeBusiness Features Editor Marc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Craig GaymerPictures Alex Ridley

CommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

Head of Distribution Nick Owen

Editorial StatementThis newspaper adheres to the system of

self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the EditorsCode of Practice, a copy of which can be found atwww.pcc.org.uk

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Distribution helplineIf you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or [email protected]

Jim Rosenthal hasbeen appointed chiefoperating officer atMorgan Stanley, takingover from Tom Nides.

BOND SURGE ON BOTH SIDES OF THEATLANTIC AS COMPANIES VIE FORFUNDSCompanies have embarked on anearly-year rush to issue debt in aneffort to beat rivals and secure f inanc-ing before any rise in borrowing costs.The surge in bond issuance on bothsides of the Atlantic on Tuesday cameas equity markets rallied on bettergrowth prospects for the US economyand corporate earnings. Almost$12bn of bonds were sold by the endof the European day, according toDealogic, with billions more due toprice in the New York afternoon.

ITV AND BSKYB CAME CLOSE TOMERGING NEWSBritish Sky Broadcasting and ITV dis-cussed merging their news opera-tions in 2006, according to people

involved in the talks. The talks,which involved Dawn Airey, then con-

troller of Sky Television, and the chiefexecutives of ITV and ITN, its news

supplier, reached an advanced stageand identified major savings for both broadcasters before they weredropped because BSkyB bought a940m stake in ITV.

SONY MUSIC CLOUD RISES OVERRIVALSSony is set to steal a march on rivalsSpotify and Apple by becoming thefirst company to launch a cloud-basedmusic streaming service in the highlylucrative US market.

PETROBRAS IN TALKS OVER ENISGALP STAKEPetrobras, Brazils national oil compa-ny, said yesterday that it was in talkswith Eni, the Italian energy group, toacquire its 33 per cent stake in Galp,the Portuguese oil company. It fol-lowed press reports in Portugal thatPetrobras was ready to pay 3.5bn

(3bn) for the stake, less than the ask-ing price of4.7bn.

TESCO DISMISSES FRAUD LINK TOCASH FOR GOLD DIRECTORThe man running Tescos new cash-for-gold service was a boss of a fraudu-lent college that swindled nearly80,000 students. Peter Kenyon, chiefexecutive of Ramsdens FinancialServices, was a director of NationalDistance Learning College. His busi-ness partner, Michael Smallman, isserving a seven-year sentence forfraudulent trading and money laun-dering after he was convicted in 2008of tricking students into believingthey would receive a recognised qual-ification. Mr Kenyon was cleared ofany wrongdoing and there is no sug-gestion that he acted improperly.

THE TRAIN NOW LEAVING IS THEPENSION EXPRESSBritains train barons are steaming

towards retirement with multimil-lion-pound fortunes.

MICROSOFTS INTERNET EXPLORERLOSES TOP SPOT TO FIREFOXMozillas Firefox has replacedMicrosofts Internet Explorer as themost widely-used web browser inEurope. Internet Explorer appears tohave been dethroned becauseGoogles Chrome is stealing sharewhile Firefox is mainly maintainingits existing share. The search enginetook a 38.1 per cent market shareacross the continent in December, sur-passing Internet Explorers 37.5 percent.

US MARKET WILL RALLY FOR THIRDYEAR, BLACKROCK PREDICTSBlackrock, the worlds biggest assetmanagement firm, has predicted thatUS stock markets will record theirthird straight year of gains since thefinancial crisis, brushing off anxieties

about Europes debt woes and thescale of stimulus in the US.

COURT CHANGES LAW ON PATENTDAMAGES A federal appeals court Tuesdayrestored a jury verdict that MicrosoftCorp. infringed a patent related tocombating software piracy, but ruledthat the software giant was entitledto a new trial on damages. ThoughMicrosoft lost on the patent at issuein the case, it may have won a largerlegal battle because the court's rulingcould be used to limit the size ofmonetary damages in patent-infringement cases.

INSURERS SUE TOYOTA OVERACCELERATION CLAIMS COSTSSeven insurance companies have filedlawsuits against Toyota seeking aminimum of $230,000 to cover thecost of claims paid for accidents relat-ed to the unintended acceleration

problems identified in Toyota vehi-cles in the past several years.

WHAT THE OTHER PAPERS SAY THIS MORNING

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FACEBOOK could be forced to go pub-lic by the US Securities and ExchangeCommission (SEC) after Goldmans$500m (320m) investment, which

valued the online giant at around$50bn.

Goldmans cash injection is to bestructured as an investment vehicleand sold on to clients, who can thentrade their stakes on secondary mar-kets.

Goldman has given clients until

the end of the week to decide whether they want to invest in thesocial networking firm, with anexpected minimum investment of$2m.

The SEC watchdog is looking close-ly at secondary trading markets tosee whether Facebook falls under arule stipulating that firms with morethan 499 shareholders must go pub-lic.

Experts are divided on whetherGoldmans vehicle will count as a sin-

gle investor or create hundreds ofnew Facebook shareholders.

Facebook gained an exemptionfrom this rule in November 2008 byarguing that most of its shares areheld by staff, but it has not releaseddetails of all its investors.

SecondMarket, a platform thatallows traders to exchange stakes inprivate companies, admitted yester-day that the SEC had requested infor-mation linked to secondary trading.

We have now received a voluntaryrequest for information from the SECregarding pre-IPO pooled investment

funds, said Mark Murphy, aspokesman for the New York-based

broker. We are fully cooperating.The SEC declined to comment.

Facebook maybe forced totrade publicly US BANKING regulators have autho-rised lawsuits against 109 bank offi-cials so far as they seek to recover atleast $2.5bn (1.6bn) in losses con-

nected to recent bank failures. The Federal Deposit Insurance

Corp said yesterday the suits target bank directors and officers foreither gross or simple negligence.

It is seeking to recoup money forits deposit insurance fund, which

backs customer accounts.It is the first time the FDIC has

published the number of bankersfacing legal action.

The regulators website will beupdated monthly with a runningtally of the amount of lawsuitsauthorised and how much theagency is seeking to recover. So far,however, the FDIC has only filed

suits against directors and officersfrom two banks.

In November, the agency sued for-mer executives of HeritageCommunity Bank of Illinois. Whenthe bank failed in February 2009, theFDIC estimated it would cost theinsurance fund $41.6m.

In 2010, 157 banks with totalassets of $92bn failed. FDIC chair-man Sheila Bair has said the agencyexpects the number of failures todrop in 2011.

US could bringlawsuits against109 bank staff

Citigroup chief Vikram Pandit has been named in the fraud case Picture: Getty

BYMARION DAKERS

TECHNOLOGY

ENFORCEMENT

The Exchange Act forces a company with$10m or more in assets to go public if it has500 or more shareholders. The rules allow some groups such as truststo count as a single investor.

FAST FACTS | US PUBLIC TRADING LAW

News 3CITYA.M. 5 JANUARY 2011

CITIGROUP chief executive VikramPandit was among the executivesnamed in a fraud case registered bythe Indian police yesterday.

The bank has been accused ofinvestment fraud by one of its NewDelhi customers, Sanjeev Agarwal,

who put the cost of the alleged fraudat around 324m rupees (4.6m) in a

written complaint.The bank said in a statement that it

identified a fraud and immediatelyreported it to regulators and lawenforcement agencies.

It added that the claims againstsenior executives are completely

without basis and we intend to con-test them vigorously.

A Citigroup employee in New Delhiwas arrested last month and has beensuspended by the bank.

The police said yesterday that theyhad registered the case and will inves-tigate the charges.

Citigroups Indian investmentbank branch accused of fraudENFORCEMENT

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THE fate of British money-printer DeLa Rue lies in its shareholders handsthis week, as Oberthur Technologiestries to sell them on its takeover bid of905p, worth 895m in total.

Oberthur, which is being advised byLazard & Co and HSBC, upped thestakes yesterday by claiming that De LaRue has lost its biggest client, without

which some analysts have said itwould be worth only 620p per share.

Shareholders will have to decidewhether to hold out for more whenthey could take a safe bet at 9.

Oberthur has tried to boost itsappeal further by promising not totake jobs abroad if it gets control of theUK firm, which prints sterling ban-knotes for the Bank of England.

In its statement yesterday, it said:Oberthur intends to maintain the

production of all sterling banknotes inthe UK. However, the company wouldnot make a commitment on the pro-

duction of passports. Unite the unionsaid in December that it was opposedto the French takeover.

De La Rues biggest shareholdersinclude Capital World Investors, whichowns 15 per cent, Prudential, whichhas 12 per cent, and Capital Researchand Management, which owns nineper cent of its stock. The company isadvised by JP Morgan Cazenove andRothschild.

Shareholdersto decide fateof De La Rue

THE TAKEOVER Panel issued a put upor shut up deadline on food tycoonRanjit Boparan yesterday over hisinterest in taking over Northern Foods.

Boparan has until 21 January tomake a firm bid for Northern, which iscurrently working with Irish conven-ience food maker Greencore on amerger that would create a company

with turnover of 1.7bn.

His firm Boparan Holdings, whichowns Harry Ramsdens fish shopchain, has been given access toNortherns books to conduct due dili-gence but has not put a value on itspotential offer.

Northern welcomed the decisionand said it would continue to recom-mend that shareholders approve themerger with Greencore at a vote on 31

January.

Boparan told to put up or shut upover Northern takeover interestM&A


Tim Cobbold (bottom) is De La Rues new chief executive and Nicolas Brookes is chairman

ANALYSIS | Oberthurs overtures to De La Ruesshareholders have just begun, says Juliet Samuel

550

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11 Nov 1 Dec 21 Dec4 Oct 22 Oct

ANALYSIS l De La Rue

p

837.504 Jan

PINK Floyd has agreed to a five-yeardeal with record label EMI, followinga year of legal disputes.

The British rock group took EMI tocourt last year in an effort to protectits albums, with a high court judgeruling that the label could not sellindividual songs without consent.

However, yesterdays deal with theloss-making label will reportedly

allow the sale of digital downloads ofsingle songs from the Pink Floydsback-catalogue for the first time.

EMI has not disclosed the terms ofthe agreement, but chief executive

Roger Faxon said the label is lookingforward to continuing to help the band reach new and existing fansthrough their incredible body of

work.EMI has lost several high profile

bands since being bought by GuyHands Terra Firma private equity

vehicle in 2007.Hands has until 31 March to pre-

pare the label for its next loancovenant test. If EMI fails, lenderCitigroup could seize the company.

EMI reaches a five-year dealwith Pink Floyd after lawsuitBYMARION DAKERSLEISURE

Pink Floyd, includingguitarist Dave Gilmour,took record label EMIto court in March in afight over digital sales

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HEALTH product producer Danone yesterday saw its share valuationdowngraded by analyst Sanford CBernstein.

Growth expectations for this yearand the medium-term have beendowngraded for the worlds largestyogurt maker, despite a strong stockperformance in 2010.

It now carries a market-performrating, down from outperform, dueto risks facing its business.

Legal rulings recently blocked thepromotion of health benefits on its

products, including Actimel andActivia, which could hit performance.

ANGLO American has sold its Moly-Cop and AltaSteel businesses to Australian steel manufacturerOneSteel for $1,076bn (641m), in thelatest move to streamline the miningcompanys business and renew itsfocus on core commodity assets.

The sale was initially priced at$932m on a debt and cash-free basison 14 November 2010, but the finalfigure has been adjusted to includecash, debt, and certain other adjust-ments.

Moly-Cop, based in Santiago, Chile,manufactures grinding metal andowns facilities across Latin Americaas well as in Canada. AltaSteel is oneof its steel bar suppliers a mini-millbased in Edmonton, Canada. Controlof the companies will pass toOneSteel on 1 July, though approvalfor the deal is still subject toCanadian antitrust clearance and reg-ulatory review in both Australia andBrazil.

The sale also includes joint ventureinterests in the Donhad grindingmedia business in Australia, and inGenAlta Recycling in Edmonton,

Canada.Anglo announced a programme of

intended divestments in October2009, which comprised a portfolio ofnon-core assets including the ScawMetals Group, of which Moly-Cop andAltaSteel are a part.

The majority of the assets plannedfor disposal have since been sold,though certain UK, South Africanand Latin American assets are still upfor grabs. This latest transaction fol-lows the sale of Anglos zinc portfoliofor 1.3m in May last year.

A spokesman from Anglo said thatthough the rump of the non-coreassets had been sold, disposals of itsTarmac UK assets, Scaw South Africa,and phosphate miners Copebrs andCatalo were still in the pipeline.

The spokesman said that thoughplans to sell the remaining assetswere underway, timing on the poten-tial deals was yet to be confirmed.

Anglo Americans South Africanshares gained 3.31 per cent on thenews, boosting the JohannesburgStock Exchange Top 40 by 0.39 percent to close at R28,933.58.

The companys stock on the LSEclosed 2.14 per cent up at 3,407p, hav-ing surged to 3,468.5p earlier.

Anglo in $1bn

sale of foreignsteel assets

STANDARD Life has extended thedeadline of its cash offer for FocusSolutions after failing to gain accept-ances on all Focus shares.

It received acceptances from share-holders holding 82.7 per cent of Focusby the offers initial closing date of 31December. It has now extended thedeadline until 1pm on 14 January.

The original offer of 140p a sharewas announced on 10 December andvalued Focus at 42m.

Shore Capital analyst EamonnFlanagan said the extension was a nor-

mal book-keeping exercise and theoffer should reach full acceptance.

Standard Lifeoffer extendedLegal decisionharms Danone

BY ELIZABETH FOURNIER

MINING

MARKETS

INSURANCE

CHINESE vice premier Li Keqiangarrived in Madrid yesterday for a three-day visit.

He met finance minister ElenaSalgado and industry minister MiguelSebastian yesterday, and today willmeet King Juan Carlos and PrimeMinister Jose Luis Rodriguez Zapatero.

The visit follows the publication ofan editorial by Li on Monday in Spains

El Pas newspaper, in which he saidthat China was and will remain a long-term investor in Spanish sovereigndebt. Chinas public support couldprove crucial when the Eurozone crisisflares up again, with bond marketseyes on Spain and Portugal as requir-ing potential bailouts.

Chinese backing saw the cost ofSpains borrowing drop from a 5.5 percent yield on 10-year bonds to a 5.3 percent yield yesterday.

Chinese visit Spainto confirm support

EUROZONE CRISIS

Anglo Americanchief executiveCynthia Carrollsaid yesterday thatthe company hadcompleted the saleof two of its steelbusinesses.

Picture: REUTERS


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The Capitalist8 CITYA.M. 5 JANUARY 2011

EDITED BY

JULIET SAMUELGOT A STORY? [email protected]

NICK HEADSTO ARGOS

BEFORE VATBOMBSHELLPROOF that it pays to keep your eyespeeled, no matter where you are. ACapitalistsource was in touch yesterday tomention a sterling spot he made while

browsing Argos catalogues in his neareststore on Monday.

Who should show up but DeputyPrime Minister Nick Clegg? But pray,

what was the illustrious DPM doing inone of the mail-order vendors branches,

with its wide selection of big-ticket whitegoods? Could he have been, erm, gettinghis expensive purchases in just beforethe introduction of the coalition govern-ments VAT bombshell yesterday (slo-gan copyright of the Lib Dem press

office)?After all, any personal finance adviser

worth her salt was telling clients to gettheir big buys in before the tax jumped.Surely Clegg, who posed proudly in frontof Lib Dem posters denouncing the

Tories VAT policy during the generalelection campaign, must be feeling therise most keenly?

Sadly, Cleggs office wasnt able to tellus exactly what he might have beenstocking up on. But we hear Argos does agreat line in cheap sackcloth and ashes.

HARD CLIMBS You might think that a former cabinetminister, former deputy chairman of JPMorgan UK and current member of theLords Economic Affairs Committee anddirector of several companies might havehad enough of chasing challenges, but itseems Lord Michael Forsyth (see above) stillhas some mountains to climb specifical-ly, the highest mountain in Antarctica.

The climb is sponsored, so far to the tuneof 337,000, with the money going toMarie Curie Cancer and Indian street chil-

dren charity CINI UK.He wrote yesterday to let us know that

hes reached High Camp, from whichhell make the exhausting climb to the16,000-foot peak of Mount Vinson: By thetime we get to the (camp) I am absolutelyexhausted, he reports. Luckily, his com-panions soon administer hot tea to takethe chill out of his bones.

A valuable lesson has been learned, hesays, of his inadequate clothing choices forthe climb. It is the Antarctic, milord! Wrapup warm!

DOWDY WRAPPING With former M&S chief exec Sir StuartRose seeking greener pastures, BGCPartners David Buik has some reminis-

cences about the UKs favourite ready-meals producer. Praise is due, he says, buttheres one problem Rose never got togrips with: The fashion leaves somethingto be desired probably too dowdy for2011 to compete with the likes of Primark,

Top Shop, Next and the like.Too dowdy a harsh analysis indeed,

and Buik recommends appropriatelyharsh penalties: No doubt new chief exec-utive officer Marc Bolland and (clothingdirector) Kate Bostock will eventually get itright or Kate will have to be replaced, he

declares.The Capitalistwas hungry for further

fashion advice, so we gave him a ring.You sound young enough to be mygrand-daughter, said Buik politely,

and Im sure someone as fashion-conscious as you wouldnt be seendead in their stuff! They have tosharpen up. Theres just nothingthats going to make me turn myhead in the street at my age.

As for his own clothing require-ments, Buik heads to a City tailor.But he says its not out of snobbery:Im like a badly wrapped present I couldnt get into an M&S suit!

Aw, David its the contents thatcounts.

Clegg was out shopping the day before sales taxes went up yesterday. Picture : REX

Browsingmail-ordercatalogues,

our sourcegets in touchto report achanceencounter onMonday.

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BLACKS Leisure said it had beenboosted by sales over the festive peri-od with total sales in its outdoor busi-ness up 12.9 per cent in December.

Blacks confirmed that it is still intalks with parties which it has notnamed about a possible takeover ofthe company.

Like-for-like sales were up 10.2 percent last month boosted by the recentsub-zero temperatures. At the peak ofChristmas trading, the retailer wasselling 10 winter jackets and fourpairs of boots every minute.

The company, which runs theBlacks Outdoor and Millets chains,appointed McQueen as adviser inOctober to assess a number of unso-licited approaches.

Blacks expects to make a pre-taxloss of 2m in 2010-11 before break-ing-even in 2011-12.

Chief executive Neil Gillis said:

The group has performed stronglyduring the key Christmas tradingperiod highlighting the strength ofour offering.The turnaround pro-gramme remains on track and weenter the New Year in a positive finan-cial position and focused on continu-ing to deliver the benefits of theturnaround strategy.

Blacks came close to administra-tion in 2009 before striking a rescuedeal with creditors that saw it closeover 100 stores.

Blacks sales

in festive riseBY JOHN DUNNE

RETAIL

News 9

30

32

36

34

38

40

42

44


ANALYSIS l Blacks Leisure Groupp 42.25

4 Jan

ANALYST VIEWS: IS BLACKS LEISURE FINALLYTURNING A CORNER? Interviews John Dunne

KEITH BOWMAN | HARGREAVES LANSDOWN

Blacks continues to inch its way out of intensivecare. Same store sales have hit double digit territory, whilstthe groups restructuring plan remains ongoing. Marketconsensus opinion currently denotes a strong hold.

DAVID STODDART | FINNCAP

Blacks has taken sales into positive territory andalso seen a boost in gross margins. The process of reviewingthe various approaches to the company continues. That

underpins our hold recommendation.

Blacks chief executive Neil Gillis (inset) said he was hoping for more snow Picture:NEWSCAST

SINGER Capital Markets wasappointed Blacks adviser in August2009 and worked on its 20m shareplacement in February 2010.

It advises small and mid-cap growthcompanies and has built up astrong reputation in the retail sec-tor. The team on the Blacks transac-tion is led by Jeff Keating (pictured,left) and Jos Trusted.Blacks appointed McQueen, a retailand leisure-focused financial advi-sory firm, in October 2010.Financial veteran Clive Baker (pic-tured, right) co-founded McQueenin 2002 after 19 years at corporatefinance house Hawkpoint.

JEFF KEATING CLIVE BAKERSINGER CAPITAL MCQUEEN

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RETAILERS may be promising to bearthe brunt of the VAT rise but con-sumers will be hit by higher pricesover time, experts said yesterday.

Large retailers such as Tesco, Marks& Spencer and Sainsburys haverushed to promise consumers they

will not bear the burden of the taxrise from 17.5 to 20 per cent.

But once January sales are overprices may well rise as firms struggleto retain profit margins, according to

Lorraine Parkin, head of VAT ataccountant Grant Thornton.

In certain sectors retailers willprobably take on the VAT increaseand will not immediately raise theirprices, so the differential will be aslight hit to their profits, she said.

It might not be in force for a fewweeks but we will see this passed on.

The increase is expected to cost UKhouseholds about 520 per year andraise 13bn for the Treasury this year.

An electrical retailer told City A.M.that although it anticipated a smallreduction in sales after the rise, theaspirational nature of electronicgoods meant sales would level outover about a six week period.

A rise like this wont put someoneoff buying a new television if theyhave their heart set on it, they said.

A new survey by Lloyds TSB

Commercial found retailers more wor-ried than other sectors about waningdomestic demand in 2011. Many busi-nesses will be planning price increasesto keep profits at current levels, saidLloyds TSB Commercial managingdirector John Maltby.

Prices to goup after VATrise squeezeBYALISON LOCKRETAIL

Focus on VAT hike10 CITYA.M. 5 JANUARY 2011

George Osbornes VAT hike will raise 13.5bn a year by 2014-15, but Alan Johnson (bot-tom) said Labour would raise employer National Insurance instead Pictures: REUTERS

Small shops togain as sales taxhits big retailers

NOT all retailers face a painful squeezefrom the VAT rise to 20 per cent.

Smaller companies such as inde-pendent retailers, corner shops andconvenience stores that fall below thethreshold at which VAT is paid will nothave to accommodate the change.

Retailers that generate turnover of70,000 or less per year do not have toregister for VAT, so wont need to putup prices, said Lorraine Parkin, headof VAT at accountant Grant Thornton.That might make independentretailers a little more competitive.

Small businesses or sole traders with gross turnover of less than150,000 are also eligible for HMRCsflat rate scheme, which allows themto calculate VAT at a lower level. Thescheme reduces VAT on items such ascosmetics to eight per cent, or vehi-cles to six per cent.

Many business turning over lessthan 150,000 can avail themselves ofthe flat rate scheme so they will bepaying lower percentages of VAT thanthe other retailers. It is medium tolarge businesses that will have to takethe hit for the increase, she said.

RETAIL

No. I think retailersshould be made

to absorb therise, so I'm notat allconcernedabouthighercosts.

TIM BLACK |QBE INSURANCE

CITY VIEWS: DID YOU BRING FORWARD ANY BIG PURCHASES TO BEAT THERISE IN VAT? Interviews by Lottie Mungavin

"Yes. I took advantage ofthe extra savings

and made aspontaneouspurchase of aplasmascreentelevi-sion."

EMRE ORAL |FARADAY

"Definitely not. Im not oneto subscribe to

knee-jerk buy-ing. The VATrise has turnedinto an excuseto goshop-ping."

BORYS BODNAR |DAIWA CAPITAL MARKETS

ALAN Johnson yesterday indicated aLabour government would hikeemployer National Insurance contribu-tions (NICs) by three per cent insteadof increasing VAT.

Labour would need to raise 13.5bn by raising NICs the same amountthat George Osbornes VAT hike willearn the Treasury annually by 2014-15.It has ruled out any increases in per-sonal taxation, meaning employerNICs would have to rise by three percent.

Johnson also said the Labour partywould have imposed a bonus tax onBritish banks.

People will scratch their heads andthink Why are we taking less from the

banks who are actually at the heart ofthe global financial crisis? he said.

But Justine Greening, theConservative Treasury minister, saidLabours tax on jobs was not a credi-

ble alternative to higher VAT.She said: All Labour can do is jump

on every passing bandwagon. Theshadow chancellor has no idea how toclean up this economic mess.

Johnson: We would raiseNational Insurance insteadPOLITICS

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SIR Stuart Rose said farewell to Marks& Spencer (M&S) yesterday, drawingto a close a colourful six years at thehelm of the retailer.

He formally hands over the reins ofchairman to former City bankerRobert Swannell today.

Sir Stuart, 61, was hailed as aninspiration after steering M&S to a1bn profit, but fell foul of sharehold-ers after a period in which he acted aschairman and chief executive, spark-ing fears that he was wielding toomuch power.

The move was also against corpo-rate governance guidelines.

Former Wm Morrison boss MarcBolland joined as chief executive inMay, paving the way for Rose to stepdown as chief executive, and nowchairman.

Sir Stuart started his retail careerin 1972 when he joined M&S as amanagement trainee.

He left the firm to work in a seriesof posts at rival retailers includingDebenhams and Argos.

However, he made his mark at fash-ion firm Arcadia after presiding over

the sale of the company to Sir PhilipGreen. He reportedly made 25mfrom the deal.

After returning to an ailing M&S in2004, he put the company back ontrack by reviewing the ranges offeredby the company as well as launchinga series of successful advertising cam-paigns. New chairman Swannell hasretail experience from his time aschairman of HMV Group. He alsoadvised M&S during the hostiletakeover battle with Green.

Rose said: I feel I have done the jobI was hired to do at M&S. People for-get what a dilapidated state it was inwhen I took over.

He has taken on an advisory role atprivate equity firm Bridgepoint.

Rose leaves

M&S as newera begins

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RETAIL

Focus on M&S 11CITYA.M. 5 JANUARY 2011

1972 to 1989Sir Stuart began his retailing career as amanagement trainee at M&S, workingthere from 1972 to 1989. 1989 to 2000Works in management positions at retail-ers including Burton Group, Debenhamsand as chief executive of Argos. 2000Becomes chief executive of ArcadiaGroup which he sold to Sir Philip Greenin 2002. Made 25m himself. 2004Returns to M&S in the position of chiefexecutive. Taken on to steady the shipafter share price plunge. Sees off a bidfor the business from Green. 2007Rose is given a knighthood in recognitionof his services to business after steeringM&S back to health and re-thinking the

companys ranges. 2008Applauded by shareholders for steeringfirm to a 1bn profit in tough economictimes. 2009His reputation is dented as he is attackedfor taking on the dual role of chairmanand chief executive, and allowing over-excessive boardroom pay. 2010Former Morrisons chief Marc Bollandtakes over as chief executive but Rosecontinues to oversee the business as heassesses the changes he wants to make.His strategy statement eventually revealsthat he would not radically change thefirm. 4 Jan 2011Officially steps away from M&S leavingRobert Swannell as new chairman.

TIME LINE | THE CAREER OF SIR STUART ROSE

370

380

390

400

410

420

430


ANALYSIS l Marks & Spencerp

374.404 Jan

Marc Bolland (left) has beenchief executive of M&S sinceMay, Robert Swannell(right) officially becomeschairman today

Sir Stuart Roseofficially stepsdown fromM&S todayPictures: REX/REUTERS

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BRITISH manufacturing growth hit amassive 16-year high in December, it

was revealed yesterday.Extreme weather and tough eco-

nomic conditions had led economiststo expect a fall in the PurchasingManagers Index. Yet the measure of

business activity improvement ralliedto 58.3, its fastest rate of growth since1994.

The index, compiled by Markit andthe Chartered Institute of Purchasing& Supplys, has now remained above50 signalling growth in the manu-facturing sector for 17 straightmonths.

Broad based improvements werebehind the rise, with factory outputand new orders both jumping toseven month highs.

This is a fantastic report, com-mented Howard Archer of IHS GlobalInsight. Healthy orders growth inDecember bodes well for manufactur-ing output in early 2011.

To cope with the backlogs, andmore new orders, firms increasedtheir levels of employment so that

jobs growth was recorded for theninth successive month.

This boosts hopes that the privatesector may be able to compensate forthe public sector job losses that areincreasingly on the way, said Archer.

However, manufacturing outputonly accounts for 12.8 per cent ofGDP, Archer warned, while manufac-turing provides less than nine percent of jobs in the economy.

The rise in manufacturing wasunderpinned by new export busi-ness, the report said, reflectingincreased sales to clients in mainlandEurope, the US and East Asia.

Export orders upticked by twopoints to 59.9, the second highest rateof 2010. Exports will be key to theoutlook for 2011, said AndrewGoodwin of the Ernst and Young ItemClub. The index contains evidence ofstrong demand, even from theEurozone where the sovereign debtcrisis has seemingly been unable todent demand for UK goods at thisstage, he said.

However, the news was slightlydampened by rising prices, as the UKfaces the prospect of even higherinflation. Growth was recorded in

both input and output prices, withinput prices seeing the steepest rise ininflation since the survey began in

January 1992.

INFLATION across the Eurozoneincreased to 2.2 per cent inDecember, its highest level for overtwo years, it was estimated yesterday.

The jump of 0.3 per cent fromNovembers rate takes consumerprice index (CPI) inflation above theEuropean Central Banks (ECB) targetof just below two per cent.

It is the first time since November2008 that the target has been

breached in the Euro area, accordingto statistics compiled by theEuropean Unions Eurostat office.

Yet analysts believe that the higherthan expected rise was due to globalincreases in energy and food prices.

Core inflation, excluding food,energy, alcohol, and tobacco probablystayed at around one per cent, con-firming that underlying price pres-sures in the Eurozone have remainedsubdued, said INGs Martin van Vliet.

Todays above target reading willprobably raise some eyebrows at the

ECB, van Vliet added, but it shouldnot be cause for alarm -- the chancesof a rate hike from the ECB before theend of this year still appear modest.

However, some economists expectthe ECB to be forced to raise rates.

We predict Eurozone inflation oftwo per cent this year so it will nolonger look appropriate for the ECBto keeprates at historical lows, said

Thomas Mayer of Deutsche Bank.We think that the ECB will have to

move interest rates upwards in thesecond half of the year, he said.

Eyes on ECB interest rates, as inflationin Eurozone jumps to a 26-month high

MORTGAGE approvals unexpectedlyincreased to their largest number infour months in November, the Bankof England revealed yesterday.

The Bank also released data on themoney supply, with its favouredmeasure increasing by 0.2 per cent onthe previous month, and 3.5 per cent

year-on-year in the three months toNovember.

And after a fall in October, thenumber of loans for house purchasesrose to 48,019 for the month.

The number of loans for remort-gaging shot up to 34,262, from 30,429the previous month.

The figures mirrored last monthssurvey from the British Bankers

Association (BBA) which showed fargreater annual growth in mortgagelending in November (3.2 per cent)than in October (0.8 per cent).

However, the slim rise is nothingto write home about, according toHetal Mehta of Daiwa Capital.

And consumer credit fell by 0.1bnin November, the Bank reported.

Yet confidence in the economyimproved in November, according toan IPSOS Mori survey that showed UKconfidence rose by three per cent.

This is also an endorsement of thedeficit reduction plan, said AshishPrashar of Ipsos MORI. The publicseem to be saying that dealing withthis deficit is not an alternative togrowth -- the two go hand in hand.

Mortgageapprovals

edge upUK ECONOMY

AMERICAN auto sales hit their high-est level in 16 months in December, it

was revealed yesterday.The figures surpassed expectationsand marked the end of a strong yearfor the formerly troubled industry.

Economists had predicted sales of12.3m, yet the annual sales rate forDecember jumped above 13m, accord-ing to initial data from majorautomakers.

US vehicle sales rose more than 11per cent in 2010, reversing a four-yearslide. The figures are a snapshot of

consumer demand and bode well forthe economic recovery in the new

year.The previous decline in the indus-

try had ended in controversial gov-

ernment bailouts for GM andChrysler.Ford, however, avoided a bailout.

Car makers now believe that sales for2011 can also exceed 13m.

It was stronger than we thought,commented Fords George Pipas onthe results.

And there was also good news forUS manufacturing, as factory ordersrose 0.7 per cent in November.

Orders excluding transportation

recorded their largest gain in eightmonths, fueling dollar buying versusthe euro.

The result surprised analysts whohad expected orders to either level

out or actually decline, after ordersfell by 0.7 per cent the previousmonth.

American auto sales top 13mBY JULIAN HARRIS

US ECONOMY

UKs factory

growth hits a16-year peakBY JULIAN HARRIS

UK ECONOMY

BY JULIAN HARRIS

EUROZONE ECONOMY

l General Motors annualised salesrose 7.5 per cent in December.l Ford sales increased by 6.7 per centover the same period, while sharesrose by over 70 per cent.

FAST FACTS | US AUTO SALES

Economic News 13CITYA.M. 5 JANUARY 2011

Mervyn Kings Bank reported positive news for the house buyers Picture: REUTERS

NEWS | IN BRIEF

UK wheat prices hit record highThe cost of UK wheat hit a nominalrecord high in the London market yester-day at 203.30 per tonne, up 90 per centover the past year and above the previ-ous peak of 197.50 a tonne set inSeptember 2007. Prices have beenunderpinned by tightening world

supplies as floods disrupted exports fromAustralia, compounding supply worriesafter Russia's severe drought this summer.

Snow blamed for German jobs dropGerman unemployment edged up veryslightly last month, rising by 3,000 onNovember. Unemployment had fallen inNovember and October, as the Germanrecovery continued to build up pace. Andemployment reached almost 40.5m inNovember, according to ILO statistics.

Economists had expected a further fall inunemployment for December. Themonthly rise in unemployment should belargely attributable to particularly harshwinter weather, said Thorsten Polleit ofBarclays Capital. The unemployment ratestood unchanged at 7.5 per cent.

Singapore: manufacturing boostNew data yesterday showed ongoinggrowth in Singapores manufacturingsector as a purchasing managers index(PMI) reading remained above the 50no change point. Meanwhile, Asianmanufacturing also received a new yearboost as in both South Korea and Taiwanthe sector moved from contraction togrowth, jumping above the 50 nochange mark. And PMI in Indiaremained above the 50 level.

0

1

2

3

4

5

ANALYSIS l Comparison of European Inflation Levels

ConsumerPriceIndexInflation

November2010

DecECB & Bank of England target rates

Eurozone Greece Hungary UK Spain Portugal France Italy Sweden Germany Norway

Percentage(%)

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ANALYSIS | YELLS TOP SHAREHOLDERS

Investors Holding

1 Invesco Asset Management 23%

2 Fidelity International 13.2%

3 Standard Life Investments 9.97%

4 Taube, Hodson & Stonex 5.74%

5 Deutsche Bank 3.87%

6 Capital International 3%

7 Ignis Investment Services 3%

BUDGET airline easyJet yesterdaypurchased 15 new Airbus A320 air-craft, as well as buying options for 33additional jets.

The order comes despite warningsfrom the airlines founder and largestshareholder, Sir Stelios Haji-Ioannou,who recently expressed concern overeasyJets expansion plans.

The Athens-born entrepreneurpressed the firm over its intentions topurchase additional aircraft inNovember following full-year results,urging the company to carefullyassess the financial viability of anyfleet expansion.

He added: I remain very con-cerned with the strategy of the previ-ous management which expandedthe fleet to develop summer holidayroutes leaving it with approximately40 aircraft parked over the winter.Parked aircraft lose money.

Despite Sir Stelios protests, the carri-er yesterday pressed ahead to convertan existing option to buy the newplanes, which have a list price of a com-bined $1.1bn (710m), or $73m each.

easyJet also converted an order for20 Airbus A319s to the more fuel effi-

cient A320s, in a deal financedthrough cash, operating leases anddebt.

Although the airline would not dis-close the value of the deal, whichcomes as part of its existing suppliercontract with Airbus, it said it hadsecured substantial price conces-sions on the latest purchase.

European manufacturer Airbus has been easyjets supplier since 2002,when the carrier turned away fromUS manufacturer Boeing.

The airline has a fleet of 192 air-craft, including nine Boeing jets, andoptions to purchase a further 73planes.

The latest additions will be broughton line by 2013, with no specificroutes earmarked for operation.

A SURGE in private investor-ownedshares has seen them end 2010 at thehighest level since the recessionbegan.

UK private equity holdings endedDecember at 207bn, recording thestrongest performance since May2008, according to research fromCapita Registrars.

The figure jumped from 194bn atthe end of November to break the

200bn mark by the new year. The surge sees the proportion of

the UK stock market in privateinvestors hands hitting 10.95 per centin December, up from a slump of10.27 per cent in May last year and atits highest measure since the sum-mer of 2009.

Activity on the stock market for private investors during the previous year was the highest in four years,with a total of 6.34bn traded in total.

A stronger than expected recoveryin the UK economy is believed to

underpin the return of private share-holders to the stock market, accord-ing to Capita Registrars, withconfidence amongst investorsremaining strong despite the down-turn.

Chief executive Charles Cryer said:Private investors began buying in aconcerted way in the early summerwhen the stock market plunged. Theyhave continued to invest new moneyin equities throughout the rest of the

year as the index has steadily climbedback to pre-recession levels.

Value of private investor shares surgesto highest level since before downturn

DIRECTORIES group Yell yesterdaymade a 150m early repayment of its

senior bank debt. The repayment saves the firmaround 3m of interest and leaves itwith 66m to repay by May under adebt restructuring agreement madelast year.

Shares in the company closed 1.7per cent higher at 14.75p as it lookedlikely to meet its May deadline.

Half-year results indicated strongcash flow revealing the business held261m in cash reserves with a total

net debt of 2.9bn.Yell has managed to reduce its debt

mountain gradually, including secur-ing a strong refinancing agreementtwo years ago to alleviate pressure.

However analysts still view the business with caution, pointing toreluctance amongst small businessesto advertise during the downturnand growing competition online.

Alex DeGroote analyst at PanmureGordon said: The quantum of debt isso large that it really obscures equity.

Its online business isnt totally outof the game but if youve got 85 percent of business in print declining you need to have high growth in

other areas to compensate for that.It has got appeal if theres a turn-

around in the advertising climate forsmaller businesses.

Yell saves 3m with paymentBYRICHARD PARTINGTON

MEDIA

Easyjet order

flies againstStelios ideasBYRICHARD PARTINGTON

AVIATION

BYRICHARD PARTINGTON

MARKETS


11

12

13

14

15

16

17


ANALYSIS l Yell Groupp 14.754 Jan

240

220

200

180Billions

160

140

120

14%

13%

12%

11%

10%

M

ar-May06

Jun-Aug06

S

ep-Nov06

Dec

06-Feb07

M

ar-May07

Jun-Aug07

S

ep-Nov07

Dec

07-Feb08

M

ar-May08

Jun-Aug08

S

ep-Nov08

Dec

08-Feb09

M

ar-May09

Jun-Aug09

S

ep-Nov09

Dec

09-Feb10

M

ar-May10

Jun-Aug10

S

ep-Nov10

9%

ANALYSIS l Rise in private shareholders

Private investor holdings Proportion of FTSE Allshareowned by private investors

Easyjetfounder SirStelios (top)had warnedagainst newexpansion

plans pushedthrough byeasyJet chiefexecutiveCarolyn

McCall (bot-tom) Pictures:

REUTERS/REX

360

380

400

420

440

460

480


ANALYSIS l easyJetp

457.604 Jan

Airline shouldcontinue itsexpansionEASYJETS decision to convertoptions on 15 aircraft is good newsfor the company. Passenger num- bers are still growing, up 8.2 percent in November, while budgetairlines are stealing market sharefrom full-service carriers, helped bya cabin crew dispute at BritishAirways.

But the 15 orders represent lessthan a fifth (17 per cent) of the 88options and purchase rights thateasyJet has outstanding with Airbus. The firm should pressahead and convert yet more ofthese options, which were agreedin the downturn and come with ahefty recession discount.

Stelios Haji-Ioannou disagrees.He wants to cap aircraft numbersat 200 (compared to the 211-strongfleet that easyJet will f ly after yes-terdays announcemnt); to operateyear-round routes only (rather thangrounding some planes in winter);and to reduce the annual target forgrowth in seats to GDP plus some-thing (as opposed to the current7.5 per cent).

He is being too cautious. easyJetstill has room to grow, especiallycompared to Ryanair, which willfly a fleet of 299 planes by 2013. Itcan win share from regional play-ers, while flying medium-haulroutes like the London-Luxor serv-ice it launched at the end of 2010.Patience isnt always a virtue.

BOTTOMLINEAnalysis by David Crow

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News 15CITYA.M. 5 JANUARY 2011

SHARES in Desire Petroleum plungedmore than 26 per cent yesterday afterthe Falkland Islands-focused oilexplorer said it had abandoned its lat-est well, the Dawn/Jacinta prospect inthe southern part of the NorthFalklands basin.

The mile-deep well is Desires latestdisappointment, having found nohydrocarbons at its Rachel prospectin the same region in October.

We now believe that DesirePetroleum has some major problemsin that the company is now startingto run out of cash, says PanmureGordon analyst Peter Hitchens.

Oil exploration in the Falklandshas resulted in only one commercialdiscovery at Rockhoppers Sea Lionwell last spring in the northern partof the North Falklands basin, some100km away from the Dawn/Jacintaprospect.

The oil rig that was used by Desire will now be subcontracted toRockhopper, which plans to drill oneor two separate wells. Desire will thenuse the well to explore one well in anundisclosed location.

It [the dry hole] really shouldnt

come as too much of a surprise topeople. It had just an eight per centchance of working, says Evolutionanalyst David Farrell, adding thatRockhoppers Ernest well is the onlyother well to be drilled in the vicinityand that was also a dry hole.

Analysts at Oriel Securities retaintheir hold recommendation onDesire as they see longer term poten-tial in Desires acreage in theNorthern part of the North basin.

AIM-listed shares in Desire closed12.75p down at 35.25p. The stock haslost more than 80 per cent of its valuesince the firm revealed the failure ofthe Rachel prospect in October.

Meanwhile, shares in AIM-listedcolleague Rockhopper closed up 0.7per cent at 370p.

OIL and gas firm Cairn Energy said ithas secured two rigs for its controver-sial Greenland drilling campaign yes-terday, boosting Arctic explorationhopes and sending its shares higher.

Cairn is optimistic it will find sub-stantial oil reserves in largely unex-plored Greenland, saying itcontracted the rigs to drill up to four

wells in the Arctic region in 2011.The deepwater rigs will be operated

by their owner, Norwegian-basedOcean Rigs.

We would view this update as pos-itive given concerns that Cairn wouldstruggle to secure rigs for this yearscampaign, said Oriel analyst RichardRose.

Cairn said it would give furtherdetails on its drilling plans in duecourse, which the analyst said couldstart as soon as April if the companyopts to drill in Southern Greenland,

as it secured a $900m (578m) debtfacility to help secure the rigs.

Standard Chartered, Bank ofScotland, Crdit Agricole, HSBC andSocit Gnrale are providing thedebt facility, which will also be usedto fund general corporate purposes.

Chief executive Bill Gammell said:By contracting two vessels for theGreenland exploration programmeCairn has increased operational capa-bility and flexibility and continues todemonstrate its focus on safety.

Shares in Cairn yesterday closed

11.60p higher, or 2.76 per cent, at431.6p.

Cairn Energy secures two rigs for itsdrilling campaign off Greenland coast

JUBILANT Energy has started drillinga second appraisal well in the DeenDayal East area of Krishna Godavariblock, off the coast of India.

The appraisal well DDE-APP-1,located in 101m of water, was spud-ded or drilled into on Saturday bythe Deep Driller-1 rig from AbanOffshore.

Jubliant said the target depth of

the well is 4,750m true vertical depthwith the objective of appraising the

hydrocarbon bearing sands of the KG-16 discovery well.

This is the 17th well to be drilled bythe consortium in the block. The last12 of the wells drilled all containedgas and condensate.

Jubilant holds a 10 per cent partici-pating interest in this block throughits subsidiary Jubilant OffshoreDrilling Private Limited in India.

Gujarat State PetroleumCorporation, with an 80 per cent par-

ticipating interest, is the operator forthe block.

Jubilant begins testingon second appraisal well

GAS & OIL

OIL explorer Xcite said yesterday ithas suspended its well in the Bentleyfield of the North Sea while it exam-ines the quality of the oil found inDecember.

The company said the oil find is atransformational well for the com-pany and that it remains ready tobe used as a production well in thefuture.

The Ocean Nomad drilling rigused to explore the hydrocarbondeposit is now off hire from theBentley field around 160 kilometresoff the coast of Shetland.

Xcite awarded 12 of its executivesinvolved in the development a totalof 1.6m share options yesterday, ,worth 6.2m in total, as a bonus forthe success of the Bentley 9/3b-6 well.

The companys London-listeshares have rocketed seven-fold inthe last twelve months, with thegain accelerating in December whenthe firm said it had successfullystruck oil at Bentley after months ofdelays.

The firm has exploration licencesfor several blocks in the North Seafollowing the Department of Energyand Climate Changes latest round ofoffshore licensing in October.

The AIM-listed stock lost 5.3 percent yesterday to close at 363p. Itsshares on the Toronto StockExchange also fell 5.4 per cent toC$5.60.

Xcite sealsNorth Sea

discoveryOIL & GAS

OIL prices fell from a 27-month highyesterday as the commodities sectorsaw a sharp sell-off.

Traders said the abrupt sellingacross energy, metal and agriculturalmarkets reflected a correction to therally that had capped 2010, ratherthan a sudden reversal of the opti-mism that made commodities thetop asset class last year. Trading vol-ume recovered to its highest levelsince mid-December.

Additional pressure came from arebound in the dollar, after news of

an improving US economic outlook.In London, ICE Brent crude forFebruary delivery fell $1.93 to $92.91a barrel, well off an early $95.74 peak.

US crude oil for February deliveryslid from an intraday peak of $92.07 abarrel to as low as $88.72 the biggestone-day fall since November.

Traders will be turning today to anupdate on US oil and fuel inventorylevels from the US Department ofEnergy.

Oil price dips from its 27month peak after sell-off

GAS & OILSHARES in oil major BP hit a six-

month high yesterday after reports

rival Royal Dutch Shell considered atakeover bid, and that economic dam-ages from its oil spill will be lowerthan forecast.

BP shares were up 5.9 per cent to492.90p by the close of trading.

The Daily Mail newspaper, citingsources close to the Anglo-Dutchgroup, reported Shell weighed anopportunistic bid for BP as crudegushed into the Gulf last summer,but was discouraged by the potential-

ly uncapped legal liabilities.The newspaper said Shell could yet

bid for BP if another suitor emergedbut Europes largest oil company bymarket value was unlikely to be the

first mover for number two, BP.Dealers and analysts including MicMills, head of electronic trading atETX Capital, said BP was also being boosted by comments late on 31December from the lawyer runningBPs gulf oil spill compensation fundthat suggested damage paymentscould be half the expected level.

Ken Feinberg, the independentadministrator of the $20bn (12.8bn)fund set up by BP, told Bloomberg

Television about half the funds assetsshould be adequate to cover claimsfor economic losses.

One dealer said the reports high-lighted the fact BP shares were cheap

compared to rivals. BP remains cheapand vulnerable at these levels but I donot think a bid is likely, he said.

BP jumps on talk of Shell bidBYHARRY BANKS

GAS & OIL

Desire gives

up on well inthe FalklandsBYMARION DAKERS

ENERGY

BYHARRY BANKS

GAS & OIL

BP posted a 63 per cent drop in quarterlyprofit when it last reported in November. The UK-listed oil giant said the April oil spillhad cost $39.9bn to date, including the $20bnset aside for compensation claims.

FAST FACTS | BP

The Dawn/Jacinta prospect in the Falklands is Desires latest disappointment

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ANALYSIS lDesire Petroleum

p35.25

4 Jan

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UNIONS at Sanofi-Aventis havecalled on staff in France to striketoday to fight plans to cut jobs atthe French drugmaker.

A group of nine trade unions rep-resenting staff at Sanofi said thecompany was seeking to scrap 916

jobs, adding that 2,700 jobs hadbeen cut at the company since themerger between Sanofi and Aventisin 2005.

The reality is that these job cutsare part of a vast 2bn (1.7bn) sav-ings plan that group management

wants to achieve by 2013. All thegroups businesses are af fected, the

unions said in a statement yester-day. A spokesman for Sanofi said the

group had not announced any newjob cuts since unveiling a reorgani-sation of its French commercial divi-sion last month that would lead to575 out of 2,800 jobs going by theend of this year.

The spokesman said the unionshad reached the figure of 916 byadding 260 unoccupied posts, and81 staff who will be expected tochange roles.

Sanofi-Aventis unions callfor strike action in France

UNIONS

US PRESIDENT Barack Obama is con-sidering tapping JP Morgan Chase

executive William Daley for a seniorrole in the White House, such as chiefof staff.

Daley, who is Midwest chairman ofJP Morgan Chase and head of corpo-rate social responsibility, was also aformer commerce secretary.

If he were chosen, the move wouldhelp satisfy a clamour in the businesscommunity to have greater represen-tation for private industry within theadministration.

Daley would bring with him abreadth of experience in business. He

serves on the board of Boeing and hasserved in the past as director atMerck. He is also a past president ofSBC Communications.

A source close to the matter cau-

tioned that no decision had beenmade. Obama, on the last leg of hisHawaiian vacation, has been consid-ering an array of staffing decisionsduring his break.

One of the biggest decisions con-

fronting him when he returned yes-terday is a replacement for top eco-nomic adviser Larry Summers.Democratic sources say senior

Treasury official Gene Sperling has

emerged as the leading candidate.Many businesspeople had hopedObama would fill Summers job asdirector of the National EconomicCouncil with a private sector figure,

but Sperlings career has been heavi-ly focused on public policy.

In another staff move, Obama is weighing whether to elevate RonBloom to a broader manufacturingpost at the White House. The leaderof Obamas automotive task force iscurrently focused on overseeing therestructuring of GM and Chrysler.

Obama woos JP Morgan execBY HARRY BANKS

US POLITICS


SPANISH builder ACS has secured acrucial 30 per cent holding inHochtief following a hotly contestedtakeover bid, allowing it to build acontrolling interest in the Germanconstruction group.

The Spanish construction group wants to get control of Hochtiefsstrong balance sheet to ease the bur-den of its own debt of more than9bn (7.7bn), and continue to diver-sify away from Spains strugglingconstruction and property sectors.

Hochtief is not the only iron ACShas in the fire. It is also pursuing

board seats at Iberdrola by increas-ing its stake in the Spanish utility,

which would allow it to consolidatea proportion of Iberdrolas earnings.

ACS said yesterday it holds 30.34per cent in Hochtief, adding it hadextended its bid to 18 January in anattempt to get more shareholders toaccept its all-share offer.

Its improved nine-for-five shareoffer closed on 29 December. Byachieving the key 30 per cent thresh-

old, German takeover rules allowACS to buy more shares on the mar-ket without making a new formaloffer for the whole of the company.

ACS , whose projects range from adam in Puerto Rico to a Spain-Francehigh-speed train, is aiming for a 50per cent shareholding in Hochtief.

Hochtiefs shares fell 1.4 per centfollowing confirmation that ACShad achieved its goal of more than30 per cent. Many had anticipatedthe result after US investorSoutheastern Asset Management,

which has holdings in both compa-nies, said it would tender half itsHochtief shares to the bid.

Spanish ACScloses in onHochtief dealBY HARRY BANKS

M&A

FLOODWATERS have eased inAustralias major coal mining region,allowing some mines to resume pro-duction, although most remain idleas floods force towns to be evacuated.

Queensland is the worlds biggestexporter of coal used in steel making,

but floodwaters have brought pro-duction and shipments overseas to a

virtual standstill, pushing world coal

prices higher.Queensland Resource Council said

it would take until next week todetermine when exports wouldreturn to normal.

This is a three part drama: firstmining production has to resume,then transport and then ports, said acouncil spokesman.

Australia accounts for more thanhalf of global coking coal exports,

which are especially important for

Asian countries such as China. Wesfarmers said it was resuming

output at its Curragh mine, but thatthe act of God would continue todampen exports and that it wouldtake until early February to return tonormal production.

Spot coking coal prices have risenaround 10 per cent in a month andlook set to move sharply higher as

Australian customers look for newsupplies to cover lost output.

Mining resumes in flood-hit AustraliaMINING

BEST OF THE BROKERS

ANALYSIS lBAE Systems

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BAE SYSTEMSEspirito Santo Investment Bank, whichincorporates Execution Noble, recommendsa buy on BAE Systems, saying the stockhas sunk back towards the bottom end ofits historic price-to-earnings ratio range.The broker says that the risk-reward trade-off now looks attractive heading intoresults.

ANALYSIS lDominos Pizza

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DOMINOS PIZZANumis rated the stock a buy yesterday,ahead of its trading update today. It expectsthe profit and loss statement to have beenaffected by tough comparisons with lastyear and snow-related disruption, but antici-pates a strong update nonetheless. The bro-ker says the stock should be driven higherby successful marketing campaigns.

ANALYSIS lPresident Petroleum

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p 79.504 Jan

PRESIDENT PETROLEUMRBS rates the AIM-listed oil and gas produc-er a buy despite well delays and increasingcosts. It says the growing costs are not par-ticularly significant in the context of the cur-rent share price says that the drilling isoverall in a good position. However, if thecompany finds as much oil as predicted,development costs could escalate further.

To appear in Best of the Brokers email your research to [email protected]

RBC Capital MarketsThe corporate and investment bankingarm of the Royal Bank of Canada has

made a new appointment, hiring CarloMareels as a director and senior finan-cials credit analyst in its European cred-

it research team. He will report to RogerAppleyard and will be based on London.He joins the company with over adecades experience in the financialsindustry. Most recently, he has workedat HSBC, covering European banks andpreviously he worked at MorganStanley.

J O Hambro Capital ManagementThe boutique investment firm hasadded two new European equity fundmanagers, Trygve Toraasen and CarlosMoreno, ahead of the launch of itsEuropean dynamic growth fund nextmonth. Both recruits come from ThamsRiver Capital, where they were manag-

ing an equivalent fund focused ondynamic growth in European region.Toraasen has also worked at Fidelityfor 14 years, while Moreno workedthere for 15 years, rising from researchanalyst to fund manager.

Electra Private EquityElectra has appointed a new non-exec-utive director: Geoffrey Cullinan. He haspreviously been a director at Bain &Company from 1997 to 2005 andfounded their private equity business inEurope. Cullinan has also been a chiefexecutive of Hamleys and a non-exec ofDatamonitor. He also co-founded OC&CStrategy Consultants in 1986.

National Institute of Economicand Social ResearchThe NIESR has appointed a new direc-tor: Jonathan Portes, currently chiefeconomist at the Cabinet Office. He willtake over on 1 February. He replacesMartin Weale, who has been appointedto the Bank of Englands MonetaryPolicy Committee.

Ascent ResourcesThe AIM-listed oil and gas firm hasappointed Scott Richardson Brown asa full-time executive finance director.He replaces Simon Cunningham, who ismoving to Australia.

CITY MOVES | WHOS SWITCHING JOBS Edited by Juliet Samuel

PricewaterhouseCoopersPwC has appointed a new technology leader inthe UK: Jass Sarai. He will be replacing BarryMurphy, who has been the companys technolo-gy leader in Britain for the last two years. Saraihas worked on the technology sector for thelast decade, having joined PwC straight fromuniversity, and will now be responsible for lead-ing the analysis of new opportunities in the sec-tor for the companys clients. He has worked inBirmingham, the US and now London.

+44 (0)20 7557 7245morganmckinley.comTo appear in CITYMOVES please email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

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ANALYSIS lHochtief

p

63.914 Jan

JP Morgan Chase execWilliam Daley is tippedfor a White House role,having already served ascommerce secretary

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17Wealth Management

3i Group 337.50 9 337.50 2503i Infrastructure 123.50 3.50 125.25 101A.B. Foods 1164 -17 1182 820Aberdeen Asset.Man. 205 2.25 205 112.75Admiral Group 1548 33 1693 1114Aegis Group 141.25 0.75 145.50 103.50Afren 150 2.50 150 79African Barrick Gold 613.50 2.50 670 503Aggreko 1486 4 1685 882Alliance Trust 375 2.50 377 293.50Amec 1175 25 1175 733.50Amlin 408.50 -0.50 433 362.50Anglo American 3407 71.50 3407 2254Antofagasta 1622 10 1634 761Aquarius Platinum 346 -6 458 227ARM Holdings 438 14.50 440.25 185.75Ashmore Group 345 10 383.75 218Ashtead Group 171.75 -1.25 177 77AstraZeneca 2990 68 3385 2732Atkins (WS) 710 9.50 792.50 556.50Autonomy 1553 48 1975 1271Aveva Group 1654 40 1654 1007Aviva 407 14 423.50 294.25AZ Electronic Materials SA (WI)299.25 -10.75 310 249Babcock International 575 4 635 492.75BAE Systems 342.25 12.25 388.75 294.75Balfour Beatty 318.25 5.50 318.25 229.75Barclays 272.75 11 383.25 255.25Barratt Development 93 4.50 142 70BBA Aviation 219.50 -2 221.50 158Bellway 684 14 826 511Berkeley Grp Hldgs 937.50 47.50 937.50 742Betfair Group 971.50 7.50 1550 964BG Group 1330.50 34.50 1337.50 984BHP Billiton 2553.50 2.50 2616 1684.50

BlackRock Mining 810 -1 811 492BlueC rest All Bl ue 170.75 0.75 1 74.50 156.25Booker Group 60.25 0 60.50 38.75BP 493 27.25 655.50 303Brit Insurance 1050 8 1050 728British Airways 286 13.50 286 184.25British Amer.Tob 2488 24.50 2521 1959British Empire Tst 503 17 503 396.50British Land 531 6.50 537 418.25Britvic 471 -2.25 518 398Brown (N.) Group 300 1.75 301.75 206.50BSkyB 744.50 8.50 746.50 524.50BT Group 185 4.25 187.75 110Bunzl 731.50 12.50 777 616.50Burberry Group 1142 18 1156 581C&W Comms 49.25 0.75 63.75 44.25C&W Worlwide 68.75 3 100 60.50Cairn Energy 431.50 11.50 493.25 318.25Caledonia Inv. 1921 21 1921 1512Capita Group 712 15.50 826 635.50Capital & Counties 148.25 -2.50 157 100Capital Shop Centre 424.75 7.25 424.75 301Carillion 386 1.50 386 273Carnival 3096 114 3096 2037Catlin Group 373.50 3.50 393 320Centamin Egypt 176 -0.25 197 106.75Centrica 332 0.50 346 264Charter 853.50 9 853.50 567Chemring Group 3031 127 3663 2598

Close Brothers 866.50 15 866.50 664COBHAM 209.25 5.75 276 192.25Colt Telecom 137.75 0 142.50 109Compass Group 568 -13 594 425Cookson Group 687.50 29 687.50 367.50Croda International 1566 -50 1616 751Daily Mail & Gen 573.50 -0.50 574 423Davis Service 439.75 3.25 441.25 360.25De La Rue 837.50 18 1005 549.50Debenhams 73 2.25 80 53Derwent London 1568 7 1605 1208Diageo 1197 12 1215 1000Dixons Retail 24 1 37.50 22.75Dominos Pizza 556 4.50 560.50 305.25Drax Group 381 12.75 444 326.25DS Smith 206 3.75 210 104Dunelm 525 14.50 550 325.25easyJet 457.50 17.50 496.50 348.50Edin.Inv.Tst. 464.75 10.75 464.75 364Electrocomponents 269 3 279.50 165Enquest 145.25 5.75 146.50 89.25Essar Energy 572 -8 589.50 383Eurasian Nat Res 1081 33 1266 818Euromoney Inst. 700 8 727 441Experian Group 800 2 819 572Ferrexpo 417.50 1.50 417.50 197FirstGroup 412.50 14.25 424 336For.&Col.Inv.Tst 310.25 0.50 311 251.50Fresnillo 1682 14 1682 669.50G4S 254.50 0 283.50 237.75Genesis E.m.f. 560.50 6.50 560.50 399GKN 219.50 -2.50 226 102GlaxoS mit hKlin e 1269.5 0 2 9.5 0 1318.5 0 1095Great Portland Est. 362 1.25 364 279Greene King 480 0.50 491.50 376.25

Halfords Group 454.50 -2.50 550 372.75Halma 360.50 1.50 366.50 223Hammerson 429 11.75 434.50 336.25Hargreaves Lansdown 597.50 1 1.50 597.50 276 .50Hays 133.50 4.75 133.50 88.50Henderson Group 136 0.50 151.75 112.75Heritage Oil 457.75 9 581 296.75Hikma 837 25.50 837 514Hiscox 389.50 8 389.50 320.75Hochschild Mining 635 -5 658 234Home Retail Group 196 7.50 295 188.50Homeserve 445.50 2.25 487.50 326.25HSBC Holdings 668 17 740.50 596.25Hunting 750.50 19.50 750.50 439.50ICAP 543 8 543 294IG Group 524 14 553 362.50Imagination Tech 372.25 11.75 441.75 215IMI 932.50 -12.50 948 530.50Imperial Tobacco 1985 17 2154 1753Inchcape 370 13.25 370 237Informa 420 12.50 448 304.50Inmarsat 674 0.50 821 606.50InterContinental Htl 1264 21 1266 887Inte rme diate Cap.Grp 3 42.5 0 9.75 3 51 24 0.5 0Inter na ti onal Pers F in 386 .50 2 .50 386 .50 183.25International Power 431 -6.75 448.50 284.50Intertek Group 1799 24 2000 1150Invensys 361 7 361 230.25Investec 531 4 562 417.75

ITV 74 4 74.25 48.25Jardine Lloyd 622.50 -6.50 629 459John Wood Group 570 11 570 293Johnson Matthey 2051 13 2100 1446Jupiter Fund Man 305.50 5 310 180.25Kazakhmys 1649 35 1649 965Kenmare Res. 35 2.25 35 9.25Kesa Electricals 161.25 2 174 99.25Kingfisher 267 3.50 267 198.50Ladbrokes 124.50 1.75 162.75 122.75Lancashire 552 -1 647 435Land Securities 680.50 6.50 696.50 545Legal & General 100.25 3.50 106.25 69.75Lloyds Banking Grp 67.75 2.25 77.50 46.50Logica 136.50 5.50 148 101.75London Stock Ex. 852 14 852.50 544Lonmin 1948 -18 2157 1355Man Group 305.75 9.75 327.50 202Marks & Spencer 374.50 5.50 427.50 323.50Meggitt 373 3 375.50 251.50Melrose 318 7 318 162Mercantile Inv Tst 1086 1 1096 828Michael Page 551.50 -3.50 565.50 346.50Micro Focus 393.25 4.50 546.50 276Millennium & Cop. 585 -5.50 590.50 368.50Misys 334 -9 343 201.50Mitchells & Butlers 358 8 360 247.50Mitie Group 240.50 6.50 241 188.75Mondi 527.50 14 557.50 338.25Monks Inv.tst. 357 0.50 363 271Morrison (Wm) 271.25 3.75 306.25 257.50Murray Int.Tst 966 25 966 736.50National Express 250.25 -0.75 259.50 194National Grid 568 15 613.25 484.25Next 2015 40 2344 1817

Nor th umb rian Water 332.5 0 1. 50 361 .5 0 252. 75Ocado Group 196.75 18.50 196.75 123.50Old Mutual 124 1 145.25 97.25PartyGaming 212 6.50 334.50 205.25Pearson 1017 9 1051 855Pennon Group 635 -5 646 483Persimmon 429.75 13 507.50 336.50Petrofac 1622 35 1622 876.50Petropavlovsk 1132 -12 1365 852Phoenix Group Hldgs 617 6 758 557.50Premier Farnell 295.25 8.50 304.50 173Premier Oil 2018 68 2018 1017Prov id en t Fin an cial 862.5 0 -11.5 0 974 728.5 0Prudential 677.50 9.50 681 487.50PZ Cussons 401 0.25 409 234.75QinetiQ Group 132.25 2.25 167 96.75Randgold Res 5175 -100 6655 4209RDS A 2162 23.50 2162 1624RDS B 2159.50 44.50 2159.50 1554Reckitt Benckiser 3617 92 3655 3037Reed Elsevier 541.50 0 563 460.50Regus 87.25 1 120 66Renishaw 1286 56 1306 548Rentokil Initial 97.50 0.75 138.50 87.75Resolution 235.50 1.50 346 211.25Rexam 338.75 6 346.75 276.50Rightmove 812 33 812 500.50Rio Tinto 4502 15.50 4584 2812RIT Capital Partners 1198 -1 1250 971.50

Ro lls- Royce Group 648.5 0 25.5 0 654 .5 0 47 3.5 0Rotork 1850 22 1895 1214Royal Bank of Scot 40.75 1.50 58 31.25RSA Insurance Grp 128.75 3.50 136.50 114.75SABMiller 2254 -2.50 2306 1650Sage Group 275 1.50 289 222Sainsbury (J) 384 7.50 395 313Schroders 1893 38 1900 1116Schroders NV 1486 28 1502 929.50Scot.& Sth. Energy 1239 14 1258 1010Scottish Mortgage 712.50 4.50 712.50 475SEGRO 295.50 9 352 250.25Serco Group 570 14.50 651 494.25Severn Trent 1486 8 1499 1072Shaftesbury 451.25 3.25 460 349.25Shire 1566 23 1567 1220SIG 132.75 4 137.75 90.75Smith & Nephew 679 2.50 696.50 537.50Smiths Group 1299 54 1299 995.50Soco International 378.25 8.75 484.25 292Spectris 1335 24 1335 735Spirax-Sarco 1934 0 1987 1235Spirent 149.50 1.75 160.25 102.75Sports Direct 166 5.75 166 92.25St Jamess Place 274.50 8.75 292 204.25Stagecoach Group 215.50 3.50 224 160.75Standard Chartered 1750 24.50 1950 1351.75Standard Life 219.75 3.75 236 173Supergroup 1317 20 1638 535TalkTalk 161.50 1.50 168.25 108.50Talvivaara Mining 620 24.50 620 342.50Tate & Lyle 532.50 14.50 544.50 388.75Taylor Wimpey 32 0.50 44 22.25Telecity Group 484 13.75 532.50 360Templeton Emrg. 685 11.50 685 471.50

Tesco 433 8 454.50 377.50Thomas Cook Group 195.25 5.50 272 171.75Travis Perkins 1043 -15 1058 664.50TUI Travel 255.75 9.50 308.50 190Tullett Prebon 396 13.25 417.25 262Tullow Oil 1308 47 1369 991.50UK Commercial Prop 81.75 -0.50 85 72.75Ultra Electronics 1710 14 1895 1265Unilever 1972 9 1997 1688United Utilities 597.50 5.50 628.50 488.25Utd Business Media 703 13 703 409.75Vedanta 2485 -32 2934 1839Victrex 1484 1 1522 806Vodafone Group 170 4.25 175 129.50Weir Group 1775 -5 1861 735.50Wellstream Holdings 791 1 793.50 436WH Smith 502 15 523 398.25Whitbread 18

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