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FLAWED risk management at BP aswell as at two of its contractors wasresponsible for the DeepwaterHorizon disaster last year, accordingto an official US inquiry into the inci-dent.

The disaster at the Macondo well inthe Gulf of Mexico, which killed 11men and led to the largest ever off-shore oil spill, could have been avoid-ed by the British oil giant and itscontractors Transocean andHalliburton if better managementpractices had been in place, says thereport.

A chapter from the report by theNational Commission set up byPresident Barack Obama amid publicanger over the spill says: Most of themistakes and oversights at Macondocan be traced back to a single overar-ching failure a failure of manage-ment. Better management by BP,Halliburton and Transocean wouldalmost certainly have prevented theblow-out.

Yet the report warns a similarcatastrophe could happen againshould significant reform of the oil

industry not take place.It says systemic failures by theindustry as well as government regu-lators failed to prevent the spill,

which without significant reform inboth industry practices and govern-ment policies, might well recur.

The 48-page chapter released todayahead of next weeks full report into

the leak points to several individualmissteps and oversights by BP,Halliburton and Transocean, includ-ing inadequate risk evaluation and

flawed procedures for securing thewell on the ocean floor.

It also criticised an apparent lack ofattention to key initial signals that ablowout might occur, as well as an

ineffective response to the situationonce the explosion had taken place,including the failure of the rigsblowout preventer.

The three firms at the centre of thechapter are also found to have clear-ly saved money from cost-cuttingmeasures that ultimately contributedto the oil spill.

Whether purposeful or not, manyof the decisions that BP, Halliburton,and Transocean made that increasedthe risk of the Macondo blowout

clearly saved those companies signifi-cant time [and money], the reportsaid.

BP attracted a large proportion ofpublic anger at the height of the Gulfof Mexico spill, seeing its share priceslump to as little as 296p in June,valuing the company at 55.6bn, lessthan half its peak value of 123.6bnbefore the disaster.

Yet co-chair of the NationaCommission William K. Reilly todaymoved the blame solely from BP, con-cluding there was a system-wideproblem.

A spokesperson for Transocean said:Consistent with industry standards,the procedures being conducted in thefinal hours were crafted and directed by BP engineers and approved inadvance by federal regulators. Basedon the limited information madeavailable to them, the Transoceancrew took appropriate actions to gaincontrol of the well. They were welltrained and considered to be amongthe best in the business.

A spokesperson for Halliburtonsaid: The report acknowledges thatcementing an oil well is an inherent-ly uncertain process and things cango wrong even under optimal condi-tions. Halliburton acted at the direc-

tion of BP, as acknowledged in severalplaces in the national commissionreport.

BP declined to comment.

FTSE 100 6,043.86 +29.99 DOW 11,722.89 +31.71 NASDAQ 2,702.2 +20.95 /$ 1.55 -0.01 / 1.18+0.01 /$ 1.32 -0.01 Certified Distribution1/11/10 - 28/11/10 is 113,348

OFFICIAL REPORT: BPSHARES SPILL BLAME

www.cityam.comIssue 1,294 Thursday 6 January 2011 FREE

FOOD PRICESROCKET

UN WARNS OF

RISK OF GLOBAL

CRISIS P3

CARLO CONCEDES BLUESJUST NOT GOOD ENOUGH

WOLVES ADD TO WOES P22

BUSINESS WITH PERSONALITY

BY RICHARD PARTINGTONENERGY

Bob Dudley, BP chief executive Dave Lesar, Halliburton chief executive Transocean, Steven Newman

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News2 CITYA.M. 6 JANUARY 2011

Cullums firmto get 200mINSURANCE broker TowergateFinancial is close to securing a 200mcash injection from private equitygroup Advent International.

The insurer, established by Cityhigh-flyer Peter Cullum, is in exclu-sive talks which would see Adventtake a significant minority stake inthe company, a source close to thecompany confirmed last night.

Founded by Cullum, who receiveda CBE in the New Years Honours Listfor his charitable work, the companyhas grown to beome one of Britainstop insurance firms.

It may look to list on the stock mar-ket within the next few years, andcould use the cash to prepare for aninitial public offering.

Towergate could also issue bonds

later this year, as part of a refinancingprogramme, as many of its debt facil-ities are thought to be set to expirenext year.

Towergate is one of Britains lead-ing insurance firms. It employs hun-dreds of people and is expected toseek a stock market listing in 2013that could see it head towards theFTSE 100.

Advent and Towergate declined tocomment last night.

The insurer provides independentfinancial advice, and has ambitiousgrowth plans.

BYRICHARD PARTINGTON

INSURANCE

Time to fight for economic freedom

IT was Frederic Bastiat, the Frenchnineteenth century economist, whofamously described the state as thatgreat fictitious entity by which every-one seeks to live at the expense ofeveryone else. It is a shame thatBastiats work, cult reading in somecircles, has yet to penetrate the publicconsciousness in Britain. Those whocampaign obsessively against cutsshould take note what they are real-ly arguing is for others their contem-poraries, as well as future generationssaddled with the national debt topay for their pet projects.

It is high time for a proper debateabout the relationship between theindividual and the state. In a classical-ly liberal society, peoples incomes areseen as theirs, to be spent, invested or

donated as they see fit, with taxationkept to the minimum necessary toprovide certain services and help thepoor (the size of these activities are, ofcourse, subject to debate). The present,collectivist mood in the UK sees it dif-ferently: earnings are implicitly treat-ed as public property, to be divided upaccording to what politicians see fit;tax cuts are even seen as a cost to theExchequer, as if it were automaticallyentitled to everybodys wealth.

There is a fundamental philosophi-cal distinction between these two posi-tions. This is not merely an abstractdebate: shifting views on what wemean by justice have economic con-sequences. The UKs relative prosperi-ty during its industrial heyday andthen again during the 1980s and1990s was based on policies thatassumed that individuals had a natu-

ral right to their earnings and proper-ty. By contrast, the post-war period,

when envy and confiscatory taxationwere rationalised on moral grounds,culminating with a 98 per cent tax

rate in the 1970s, was a disaster.The situation is obviously no way asbad today as it was in those days. ButBritain is now a very high tax society

by international standards. So it wasgreat to see Boris Johnson call for the50p tax to be scrapped yesterday. Thereal top rate of tax is even higher

when national insurance is included;earnings are taxed again when con-sumed (VAT, petrol tax); and anythingleft is taxed again at death. Cripplingrates of double and triple taxation arethe order of the day.

Such a state of affairs would haveoutraged Bastiat. To him, high rates oftaxation were unacceptable, morallyas well as in terms of the damageinflicted on the incentive to work,save and invest. No legal plunder:

This is the principle of justice, peace,order, stability, harmony, and logic,

he argued in his inimitable style. There are plenty of voices around

today fighting for free speech, civil lib-erties and social freedoms. It is ashame there is no equal enthusiasm

when it comes to defending individu-als economic freedom.

GLOBAL GROWTH CHEERMore good news on the economicfront: the US ADP private employmentsurvey was remarkably strong yester-day, while the US services index rosefor the fourth month in a row. It ishard to tell how sustainable the

American rebound will turn out to bebut it is nevertheless a welcome devel-opment. The next challenge is tack-ling the budget deficit: theRepublicans have now formally seizedcontrol of the House and have pledgedto tackle out-of-control spending andprevent the US from going the way ofGreece. We shall soon see whetherthey mean what they say.

[email protected] me on twitter: @allisterheath

SHARP fluctuations in the price offuel could be brought to an endunder plans being considered byDavid Cameron.

The Prime Minister is looking atpegging fuel tax to oil prices in aneffort to ease fuel pump prices forconsumers.

Cameron had previously proposeda fair fuel stabiliser when his party

was in opposition three years ago,

sparking criticisms from Labour overits costing as well as being denounced

by the Lib Dems Vince Cable.Speaking at a Caterpillar plant in

Leicester yesterday, the PM said therecent rise in oil prices, compounded

by the 2.5 per cent VAT increase, had been painful and difficult formotorists.

He said he was working with theTreasury to look at ways in whichthe government could share therisk of higher fuel prices with theconsumer.

BYRICHARD PARTINGTON

POLITICS

PM looks to stabilise fuelPM David Cameron is considering pegging fuel tax to oil prices

NEWS | IN BRIEF

Banker linked to F1 arrestedA former German bank executive hasbeen arrested for allegedly accepting a$50m (32m) kickback in the 2006 saleof a large stake in the Formula Onesrights holding company, German prose-cutors said yesterday. The former riskmanager of regional public-sector bank

BayernLB was taken into custody oncharges of corruption, tax fraud andbreach of trust toward his formeremployer, prosecutors in Munich said ina statement. Gerhard Gribkowsky was incharge of managing the sale of thebanks F1 stake to London-based buyoutgroup CVC Capital Investment.

US private sector jobs surgeThe number of US private-sector jobssurged in December at a rate threetimes stronger than forecast, the mostbullish signal in months that a recoveryin the worlds biggest economy is shift-ing up a gear. Private employers added297,000 jobs last month, payrollsprocessing company ADP EmployerServices said yesterdfay. It was the largestgain on ADP records dating to 2000, andcomes ahead of tomorrows more compre-hensive non-farm payroll data.

EDITORS LETTER

ALLISTER HEATH

7th Floor, Centurion House,24 Monument Street, London, EC3R 8AJTel: 020 7015 1200 Fax: 020 7283 5334Email: [email protected] www.cityam.com

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

Printed by Newsfax International,Beam Reach 5 Business Park,Marsh Way, Rainham, Essex, RM13 8RS

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

Towergate was set upby Peter Cullum, whowas awarded a CBE inthe New YearsHonours List.

HEDGE FUNDS BET ON REVIVAL OFFORTUNESAfter one of their most disappointingyears, hedge fund managers are hop-ing for a better 2011 with less macroeconomic volatility and more corpo-rate events to bet on, such astakeovers. As of the end of November,the average hedge fund had returned

just over 7 per cent for the year,according to Hedge Fund Research underperforming leading stock mar-ket indices over the same period.

Among hedge funds, equitylong/short managers who follow themost common hedge fund strategy averaged just 6.7 per cent, accordingto HFR. Investors in hedge fundsexpect better performance ahead.

CHINA EYES CREATION OF GLOBALRAIL LEADERChina is considering merging its two

dominant state-owned railway equip-ment producers to lead a high-speed

rail export drive, in a move thatwould create the worlds largest com-

pany of its kind in terms of operatingrevenue. If approved, the merger ofChina North Locomotive and RollingStock Corp (CNR) and China SouthLocomotive and Rolling Stock Corp(CSR) would form an entity control-ling well over 90 per cent of thedomestic Chinese rail equipmentmarket.

LOVEFILM EYES BENEFITS OF PAY-TVMOVIE RULINGLovefilm, the DVD rental and onlinemovie company, is poised to exploit apossible loosening of British SkyBroadcastings grip on movies shownon UK pay-television, according toone of its founders. Simon Morris,

who is the chief marketing officer ofLovefilm, said yesterday that a recentEuropean Commission statementabout British Sky Broadcastingsarrangement with the six largest

Hollywood studios was very interest-ing to us.

OVERBLOWN BBC SHOULD TRIM ITSSAILS, SAYS ATTENBOROUGH The BBC is too big and should cut back on some of its activities, SirDavid Attenborough, the naturalistand veteran of the corporation, has

warned. Sir David, a former con-troller of BBC Two who oversaw theintroduction of colour television toBritain, said that in recent years theBBC had strayed from the straightand narrow on a number of courses.

CABLE OFFERS A MODERN PASSAGE TOINDIA

The first part of the Europe IndiaGateway, running from Bude on theNorth Cornwall coast to Egypt, willcome on stream in March and by thesummer the rest of it, runningthrough the Suez Canal to the westcoast of India, touching thirteencountries, will be running. It will

enable speeds of up to 100 gigabitsper second.

BRAZIL PLEDGES TO STOP US MELTINGTHE DOLLARBrazil has sounded a new note of

warning in the international curren-cy war by pledging not to allow theUnited States to melt the dollar.Guido Mantega, the Brazilian financeminister, raised the prospect of intro-ducing greater controls on short-termflows of speculative capital into hiscountry.

EU PLANS FOR BONDHOLDER HAIRCUTSUNSETTLES DEBT MARKETS

The European Commission will todaypress ahead with plans to spread the

burden of EU bank failures to senior bondholders, marking the start ofharsher times for Europes creditors.Michel Barnier, the single marketcommissioner, will publish a consul-tation paper outlining ways to shield

taxpayers from banking crises thefirst stage of an eventually binding law.

HP MARKETING CHIEF LEAVESHewlett-Packard chief marketing offi-cer Michael Mendenhall hasresigned, according to people famil-iar with the matter, one of the firstdepartures from among HPs seniorranks since Leo Apotheker becamechief executive in November.Mendenhall, who is also an HP senior

vice president, is leaving for a newjob, these people said.

AT&T PINS 4G LABEL TO EXISTINGNETWORK

AT&T flipped a switch and turned onits 4G wireless network yesterday. Theswitch, however, was in the compa-ny's marketing department. By rela-

beling its existing 3G network, thecountry's second-largest wireless car-rier joined the noisy fray over so-called fourth-generation wireless

technology promising super fastmobile Internet speeds.

WHAT THE OTHER PAPERS SAY THIS MORNING

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News 3CITYA.M. 6 JANUARY 2011

FOOD prices have surged above the

peak they reached during the 2008crisis, the United Nations (UN)revealed yesterday.

The 2008 food crisis provoked foodriots, the toppling of at least one gov-ernment, and plunged over a billionpeople into hunger.

And the UNs food price index aver-aged 214.7 last month, a record highthat surpassed the 213.5 mark of June2008 when prices jumped to a 30-yearpeak.

The index measures monthly pricechanges for a food basket of cereals,oilseeds, dairy, meat and sugar.

I am feeling less optimistic than Iwas in November we have not hadmuch good news, said Abdolreza Abbassian of the UNs Food andAgricultural Organisation (FAO).

Nobel economics laureate GaryBecker has estimated that a 30 percent rise in food prices over five years

would cause a 20 per cent fall in liv-ing standards in poor countries.

And the FAO estimated that domes-tic staple food prices in developingcountries increased by 48 per cent inreal terms during the 2008 food crisis.

While Abbassian does not expect arepeat of the 2008 riots, he fears highprices could be here to stay. Highprices are not going to go away andthere is a strong possibility that theymight remain high for two years, hesaid.

Sugar, cereal and oil and fat pricesexperienced the sharpest jumps.

NEWS | IN BRIEF

New York budget crisisDemocratic governor Andrew Cuomodeclared the state of New York in crisisyesterday, proposing solutions champi-oned by Republicans to control thebudget deficit, overhaul Medicaid andreform a dysfunctional government. Onhis fifth day in office, Cuomo pledged

not to increase taxes or rely on bor-rowing to close a $10bn budget deficit.

All change at StarbucksStarbucks, the worlds biggest coffeechain, unveiled a new logo yesterdaythat omits its name and the word "cof-fee, infuriating loyal customers. Thenew green logo is essentiallyStarbucks representation of a femalesiren a half-human mythical

temptress who led sailors to theirdeaths.

BoA attacks Dodd-Frank ActThe Federal Reserve's proposed capson fees that banks charge merchantsfor processing debit card transactionsare too low and do not allow banks toadequately cover their processingexpenses, Bank of America consumerbank chief Joe Price said yesterday.

The rules are a key part of the Dodd-Frank financial reform act.

Food prices soar to new high

Sugar and cereals both rose by 6.7per cent in the index fromNovember to December.

Extreme weather conditionsand the surge in oil prices arepartly behind the rise in the foodindex. Recent floods in Australia,which have covered an area thesize of France and Germany, have

hit the supply of wheat. And earlier in the year

droughts and fires in Russia andUkraine, also top wheat produc-ers, harmed supply, pushing upprices. In September the supply was damaged further after theRussian government bannedwheat exports.

BARCLAYS won the dismissal of a law-suit brought by US investors seekingto recover losses from the Britishbanks alleged failure to disclose andproperly account for its real estateexposure.

US District Judge Paul Crotty foundyesterday an absence of ample allega-tions that Barclays did not trulybelieve how it valued its subprimeand other real estate assets, andoffered substantial risk disclosuresregarding its valuations to investorswho bought its securities.

The judge also dismissed dozens ofadditional defendants. Among thesewere Barclays directors, including cur-rent chief executive Bob Diamond andhis predecessor John Varley, and morethan one dozen underwriters such asBank of America, Citigroup and

Goldman Sachs. The lawsuit is one of many to

accuse major banks of being too slowto report credit deterioration on theirbalance sheets.

Barclays winsdismissal of USrisky debt suit

BANKING

BY STEVE DINNEEN, LAS VEGAS

INTERNATIONALCONSUMERELECTONICS SHOW

2011

400

325

250

175

100

2009 2010

Dec Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

2002-2004 = 100

FOOD COMMODITY PRICE INDICES

Intel launches high-speed

chip for home moviemakers

WHILE the giants of the electronics world were still setting up theirstalls for the Consumer ElectronicsShow in Las Vegas, it was Intelwhich made the first game-chang-ing announcement.

The firm yesterday unveiled achip it says is the most excitingproduct in the companys history.

Its Second Generation Intel Core,which features an inbuilt graphics

chip, can outperform the fastestmicroprocessor in the world by astaggering 60 per cent and will run basic tasks more than 800 timesfaster than most current chips.

Intel expects the new processorto contribute more than a third ofits revenue next year and generate$125bn (81bn) for the PC industry.

Intel chief executive Paul Otellinisaid the new chip represents the best ever integration betweenMicrosoft and Intel.

It says the chip will provide thepower needed for next-generationfunctions including wirelesslystreaming HD content and playingrevolutionary new games, as wellas allowing users to rapidly editand play the ever increasingamount of home-generated videocontent.

The chip could also overhaul the way we interact with computers,

with Intels head of consumerMooly Eden demonstrating a newprogramme powered by the chipthat allows users to control theirPC by instructing an on-screenavatar which can read facialexpressions and gestures.

Mooly also said his firm is mak-ing inroads into the lucrative

smartphone and tablet markets which Intel has been slow to join but said the PC will not be usurped.

He said: At the moment thetablet is like a new baby and every-one is fussing over it and wants tohold it and change its diaper. But itisnt going to take over the world.

Mooly added: Tablets are hereto stay but in a couple of years they will be seen as complimentarydevices to netbooks. People dontwant a Swiss army knife that doeseverything. They want a devicethat will fit their needs at a specific

time. Intel says it has worked close-ly with Microsoft in the lead-up tothe launch but would not confirmrumours it is also in talks with Apple about incorporating itsprocessors into its devices.

City A.M.will be covering the lat-est from the show over the nextfew days.

BY JULIAN HARRISWORLD ECONOMY

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MID-MARKET deals of up to 500m jumped in value by 66 per cent lastyear, according to research by account-ants Grant Thornton.

Last year saw 2,163 deals at this level,worth 38.9bn in total, versus 2,021deals worth 23.5bn in 2009. The jump

was driven by foreign and private equi-ty bidders.

But most of the action was earlier inthe year. The number of dealsdropped off in the second half asuncertainty gripped the market onceagain and economic recovery looked

likely to be a long slog, said GrantThornton partner Stephen Baker.

AIG has received speculative offers ofup to $3bn (1.9bn) for its Taiwanesearm following a blocked bid of $2.1bnlast year, it has told US regulators.

In a letter released by the USSecurities and Exchange Commissionthe insurance group revealed thatNan Shan, the third largest life insur-ance firm in Taiwan, had attractedoffers well above its market pricesince it was put back on the block inSeptember last year.

The disclosure came after newsbroke of a potential joint bid for NanShan by Taiwan Secom, PrimusFinancial and Goldsun, four monthsafter a $2.15bn by Primus bid was

blocked by the countrys regulators.The deal would see the consortium

take a stake in Nan Shan and co-man-age the firm with AIG, a set-up that

AIG would rather avoid in favour ofan outright disposal.

But a sale is being delayed due to a wish list of conditions that theTaiwanese regulator has drawn up forNan Shans suitors, in line with thecountrys rules on mainland invest-ment that blocked the initial offer.

The regulators intervention is a barrier to AIGs attempts to raisemoney through divestments to pay

back bailout money it received fromthe US government, which ownsmore than 90 per cent of the group.

Ex-AIG chairman Hank Greenbergyesterday reiterated his distaste at thebailout of AIG, accusing the govern-ment of denying AIG the morelenient terms that were offered tosome investment banks to access gov-ernment funds.

AIGs shares fell on news of the con-sortiums offer on Tuesday, butclimbed throughout Wednesday asthe unsolicited bid amounts wererevealed, closing 7.3 per cent up at$60.95

AIGs Taiwan

business maysell for $3bn

FRENCH carmaker Renault has sus-pended three executives for suspectedindustrial espionage thought to bethe leaking of company secrets, itadmitted yesterday.

Three top staff members arebelieved to have shared confidentialinformation about the new electric

vehicles Renault is developing,

according to sources close to the situ-ation. The suspended managers, which

are understood to have left their posi-tions on Monday, had all headed elec-tric vehicles projects and one was amember of the companys manage-ment committee, sources said.

A Renault spokeswoman confirmed that the suspensions followedan internal investigation that has

been running for several months.

Renault ousts execsover espionage claim

A FLOOD of covered bonds for sale onthe market has caused indigestion,pushing prices higher.

More than13bn (11bn) of coveredbonds have been sold this week, dou-ble the amount of this time last year,according to Dealogic.

Covered bonds give the safest formof debt for banks, offering a form ofsecuritisation which protectsinvestors interests even in the eventof bankruptcy.

Yet despite the popularity of thebonds, with a record $356bn (230bn)

sold last year, investors have not beenchasing deals to push prices down.

Covered bondscongest marketDeals driven byforeign demand

BY ELIZABETH FOURNIER

INSURANCE

M&A

MARKETS

Former AIGchairman HankGreenberg said thebusiness wastreated unfairly bythe US government

Picture:REUTERS

BYALISON LOCKAUTOMOTIVE


ANALYSIS lAIG

50

45

40

35

55

60

29 Oct 18 Nov 30 Dec9 Dec11 Oct

$ 60.955 Jan

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EMPLOYERS face costs of thousandsof pounds from spurious employ-ment claims, the British Chambers ofCommerce (BCC) claimed yesterday.

Tribunals are overwhelminglyweighted in favour of the employee,causing companies to pay large settle-ments even for claims with no sub-stance, the BCCs report said.

The average cost for an employer todefend themselves at tribunal is8,500. However, the average settle-ment is 5,400, often making itcheaper for employers to settle.

Three in four employers that settlesay they have done so to reduce costsor because it is more convenient thanlengthy legal procedures.

Currently, tribunals are too slow,

said Dr Adam Marshall of the BCC.Ministers must commit to reducingthe wait time for a first hearing -- and

making the system less of a barrier tobusiness growth.

Statutory disciplinary and griev-ance procedures have provoked a cul-ture change, encouraging litigious

behaviour, according to employmentlawyer Pam Loch of Loch Associates.

Filing a complaint is as easy as com-pleting an online form, she said.Unrepresented or badly informedemployees often demand their dayin court and procedures drag on as

judges guide claimants through legalcomplexities increasing legal coststo defendants.

And hardly any companies are ableto reclaim costs, despite winningcases, the BCC reported. The amountof cases in which reimbursement ispaid is close to 0.15 per cent, theysaid.

Judges could weed out spurious

claims to stop wasted time and expen-diture, and require claimants to laydown a deposit, Loch suggests.

Tribunals costfirms 8,500each, says BCC

Its the business

skynews.com

Broadcast live and in high definition from

the Sky News studio at The Gherkin in

the City,Jeff Randall Live offers in depth

coverage of the big business stories of

the day with exclusive guests and high

profile interviews.

Jeff Randall Live

7pm - 8pm, Monday - Thursday

BY JULIAN HARRIS

EMPLOYMENT

Focus on Employment Tribunals6 CITYA.M. 6 JANUARY 2011

Lawyer Pam Loch of Loch Associates says the law should protect firms from spurious claims

Average amount of compensation awarded for unfair dismissal

RPI inflation

ANALYSIS lCompensation Settlements Are Rising Above The Rate of Inflation

3,000

4,000

2,000

1,000

5,000

6,000

2001/22000/1 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/101999/0

Source: British Chambers of Commerce

A successful small business dismissed an employee for steal-ing alcohol and underperforming. The employee was afemale reporting to a male manager. She went off sick whilesuspended pending her hearing and altered her medical sicknote. During this period she continued to work for anotheremployer. The company dismissed her after following theACAS Code, but she lodged an unfair dismissal and a sex

discrimination claim. She also lodged a personal injury claim,claiming she could not work due to an injury she sustained,and complained to HMRC that she had not received any sickpay. Despite HMRC knowing she had amended the certifi-cate it determined that as she had a certificate she shouldbe paid. The employment judge took a different approachand withdrew her sex discrimination claim.

The personal injury claim is ongoing. Though the defenceof the other claims incurred thousands of pounds, the busi-ness concluded that settling the claim for less than the costswould send out a negative motivational message to staff.

CASE STUDY 1 CASE STUDY 2

A claim was brought against a national facilities manage-ment company for equal pay, breach of contract and holi-day pay. As the claimant was unrepresented a casemanagement hearing had to take place in person, incur-ring additional costs. A hearing was set for breach of con-tract, holiday pay and victimisation claims, with a separatehearing to consider the equal pay claim, as it had to be

heard by specialist employment judges.Due to the nature of the equal pay claim the companyfelt it had to be defended, as settlement would send outthe wrong signal to the workforce. The company knewthis would incur substantial costs, as the claimant wasknown for submitting unfounded grievances and taking upmanagement time with emails and letters.

The claims were dismissed at the first hearing, but fur-ther case management discussions on the claimants con-duct and two further hearings on the equal pay claimwere held. The companys costs were 20,000.

Source: Loch Associates

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AN auction of the first region-wideEurozone bonds was concluded with-in the hour yesterday, as the EuropeanCommission found itself inundated

with demand for the five-year notes.It sold the targeted amount of5bn

(4.3bn), with the proceeds going toprop up the European FinancialStabilisation Mechanism (ESFM), the

bailout fund that is part-fundingIrelands rescue to the tune of

22.5bn.The bonds were sold with a 2.5 per

cent yield, compared to 1.8 per centfor equivalent German debt. Investorssnapped up the new notes, which areperceived to be high-quality paper

backed by Europes most stableeconomies but offered at a premiumto reflect high yields in peripheralEurozone nations such as Portugaland Greece.

The plan to issue region-wide bonds was announced last year in an

attempt to slow the heady rise of bond yields across countries after Ireland was forced to apply for a bailout inNovember.

But the idea of introducing a morepermanent region-wide eurobond, ore-bond, has proved controversial,

with German chancellor AngelaMerkel strongly opposing the idea.

Analysts at BNP Paribas said: We believe that an e-bond is the rightthing to do if linked with fiscal har-monisation within the EU.

But they admitted that it could be

interpreted as a permanent subsidyfor peripheral countries.

A series of region-wide Eurozonebond auctions is expected this year.

High demandfor first eurobailout bonds PORTUGAL saw borrowing costs soarat its first debt auction of the year yes-terday, with yields on the sale of six-month notes reaching a new record

of 3.7 per cent up by an eye-watering170 basis points since its last six-month bond auction in September.

However, at these rates, demandwas higher than previously, with all500ms (430m) worth of notes onoffer sold.

The Portuguese auction came onthe same day as Germany also held asuccessful sale of3.9bns worth of10-year bonds, helped by a dip inequity prices that sent investors into

bond markets after yesterdayshares rally.

The auctions yesterday followedsales by the Netherlands, Belgiumand Hungary on Tuesday, with costs

on their short-term debt falling over-all.

But there are further tests tocome, with analysts particularly

watching demand at longer-datedauctions.

Barclays Capital estimates that theEurozone will need to finance175bns worth of debt in just thenext two months, making for a yeartotal issuance of842bn in bonds.

That would be slightly down fromlast years total sales of911bn.

DEALS signed between Chinese andSpanish companies during the visit ofChinese vice premier Li Keqiang toSpain are expected to total $7.3bn(4.7bn) by the time Li leaves today.

The deals are said to cover 16 sec-tors, including telecoms, banking,energy, transport and agriculture.

In one agreement, Spanish bankBanco Bilbao Vizcaya Argentaria

announced that it will cooperate with China Development Bank dur-ing dealings in Latin America.

There is also good news for Spanishexports, with China expected to signup to import $29ms worth of food-stuffs such as meat, olive oil and winefrom the country.

Li wrote in a Spanish newspaperearlier this week that China wouldalso continue to be a long-terminvestor in Spains sovereign debt,prompting bond yields to fall.

Portugals debtnearly doublesin cost at sale

China-Spain deals to beworth $7.3bn during visit

Chinese vice premier Li Keqiang ends his visit to Spain today Picture: REUTERSBY JULIET SAMUEL

EUROZONE CRISIS

EUROZONE CRISIS

Europe last year announced plans to issue34bn in region-wide bonds this year in order tofund the Eurozones bailout funds. Analysts expect a yield premium of one totwo per cent over European Union debt.

FAST FACTS | E-BONDS

NewsCITYA.M. 6 JANUARY 2011

BY JULIET SAMUELEUROZONE CRISIS

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Consumer News8 CITYA.M. 6 JANUARY 2011

SHARES in HMV Group plunged bymore than a fifth at one stage yester-day as it issued a profit warning

while admitting that it was strug-gling to meet the terms of a loancovenant.

The music and DVD retailer which also owns Waterstones book-shops and a string of live venues plans to close 60 UK stores this year inan attempt to rein in costs.

Christmas like-for-like sales plum-meted by 10.2 per cent on the sameperiod last year with the company

blaming the snow for denying it a fes-tive boost. It said business was hit bythe severe weather and challengingtrading conditions.

The figures, which covered the five weeks to 1 January, were draggeddown by a 13.6 per cent sales slump atits HMV music stores in the UK andthe Irish Republic.

It said profits for the year to April would be at the bottom end of the46m-60m range expected by mar-kets.

HMV said there was an underlyingdrop in demand for CDs and DVDs

with downloads eating up a growing

slice of the market. The demise of rivals Woolworths

and Zavvi have left HMV as the lastchain of its kind standing.

Meanwhile, the companys struggle with debt was laid bare in its state-ment. HMV said: The board nowexpects that compliance with the

April covenant test under the groupsbank facility will be tight and is tak-ing further mitigating actions duringthe next four months to address this.

The company said it would save10m this year as well as closing the60 stores. Waterstones performed rel-atively well compared with the rest ofthe business, with steady like-for-likesales.

HMVs shares closed 20 per centlower at 26p.

JOHN Lewis Partnership reportedbumper Christmas sales, despite thesnowy conditions that robbed otherretailers of a seasonal boost.

Sales at its John Lewis departmentstores in the five weeks to 1 January

were 545m, up 8.9 per cent from ayear before.

The strong performance was driven

by its electrical and home technologydepartment, as well as a 42 per cent

rise in online sales, the partnershipsaid in its trading update.

Like-for-like sales, which considerssales at stores open at least 12months, rose by 7.6 per cent.

Meanwhile, its supermarket chain Waitrose said it will open 39 newstores in the UK this year, creating3,000 new jobs. Convenience stores

which are smaller versions of thesupermarket will account for 27 ofthe outlets. Christmas sales at

Waitrose were also strong, up 8.9 percent for the week to 23 December.

John Lewis boosted byChristmas sales surge

THE countrys biggest pizza deliveryfirm Dominos Pizza yesterday said it

expected its 2010 pre-tax profit to beat market forecasts following astrong finish to the year, sending itsshares to an all-time high.

Dominos, which operates theBritish and Irish franchises of theglobal delivery brand, has excelledthrough challenging economic condi-tions as cash-strapped customers optto stay in and order takeaways ratherthan eating out.

Dominos, which opened 57 new

stores over the year and has 665 out-lets, said yesterday sales at shops openmore than a year grew by 10.3 percent in the 13 weeks to 26 December.

We have again finished the year

with a like-for-like sales performancethat is ahead of expectations and,together with the improvements inour operational gearing, the compa-ny will deliver 2010 profits ahead ofcurrent City expectations, saidDominos chief executive ChrisMoore.

The strong performance camedespite heavy snowfall across Britainthroughout December.

Dominos said total sales increased

by 17.8 per cent in the fourth quarterto 132.5m. For the year as a whole,they were up 19.2 per cent to485.3m. THE TIPSTER: P18

Dominos sales top forecastsBY JOHN DUNNELEISURE

HMV shares

dive as profitwarning hitsBY JOHN DUNNERETAIL

BYHARRY BANKSRETAIL

HMV chief executive Simon Fox said sales simply werent there Picture: REX

ANALYST VIEWS: CAN HMV BOUNCE BACKAFTER THIS BLOW? Interviews by John Dunne

KATE CALVERT | SEYMOUR PIERCE

A break up of the business becomes more likely andfurther store disposals are expected. While the valuationappears undemanding on conventional measures, we believe

there are safer investment opportunities elsewhere.

RICHARD CURR | PRIME MARKETS

We had little faith in prospects for the retailer overthe Christmas period; with increased losses, falling like-for-like sales and soaring debt levels, even a bumper set of saleswould have done little to stem the tide.

NICK BUBB | ARDEN PARTNERS

We are downgrading our numbers and recommen-dation again. The market largely expected a profit warning,but the news is still depressing because HMV has warnedthat it is now close to breaching bank covenants

Yes. I really likethe idea ofpurchasingfood andespeciallypizza throughmysmart-

phone

ADRIAN MILNE |ACCENTURE

I'm on the fence. Icould see myselfbuying fromAmazon but withitems like clothes,I'd muchrather trythem on

ANDREW HIBBARD |TRANSATLANTIC REINSURANCE

Definitely. In fact, Idid all of myChristmas shop-ping using mysmartphone, as itwas so muchmoreconven-

ient.

KEIR MCCARTHY |BULLHORN

ANALYSIS lHMV

30

40

25

35

45

50


p

26.005 Jan

ANALYSIS lDominos Pizza

520

540

500

480

460

440

560

580


p 561.505 Jan

NEXT posted a slightly-worse-than-expected fall in underlying store salesat Christmas, blaming the hit to tradefrom snow in December.

It said that even though it lost anestimated 22m of sales because ofthe snow it was still in line to hit fore-casts.

The group, which runs over 500stores in Britain and Ireland, said yes-terday that sales at shops open atleast a year fell 6.1 per cent in theperiod from 1 August to 24 December the bulk of its second half.

However, sales at Nexts Directoryhome shopping business climbed 8.7per cent.

Next guided that full-year pre-taxprofit will be in the range of 540m-555m, in line with current marketexpectations.

The retailer repeated an earlierwarning that its prices were likely torise by about eight per cent this year,due to the VAT rise and higher cottoncosts. Next said: We estimate that welost 22m of full price sales as a resultof the snow representing 2.2 percent of the seasons total sales.

Also, Games Workshop, whichmake the Warhammer models series,issued a profit warning yesterday.

In the half year to the end ofNovember, sales were down four percent, with the company unlikely tohit City forecasts. But the companysaid margins and costs are undercontrol. The stock closed down 14per cent at 366p.

Next sees snowknock 22moff Xmas sales

RETAIL

HUNGRY pizza fans bought 1mof Dominos food through theiriPhones in the three months tothe end of December, writesLottie Mungavin.

In total, the companys e-commerce business which

includes orders made onlineand through its iPhone app accounted for over a third ofpizza sales in the fourthquarter.

Buoyed by the successof its iPhone app, Dominosis working on a similarapp for Android, themobile phone operatingsystem developed by web

giant Google.Dominos is also a convert to the

power of so-called social marketing,where firms use social net-

works like Facebookand Twitter to pro-mote their products.

It has 21,000 fol-lowers on Twitter, aswell as 109,000 fansand 1.5m likes on

Facebook. It keeps theirattention by offeringoccasional online-onlydiscounts.

The iPhone appaccounts for just four percent of online sales, butthat is from an incrediblylow base the firm onlylaunched the app in October2009.

iPhone lovers add 1m topizza firms top line

CITY VIEWS: CAN YOU SEE YOURSELF BUYING GOODS OR SERVICES THROUGHYOUR SMARTPHONE? Interviews by Lottie Mungavin

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Lord Forsythgesturestriumphantly atopMount Vinson, thetallest mountain inAntarctica.

The Capitalist9

EDITED BY

JULIET SAMUELGOT A STORY? [email protected]

AT THE BOTTOM OF THEWORLD: LORD FORSYTH

REACHES THE SUMMITFOLLOWING The Capitalists updateon Tuesday regarding the progress ofthe eminent Lord Forsyth, he wrote

yesterday with a triumphant missiveand picture: He has at last reachedthe top of Antarcticas highestmountain and had just enough ener-gy left to take a few snaps of himself

brandishing an ice pick atop thesummit.

The campaign to ice-climb his wayup Mount Vinson is Lord Forsythslatest career move after former postsin the cabinet and as deputy chair-man of JP Morgan.

He will now begin the arduoustrek back to civilisation to continue

with his current duties as a director

of NBNK Investments, J&J Denholmand as a member of the LordsEconomic Affairs Committee.

The climb is sponsored, with337,000 being raised for MarieCurie Cancer and CINI UK, whichhelps Indian street children.

True to his reputation for goingfurther, faster than others woulddare, Lord Forsyth decided to skip aplanned day of rest at camp beforehauling himself up the last part ofthe 16,000-foot peak.

I was apprehensive, as I had notslept well and had not acclimatisedfully, he wrote in his update.

At one point, I thought I mighthave to turn back as I fought to

breathe in the thin, cold air.He seemed to have bundled up bet-

ter than during his previous climband all was well as he reached thetop and roamed around victoriously and carefully:

The summit ridge is ice-coveredand very narrow with big drops oneither side, he detailed.

At least well be able to welcomehim back to London with a refresh-ing dose of murky fog and generallychilly temperatures.

SPIFFY DRESSERGQ magazine today unveils its best-dressed male league table for 2011

with the businessmens list toppedby Cartiers Arnaud Bamberger.

It seems traditional is in, sinceBamberger is most likely to be seenstrutting his stuff at theraces or onpolo stands

with animpecca-

b l epock-e thandker -chief on his

breast.For special occasions, he

breaks out the old navy blazer withgold buttons and the ensemble is

always completed by a floppy toppingof silver hair.

But who should play second fiddleto Bamberger on the best-dressed list?None other than newly crowned M&Schief executive Marc Bolland, whoclaims second place.

Perhaps he will be able to put someoomph into the retailers wardrobeafter all.

A NEW LEAF They said rechargable electric cars would never catch on, but oneEurozone leader is doing hisdamnedest to prove the naysayers

wrong.Portuguese Prime Minister Jose

Socrates has become the first worldleader to have a fully electric car forofficial purposes, with the delivery of10 brand new Nissan Leafs to thecountry.

But before he goes zipping aboutEurope on a fund-raising tour, hemight have to switch over to a moretraditional fuel-guzzling model: thecars rely on a network of chargingstations only available in Lisbon.

With nine Portuguese companieshaving a hand in the development ofthe car, Socrates is certainly doing his

bit for national manufacturing.Unfortunately it might take a little

bit more to convince bond markets.

EAT FOR VICTORYIt seems the way to a royal honourcould be through City stomachs.Robyn Jones, who founded City cater-er Lusso among other culinary ven-tures, has been awarded an OBE inthe New Years Honours list for servic-es rendered.

Lusso does the food for 22 Cityfirms, including Investec, Allianz

and financial advisory BDO, withthose called by The Capitalist pro-nouncing the grub generally prettygood.

Investecs hot roast on Thursdaysgarners particular praise.

Conveniently, among Jones otherclients are The Garden Cafe atBuckingham Palace and the Palaceof Holyroodhouse. So her Majesty

wont have to go far to sample hernewly ennobled subjects pro-

duce.

Cartiers Arnaud Bamberger: best-dressed

Prime Minister Socrates tries out the car

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SHARES in Ocado, the online gro-cery retailer, rose to a new recordyesterday, reaching a high of 212.4pafter lunch before falling back toclose at 200p, giving the firm a mar-ket capitalisation of 1.1bn.

The 200p close is 5p up on theprevious day when Ocado sharestraded above their 180p July flota-tion price for the first time.

Sources close to the group con-tended there was no specific reason

for the rise, other than that themarket was at last realising thegroups valuation.

There were vague bid rumoursaround and a suggestion that anumber of hedge funds that hadshorted the stock were now closingtheir positions.

Mike Tattersall, an analyst at UBS,one of the firms that backed thegroups IPO, changed his stancefrom buy to neutral, arguing thatthe shares have already had a strong

run. His target price was raisedfrom 167p to 197p.

Clive Black at Shore Capital saidhe was sceptical about a bid com-ing. He said the shares were still asell. Theres too much factored inalready, he said.

Next week Ocado is set to make atrading statement, which is expect-ed to be positive.

And in February the group willannounce detailed results and mapout its expected path to profitabili-ty.

Ocado suffered from a poor float,

with its shares immediately fallingfrom their 180p issue price.

VISION

STRATEGY

OPPORTUNITY

BP has hired one of chief executiveBob Dudleys former colleagues torepair the companys public imagefollowing the Gulf of Mexico disas-ter, sources close to the companyconfirmed yesterday.

Peter Henshaw is set to join thefirm as a senior executive in thenext month, with responsibility forrebuilding the companys reputa-tion.

He most recently worked forBritish natural gas explorer BGGroup as head of government andpublic affairs, but prior to thisspent close to a decade with BP.

He worked alongside Dudley at

BPs Russian joint venture TNK-BP between 2003 and 2008. Formerchief executive Tony Hayward hasbeen with the Russian offshoot in anon-executive role since steppingdown from BP in October 2010, fol-lowing a string of embarrassinggaffes.

Henshaw replaces AndrewGowers, the former editor of theFinancial Times who left BPs com-munications team at the end ofNovember.

BP declined to comment on thenews yesterday.

Henshaws appointment comesin the middle of BPs $30bn(19.4bn) asset sale as it tries toraise funds to compensate victimsof the Deepwater Horizon spill.

Shares in BP rocketed yesterdayafter Keith Feinberg, the lawyer incharge of the firms $20bn compen-sation fund, said only about half ofthe money could be needed to payclaimants.

Shares closed 1.3 per cent up yes-terday at 499.25p.

BP hires new headof PR after Gulf spillBYMARION DAKERS

ENERGY

BYDAVID HELLIER

TECHNOLOGY

Ocado soars to fresh highsas it leaves IPO blues behind

OIL services firm Petrofac has hiredthe former boss of BPs explorationand production (E&P) arm to run itsenergy developments business, lessthan four months after he quit BP inthe wake of the Gulf of Mexico disas-ter.

Andy Inglis, 51, will join the Petrofac board in March after relocating toLondon from Houston, Texas.

Inglis started his career at BP andstayed with the oil major for 20 years,working his way up to become one offormer chief executive Tony Haywardstop deputies.

He stood down as part of new bossBob Dudleys reshuffle in September,following the Deepwater Horizonexplosion that killed 11 workers and isset to cost BP up to $20bn (13bn) in

compensation payments. The US gov-ernment is due to publish a report intothe causes of the spill next week.

Analysts said the appointmenmarked a milestone in Petrofacsincreasing focus on energy develop-ments, which includes co-investing inoil and gas production, processing andtransportation assets. The branch cur-rently employs more than 400 people.

However not all analysts were con-vinced of the value of the strategy.

This appointment is very muchmixed news, in our view, said PeterHitchens, oil analyst at PanmureGordon.

This will move the company fur-ther down the hybrid route [oil servic-

es and E&P] rather than a pure oilservice play and, as such, will makethe company less easy to value.

Shares in Petrofac closed up 1.6 percent at 16.49 yesterday.

Petrofac gives jobto drilling boss who

quit over oil disaster


Andy Inglis will move from Texas to London to take a job at Petrofac

NEWS | IN BRIEF

Hardy tanks as well disappointsBritish oil explorer Hardy Oil and Gas hasabandoned a second exploratory well inIndia after failing to find enough gas tomake the project commercially viable,sending its shares down 17.5 per cent.Reliance Industries, an Indian companythat owns 90 per cent of the D9 field,

agreed with Hardy to shelve the projectafter finding more water than gas in thesand reservoirs below the well. Hardychief executive Yogeshwar Sharma saidhe was disappointed by the result, butthat the presence of thick reservoirquality sands and the potential presenceof a petroleum system are encouraging.

Gulf Keystone hits oil in IraqGulf Keystone Petroleum said yesterdayit has found a massive oil deposit in theKurdistan region of Iraq, sending sharesup 5.5 per cent to close at 173p. The firmestimated it has struck 220m barrels ofprobably oil reserves at a shallowerdepth than previous discoveries, with thepotential for up to 2.2bn barrels underless certain estimates. The UK listedcompany owns a 75 per cent stake in theblock, and said the well would now beconverted to produced oil from the deep-er geological reserves while it worked to

develop the shallower resources. GulfKeystone is currently contesting claimsmade against it by Excalibur Venturesover an interest of up to 30 per cent inits Kurdistan blocks.

BYMARION DAKERS

ENERGY

ANALYSIS lBP

460

480

440

420

400

500


p

499.255 Jan

TOP OF THE GAFFESITS NOT JUST BP: EVEN THE BEST MEDIA SPINNERS CANT STOP SOME CHIEFEXECUTIVES FROM CAUSING HAVOC WHEN PUT IN FRONT OF A MICROPHONE

1Gerald Ratner called Ratners jewellery products totalcrap in 1991. His remarks wiped 500m from the value ofthe firm (later renamed Signet), and doing a Ratnerbecame synonymous with corporate bloopers.

3The fate ofBPs media chief Andrew Gowers was sealed lastMay, when chief executive Tony Hayward said: I wouldlike my life back. A month later BPs chairman assuredvictims that he cared about the small people.

5Barclays chief executive Matt Barrett dropped a clanger in2003 when he said he and his family would never use cred-it cards. He told a Treasury Select Committee thatBarclaycard credit in particular was too expensive.

2Topmanbrand chief David Shepherd described his customers as hooli-gans or whatever in a 2001 interview. He clarified that very few of ourcustomers have to wear suits to work. Theyll be for his first interview orfirst court case.

4The chief exec of music label EMIAlain Levy managed to insult the wholeof Finland in 2002 after cutting a subsidiary in the country because therewere no artists there who could sing. EMIs Finnish offshoot was actual-ly a market leader with 49 successful but annoyed musicians on its books.

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STOCKBROKER Panmure Gordon hasdrawn a line under a tough first sixmonths of 2010 to report a signifi-cant improvement in trading in thesecond half, it said yesterday.

Its businesses on both sides of theAtlantic had reported operating prof-its despite continued challengingtrading conditions, it said.

The update will hearten investorsafter a torrid first half in which totalincome shrank to 17.1m, from28.4m the previous year, and it post-ed a 6.05m pre-tax loss.

It also vindicates Panmures rebut-tal of an unsolicited takeover bidfrom larger rival Evolution Securitieslast September on the grounds that it

was independently successful.Panmure chief executive Tim

Linacre said that while he felt theresults could still improve, Panmurehad a better end to 2010 than we hadexpected or feared and ended the

year with more momentum thanexpected.

Linacre said the year had been along hard slog and he anticipated afurther slow start to 2011 as a spike incorporate debt refinancing and the

effect of the governments austeritymeasures hold back the market.

The US business performance wasencouraging but we hope to see amuch better performance in 2011, headded.

Panmures UK second-half perform-ance bounced as it completed a num-

ber of client fundraising, M&Aadvisory and restructuring transac-tions. It also won 22 new corporateclients over the year, taking its totalroster to 73.

Its US investment banking businessalso took off, generating full-year rev-enue of more than five times thatrecorded in the first half of the year.

Both the UK and the US invest-ment banking businesses have a goodpipeline of deals for 2011, it said.

FAR fewer struggling UK companiesfell into administration in 2010 com-pared with 2009, Deloitte researchshowed yesterday.

Insolvencies fell by 35 per cent, orby 1,102 companies last year, to 2,086in 2010 from 3,188 in 2009, analysis ofnotices in the London Gazette overthe year showed.

Policymakers have worked to keepthe business environment as benign

as possible for companies butexperts fear this may be keepingfirms artificially solvent.

The reality is that many compa-nies are still walking a tightrope,said Deloittes reorganisation servicespartner Lee Manning.

A large number of struggling com-panies were able to stay afloat

because of low interest rates, alenient approach by lenders andHMRCs favourable Time to Pay

scheme. However, the rapidly chang-ing economic environment will no

longer make this sustainable.Property and construction compa-

nies were the hardest hit, accountingfor one in five insolvencies. The sectorsaw 453 companies fall into adminis-tration, though this was better thanin 2009 when 683 firms went down.

Retailers fared better, as insolven-cies fell 43 per cent to 165 in 2010 com-pared with 290 the previous year. ButManning said retailers may struggleto cope in the first few months of

2011 in the wake of governmentspending cuts and the VAT increase.

Fewer closures in 2010 but many firmsare still walking an economic tightrope

BORIS JOHNSON has called for the50p top tax rate to be scrapped toallow the City to compete on a globalstage.

The London mayors comments riskstirring up tensions between himselfand chancellor George Osborne, whohas refused to remove the higher band.

Speaking to Management Todaymagazine, Johnson said: Its not right

that an entrepreneurial city such asLondon should have a top tax rate

higher than most of its competitors.People respond to hostile signals.

Our message should be that were openfor talent from all over the world.

A spokesperson for the mayor saidlast night: The mayors words are notmeant to be inflammatory, he is call-ing for something the governmenthas said it ultimately wants to do.

The top rate comes on top of otherthings that make it more difficult inLondon, such as the bonus tax and the

banking levy. All these add up to a fair-ly hostile mood for the City.

Boris calls on Osborne toscrap 50p top tax rate

POLITICS

TRAVEL firms British Airways andP&O have stepped in to support a gov-ernment drive to boost tourism.

The companies are part of a 100mfund aimed at boosting the numberof visitors to the UK and tourism jobsover the next four years.

Representatives from the twofirms, as well as ferry operator DFDS,hotel group Radisson Edwardian andholiday website Lastminute.com, met

with Prime Minister David Cameronyesterday to launch the fund.

They have pledged to match 50m ingovernment funds committed by thenational tourism agency, VisitBritain.

The royal wedding and the 2012Olympics are among events the firmshope will draw in tourists, with thenew campaign fund aiming to attractone million extra visitors a year, anadditional 2bn spent by tourists andthe creation of 50,000 new jobs.

BA chief executive Willie Walshsaid: We look forward to playing ourpart in welcoming people from allparts of the world to Britain as part ofthis partnership with VisitBritain tocelebrate everything our country hasto offer.

Companiesjoin tourism

campaignLEISURE

BRITISH banknote printer De La Ruewill not be awarded new contracts tosupply the Reserve Bank of India (RBI)in the near future, a source close tothe matter said yesterday.

That could harm De La Ruesdefence against an 895m approachfrom Oberthur Technologies, the

worlds third biggest banknote maker.De La Rue rejected the approach fromits French rival in December.

De La Rue said in July there had

been production problems at one of itspaper factories. As a result, De La Rue

has been excluded from contract winswith India in the near future.RBI is thought to be the customer

which De La Rue said in November itcould lose following problems withfaulty banknote paper.

A recent tender by Indias financeministry for the supply of currencypaper prompted predator Oberthur on

Tuesday to ask De La Rue to provideclarity on its prospects of winningfuture business with RBI.

De La Rue to be excludedfrom new Indian contracts

MANUFACTURING

Panmure sees

a recovery inBritain and USBYALISON LOCK

STOCKBROKING

BYALISON LOCK

UK ECONOMY


FRESH HOPE FOR PONTINS

UK HOLIDAY camp firm Pontins has attracted ten offer approaches since going intoadministration, accountants KPMG said yesterday. KPMG, appointed as administratorsin November, said the majority of the offers were from parties keen to continue operatingthe business as a going concern. But in a blow to unsecured creditors, KMPG said therewould be insufficient funds from the sale to pay them the 3.6m owed. Picture: PA

ANALYSIS lPanmure Gordon

28

30

29

31


p 33.505 Jan

BA chief executiveWillie Walsh has joineda 100m governmentdrive to attract moretourists to Britain

Management have bungled defenceIS this the most bungled takeoverdefence in corporate history? First, DeLa Rue managed to irk shareholders

by keeping Oberthurs approachunder its hat for a whole month. Nowmanagement refuses to say whetherit has been excluded from bidding for

a key banknote printing contractfrom the Indian government. Wethink that De La Rues silence speaks

volumes.According to Oberthur, there was

recently a tender for 16,000 tonnes ofIndian banknote printing, equivalentto the entirety of De La Rues currentcontract. If the French suitor is right,the situation is far worse than share-holders thought. Analysts at UBS

were predicting De La Rue would lose8,000 tonnes, or around half, of thecontract in the future.

If De La Rue has lost out on theReserve Bank of India (RBI) deal,

which wont be re-tendered foranother 12-18 months, Oberthurs

905p indicative offer looks increas-ingly attractive. In fact, it is the onlything propping up the stock, whichclosed at 836p yesterday.

Analysts at Olivetree Securitiesreckon there is some 200p downsideshould Oberthur walk away, whileMerrill Lynch sees the stock falling to620p. Either way, it wont be pretty.

De La Rue claims it is winning newbusiness at the same rate as last year.

But there is no way that new winscan fill the gaping hole left behind bythe RBI contract.

Oberthurs overtures might be sup-porting the stock for now, but theFrench firm has some talking of itsown to do. It is still unclear how it

could fund a bid; if it were to usedebt, the combined firm would bepainfully geared, with net debt ofaround five times earnings.

Only the most daredevil sharehold-ers will wait around to see ifOberthur is for real.

BOTTOMLINEAnalysis by David Crow

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Economic News14 CITYA.M. 6 JANUARY 2011

SPLITS in the Eurozone recovery wereevident yesterday, as economic datashowed strength in Germany andFrance despite ongoing slumps introubled Mediterranean and periph-eral states.

The service sectors actually con-tracted in Spain and Ireland lastmonth, and effectively stagnated inItaly.

However, service industries contin-ued to grow in France and Germany,the purchasing managers index (PMI)showed.

In Germany the rate of growthaccelerated to 59.2 in the PMI index,from 58.3 in November. All figuresover 50 indicate growth.

The sector grew in the Eurozone asa whole to 54.2 in the PMI index withemployment rising for the eighthconsecutive month. Germany experi-enced the fastest rate of jobs growth.

Backlogs of work also rose in theEuro area for the second month run-ning, boosting optimism for the sec-tor in the opening months of 2011.

Spains service sector businessactivity dropped to a 46.2 rating from48.3, while Irelands fell to 47.4 its

weakest level since January 2009.Meanwhile industrial orders for

October were also down in Spain by0.3 per cent and Italy by 1.4 per cent,despite rising by 1.4 per cent acrossthe Eurozone as a whole.

Month to month industrial orderscan be volatile, yet the Eurozone is onan upward trend, according toHoward Archer of IHS Global Insight.

The underlying strength of indus-trial orders was evident in the factthat they rose by 2.4 per cent in thethree months to October compared tothe three months to July, he said.

New orders rose in Germany by 1.4per cent and France by 2.3 per cent, asthe news mirrored extremely strongmanufacturing results from earlier inthe week.

Mondays manufacturing PMI andyesterdays services PMI both showeda rise in input prices, reflecting glob-al commodity price inflation.However, output prices in servicesrose at more modest rate, as compa-nies looked to absorb the pressures.

And Eurozone inflation was alsoreflected in producer price index (PPI)figures released yesterday.

Euro area November PPI rose by 0.3per cent on the previous month, anannual rise of 4.5 per cent.

AFTER a booming middle of the year,the UKs construction industry slight-ly contracted in the final month of2010, it was revealed yesterday.

Freezing weather conditions wereblamed by many constructors for thedecline, recorded by the purchasingmanagers index (PMI) compiled byMarkit and the Chartered Institute of

Purchasing and Supply.The index fell to 49.1 in December,

from Novembers reading of 51.8 which had signalled constructiongrowth. It marked the first contrac-tion in the construction industrysince February.

Civil engineering recorded 48.6 inthe index, after slight growth 50.9

was recorded the previous month.Meanwhile, the sluggish housing

market saw a rapid contraction inhouse construction, which fell byover four points to 43.1.

However, commercial activityshowed signs of making up for other

sub sectors, continuing its expansion with a reading of 51.7. Companiesare well placed financially to increase

buildings investment, said SimonHayes of Barclays Capital.

And new orders also grew, and at afaster rate than in November risingto 51.3, from 50.9.

There was a huge jump in reportedinput price increases from 57.3 to65.2, as constructors had to deal withhigher raw material prices. The latest

rate of inflation was the fastest inseven months, the report said.

British construction industry contractsin the final month of a prosperous year

FORMER Federal Reserve chairmanPaul Volcker plans to leave his role ashead of a panel of experts advisingPresident Barack Obama on theeconomy, sources familiar with thedecision said yesterday.

The departure of Volcker, 83, ashead of the Presidents EconomicRecovery Advisory Board is among aseries of changes under review at the

White House. The decision to leave the board

was Volckers. A source close to himsaid he was ready to continue toadvise Obama on an informal basisas often as the president would like.

Volcker, who became a legendaryfigure on Wall Street when as Fedchief he broke the back of double-digit US inflation in the early 1980s

by sharply raising interest rates, began advising Obama during his2008 presidential campaign and has

wielded clout on issues ranging

from financial regulation to fiscalpolicy.

Volcker set to step downas US economic adviser

US ECONOMY

IN a bid to tackle its problematicinflation, China will let the yuan rise by around five per cent against thedollar this year, it was revealed yester-day.

However, any appreciation will dolittle to narrow Chinas trade surplus

with the US, a Chinese governmentofficial warned.

The trade imbalance is a constantsource of irritation between the twocountries.

Yuan appreciation will makeimports cheaper to reduce the impact

of rising commodity prices, providingrelief from inflationary pressure, aChinese language newspaper report-ed.

The yuan is expected to be aboutthree per cent higher in a years time,according to pricing in offshore for-

wards markets.China let the yuan rise 3.6 per cent

in 2010. But traders expect the yuanto appreciate about two per cent inthe first quarter of 2011 alone.

Yuan free to rise five percent against dollar in 2011

ASIA ECONOMY

CORPORATE profitability jumped toits highest level for 18 months in the

third quarter of last year, official datashowed yesterday.Strong economic growth boosted

sales, with non financial corporationsseeing their net rate of returnincrease to 11.9 per cent up from11.6 per cent the previous quarter.

The result marked a year ofgrowth, as companies recover fromthe 16 year low of 10.8 per cent in thethird quarter of 2009, the Office forNational Statistics (ONS) announced.

Manufacturers reaped the rewardsof a resurgent sector, with net rates ofreturn shooting up to 8.7 per cent,from 7.5 per cent in the previousquarter, and five per cent in the first

three months of the year. And Britains offshore oil and gasindustry saw profitability rise to 44.8per cent the highest rate since theend of 2008, and a large jump from39 per cent in the second quarter oflast year, and 36.5 per cent in the firstquarter of 2010.

Yet profitability is still well belowits 2007 peak, and the 2008 averagenet rate of return of 14.3 per cent.

The improved profitability per-

formance in the third quarter is wel-come news, which is supportive forinvestment, said Howard Archer ifHIS Global Insight.

UK profits recover from slumpBY JULIAN HARRIS

UK ECONOMY

Germany and

France driveEuro recoveryBY JULIAN HARRIS

EUROZONE ECONOMY

BY JULIAN HARRIS

UK ECONOMY

ECBS MERSCH: IT IS TIME TO END STIMULUS

INSTEAD of timidly reducing deficits, governments should be aiming for surpluses, theEuropean Central Banks (ECB) Yves Mersch said yesterday. The governing council mem-ber, who also heads Luxembourgs central bank, said it was time to withdraw stimulusmeasures at a moderate but steady pace. Governments will have to achieve surplusesin order to erode massive debt mountains, he said. Picture: GETTY

ANALYSIS lNet rate of return ofprivate non-financial corporations

14

10

12

16

20102008 2009

%

Source: Office of National Statistics

Hoenig says theFeds policy onrates is wrong

US ECONOMY

THE Federal Reserves most vocalinternal critic yesterday pushed backagainst the US central banks effort tocontrol a sometimes-dissonant mes-sage, saying it is the duty of those

who disagree to vote their conviction. Thomas Hoenig, president of the

Kansas City Fed and a known infla-tion hawk, said the US economy isrecovering remarkably well given thedepth of the downturn, and repeatedhis view that the Feds loose mone-tary policy risks provoking bubbles orinflation in the future.

The banks lone dissenter, who hasrepeatedly and openly opposed theFeds policy of ultra-low interest rates,not only stuck to his views but alsotook a jab at those at the Fed who areconcerned about the divergence of

view on policy. The idea that a dis-senting vote is confusing, counterpro-ductive and generally undesirable isunhealthy, Hoenig told The CentralExchange, a womens business advo-cacy group. If I had failed to expressmy views with my vote, I would havefailed in my duty.

Minutes from the Feds Decemberpolicy meeting, published on

Tuesday, contained a nod to the inter-nal effort, led by vice chair Janet

Yellen, to review the central bankscommunications guidelines for poli-cymakers. Hoenig, who retires inOctober and will no longer have a

vote this year on the Federal OpenMarket Committee, expects the USeconomy to grow 3.5 to four per centannually over the next two years.

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ARCELORMITTAL has said it will notraise its C$550m (352m) bid forminer Baffinland, which owns vastiron ore deposits in the Canada.

We dont intend to raise the offerfor Baffinland, spokesman GilesRead said. We are confident we havethe superior bid.

ArcelorMittal and private-equitybacked Nunavut Iron have been bat-tling for control of Baffinland IronMines, which has recommendedArcelorMittals bid, since September.

Both suitors have upped their bids

in recent days, despite an ArcelorMittal source quoted in

September as saying it would not goabove C$1.25 per share. The steelmak-er also said it would not extend itsearlier offer past 29 December, butthen extended it to 10 January.

ArcelorMittal boosted its bid toC$1.40 per share, which was followedby Nunavut offering C$1.45 per share.Nunavuts bid values Baffinland atC$570m.

Nunavuts bid is for only 60 percent of Baffinland shares, meaningthe other 40 per cent would be pricedaccording to the market.

ArcelorMittal wont raisebid in fight for Baffinland

MINING

QANTAS Airways hopes to resumeAirbus A380 flights between Australia

and Los Angeles from mid-January, asRolls-Royce finalises its investigationinto the cause of a mid-flight engineexplosion on one of the aircraft lastyear.

Qantas said yesterday it hoped toresume normal A380 operations from17 January, but would still need thego-ahead from Australias aviationregulator before flying the superjum-bo aircraft on the lucrative route.

Qantas has been in talks with Rolls-Royce since one of the A380 enginesdisintegrated mid-flight in

November, forcing the airline to ini-tially ground its fleet of the aircraft.It has since resumed A380 flights toLondon but was not flying the air-craft on the longer Los Angeles route.

The Australian airline said itexpected to have eight A380 aircraftin the air by early February, up fromfive. It is scheduled to take delivery ofa new A380 aircraft in mid-Januaryand another new aircraft by early

February. A third A380 grounded inSydney is also due to be operating bymid-January.

Aviation sources said Rolls-Roycehad found the cause of the explosion,

which was related to problems insidea pipe that feeds oil to the enginesturbine bearing area. Once identifiedit would be easy for the engine-makerto identify which engines would be atrisk from the fault, one source said.

Analysts estimate damages toQantas could reach $60m (38.5m),although forecasts vary. The LA routeis one of Qantas most profitable butits latest operating statistics showthere has not been a major impact onpassenger numbers from the inci-dent.

Qantas to resume A380 to LABY HARRY BANKSAVIATION

QUALCOMM plans to buy AtherosCommunications for roughly $3.2bn(2.1bn) in cash, showing its determi-nation to become a major player insupplying chips for smartphones andtablet computers.

Qualcomm is clearly betting thatthe deal at a 21.6 per cent premiumto Atheros share price before talk ofthe takeover began to circulate willbeef up its position in mobile devices,a market expected to explode in 2011with new tablet computer offeringsto compete against Apples iPad.

Atheros two biggest customers areHon Hai Precision Industry andNintendo, according to its most-recent annual report.

Qualcomm is already a major play-er in making microchips that handledata crunching and voice communi-cation in phones. But until now, it hasmade less progress in developingchips for tablet PCs that incorporateadvanced networking functions.

Qualcomm said it will pay $45 pershare for Atheros. The potential

acquisition was first rumoured onTuesday, sending Atheros shares up18.9 per cent to $44 on the Nasdaq.Based on 71.6m outstanding Atherosshares as of 20 October, the acquisi-tion is worth $3.2bn. Qualcomm saidthe enterprise value of the transac-tion is $3.1bn.

Craig Barratt, Atheros chief execu-tive, is expected to become presidentof Qualcomm Networking andConnectivity following the merger.

Qualcomm expects the acquisitionto close in the first half of this year,and add modestly to earnings pershare in its 2012 fiscal year.

Qualcomm tobuy Atherosin $3.1bn dealBY HARRY BANKS

M&A

BRAZILS state-run oil companyPetrobras has said it is consideringbuying Italian group ENIs 33 per centstake in Portugals Galp, expandingits deepwater exploration globally.

The sale, valued at 3.8bn (3.2bn) based on Galps market capitalisa-tion, would help ENI reduce its debtand keep dividends flowing to share-holders while strengthening ties

between Petrobras and Galp.Petrobras and Galp are already

partners in some oil explorationdeals in Brazil, including in the Lulaand Cernambi fields, which hold acombined 8.3bn barrels of oil equiva-lent in recoverable reserves.

ENI paid900m for its Galp stake in2000.

Eni confirmed it is mulling optionsincluding Petrobras for its Galp stake,but said no decision had been made.

Petrobras said in a securities filingthat no binding agreement had beenreached and that it routinely looksfor investments in Brazil and abroad.

Petrobras confirms it is studyingthe possibility of a potential transac-tion with ENI, but until now no analy-sis has been finished, just as there isno binding agreement between theparties, Petrobras said in the filing.

Galp declined to comment on apossible deal with Petrobras.

Petrobras looking at ENI stake in GalpOIL

BEST OF THE BROKERS

ANALYSIS lOcado

160

140

120

180

200

29 oct 18 Nov 8 Dec 30 Dec11 Oct

p200.00

5 Jan

OCADOUBS has downgraded the online grocer toneutral from buy with an increased tar-get price of 197p, following share pricegains and an improvement in valuationsamong Ocados peers such as Amazon andAsos. It adds that the trading statementdue on 10 January will shed light on thefirms progress since floating.

ANALYSIS lBetfair

1,200

1,100

900

1,400

1,600

9 Nov 29 Nov 17 Dec20 Oct

p

937.505 Jan

BETFAIRMorgan Stanley rates the betting firmequal-weight with a target price of 14.The broker says it was surprised by the oneper cent growth in gaming revenue in thesecond quarter, but adds that Betfair has ahistory of short-term volatility. It expectsto see medium-term growth of 12 per cent,but has trimmed EBITDA forecasts

ANALYSIS lBritish Airways

270

260

250

280

290


p

287.605 Jan

BRITISH AIRWAYSDeutsche Bank rates the airline buy witha target price of 272.5p. The broker seesshares in the new BA/Iberia tie-in, whichlist on 24 January, as a good play on USrecovery and improving premium demand.However, it holds concerns about uncer-tainty in the new companys strategy, inparticular its weak presence in Asia.

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

HSBCThe bank has added Fatima El Ouarti toits London-based Egyptian team in its

private banking division. She willreport to Fouad Batshon, head ofEgypt for the regional team.

El Ouarti has more than ten yearsexperience in private banking. Shecomes to the firm from GoldmanSachs, where she managed client rela-tionships. She has also previouslyworked at Barclays and Levant PrivateBanking.

Esprito Santo Investment BankThe investment bank, which is head-quartered in London and Lisbon andincludes Execution Noble, has appoint-ed Simon McEvoy to its new divisioncovering mid and small-cap market-making.

McEvoy has previously worked asdirector of trading at Evolution Group,

before moving to Mint Partners, wherehe headed the hedge fund executionteam.

Apitope InternationalThe pharma company has appointed DrMartin Sims as research director on itssenior management team.

Martin will be in charge of the com-panys research, working withProfessor David Wraith to directresearch strategy.

He brings 20 years experience indrug discovery and has worked atGlaxoSmithKline, GlaxoWellcomebefore 2000 and the WellcomeFoundation previously.

VideojugThe UK video firm has hired a newmarketing director: Ash Ali. Ali will bereporting to chief executive TomLaidlaw and will be in charge of devel-oping the brand and promoting thecompany across a range of media. Hebrings 11 years experience in onlinemarketing and joins from Just-East.co.uk.

Citibank Agency and TrustAdrian Nye has joined Citibank as asales manager. He will be responsiblefor expanding the firms presenceacross Asia, having previously beenfocused just on the south-east region.

CITY MOVES | WHOS SWITCHING JOBS Edited by Juliet Samuel

PrudentialThe insurance giant has announced theappointment of Peter Goerke as group humanresources director, with effect from the startof March. He will be a member of the executivecommittee and succeeds Priscilla Vacassin inthe job. Goerke comes to the company fromZurich Financial Services Group, where he hasworked since 2005 in a similar role. Previously,he has also worked at Egon ZehnderInternational.

+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

25

30

35

40

45

18 Nov 9 Dec 30 Dec11 Oct 29 Oct

ANALYSIS l Atheros$

44.625 Jan

Qantas chief executiveAlan Joyce hopes torelaunch the A380route from Sydney toLA by mid-January

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3i Group 340 2.50 340 2503i Infrastructure 122 -1.50 125.25 101A.B. Foods 1150 -14 1182 820Ab erde en Asset .Man. 20 7.75 2.5 0 2 07.75 112. 75Admiral Group 1565 17 1693 1114Aegis Group 140.75 -0.50 145.50 103.50Afren 150 0 150 79African Barrick Gold 600 -13.50 670 503Aggreko 1487 1 1685 882Alliance Trust 375.75 0.75 377 293.50Amec 1185 10 1185 733.50Amlin 415.50 7.25 433 362.50Anglo American 3348.50 -58.50 3407 2254Antofagasta 1586 -36 1634 761Aquarius Platinum 334 -12 458 227ARM Holdings 471.50 33.50 471.50 187Ashmore Group 343 -2 383.75 218Ashtead Group 164.75 -7 177 77AstraZeneca 3009 19 3385 2732Autonomy 1553 0 1975 1271Aveva Group 1663 9 1663 1007Aviva 412 5.25 423.50 294.25AZ Electroni c Mater ia ls SA (WI) 303 3.75 310 249Babcock International 578 3 635 492.75BAE Systems 341.75 -0.50 388.75 294.75Balfour Beatty 324.50 6 324.50 229.75Barclays 281 8.25 383.25 255.25Barratt Development 95.75 2.75 142 70BBA Aviation 216 -3.50 221.50 158Bellway 682.50 -1.50 826 511Berkeley Grp Hldgs 941 3.50 941 742Betfair Group 937.50 -34 1550 937.50BG Group 1331 0.50 1337.50 984BHP Billiton 2534 -19.50 2616 1684.50BlackRock Mining 808 -2 811 492

BlueC rest All Bl ue 172 1 .25 1 74.50 156 .25Booker Group 60.25 0 60.50 38.75BP 499.25 6.25 655.50 303Brit Insurance 1049 -1 1050 728British Airways 287.50 1.75 287.50 184.25British Amer.Tob 2485 -3 2521 1959British Empire Tst 505 2 505 396.50British Land 529 -2 537 418.25Britvic 477 6 518 403Brown (N.) Group 303 3 303 206.50BSkyB 742 -2.50 746.50 524.50BT Group 186 1 187.75 110Bunzl 745.50 14 777 616.50Burberry Group 1120 -22 1156 581C&W Comms 49.75 0.25 63.75 44.25C&W Worlwide 69.50 0.75 100 60.50Cairn Energy 442.25 10.50 493.25 318.25Caledonia Inv. 1928 7 1928 1512Capita Group 707.50 -4.50 826 635.50Capital & Counties 148 -0.25 157 100Capital Shop Centre 421 -4 424.75 301Carillion 387.50 1.50 387.50 273Carnival 3153 57 3153 2037Catlin Group 378.50 5 393 320Centamin Egypt 170 -6 197 106.75Centrica 335.75 3.50 346 264Charter 837 -16.50 853.50 567Chemring Group 3184 153 3663 2598Close Brothers 873 6.50 873 664

COBHAM 213 3.75 276 192.25Colt Telecom 134.50 -3.25 142.50 109Compass Group 573 5 594 425Cookson Group 670.50 -17 687.50 367.50Croda International 1548 -18 1616 751Daily Mail & Gen 575.50 2 575.50 423DAVIS SERVICE 435.25 -4.50 441.25 360.25De La Rue 836 -1.50 1005 549.50Debenhams 74.25 1.50 79 53Derwent London 1583 15 1605 1208Diageo 1204 7 1215 1000Dixons Ret ail 23.5 0 -0 .25 37.5 0 22.75Dominos Pizza 561.50 5.50 561.50 305.25Drax Group 385.50 4.50 441.50 326.25DS Smith 208 2 210 104Dunelm 530 5 550 325.25easyJet 457.75 0 496.50 348.50Edin.Inv.Tst. 467.25 2.50 467.25 364Electrocomponents 273 4 279.50 165Enquest 145.50 0.25 146.50 89.25Essar Energy 575 3 589.50 383Eurasian Nat Res 1079 -2 1266 818Euromoney Inst. 703 3 727 441Experian Group 795 -5 819 572F&C Commercial 107 0.75 107 87.50Ferrexpo 424 6.50 424 197FirstGroup 394 -18.50 422.50 336For.&Col.Inv.Tst 313 2.75 313 251.50Fresnillo 1667 -15 1682 669.50G4S 258.50 4 283.50 237.75Genesis E.m.f. 568 7.50 568 399GKN 219 -0.75 226 102GlaxoSmithKline 1252 -17.50 1318.50 1095Great Portland Est. 369.25 7.25 369.25 279Greene King 480.25 0.25 491.50 376.25

Halfords Group 440 -14.50 550 372.75Halma 359.50 -1 366.50 223Hammerson 431 2 434.50 336.25Hargreaves Lansdown 599 1.50 599 276.50Hays 128 -5.75 133.50 88.50Henderson Group 137.50 1.50 151.75 112.75Heritage Oil 483 25.25 581 296.75Hikma 866.50 29.50 866.50 514Hiscox 392.50 3 392.50 320.75Hochschild Mining 610 -25 658 234Home Retail Group 198 1.75 295 188.50Homeserve 449.25 3.75 487.50 326.25HSBC Holdings 689 21 740.50 596.25Hunting 750 -0.50 750.50 439.50ICAP 540 -3 543 294IG Group 527.50 3.50 553 362.50Imagination Tech 388.50 16.25 441.75 215IMI 922 -10.50 948 530.50Imperial Tobacco 2012 27 2154 1753Inchcape 379.50 9.75 379.50 237Informa 422.50 2.50 448 304.50Inmarsat 667.50 -6.50 821 606.50InterContinental Htl 1303 39 1303 887Inte rme diate Cap.Grp 349.50 6. 75 3 51 24 0.5 0Inte rnati onal Pe rs Fin 384 - 2.5 0 386.5 0 183.25Inte rnatio nal Power 4 30. 25 - 0.75 4 48. 50 284 .5 0Intertek Group 1801 2 2000 1150Invensys 355.75 -5.25 361 230.25Investec 538 7 562 417.75

ITV 72 -2 74.25 48.25Jardine Lloyd 628.50 6 629 459John Wood Group 571.50 1.50 571.50 293Johnson Matthey 2051 0 2100 1446JPM Flem.Emerg Mkt. 639 3.50 639 450.50Jupiter Fund Man 302.25 -3 310 180.25Kazakhmys 1624 -25 1649 965Kenmare Res. 33.75 -1.25 35 9.25Kesa Electricals 161 0 174 99.25Kingfisher 265.25 -1.75 267 198.50Ladbrokes 125.50 1 162.75 122.75Lancashire 567 15 647 435Land Securities 683 2.50 696.50 545Legal & General 103.50 3.25 106.25 69.75Lloyds Banking Grp 68.50 0.75 77.50 46.50Logica 137.50 1 148 101.75London Stock Ex. 868 16 868 544Lonmin 1940 -8 2157 1355Man Group 310.50 4.75 327.50 202Marks & Spencer 375 0.50 427.50 323.50Meggitt 371.25 -1.75 375.50 251.50Melrose 318.50 0.50 318.50 162Mercantile Inv Tst 1082 -4 1096 828Michael Page 550 -1.50 565.50 346.50Micro Focus 394.50 1.25 546.50 276Millennium & Cop. 587 2 590.50 368.50Misys 332.50 -1.75 343 201.50Mitchells & Butlers 356 -2 360 249.75Mitie Group 241 0.50 241 188.75Mondi 528 0.50 557.50 338.25Monks Inv.tst. 357.50 0.50 363 271Morrison (Wm) 272 0.75 306.25 257.50Murray Int.Tst 955.50 -10.50 966 736.50National Express 252.75 2.50 259.50 194National Grid 579 11 600.25 484.25

Next 2103 88 2344 1817Nor th umb rian Water 331. 75 - 0.75 361 .5 0 2 52. 75Ocado Group 200 3.25 200 123.50Old Mutual 124.50 0.50 145.25 97.25PartyGaming 210 -2 334.50 205.25Pearson 1009 -8 1051 855Pennon Group 639 4 646 483Persimmon

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