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www.cityam.comIssue 1,345 Friday 18 March 2011 FREEBUSINESS WITH PERSONALITY

UN APPROVES AIRSTRIKES ON LIBYABY ALISON LOCKWORLD

BRITISH and international forceswere preparing to launch air strikesin Libya last night after the UnitedNations passed an eleventh-hourresolution to intervene in the crisis.

Prime Minister David Cameron isto hold an emergency cabinet meet-ing today after the 15-member UNSecurity Council dramatically gavethe green light to a no-fly zone andall necessary measures short ofan occupation force to protectLibyan civilians under threat.

Critically, it includes authorisa-tion for direct military action suchas air strikes on targets on theground, as well as measures to denyLibyan planes permission to takeoff, land or overfly the territory ofUN member states.

This resolution puts the weightof the Security Council squarelybehind the Libyan people, UKambassador Sir Mark Lyall Granttold the meeting.

Foreign secretary William Haguesaid the resolution was necessaryto avoid greater bloodshed and totry to stop what is happening interms of attacks on civilians.

Oil prices jumped immediately,with April-delivery crude up morethan $2 (1.24) per barrel to $103.47just minutes after the vote.

Middle Eastern states are key tothe resolution, with members ofthe Arab League able to participatein military intervention alongsideUK, French and Nato forces.

Diplomats in New York saidQatar and the United Arab Emirateswould be part of any air strikes.

Arms embargo enforcement

measures and an extension of theasset freeze on Libyan regime mem-

bers and entities are also included.Diplomats said an operation in

Libya could start within hours ofthe vote.

The resolution, proposed by theUK, France and Lebanon with USsupport, was passed with ten votesand five abstentions, from Brazil,China, Germany, India and Russia.

Crowds of pro-democracy protest-ers in the rebel-held eastern city of

Benghazi cheered, sounded hornsand set off fireworks after hearingthe news.

But Gaddafi hit back defiantly,calling the ruling craziness, mad-ness, arrogance.

He accused the rebels of havingbacking from Egyptian andTunisian protesters, who forced

their Presidents to resign afterweeks of protests.

In a radio address he issued achilling warning to rebels beforeattacking the citys outskirts withbombs and heavy gunfire.

We are coming tonight, he said.We will have no mercy and nopity. Gaddafi also warned UN andEU leaders that he would retaliatewith attacks on the Mediterranean

region, targeting air and maritimetraffic, if they proceeded with any

military intervention against him.US support for the resolution

marked a significant hardening ofits anti-Gaddafi stance as it backedmilitary intervention for the firsttime, despite fears that it couldover-stretch its defence capacity asit fights in several countries.

US officials said no immediate

action would be taken after the vote.ALLISTER HEATH: P2

Forces are being mobilised to protect Libyascivilians after the UN Security Councilincluding UK ambassador Sir Mark LyallGrant (pictured top right) voted to inter-vene against Colonel Gaddafi (bottom right)

Picture: GETTY/REX

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RADIATION levels spiked at deadly lev-els at the Fukushima plant yesterday,as increasingly desperate efforts tocool the reactors continued.

Officials measured radiation atalmost 4,000 millisivert (mSv) per houryesterday morning, plant operatorTokyo Electric Power Company(TEPCO) told a press conference, andlevels hit 170mSv per hour at thenorth west end of the 30km exclusionzone around Fukushima Daiichi.

The UK foreign office has advisedBritons to stay at least 80km (30 miles)away from Fukushima Daiichi as a pre-caution, in line with US advice.Military helicopters dumped waterover the reactor 3 building yesterdaymorning and electricity is due to berestored to the site after engineerslinked up cables to the power grid.Seawater is being pumped into thefour unstable reactors by the 180 work-ers who have remained onsite.

Radiation riskat Fukushimaplant escalatesENERGY

News2 CITYA.M. 18 MARCH 2011

We must act fastand decisively to

save Libyas rebels

YET again, we are at war. By the timethis newspaper hits the streets thismorning, airstrikes against Libya mayalready have started, led by the UK,France and perhaps others, includingthe US, members of the Arab League,

and Canada. Just after 10:30pm lastnight, the United Nations SecurityCouncil voted 10-0, with five absten-tions, for Resolution 1973. It goes sub-stantially further than merelyimposing a no-fly zone and calls forall necessary measures to protectcivilians. What it doesnt allow isoccupation but this is a hugely sig-nificant moment for the world, forglobal markets and of course for thepopulation in the rebel town ofBenghazi. We can only hope thattheir moving celebrations last nightwere not horribly premature.

While the world media wasobsessed with Japan in recent days,for good reason, the situation in Libyahad started to look desperate for therebels, who were being massacred bytheir genocidal and blood-thirsty dic-tator Muammar Gaddafi and theirstrongholds retaken one by one.Earlier Western assessments thatGaddafi would crumble quickly including a preposterously ill-informed comment by WilliamHague, the foreign secretary, that hewas on a flight to Venezuela wereentirely off the mark.

EDITORS LETTER

ALLISTER HEATH

MAJOR central banks agreed to co-ordi-nate action to drive the yen lower lastnight in a desperate bid to stem theyens rapid rise.

The extraordinary move comes afterthe yen surged to a record 76.25 againstthe dollar fuelling fears that Japanseconomy, already crippled by lastweeks earthquake and tsunami,would suffer further as its goodsbecame less competitive.

Given yen moves after the tragicevents that hit Japan, the United States,Britain, Canada and the EuropeanCentral Bank have agreed with Japanto jointly intervene in the currencymarket, finance minister YoshihikoNoda said following an emergencymeeting of the Group of Seven (G7)

nations.Japanese authorities will buy US dol-

lar/yen in the market today. Other cen-tral banks will act when their marketsopen, Noda said. But he declined tocomment on the size of Tokyos inter-vention.

The US dollar spiked immediatelyafter the annoucement, rising abouttwo yen to above 81 yen immediatelyafter the announcement which cameas markets opened. And Japanesestocks were also boosted with theNikkei jumping three per cent in thefirst hour of trading. This is not justone central bank, this is seven. Its abrave man to be on the other side ofthat trade, said Rochford Capital man-aging director Thomas Averill.

Tokyo last intervened in the curren-cy market on 15 September last year,when it sold 2.13 trillion yen, a recordamount for a single day.

G7 tries to putbrakes on yen

Almost as unedifying was theinability of the main military powers,in the absence of American leader-ship, to come to a consensus on whatto do. After days of dithering, BarackObama finally decided to intervene,supporting David Cameron andNicolas Sarkozys UN Resolution.What will happen next is hard to pre-dict; the vote last night could easilybe a case of too little, too late. Wedont really know how the mission toprotect civilians will be interpreted;but heavy military action from the airis inevitable. Whether that will beenough to destroy Gaddafi is unclear;and while the resolution had thestrong backing of Lebanon and some

other Arab nations, support couldeasily ebb away if there is too muchcollateral damage or if the operationstrigger more unrest in Arab Leaguecountries. There is a real possibilitythat the refugee crisis and exodusfrom Libya could intensify; the rest ofthe world must ready itself, especiallySouthern European nations. Perhapsmost intriguing is how the UK armedforces will cope: they have been deci-mated and are already terribly over-stretched.

It is astonishing how fast the globalgeopolitical situation has deteriorat-ed in recent months. First, it was theEuropean sovereign debt crisis, whichhas only been temporarily containedwith a combination of bailouts andobfuscation. Then came what wasoptimistically dubbed the Arabspring: an almost completely unpre-dicted popular uprising in Tunisia,Egypt, Libya and elsewhere. Thencame the earthquake in New Zealand merely a dry run for the far worsecatastrophe which has befallen Japan,and which has mutated from human-itarian nightmare into a nuclear dis-aster with far-reaching consequenceson markets, the international supply-chain and the future of the nuclearenergy. The chaos triggered massive,coordinated intervention in the glob-al forex markets late last night, withthe Bank of England, the Bank ofJapan and others all acting in concert.

The Arab uprisings have nowturned into international conflicts.First it was the UAE and the Saudiswho sent troops into Bahrain, turningup the pressure on Iran, an ally of therebels then it emerged that Egypthas started supplying Libyas rebelswith weapons. Last nights move was

the real game-changer, however.It is increasingly likely that theworld could face a massive, double-edged energy shock. Crucially, it isnot just the price of oil that is shoot-ing up: the catastrophe in Japan hasbeen a bitter blow for the globalnuclear energy industry. Even Chinahas halted its massive investment,while Germany and others have halt-ed plants. More coal and gas will haveto be used instead. Their prices will goup, as will the cost of carbon creditsas a result of stringent green rules.

Now that the UN has agreed to actin Libya, there is no time to be wasted.Strikes must be swift, powerful andwell-targeted, and inflict as muchdamage as possible on Gaddafi andhis henchmen. The mass murder ofhis opponents must be stopped. Theworlds credibility is on the line; wecannot afford to fail.

[email protected] me on Twitter: @allisterheath

Above: Militaryhelicopters dous-ing theFukushimaDaiichi nuclearreactors withwater got aglimpse of thedamage to thebuildings; Right:People queue toget petrol whichremains in shortsupply

Pictures:GETTY, AP

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 Hope

Business Features Editor Marc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Craig Gaymer

CommercialSales Director Jeremy SlatteryCommercial Director Harry OwenHead of Distribution Nick Owen

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JAPANESE DISASTER

BYKATIE HOPE

CURRENCIES

RAJARATNAM REVEALEDOUTSOURCERS SALERaj Rajaratnam, the hedge fund bil-lionaire on trial for alleged insidertrading, told a friend the price anIndian company offered to pay forPeopleSupport days before a deal wasannounced, according to a phone callplayed by prosecutors.

TCHENGUIZ PLANS TO RESTRUCTURE2BN DEBT PILEVincent Tchenguiz, the propertymogul arrested and released withoutcharge last week as part of the investi-gation into Kaupthing, has begun aprocess to restructure more than 2bnof debt backing his business. He lastmonth held a beauty pageant of

investment banks to advise on plans torestructure or refinance the debt.

US INFLATION PUTS EATING OUT BACKON THE MENUThe surge in US food prices so far thisyear is making eating out an evenmore attractive option for many cash-strapped Americans, official figureshave shown. The Labor Department'sindex for food away from homeedged up 0.2pc in February and isnow 1.6pc higher over the past 12months.

JAPAN RISKS CREDIT CRUNCH AS YENTHUNDERSJapan is in imminent danger of acredit-crunch with global implica-tions unless the authorities stabiliseTokyos stockmarket and take over-

whelming action to stop the yenexploding to record levels.

RECOVERY UNDER THREAT?Britain has entered a hazardous peri-od as new question marks hang overthe recovery at a time of persistentlyabove-target inflation, a top Bank ofEngland official said yesterday.Charlie Bean, the Deputy Governor,told The Times that it was still notclear whether the economy was pass-ing through a soft patch or hadentered a more durable slowing.

CREDITORS LOSE MILLIONS INODDBINS BATTLEMore than a hundred wine produc-ers, brewers and drinks distributorsstand to lose millions of poundsunder the company voluntary

arrangement proposed by theOddbins offlicence chain.

WHAT THE OTHER PAPERS SAY THIS MORNING

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THE corporate exodus from Japans

capital Tokyo continued yesterday,with real estate agent Savills amongmajor firms closing their offices there.

In a sign of growing nervousness atthe threat of a nuclear meltdown atthe Fukushima Daiichi power station,the UK joined others in offering char-ter flights out of Tokyos Narita airportfor British citizens unable to securecommercial flights out of Japan.

Savills said it had shifted its 80-manoperation to the south of Japan and allbut one of its expatriate staff had left.

Law firm Clifford Chance con-firmed that it would keep its Tokyooffice closed until Tuesday with staffworking remotely as far as power out-

ages allowed. Allen & Overys officehas also been closed all week.

France Telecom, nuclear poweroperator Areva and carmaker Volvoare among a tide of internationalfirms moving expatriate employeesaway from Japans north. Local staffare also being allowed to remain athome: software provider SAP has toldall 1,000 of its staff to work from homewith the option to move to bases suchas Osaka with their families.

Swedish retailers Ikea and Hennes &

Mauritz also said they were helpingstaff move south, to Kansai and Osakarespectively.

Airlines have been moving their

overnight staff swaps out of Tokyo.British Airways said yesterday that itwould change crew in Hong Kongrather than Tokyo.

But many banks insisted that theywere continuing to operate business asusual, with Barclays Capital, MorganStanley and UBS all confirming theirstaff were at work. While executivesemphasised that the safety of staff wastheir priority, many employees voicedunease at the policy and moved theirfamilies abroad.

BYALISON LOCKJAPAN CRISIS

News 3CITYA.M. 18 MARCH 2011

Japan exodus goes on

CITY VIEWS: DO YOU TRUST NUCLEAR ENERGY? Interviews by Eric Wilkens

I continue to support nuclear energy. We

can destroy our world with mining fossilfuels, but nuclear is safe. Weneed to continue to invest innuclear and improve safetyissues because in fiftyyears there will onlybe nuclear energy.

MICHAEL BIRKS |ADSATIS

Before the earthquake and tsunami, I def-

initely thought there were no safety haz-ards about nuclear energy.But because of the eventsthat have transpired inJapan, it has definitelychanged my view ofnuclear energy."

GRANT ROBERTSON |MILES SMITH

I absolutely trust nuclear energy because

its going in the right direction. While itwasnt the brightest idea to putnuclear energy plants in areasthat are prone to earthquakes,we need more analysis on howwe can safely contain poten-tial meltdowns.

MICHAEL HOWARD |KENNEDYS

GAS prices rose to a two-year high inEurope after Japans earthquake andtsunami crippled Fukushima Daiichiplant, triggering the worst nucleardisaster since Chernobyl.

The price of liquefied natural gas(LNG) jumped more than seven percent yesterday to reach 74p pertherm, on expectations that importsfor the UK will be diverted to Japan.

Japan is the worlds largest con-

sumer of LNG, with 30 per cent of its

power supply coming from thissource.

But shares in uranium producersslid due to rising concerns over thedamaged nuclear power plant innortheastern Japan. Shares ofCameco, the worlds second largesturanium producer, closed down 5.78per cent at C$27.73 (17.46) on theToronto Stock Exchange. No onewants to own that kind of stocktoday, said Baskin Financial Servicesportfolio manager Barry Schwartz.

BYROGER BAIRD

COMMODITIES

Gas prices push up whileuranium falls after crisis

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DANISH outsourcing firm ISSpulled its listing plans at the eleventhhour in a dramatic turnaround lastnight.

The highly anticipated 1.55bn floatin Copenhagen was to be one ofEuropes biggest this year and its can-cellation is a major setback for ISSsequity-holders. It is 55 per cent ownedby EQT and 45 per cent by a GoldmanSachs private equity fund.

ISS blamed the cancellation on mar-ket volatility caused by extraordinaryexternal events, including escalatingviolence in the Middle East and theongoing disaster in Japan.

ISS chairman Ole Andersen told CityA.M.: Although we had the book andoffer completely covered within theprice range, we had to sit down at theend of the period and ask ourselves, is

this really the start we would like tosee for ISS as a listed company?

However, some bankers queried theambitious price range, which was cutfrom 100-135 Danish crowns to 100-110 Danish crowns on Wednesday.

It just felt wrong, like it hadtripped up out of the box, one seniorbanker said. ISS was being advised byGoldman Sachs, Morgan Stanley andHSBC.

ISS joins media group Lagardere asthe latest firm to put listing plans onhold, after the French company post-poned the sale of its 20 per cent stakein TV channel Canal + France earlierthis week.

The turmoil has also caused specula-tion that Glencore Internationalmight cancel its $60bn listing, current-ly scheduled tentatively for the secondquarter of this year. But sources closeto the deal said that the Glencorefloat is pretty uncontroversial andunlikely to be derailed.

ISS pulls its1.6bn floatBY JULIET SAMUEL AND

RICHARD PARTINGTON

M&A

ERIC Daniels, the former LloydsBanking Group chief executive, is acandidate to become the next chair-man at insurer Aviva, City A.M.learned yesterday.

Daniels, who stepped down asLloyds chief executive at the start ofMarch, is one of about five candidatesapproached by Aviva about taking anon-executive board position.

The new director would be linedup to succeed Lord Colin Sharman,

who has chaired Aviva since 2006.Aviva has charged Chelsea-based

search company Zygos with the taskof finding the new director. It is notclear who the other names on theshortlist are.

US-born Daniels, who remains anadviser to Lloyds until September, islikely to be considering a number ofroles following his tenure at thebank. He is also currently a non-exec-utive director of telecoms firm BT.

He stepped down after announcingthat Lloyds made a 2.2bn pre-taxprofit in 2010, its first annual profitsince the takeover of HBOS in 2008.

Aviva and Zygos both declined tocomment last night.

Former Lloyds chief Eric Danielstipped as next Aviva chairmanRECRUITMENT

RBS highest-paid bankers werenamed yesterday as it revealed it paidfive top-ranking employees a total ofmore than 20m last year.

RBS originally published its biggestpay awards anonymously as part ofthe Project Merlin deal with the gov-ernment but staff members could beidentified from analysis of its stockmarket filings.

RBS said it paid 323 critical staffknown as code staff a total of 375min 2010 an average of 1.1m each.

Analysis revealed that EllenAlemany, who runs RBS US opera-tions, was paid 5.95m plus pension.

John Hourican, chief executive ofRBS global banking and markets divi-sion, was awarded a 5.93m salaryand benefits package.

Others were Nathan Bostock, whoheads RBS restructuring and risk, on3.3m; head of retail Brian Hartzer,

on 3.2m and corporate division chiefChris Sullivan on 2.6m.RBS stands out from other British

banks, such as Barclays and HSBC,where senior executives in the invest-ment banking businesses, tend toearn more than the chief executive.

Increased transparency around thepay of senior banking executives wasone of the more contentious conces-sions made by the banks in theMerlin agreement with the govern-ment.

RBS reveals five highest paidbankers earn total of 20mBY ALISON LOCKREMUNERATION

Ellen Alemany, who runs RBS US operations, was paid 5.95m plus pension

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GENERAL Mills is set to buy a 50 percent stake in French yoghurt makerYoplait from PAI Partners for roughly800m (496m).

The deal would give Yoplait, theworlds second-largest yoghurt makerafter Danone, a total value of1.6bn,some four times the value of the busi-ness when PAI invested in 2002.

French dairy cooperative Sodiaalwill retain the remaining 50 per centof the business. A spokesperson forSodiaal said PAI would make anannouncement regarding its stake inYoplait by this morning.

The transaction leaves everybodyhappy, and Sodiaal would feel therewas a partner that was really commit-ted to taking the business forwardand had the means to do so, said asource close to the situation.

Another source familiar with thedeal said both Mexicos Groupo Lalaand Nestle were in a good position towin the bid, but General Mills strongfinancials helped win the day.

[General Mills] could pay for it offtheir balance sheet, said a personclose to the deal. No mess or fuss.

A deal with General Mills, which

also makes Cheerios cereals andHaagen-Dazs ice cream, will resolve aconflict with Yoplait parent groupSodima, which told the US firm lastyear it wanted to terminate theirlong-running licensing agreement.

General Mills, whose brandsinclude Pillsbury and Betty Crocker,has distributed Yoplait yogurt in theUnited States for more than 30 years,analysts said.

The acquisition of the Yoplait stakeprotects General Mills distributionrights in the US and eliminates therisk of a competitor edging in on thatbusiness, analysts said.

The price is a bit higher thanexpected, but settles an ongoing ques-tion mark, said Janney CapitalMarkets analyst Jonathan Feeney.

FEDEX, the worlds largest cargo air-line, forecast improved revenue andmargins in the current quarter andbeyond, and sees more shipments forreconstruction in Japan.

The brightening outlook overshad-owed lower earnings for the fiscalthird-quarter, ended 28 February,which was slammed by severe winter

storms and spiking oil prices.

The package delivery company saidfourth-quarter profit should rise to arange of between $1.66 to $1.83 pershare, compared with the Wall Streetview of $1.66 a share.

FedEx and United Parcel Service, thelargest package delivery company, areconsidered economic bellwethers.

FedEx said rising oil prices that dragon the economy are a concern thisyear, and the near-term impact of theearthquake and tsunami in Japan is

uncertain.

There will be more traffic goinginto Japan for reconstruction purpos-es and for humanitarian relief in themidst of an earthquake, tsunami andnuclear crisis, chief executive FredSmith said.

Winter storm disruptions and spik-ing oil costs hurt profit in the third-quarter, but revenue topped forecasts.

Net profit fell three per cent to$231m (143m), or 73 cents per share,from $239m, or 76 cents per share, a

year earlier.

Upbeat outlook for FedEx as deliverycompany foresees growth in demand

INTER-DEALER broker Tullett Prebon ispursuing US arch-rival BGC for dam-ages of around 14m for poaching keystaff, a source said yesterday.

Laying out its case at the start ofyesterdays trial into how much com-pensation BGC should pay for raidingits employees in 2009, Tulletts lawyersaid the defections damaged thevalue of remaining teams and his

client aimed to recover the costs of

mitigating a BGC conspiracy.The key to this case is that the

whole is more than the sum of theparts, Daniel Oudkerk told the court.

Documents show that at all times,BGC focused on teams and the rev-enues those teams could generate. Ithas always been about that.

Tulletts legal team declined tocomment on the damages it wouldclaim. The feud between Tullett andBGC began in April 2009 and centres

on 10 defections.

Tullett Prebon seeks 14mfrom BGC for staff exodus

FINANCIAL MARKETS

A FORMER executives industrial rela-tions case against the London Stock

Exchange (LSE) got off to a fiery startyesterday as hundreds of documentscame to light just hours before thebeginning of the Tribunal hearing.

The former head of Turquoise EliLederman is suing the LSE under lawsthat protect employers when onebusiness is sold to another.

The LSE has already conceded thatLederman was unfairly dismissed butit is contesting the rest of the claimsin the case that started yesterday at

Kingsway, near Holborn. Unfair dis-missal carries with it a maximumpayout of 80,000.

Lederman says his solicitors havebeen seeking documents and emails

relevant to the case for weeks and itwas only eight hours before the casebegan that hundreds of fresh paperswere handed over.

The hearing was adjourned yester-day mid-morning so that Ledermanand his legal team could readthrough the documents.

It seems that senior LSE executiveshave as much difficulty discoveringimportant documents from theiremail systems as their clients have

recently had obtaining prices reliablyfrom LSE trading systems, Ledermansaid yesterday, referring to the LSEsrecent trading system glitches.

LSE in February last year replaced

Lederman with David Lester, thedirector of information services atthe exchange.

Turquoise was set up by LSEsbiggest customers including MorganStanley, Credit Suisse Group, Bank ofAmerica, Deutsche Bank andGoldman Sachs, and had taken mar-ket share from LSE and other tradi-tional exchanges.

The LSE declined to comment lastnight. The case continues.

BYDAVID HELLIER

TRIBUNAL

General Mills

set to snap upYoplait stakeBYHARRY BANKS

CONSUMER GOODS

BYHARRY BANKS

LOGISTICS


MERGER IS CHILDS PLAY NEWS | IN BRIEF

Lloyds cuts jobs to merge HBOSLloyds is to axe 570 jobs from acrossits business as part of its integrationprocess with Halifax Bank of Scotland.The state-owned lender is also set to

outsource up to 600 roles. The cuts,which will mainly come from back-office roles, will take the total numberof job cuts at the bank close to 27,000since the height of the banking crisis.Lloyds, under the direction of newchief executive Antnio Horta-Osrio,is in the middle of restructuring thebank after it bought HBOS at the peakof the financial crisis.

HMV shares surge by over 30pcHMVs shares surged 32.6 per cent to15.25p yesterday after chief executiveSimon Fox said he was confidentthat the struggling retail firm wouldsurvive. Fox said talks the music, booksand gaming group was having with itsconsortium of eight banks, includingthe state-backed Royal Bank ofScotland and Lloyds Banking Group,were very positive. But he said thefirms staff were having a tough time.Our premature death and our prob-lems are being much written aboutand thats very, very destabilising, hesaid.

London cable car gets go-aheadPlanning permission has been finalisedfor a cable car spanning the riverThames between Greenwich Peninsulaand the Royal Docks, and contractorsfor the project are expected to beappointed soon. Sir Simon Milton, thedeputy mayor of London, gave the go-ahead for the project yesterday, aftera comprehensive safety review consid-ering its proximity to London City air-port concluded that risks wereincredibly low. Funding for the cablecar is expected to come from a combi-nation of sources including third party,sponsorship and fare revenues.

Eli Lederman when he was chief executive at Turquoise

Lederman begins LSE action

ANALYSIS l General Mills

$

20 Dec 10 Jan 31 Jan 18 Feb 11 Mar

37.5

36.5

35.5

34.5

35.8517 Mar

THE OWNER of the childrens character Noddy could merge with the parent company ofBob the Builder. Chorion, a media content firm owned by private equity house 3i, is closeto appointing DC Advisory Partners to assess its options. A merger could take placewhen Hit Entertainment, Bob the Builders owner, is sold off by its private equity backerApax Partners.

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THE CBI today urged the governmentto tackle employment laws that pre-vent smaller businesses from creatingjobs, highlighting the role they canplay in compensating for public sectoremployment cuts.

The business lobbying group said 60per cent of small businesses citedobstructive employment laws as thebiggest barrier to job creation.

SMEs in the UK currently employ13.6m people, employing a larger-than-average proportion of the private sec-tor workforce in areas where the

public sector accounts for a largershare of the regional economy.

GEORGE Osborne will outline hisintention to simplify Britainsunwieldy tax code when he unveilsthe Budget on Wednesday, includinga proposal to simplify national insur-ance contributions (NICs) and incometax.

The chancellor is considering aplan that would let employers payNICs and income tax in a single com-bined payment rather than separate-ly.

Treasury sources claim this wouldcut down on paperwork and so reducecosts for firms while making theprocess simpler for the self-employed.

However, employees would still geta pay slip with NICs and income taxdeducted separately, according to aTreasury official.

The change was recently proposedin a report by the Office for TaxSimplification, which has beencharged with slimming down the taxcode.

Tolleys Tax Guide is now so longthat the worlds fastest speaker wouldtake about five solid days to getthrough it.

A Treasury source said there wouldbe nothing in terms of hard physicsat the Budget but that Osborne wouldgive a flavour of his tax simplifica-tion agenda.

The NICs proposal is one of a seriesof micro-reforms in the Budgetdesigned to kick-start growth.

Osborne is hoping that a series ofsmaller changes designed to aid busi-nesses will add up to something moresignificant.

He is also likely to make sweepingchanges to the planning regime toencourage firms to expand theirpremises and to boost housebuilding.

The chancellor is likely to come upagainst stiff opposition to the plan-ning changes, both from local com-munities and councils.

But he will point to the OECDsdecision earlier this week to down-grade its 2011 growth forecasts for theUK from 1.7 per cent to 1.5 per cent asproof the government needs to domore to boost growth.

There is a recognition among sen-ior cabinet ministers that the govern-ments time has been eaten up withreforms in education, welfare andhealth at the expense of supply sidereform to grow the private sector.

Osborne set

to tinker withthe tax code

BUSINESS lobby group the BritishChambers of Commerce said govern-ment efforts to reduce regulationwill be welcomed by business yester-day, but that promises will have to bebacked by prompt action to reducered tape.

If the government is seriousabout encouraging private sectorgrowth and tackling high levels ofunemployment, particularly amongthe young, we need to make it easierfor companies to grow and createjobs, said BCC director general

David Frost. The answer to this hasto be reducing regulation.

BCC: Act now totrim regulationReforms neededto add SME jobs

BYDAVID CROW

POLITICS

POLITICS

POLITICS

Politics 11CITYA.M. 18 MARCH 2011

VINCE Cable will today unveil plansto cut some red tape, although thereforms are likely to be criticised astoo weak.

The business secretary will say thatthe coalition will not extend the rightto flexible working to parents of 17year olds as planned on 6 April, whilecompanies with less than 250 employ-

ees will not be required to give stafftime off to train.Start-up firms and companies with

less than ten employees will beexempted from all new domestic reg-ulation for three years, Cable will say.

However, critics counter that thevast majority of new regulations arewritten in Brussels, making domesticguarantees worthless.

Meanwhile, Cable will pledge tointroduce so-called sunset clauses

for all new domestic regulations,which retire rules after a set period oftime. But this will not apply toEuropean rules either.

There are a staggering 22,000 indi-vidual regulations and Cable willtoday announce an audit designed toroot out costly and pointless rules.

However, he is sure to draw firefrom business groups who will saythat the reforms do not go farenough.

Vince Cable announces plansto scale back some red tapeBYDAVID CROW

POLITICS

Vince Cable is ordering an audit of the UKs 22,000 regulations

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THE FSA has warned banks that theymight have to cut their targets forreturns on equity (RoE) in order tomeet a capital surcharge for majorfinancial institutions.

It has also said that it willremain vigilant to banks tak-ing excessive risks in anattempt to maintain return onequity.

In its annual PrudentialRisk Outlook, the FSA warnedthat banks will only be ableto achieve the necessary cap-ital ratios provided divi-dend payout rates are notexcessive and by restrain-ing pay.

FSA chairman LordTurner (pictured) also reiter-ated that he favours countingcapital in the form of equity ratherthan debt, saying: There is a signif-icant global support for an elementof equity. The argument that equity isthe best form of [capital surcharge]has significant support around theworld.

Turners view makes it likely thatif UK banks are allowed to use forms

of debt to fulfil their core tier one cap-ital requirements, they will have to beconvertible into equity if their capitalratios fall too low and might have to

use a highly cautious exchangerate for the conversion.

Banks are keeping a keen eye onthe different forms of capital-rais-

ing available, with CreditSuisse having already goneahead with two rounds ofcontingent convertible (co-co) bond issuances inorder to fulfill Swiss regu-latory requirements.

Simon Morris of lawfirm CMS Cameron

McKenna said: The FSAhas gained a name for its

poor grasp of macro-pruden-tial regulation. There is the

consequent risk that the FSAreport is unduly negativebecause it is compensating forhaving missed the macro-pruden-tial warning signs of the last cri-

sis.At the launch of the pru-

dential outlook report, DavidRule of the FSAs macro-pru-

dential team also estimatedthat UK banks exposure to

Japan runs as high as 136bn.

MEDIA watchdog Ofcom will reviewthe TV advertising market in a movethat could drastically alter the waybroadcasters such as ITV operate.

Ofcom will examine the way TVadvertising is bought and sold andwhether the current method prevents,

distorts or restricts competition.It will examine current rules which

allow commercial broadcasters moreadvertising minutes per hour thanpublic service broadcasters.

It will also look into Contract RightsRenewal, a set of rules that wereadopted in 2003 when GranadaTelevision and Carlton Televisionmerged to form a single ITV.

It was designed to ensure that adver-tisers and their agencies were not put

at a competitive disadvantage whennegotiating advertising contracts.

Contract Rights Renewal also givesadvertisers an opportunity to reducetheir commitments to ITV if its shareof commercial impacts fall.

However, the broadcast landscapehas shifted dramatically since 2003and looks set to be revolutionised bythe advent of connected TV.

If Ofcom discovers cause for con-cern, it will pass the matter to the

Competition Commission for a full-scale review.

THE European Banking Authority(EBA) will this morning reveal thedetails of a second round of stresstests that are meant to help restoreconfidence in Europes ailing bankingsystem.

The tests will be the EBAs first in-depth interaction with 88 of Europesbanks, which have previously been

subject only to the authority of theCommittee of European BankingSupervisors (CEBS), a looser commit-tee of pan-European regulators.

But there are already doubts aboutthe EBA tests effectiveness given thatboth the Bank of Ireland and the UKsFinancial Services Authority havepromised a tougher round of tests.

Reports have suggested that thetests will be a little tougher on the

issue of sovereign debt, but will other-wise be easier than the tests last yearthat were failed by only seven banks,none of them Irish.

Ann Cairsn of Alvarez & Marsalsaid: The regulators and the banksknow who the weaker players are. Thestress tests can confirm that, but theywill have no teeth unless the followup restructuring and consolidation ofthe financial landscape happens.

Strong doubts over rigour of Europeanstress tests to be unveiled this morning

EUROZONE

AMERICAN authorities have issuedsubpoenas to several international

banks as part of an investigation intomanipulation of the London inter-bank offered rate (Libor) during thefinancial crisis.

The investigation came to light aspart of a disclosure made by UBS inits annual report saying it had beensubpoenaed by the US Securities andExchange Commission (SEC), the USCommodity Futures TradingCommission (CFTC) and the JapaneseFinancial Services Authority (FSA)

regarding whether there wereimproper attempts by UBS, either act-ing on its own or together with oth-ers, to manipulate Libor rates atcertain times.

Sources familiar with the situationhave confirmed to City A.M. thatBarclays, Bank of America MerrillLynch and Citigroup have alsoreceived subpoenas on the matter,and said that a lot of banks are inthe same situation. All the banksnamed declined to comment, as didthe SEC and CFTC.

Libor is calculated by ThomsonReuters for the British BankersAssociation (BBA) and is used interna-

tionally as a benchmark to set priceson numerous derivatives and finan-cial instruments.

Submitting an incorrect figure forLibor could be seen as market

manipulation that might affect themarkets perceptions of risk and easeof credit between banks.

The BBA said in a statement: Liboris fully transparent all of the datainputted by the contributor banks ispublicly available, as is our method-ology.

It added: And all decisions regard-ing the design and governance of thebenchmark are taken in full consul-tation with market participants.

US doles out Libor subpoenasBY JULIET SAMUEL

REGULATION

FSA to banks:

Cut returnsand dividendsBY JULIET SAMUEL

REGULATION

BY STEVE DINNEEN

MEDIA

ST PATRICKS DAY TETE-A-TETE

PRESIDENT BarackObama said dur-ing a meeting withIrish PrimeMinister Enda

Kenny that the USwould help Irelandrecover from itseconomic problemsand that he wouldvisit in May. Wehave had an excel-lent conversationabout how Irelandis going to bebouncing backfrom the severe eco-nomic challengesthat its experi-enced over the lastseveral years, saidObama.

Picture: GETTY

LIBOR: THE FACTS

Q.WHAT IS LIBOR AND WHAT IS ITUSED FOR?A.It is the London InterbankOffered Rate, a benchmark ratemeasuring what banks are chargingone another for loans. It is a barome-ter of banks willingness to lend toone another and therefore indicativeof perceived risk and of where banks

expect lending prices (interest rates)to go. It is also used to price certainfinancial instruments.

Q.HOW IS IT CALCULATED AND HOWCOULD IT BE MANIPULATED?A.It is calculated by ThomsonReuters for the British BankersAssociation (BBA) drawing on a panelof banks that agree to contribute.They are surveyed each day on thecost of borrowing at different maturi-

ties of debt and in 10different currencies.After removing the topand bottom quartiles, the remainingnumbers are used to calculate therate for various lengths of debt in dif-ferent currencies. The data for eachcontributing bank is published every-day. In order to manipulate it to

submit falsely low borrowing cost fig-ures a bank would probably needthe cooperation of others.

Q.WHAT IS THE DIFFERENCEBETWEEN LIBOR AND AN AGREEDCREDIT LINE BETWEEN BANKS?

A.Whereas a credit line is agreedbetween several parties, Libor ismeant to be the current going rate inthe market, without a specific creditcontract.

Q A&

NINTENDOS new handheld gamingsystem has become the most pre-ordered console ever.

The 3DS, whichallows gamers to playgames in 3D withoutthe need for glasses,has already received20 per cent moreorders than thePlayStation 3 withmore than a week togo before its launch. Italso received 56 percent more orders than Nintendos for-

mer most pre-ordered console the

Wii, according to online retailerAmazon. The flurry of orders haspushed the console into the top tenproducts in Amazons bestsellerschart.

Microsofts Kinect, launched inNovember last year, is fourth on thelist. It went on to smash records, sell-

ing more than 10munits in just fourmonths.

Chris Poad, directorof video games atAmazon said: Itsunusual for a handheldconsole to attract thisamount of excitement, such high levels ofinterest are normallyreserved for the play-

at-home hardware like the ground-

breaking Wii.

THE 3DS

NINTENDOOfcom set to overhaul TV adrules as reviews airtime deals

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UK INSURER Legal & General boostedits divided by 24 per cent yesterday onthe back of a 1bn operating profit,and said it expected to benefit fromstronger demand for savings productsin future as reduced welfare provi-sion forces consumers to save more.

Though operating profits fellslightly from 1.1bn in 2009, theyremained broadly in line with analystexpectations of 1.05bn.

Sales for 2010 also jumped at theUKs fourth largest insurer, climbing28 per cent to 1.8bn from 1.4bn in2009.

Chief executive Tim Breedon saidthe company was confident about itsgrowth prospects, citing rising cus-tomer demand in the UK and a busi-ness model and product mix suited tothe current economic and demo-graphic environment.

Our balance sheet is strong, eachof our business divisions is profitableand cash-generative, and we are deliv-ering excellent results across thegroup, he said.

The insurer also renewed its seven-year partnership with SainsburysFinance yesterday, which will see the

supermarket chains financial outletscontinue to sell L&G life cover prod-ucts.

Despite the upbeat outlook, sharesin L&G fell more than two per cent inearly trading, before recoveringslightly to close 0.4 per cent down at110.7p.

The stock is up 12 per cent sincethe start of the year, outperforming a1.6 per cent rise in the Stoxx 600European insurance index.

Financial Services Authority chair-man Adair Turner cast a shadow overthe insurance industry in his pruden-tial risk outlook yesterday, claimingthat though well capitalised, theindustry was exposed to balancesheet stress from both a rise in claimsand low investment returns.

FRENCH bank Crdit Agricoles newplan to grow net profit more thanfive-fold by 2014 disappointed hopesyesterday for an announcement onpossible asset sales.

New chief executive Jean-PaulChifflet unveiled a new target of6bn-7bn (5.2bn-6.1bn) in netprofit by 2014 as the bank shifts itsfocus back from investment bank-

ing onto its retail business.Analysts on average already

expected the bank to be making6bn of net profit in 2013 and6.35bn the year after.

Profits at the corporate andinvestment bank (CIB) division areexpected to only rise to 1.8bn fromaround 1.5bn in 2010, excludingthe impact of toxic assets kept in aseparate portfolio, as it puts a capon expansion.

Group return on equity will in2014 be between 10 and 12 per cent,

the bank said, also helped by freshcost-cutting at the investment bank.

Crdit Agricole focusesgrowth on retail banking

BANKING

STOCKBROKER Panmure Gordonrecorded a further slip in its profits,posting a bigger loss than a year earlier.

The firm posted a pre-tax loss of4.26m for the year, further into thered than the 3.08m deficit it recordeda year earlier.

Net revenues were also down to40.46m, from 50.86m a year earlier.

Obviously its painful to produce[results] that are loss making, saidchief executive Tim Linacre.

2010, for everybody, was a very, verytough year.

He added that the losses related tothe first-half of last year, adding that itsaw profits in the second-half.

The results were also in line with atrading statement the broker put outearlier this year.

Panmure was appointed to 19 newcorporate clients in the UK last year,with an increasing emphasis on com-panies that have exposure to growingeconomies.

Linacre said the situation in Japan,following its devastating earthquakeand tsunami, could cause problems forthe broker this year.

Its very hard you always come intoevery year with optimism. But in thelast few weeks with the Middle Eastand Japan, it obviously makes it harderfor everybody, he said.

Clearly the market is going toremain quite challenging for every-body but we remain confident.

Panmureposts larger

yearly lossesFINANCIAL SERVICES

BOUTIQUE lender Arbuthnot Bankingyesterday posted flat profits for lastyear and cautioned on difficult mar-ket conditions for the year ahead.

The group, one of the oldest inde-pendent banks in London, posted pre-tax profits of 5.1m.

Arbuthnots retail arm posted pre-tax profits of 8.5m, down from10.2m a year earlier although itsaw underlying profits up 19 per centafter one off items.

Its investment division hit pre-taxprofits of 1m, after a 100m loss a

year earlier, boosted by 16 corporatetransactions.However, the bank warned market

volatility, driven by tension in theMiddle East and the disaster in Japan,could hit financial services firms.

There does seem to be a never end-ing stream of uncertainties. From theMiddle East and Japan to the sover-eign debt crisis. This is making themarkets more difficult and that willhave an effect.

Arbuthnot profits are flatas it warns of tough year

BANKINGINVESTEC yesterday bucked the trend

of falling loan impairments to take a

205.4m hit from increasing non-per-forming loans (NPL) across several ofits business lines.

The slower pace of economic recov-ery has caused a delay in the improve-ment of the level of NPLs, the assetmanager and bank said in its annualreport published yesterday.

Overall, however, operating profitsrose 8.9 per cent to 275m, with assetsunder management swelling 17 percent to 86.4bn.

Operating profits at the firms pri-vate banking division plummeted 54per cent, which the firm blamed ondepressed lending activity and a con-tinued rise in impairments concen-

trated in Europe, though also presentin its South African and Australiandivisions. The private banks difficultyear saw its return on equity fall to 5.4per cent, significantly below that ofthe other divisions.

The overall performance wasenough to see the firm hike its divi-dend by 23 per cent to 16p per share,but remained mixed: We achievedthree out of our five financial objec-tives, said the bank, saying that its

return on equity (RoE) target of over 20per cent and adjusted earnings pershare still remain elusive. Like manyfinancial firms, it is particularly strug-gling with delivering returns: overall

RoE actually decreased from 14.8 percent in 2009 to 13.5 per cent in 2010.Most executives on the Investec

board saw their pay rise on the back ofthe mixed performance. Both chiefexecutive Stephen Koseff and manag-ing director Bernard Kantor saw theirpay rise 60 per cent to 2.66m each,while chief risk officer Glynn Burgerspay rose 39 per cent to 2.26m. AlanTapnack saw his pay drop 21 per cent,however, to 651,781.

Investec impairments riseBY JULIET SAMUEL

FUND MANAGEMENT

L&G boosts

dividend as itbeats targetsBY ELIZABETH FOURNIER

INSURANCE

News 13CITYA.M. 18 MARCH 2011

ANALYSIS l Legal & General

p

20 Dec 12 Jan 1 Feb 21 Feb 11 Mar

125

115

105

110.7017 Mar

Overseas is where the growth liesLEGAL & Generals 24 per cent divi-dend hike and 1bn in annual prof-its are a sign of just how far theinsurer has come over the past twoyears. In early 2009, concerns overthe insurers capital requirementscaused shares to drop 30 per cent ina single day. The dividend washalved to bump up reserves, andchief executive Tim Breedon spentmost of the year denying that arights issue was imminent.

Twenty-four months later andBreedon is back in investors goodbooks with yesterdays dividendannouncement, though guidanceon future increases would have beeneven more welcome. L&Gs depend-ence on its core UK market alsoseems to have paid off Breedonattributed the 28 per cent rise ingroup sales to long-term planning byprudent policy holders, and the fig-ures support his claims. Profits on

saving products were up 130 percent to 115m, largely credited to anincrease in demand for private pen-sions. But emerging markets growthhas contributed too, with a success-ful Indian launch yielding morethan 130,000 policy sales in its firstyear of trading. With China next onthe list L&G is looking to consolidateinternational growth, and continuesto diversify by growing funds in itsinvestment management portfolio.Some brokers remain cautious, pre-ferring Avivas more establishedinternational presence and steadydividend record. But todays dip inshare price can be put down to con-tinued market uncertainty, andgives buyers an excellent opening toget in on future distributions.

BOTTOMLINEAnalysis by David Crow

BY JOHN DUNNE

PROFILE

AUSTRALIAN investment bankMacquarie yesterday made theshock announcement that itsfounder and chairman DavidClarke would stand down.

Clarkes departure comes 19months after he returned to workfrom nine months leave to be treat-ed for cancer.

The bank described him as one ofAustralias great business leaders.He worked 40 years at Macquarie,from when he was joint managingdirector of Hill Samuel Australia in

1971. The company that was to

become Macquarie had just 12 staff atthat time. Clarke was appointed man-aging director in 1977 and executivechairman in 1984. He was executivechairman from 1985 until March2007.

Clarke has been a successful winegrower, producing an award-winningrange of wines under the HunterValley label.

He has been a prominent memberof the Liberal Party, but fell out withleader John Howard over universityfees. More recently he has taken partin street protests against coal seam-gasmining in the Hunter.

At 69, he is a year short of the age at

which he recently said he would

think aboutretirement.

Clarke handsover the reinsto new chair-man KevinMcCann, 70.

Macquarie chairman steps aside after illness

DAVID CLARKE

L&G boss Tim Breedon is confident about the firms growth prospects

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REAL ESTATE consultant Savills post-ed an 88 per cent rise in pre-tax prof-it to 47.3m yesterday but warnedthat transactions in Asia are likely tofall this year in the wake of theJapanese disaster.

The firm has evacuated all but oneof its 70 Tokyo staff to the west of thecountry but said Japanese business,which makes up around one per centof its Asia Pacific sales, would contin-ue from other offices.

Savills posted a 21 per cent rise inglobal revenues for 2010 to 677m,largely from strong growth in Asiaand parts of continental Europe.

It said it expects growth in Londonand Europe to offset any decline inAsian sales this year, which made up41 per cent of the groups revenues in2010, to deliver largely flat profits in2011.

If I have to pick one country inAsia, with the caveat of what we havejust been talking about [Japan], weare probably going to see the biggestgrowth in China this year, chief exec-utive Jeremy Helsby said.

In the UK, revenue from commer-cial transactions rose 35 per cent to

48.2m, helped by a 4m boost frommarketing the One Hyde Park luxuryflats.

Savills underlying profit marginjumped from 4.5 per cent to seven percent in the year as the firm focusedon transaction advisory work andpared losses in Europe.

The firm has raised its dividend to13p for the year and said its share-holder pay-outs would be linked toless volatile parts of the business tobuffer against more cyclical opera-tions.

Its earnings per share rose 92 percent to 27.9p, from 14.5p.

Savills shares closed down 1.2 percent to 369.47p yesterday, sufferingfrom some ongoing jitters in the mar-ket surrounding Japan.

HERITAGE Oil and Gas shares leapt 8.2per cent to 313.5p yesterday after areport that a suitor from Abu Dhabihad made an informal takeover bid.

Heritage turned down the 1.2bn,or 425p per share indicative offer afterreceiving a letter from the groupsadvisers.

Shares in the FTSE 250-listed groupmade their highest jump in seven

weeks after the report after a volatilefew months for Heritage, which hasbeen battered by exploration disap-pointment and then buoyed bytakeover rumours.

The identity of the bidder is notclear, though sources in the MiddleEast said yesterday it was not the AbuDhabi Investment Authority or its gov-ernment-run peer Mubadala, whichwas set up to diversify the UAEs econ-

omy. Heritage and the sovereignwealth funds declined to comment.

Heritage Oil shares surge after talk oftakeover interest from the Middle East

NEWS Corp is being sued by a groupof its shareholders over accusationsthe Murdoch family is treating thebusiness like a wholly owned familycandy store.

Several legal filings allege nepo-tism over its purchase of ElisabethMurdochs Shine television companyfor 415m.

Amalgamated Bank, a trustee forseveral investment funds holdingmore than 1m News Corp shares and

the Central Laborers Pension Fundare behind the action. Neither are in

News Corps top 100 shareholders byvoting rights.A News Corp spokeswoman told

City A.M. she doesn not believe theclaims have any merit.

Elisabeth will take a seat on theNews Corp board as part of the dealfor her production firm, which isbehind hits including Ashes to Ashesand Ugly Betty.

Elisabeth will make around 200mfrom the deal.

News Corp accused ofnepotism in Shine dealMEDIA

MARKETING group Aegis beat fore-casts yesterday despite suffering a

25m exceptional charge on thethreat of bad debts from a Spanishformer client.

The debt provision pushed its pre-tax profits down 25 per cent from91.2m to 68m but chief executiveJerry Buhlmann told City A.M. his firmhad taken a very prudent view onthis, with the firm still working torecover the money.

Organic revenue grew 5.8 per centyear-on-year to 1.45bn, with underly-

ing pre-tax profits up seven per centto 162m.

The strong results followed arebound in advertising markets inthe second half of the year.

Buhlmann said the business per-formed particularly well in the USand Asia. The firm has increased itsoperations in Asia with the recentacquisitions of Australian marketinggroup Mitchell and Chinese mediaagency Charm Communications.

It has also expanded its presence inRussia and China.

Buhlmann said he is upbeatabout the outlook for 2011, saying heis confident the forward momentum

will continue. It increased its divi-dend 10 per cent to 2.75p.

The results followed similarimprovements at other global adgroups such as WPP, Omnicom and

Publicis, which all reported strongends to the year due to growth in theUS and emerging markets.

Ad recovery is boost for AegisBY STEVE DINNEEN

MARKETING

Savills profit

up but Asiacould dragBYMARION DAKERS

PROPERTY

BYMARION DAKERS

ENERGY

Operating profit was up 12.9 per cent to 192m,but pre-tax profit fell 25 per cent to 68m. The group, which has expanded in emergingmarkets, says its outlook for 2011 is positive andraised its dividend 10 per cent to 2.75p.

FAST FACTS | AEGIS

ANALYSIS l Savills

p


400

380

360

340

369.4717 Mar

ANALYSIS l Heritage Oil

p


500

400

300

313.5017 Mar

Savills chief executive Jeremy Helsvy said growth in Europe would offset Asian declines

ANALYST VIEWS: WHAT DO YOU THINK OFSAVILLS RESULTS? By Marion Dakers

NAN ROGERS | COLLINS STEWART

The figures were a little bit better than we were expecting, with the

transactions business improving more than we had hoped. The dividend was alsosignificantly higher. The Asian market could drop back this year, just because itwas so strong in 2010, but the US market is looking particularly positive.

CHRIS ALEXANDER | BNP PARIBAS

Savills reported a bumper year that beat forecasts on all levels. Thisyear the temptation will be to raise estimates, but over-exuberance should be tem-pered by the potential success of anti-property speculation measures being pur-sued by authorities in Hong Kong, Singapore and China.

CHRIS MILLINGTON | NUMIS

Savills has reported very strong full-year results, in line with our fore-casts following a November upgrade. London residential and Hong Kong/Chinatransactions remained the drivers, but improvements elsewhere provide anencouraging backdrop to the business. The outlook feels notably improved.

NEWS | IN BRIEF

Lufthansa fears oil cost risesGerman airline Lufthansa yesterday saida sharp rise in fuel costs could hurt itsprofits, although economic recoveryshould boost the airline's revenues and

operating profit this year and next. In itsfull-year financial report, Lufthansa saidit had swung to a 2010 net profit of1.1bn (956m),boosted by a 400mone-off tax effect. 2011 will not be awalk in the park, chief executiveChristoph Franz said in a statement.

SIG expects housing growthRoofing and insulation firm SIG is con-sidering resuming its dividend paymentsthis year after yesterday posting a 3.1rise in underlying pre-tax profit of62.5m. Though revenues declined twoper cent to 2.67bn, the firm said mar-ket conditions are set to stabilise andexpects to see modest growth in resi-dential building work. The FTSE 250-listed firms shares rose 7.8 per centyesterday to 130.5p.

Strong start for Premier FarnellElectronic components distributorPremier Farnell said 2011 had startedstrongly as it posted an expected 70 percent jump in 2010 profit, helped bystrong growth in emerging markets.Group sales were up eight per cent year-on-year, and the company said momen-tum had continued into this year. Thefirm added that its exposure to theJapanese supply chain is very small.

Sales up at bid target ProStrakanProStrakan, the pharmaceutical firmthat has agreed to be bought by JapansKyowa Hakko Kirin, narrowed its full-year loss after bouncing back from man-ufacturing problems. The Scottish firmreported a pre-tax loss of 600,000against a loss of 15m a year ago, aftera 27 per cent jump in revenues.ProStrakan reiterated that the 292mtakeover bid fully valued the business.

IAN Hannam, managing director at JPMorgan Cazenove and lead HeritageOil & Gas adviser, is a well-knownname on the London oil, gas and min-ing circuit.

He was involved in the 2001 mergerand 2005 London listing of BHPBilliton, around which time hebefriended its then-chief financial offi-cer Mick Davis. When Davis becamethe boss of Xstrata, a JPM Caz teamled by Hannam moved too, later steer-

ing the miners 8.4bn acquisition of

Canadian peer Falconbridge in 2006.Hannam is also advising Nat

Rothschilds Vallar mining venture,which is due to seal its first purchasesin April but it is relationship withDavis that he is best known for.

Hannam started his career as achartered engineer at TaylorWoodrow before switching to invest-ment banking.

His reputation in the City as a can-did negotiator might stem from hismilitary past he is a former memberof the Territorial Armys answer to theSAS.

His other clients include Fresnillo,SAB Miller and Devro.

JP Morgan Cazenove has advisedHeritage since it floated in 2008. Alsoinvolved at the bank is Barry Weir, theM&A veteran currently working on

Topazs 1bn London float.

IAN HANNAM

JP MORGANCAZENOVE

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Mervyn Kings Bank of England faces a battle with growing inflation expectations, as prices escalate Picture: REX

Economics 15CITYA.M. 18 MARCH 2011

INFLATION expectations have risen totheir highest level since August 2008,increasing the likelihood that pricepressures are seeping through into sec-ond round effects.

Britons expect inflation of four percent over the coming year, accordingto the latest Bank of England surveyreleased yesterday.

Expectations rose from the 3.9 percent level, recorded in the previoussurvey last November. The Bank will beconcerned that, on average, peoplebelieve inflation is currently at 4.4 percent up half a percentage point fromNovembers survey 3.9 per cent.

Inflation hit four per cent inJanuary, with the Office for NationalStatistics (ONS) delaying theannouncement of Februarys leveluntil Tuesday next week.

Previous Bank of England monetarypolicy committee member DeanneJulius recently said that Februarysrate could be the shocker that con-vinces the Bank to move rates.

Almost two thirds (62 per cent) ofrespondents expected rates to rise overthe next 12 months, compared with

52 per cent in November.A quarter of people now think that

higher interest rates would be best forthe economy, up from a fifth inNovember. Just over a third, 34 percent, think rates should stay wherethey are.

A positive balance of 17 per centthought that the Bank was doing itsjob to set interest rates to control infla-tion, down from 23 per cent last timearound.

This is its lowest level since the lastspike in inflation and the financial cri-sis in 2008-09, said Chris Crowe ofBarclays Capital. This does suggestthat credibility concerns are valid.

With the recession over, therenewed dissatisfaction with the Bankprobably is mainly attributable to therepeated inflation overshoots, addedCitis Michael Saunders.

Long-term expectations will also bea concern for the Bank, with bothmeasures over two years and fiveyears increasing by 0.2 per cent sinceNovember. In the next 48 months peo-ple expect inflation to fall slightly to3.4 per cent, yet over five years stillexpect it to remain stubbornly abovethe Banks two per cent target at 3.5per cent.

SMALL businesses want the govern-ment to deliver a more simple and pre-dictable tax system, according to newresearch.

Almost half 46 per cent specifi-cally called for stable, consistent, pre-dictable and transparent tax policy,ahead of chancellor George Osbornesbudget next week.

Meanwhile, 37 per cent called forcuts in corporation tax, to a level com-

petitive with the G7 average.Over one in 10 11 per cent think

new regulation should only be permit-ted if it replaces existing legislation,according to The City UK, a groupwhich promotes financial services.

To deliver on the governmentspromise of an export-led economicrecovery, companies need unfetteredaccess to a skilled workforce from theUK and elsewhere and tax and regula-tion which are consistent with global

and regional standards, said its CEO,Chris Cummings.

Over half of respondents 57 percent believe the government shouldprioritise business requirements forstaff when weighing up immigrationpolicy, although 36 per cent disagreed.

There was some good news for thecoalition government from a separatepoll, by Ipsos MORI, which revealedthat Labour are seen as more to blamefor public spending cuts.

However, seven in 10 respondentsthought it was better to slow down the

fiscal consolidation, the surveyshowed.

Small businesses call for simplificationof taxes and regulation in new budget

RESTRICTIONS on immigration from

outside the European Union willharm the UKs recovery, several econ-omists said yesterday.

Limits on skilled migration havea significantly negative effect ongrowth, said Jonathan Portes of theNational Institute for Economic andSocial Research (NIESR).

His sentiments were echoed by for-mer government economist VickyPryce, also in attendance at the

NIESRs pre-Budget conference inWestminster.

There is a debate within govern-

ment about how immigration curbson highly skilled employees areaffecting growth sectors, Pryce said.We want government to rethinkthis issue.

The Centre Forum, a liberal thinktank, said immigration curbs had tobe revisited as part of chancellorGeorge Osbornes budget. Osborne isexpected to promise a budget forgrowth next week.

Immigration limits willhit growth, warn analysts

MIGRATION

CONSUMER confidence plummetedto an all-time low in February, accord-

ing to a Nationwide survey releasedtoday.The surveys headline measure of

morale on the high street collapsedby 10 points, as households continueto feel the squeeze.

The headline index dropped to ascore of 38, from 48 in January. Atthe same time last year it was signifi-cantly higher, measuring 82 points.

Consumer confidence has now

reached its lowest level in the surveyshistory, superseding the previous lowseen during the recession, saidNationwide economist RobertGardner.

A fall in expectations towards thefuture was the main factor drivingthe index down, Gardner said.

The expectations section of theindex which gauges respondentseconomic expectations six monthsfrom now -- flopped to 50 points,from 64 the month before.

Yet even the present situationindex fell to its lowest level for 18months, while the spending index hit

its lowest level since the survey beganin 2004.

The spending index fell by 18points in February, to a score of 52.

The proportion of consumers who

believe now is a good time to buyhousehold goods is just over a fifth(21 per cent), dropping by 14 per centon the previous month. Meanwhile,the proportion feeling now is a goodtime for purchases fell three per cent.

Inflation is showing few signs ofeasing, and high fuel prices and theVAT increase have further eroded dis-posable incomes in recent months,Gardner added.

Consumer morale at new lowBY JULIAN HARRIS

UK ECONOMY

Expectations

of inflation at2.5 year highBY JULIAN HARRIS

UK ECONOMY

BY JULIAN HARRIS

UK ECONOMY

NEWS | IN BRIEF

US grows but price pressures riseThe US recovery was boosted by anoth-er blockbuster series of positive econom-ic releases, yesterday. In Philadelphia,manufacturing activity soared to a 27-year high, the states Federal Reserveboard stated. The business conditionsindex jumped from 35.9 in February, to43.4 this month. Across the whole coun-try, the Conference Board's index ofleading indicators rose for an eighthstraight month in February, increasingby 0.8 per cent. The figures suggest theUS economy remains well positioned towithstand challenges like high unem-ployment and rising energy prices.However, stronger than expected pricerises for February were also revealed

yesterday. Consumer prices were up 0.5per cent, to 2.1 per cent.

Rental costs increase across UKRents rose across the country inFebruary, LSL property services revealedtoday. The average monthly rental pricerose 0.2 per cent to 684, reflecting anannual jump of 3.9 per cent. In Londonrents were up 0.3 per cent in the month,yet have shot up by 7.7 per cent over thepast year. The amount of unpaid rent alsoincreased, as high unemployment andinflation continue to bite. Around oneeighth (12.6 per cent) of UK rent in totalwas unpaid by the end of February,according to the survey.

Euro area construction reboundsConstruction across the Eurozone was up1.8 per cent in January, compared to the

previous month, bouncing back from atwo per cent fall in December.

ANALYSIS l Inflation Expectations rose again in the last three months

CPI %

Source: BNP Paribas/BoE

20032002 2004 2005 2006 2007 2008 2009 2010 2011

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

5 Years Ahead5 Years Ahead

1 Year Ahead1 Year Ahead

Bank of England

Inflation

Target

Bank of England

Inflation

Target

2 Years Ahead2 Years Ahead

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Horizon PropertiesThe FSA-regulated distributor of theBritish Property Opportunities Fund has

appointed Mike Porter as businessdevelopment director. Porters career infinancial services spans more than 25

years, where his roles have includedregional sales director at SchrodersInvestment Management and businessdevelopment manager at MerchantSecurities Limited.

First Reserve Corporation

The energy sector private investmentfirm has expanded its energy infra-structure team by appointing JamesBerner as director and Adi Blum andMark Saxe as vice presidents.

EMPEAThe Emerging Markets Private EquityAssociation (EMPEA) has elected H.Jeffrey Leonard, the president, chief

executive and founding partner of theGlobal Environment Fund, as its nextchairman. Leonard succeeds outgoingchairman Roger Leeds, who has heldthe post since 2004.

Field Fisher Waterhouse

The law firm has appointed AmerjitKalirai as corporate partner. Kalirai,who joins the firms Equity CapitalMarkets practice from Berwin LeightonPaisner, specialises in public companytakeovers, following a two-year second-ment at The Takeover Panel.

Russell Reynolds AssociatesThe global executive search and assess-

ment firm has appointed SuzzaneWood as a board practice member andhead of the firms European FinancialOfficers practice. The firm has alsoappointed Greg Cowling as a managingdirector in the Global Industrial andNatural Resources practice.

First StateFirst State Investments Internationalhas made two appointments to itsEuropean Infrastructure Investmentsteam. Tomas Pedraza joins as director,asset management, and Trygve Refvemhas been appointed as senior adviser.Both Pedraza and Refvem will start atFirst State later this month.

CITY MOVES | WHOS SWITCHING JOBS Edited by Harriet Dennys

Tesco TelecomsGraham Harris has been named as the new chiefexecutive of Tesco Telecoms and Tesco Mobile.Harris will oversee all Tescos telecoms business-es: Tesco Mobile, Tesco Phone Shops, TescoBroadband, Tesco Home Phone and Tesco

International Calling Card. Harris joined Tesco in2000 as non-food finance director and went onto lead the Hardlines Commercial Division. Priorto Tesco, he spent 15 years with retailers includ-ing Woolworths and The Burton Group.

+44 (0)20 7557 7245morganmckinley.com

To appear in CITYMOVESplease email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

Bargain huntershelp lift Wall St

WALL Street rebounded afterthree days of declines yester-day, but the advance couldbe temporary as concerns

about Japans nuclear crisis persisted.The S&P 500 recovered after giving

up the years gains on Wednesday, but

options activity showed traders areincreasing hedges against anotherdecline in stocks.

As the headlines come out ofJapan, there are more nervous tradersliquidating their long positions infutures put on this morning, saidSteve Leuer, stock-index futures traderat X-FA Trading firm in Chicago.

The recent losses brought outinvestors looking for bargains.However, volume was lackluster, withjust 7.95 billion shares changinghands on the New York StockExchange, the American StockExchange and Nasdaq, below lastyears daily average of 8.47 billion anddown sharply from Wednesdaysrecord for the year of 11.1 billionshares traded.

If the market is to refocus on funda-mentals, more news from bellwetherslike FedEx will help. The worldslargest cargo airline forecastimproved revenue on strong demand,

lifting shares 3.1 percent to $87.89.The Dow Jones Transport average

gained 1.4 per cent.At the close, a total of about 1.23

million option contracts changedhands in the S&P 500 as puts out-paced calls by a factor of 2.17:1,according to options analytics firmTrade Alert. The recent average put-to-call ratio is 1.93.

An index put option conveys theright to sell an index at a certain level.

The Dow Jones industrial averagewas up 161.21 points, or 1.39 per cent,at 11,774.51.

The Standard & Poors 500 Indexwas up 16.81 points, or 1.34 per cent,at 1,273.69. The Nasdaq CompositeIndex was up 19.23 points, or 0.73 percent, at 2,636.05.

But the S&P 500 is down 2.3 percent for the week so far.

Stocks recent declines followed arally of nearly six months. The rally initself has prompted predictions of amarket correction.

From a chart standpoint I dontsee anything right now that suggeststhat the near-term decline is over,said Chris Burba, short-term markettechnician at Standard & Poors inNew York.

The CBOE Volatility Index VIX, WallStreets fear gauge, fell 10.3 per centto 26.37 as stocks rose, but the VIXwas still high compared with therecent average of about 20.

The market could see greater

volatility today as the two-day quadru-ple witching period ends.

COMMODITY stocks powered abounce in Britains top sharesby close yesterday, as heavy sell-ing this week made equities

look attractive from a technical per-spective, with volatility set to persist.

The FTSE 100 index closed 97.88points or 1.8 per cent, higher at

5,696.11.It had fallen in each of the previ-ous six sessions and the index is stilldown 4.3 per cent this month, withpolitical unrest and violence acrossthe Arab World and Japan's nuclearcrisis keeping investors fearful.

ROLLERCOASTER SET TO CONTINUEVolatility is horrendous, said NeilTong, head of UK equities at the800m Alliance Trust.

There are a lot of unknowns,risks have gone up, the investmentbackdrop has deteriorated furtherand there are headwinds ahead interms of oil and gas prices.

Energy stocks were strong gainers,benefiting from strength in the oilprice, with Royal Dutch Shell up 2.4per cent.

Credit Suisse raised its estimatesand target prices across the global

sector based on strong crude priceforecasts.

Oil rose by around $3 as unrest inthe Gulf and Libya heightened sup-ply disruption worry and investorsweighed the impact on energydemand from quake-hit Japan.

DEAD CAT BOUNCEThe FTSE 100 has had over 50bnwiped off its value in the slide sinceJapan suffered a devastating earth-quake on Friday, which left theindex looking oversold on a techni-cal basis.

The index ended below its 200 daymoving average around 5,611 on

Wednesday and traders said othertechnical indicators pointed to theFTSE 100 looking cheap too.

The FTSE at the moment is ridicu-lously oversold. RSIs (relativestrength index) are running verylow, signalling an oversold situa-tion, a London-based trader said.

Miners, seen as benefiting onceJapan begins to rebuild, advancedagainst a backdrop of firmer metalsprices. BHP Billiton rose 3.1 per cent.

Elsewhere, Vodafone climbed 2.6per cent, boosted by an upgrade toneutral by Evolution after aninvestor day.

Meanwhile, on the downside,Insurer Legal & General fell one percent to 110p after results whichcame in slightly below forecasts,against a 1.5 per cent rise for theEuropean insurance sector.

MAN GROUP TOPS THE LOSERSMAN Group was top of a short list of

blue-chip losers, down 2.1 per centon high volumes. Its latest pub-lished figures showed its key AHLfund shed four per cent on 15March.

The weakness in recent days hadpushed the UK index back to levelshit during the Irish sovereign debtcrisis, after that the market ralliedby more than 10 per cent over thesubsequent months, said DavidJones, chief market strategist, IGIndex.

However, Jones warned thatinvestors remained jittery and said

that it was unlikely markets wouldcontinue to rise from here on.Despite the strong rise seen

today investors nerves are still onedge, and markets remain almostcompletely news-driven by what ishappening with the Japanesenuclear plants and Libyan unrest.Until there is some form of resolu-tion to both of these, it would beprudent to expect further bouts ofvolatility, he said.

Commodities drive FTSE 100higher as prices tempt buyersTHELONDONREPORT

THENEW YORKREPORT

p


6,100

5,800

5,700

5,600

5,500

5,900

6,000

ANALYSIS l FTSE 5,696.1117 Mar

BEST OF THE BROKERS To appear in Best of the Brokers email your research to [email protected]

ANALYSIS lRAB Capital13.5

12.5

11.5


p

11.8317 Mar

RAB CAPITALJP Morgan Cazenove (JPM) has downgraded the hedge fund manager toneutral with no target price following its full-year results. The brokerthinks the firm is still mid-transition, with outflows from its special situa-tions fund expected this year that could be offset by new fund launches.JPM thinks financial risks for the company are minimal as its balance sheetremains strong, but has cut its 2011 forecasts.

ANALYSIS lCapital & Counties Properties165

155

145


p

159.7017 Mar

CAPITAL & COUNTIESEspirito Santo rates the property developer buy with a fair value of 184p.The broker thinks C&Cs Earls Court plans look promising, with planningconsent expected in December 2013. It also forecasts a 23.9m per acrevalue of the site after planning approval, giving a 82m net asset value liftto C&C. The firm has a relatively safe business despite the new project,with a loan to value ratio of just 37 per cent, the broker adds.

ANALYSIS lMitchells & Butlers370

350

330

310

290


p291.00

17 Mar

MITCHELLS & BUTLERSNumis rates the pub chain buy with a target price of 430p. The brokerurges investors not to panic over the departure of chief executive AdamFowle, since the firms strategy is firmly in place with a stable executivecommittee to back it up. Numis notes that the board has delivered positivelike-for-like sales every year since 2003, and has arguably the best qualityassets in the sector.

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PRICES of the Monopoly boardfavourite Mayfair, as well as otherprime favourites, have rocketed tonear 2007 levels (see graph below),

leading to the emergence of alternative

investment hotspots. Marylebone isbeing hailed as the new Mayfair, withresidential favourites Pimlico,Hampstead and Fulham hot on its heels.

Mayfair prices have been drasticallypushed up due to foreign investors com-ing thick and fast into the primeCentral property market with Arab,Russian and more recently, Chinese buy-ers leading the charge.

February saw a 310 per cent increasein buyers from Hong Kong as well as a320 per cent increase in Uzbekistanibuyers, according to Knight Frank. Withprices just off Curzon Street (known ashedge fund alley) being pushed up from1,600 per sq ft to 1,900 per sq ft in thelast few weeks, its not surprising thatwealthy Brits are being forced to lookelsewhere.

Despite being traditionally popularwith wealthy buyers, house prices inMayfairs new satelllites of NW3, SW1,and W1U have not seen anywhere nearas steep a climb. Even the uber-expen-sive Rosslyn Hill in Hampstead is 678cheaper per sq ft than the 1,900 per sqft generally found in Mayfair at themoment. In Fulham, buying a 4,000 sqft property is half the price of what it isin Mayfair.

Indeed, imply crossing Oxford Streettowards Marylebone (and away fromMayfair) shaves 20-30 per cent off theprice of a property.

THE PROPERTY GOLD STANDARDSo why are foreign investors still sofocused on traditional prime centralLondon? Mohamed Nurmohamed, ofChesterton Humberts, says: I think theMonopoly game has a lot to do with it,getting the purple Mayfair is sure to be astore of wealth at such an uncertaintime. In other words, Mayfair is the

gold (or purple) standard of property.Nurmohamed notes the peculiarnature of Mayfair prices: Its like anisland prices exist in a bubble, albeit a

safe one. Its sort of like Monaco.But for the Londoners who cant

afford Monopolys very best, its secondbest spots are exerting an ever-strongerpull, in part because of their ever morechic high streets. Marylebones is now anightlife hotspot, with exclusive barsand restaurants to rival those of Mayfair.A chi-chi bakery or boutique opens onHampstead High Street every week itseems.

They may not be Mayfair, but thesemore British alternatives are also prime,with prices that will reliably climb dueto limited stock, high desirability andthe diminishing prospect of attaining ahome in W1 or SW1.

Indeed: experts predict prices to risestill further in prime central London,due to the instability of the financialmarkets. Nurmohamed says: Peoplewant safety and at a time when stockmarkets are so volatile, investing in top

properties is very appealing.Mayfairs safe havens may havepushed Brits out, but the alternativesoffer relative value for money.

Passing Mayfairmight start to payoff.

Picture: REX

17CITYA.M. 18 MARCH 2011 Living | London

Changing times: moving on from MayfairWith Brits pushed outof Londons primecentral market, newareas are becomingattractive to Cityworkers, writesDonata Huggins

ANALYSIS l The increase in prime central London property prices over the last five yearsm

Source: Savills Research - Prime Central London 5m+ market sales (value)Jan 07 Feb 07 Jan 08 Feb 08 Jan 09 Feb 09 Jan 10 Feb 10 Jan 11 Feb 11

300,000,000

250,000,000

200,000,000

150,000,000

100,000,000

50,000,000

0

5m -10m

15m -20m

10m - 15m

20m +

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RIDLEY ROADPrice: 749,950The elegant yet unassuming exterior of this three-bedroom house con-ceals a family home to die for: all clean lines, sash windows and shinywooden floors. Plenty of space for entertaining, including an extensiveopen-plan kitchen ideal for dinner parties, and a decent-size garden.Contact: Foxtons on 020 8605 2900 or go to www.foxtons.co.uk.

VICTORIA DRIVEPrice: 375,000This well-presented and spa-cious two bedroom apartmentwould make an impressive firststep on the property ladder.There is access to a communalroof terrace (from which thereare panoramic views acrossLondon) and a pretty, carefullytended garden. Contact:Chesterton Humberts on 0208246 5959 or go towww.chestertonhumberts.com.

MOSTYN ROADPrice: 3,300,000A charming ivy-covered period property with nine bedrooms. Thereception space consists of a large drawing room, a further receptionroom, a dining room and a conservatory with raised flower beds.Outside, there is a heated swimming pool. Contact: John D. Wood &Co. on 020 8944 7172 or go to www.johndwood.co.uk.

Commuting: Based at the southern end of District Line,Wimbledon Station has good access to West andCentral London. There are also regular overgroundtrains to Waterloo (taking 19 minutes) and a twice-hourly service to St. Pancras (taking 40 minutes).

Education: Ursuline High for girls and WimbledonCollege for boys are two above-average comprehen-sives. Wimbledon High is a well-reputed private girls

school, while the highly academic Kings College Schoolwas recently described in glowing terms by TatlersSchool Guide as sizzlingthe most exciting day schoolin London.

Crime: One of the lowest crime rates in London.

Bars and restaurants: A medley of upmarket chainslike Caf Rouge and Carluccios, plus some great inde-pendent outlets. The Dog and Fox is the oldest andliveliest pub in Wimbledon, located at the heart of theVillage. It boasts a generous selection of ales, heartyunpretentious pub food, and a large beer garden per-fect for summertime schmoozing. The Light Houserestaurant is a safe bet for something more refined. Itsdessert menu (created by an ex-Boxwood Caf pastrychef) is a particular highlight, currently featuringtempting treats such as coconut and pineapple parfait,and a dark chocolate cheesecake with cherry sauce.

Leisure: SW19 is home to the All England Tennis Cluband the famous tennis championship that is held there

each summer. The Polka Theatre is a childrens theatre,which puts on colourful and stimulating productions.Wimbledon Common, with its picturesque windmill(now a rather quirky museum) is a lovely spot for aleisurely sunday afternoon stroll.

Shopping: The buzzy town centre is home to a largeMorrisons supermarket and two departments stores:Debenhams and Elys. Wimbledon Village boasts chi-chiboutiques and classy chains like LK Bennett, Josephand Whistles. Top fashion chain Matches originated inWimbledon and now has six shops in the village.

NEED TO KNOW | AREA INSIGHT

Living | Focus On CITYA.M. 18 MARCH 201118

WIMBLEDON BY AMY HIGGINS

SOUTHDOWN DRIVEPrice: 625,000This three-bedroom house ispeacefully located on a quietno-through road, just a few

minutes walk fromWimbledon Village. The liv-ing space is light and airy,and includes a largedining/living room. A privategarden at the rear of theproperty is small but per-fectly formed. Contact:Foxtons on 020 8605 2900or go to www.foxtons.co.uk.

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Living | The Knowledge 21CITYA.M. 18 MARCH 2011

Q.Dear Andrew, the rooms inmy home are not particularlybig. How can I make them

appear bigger?

A.Start by asking yourself if youcould just reorganise anddeclutter to create more space.

Nothing makes a small room look small-er than a cluttered, messy room, soclear it out and have a good sort. Peopleoften blame a messy room on lack ofstorage and in a small room, it isabsolutely essential that you haveappropriate storage that works well. Ifyou have awkward spaces in the room,it is worth spending some money to getsome bespoke furniture.

If you have a couple of small rooms,you may want to consider knockingthem down to open up the space, but dothink carefully if a large open space

would work for you. Alternatively, if youdont want to change the structure, thenuse focal points in other rooms to drawthe eye through the smaller room andbeyond.

When decorating choose light, softercolours which will embrace the feelingof openness, and unless the room bene-fits from very good natural light thensteer clear of darker colours. Theyabsorb light, making a room look small,while