cityam 2011-03-25

8/7/2019 Cityam 2011-03-25

1/36

Featuring the worlds greatest flat race

Investec Derby Festival 3rd & 4th June 2011 Book now: 0844 848 3256 epsomdowns.co.uk

FTSE 100 5,880.87 +84.99 DOW 12,170.56 +84.54 NASDAQ 2,736.42 +38.12 /$ 1.61 -0.01 / 1.14 -0.01 /$ 1.42-0.01 Certified Distribution31/01/11 - 27/02/11 is 107,265

Portugal on

the brink ascrisis looms

A CRUCIAL European summit inBrussels has been hijacked by the crisisembroiling Portugal after its govern-ment collapsed on Wednesday, withyields on Lisbons debt spiking to eurolifetime highs and expectations of abailout mounting.

EU leaders were meeting for a sec-ond day of crisis talks today in a bid tosolve the regions debt problems.

But instead, negotiations havebecome mired in the prospect ofanother Eurozone bailout.

Portugal is being represented at thesummit by Jose Socrates, acting asinterim Prime Minister since a failedbudget vote pushed him to resign onWednesday. He refuses to countenancea bailout despite a credit rating down-grade by both S&P and Fitch Ratingsyesterday. Yields on the countrys five-year debt yesterday surged to a high of8.4 per cent as a result.

The chaos means that prospects of anew deal for Ireland to reduce interestpayments on its rescue funds looksremote. Bill Blain, of brokerageNewedge, said: It really feels like anew crisis is developing, but in yetanother example of the euro elitesdelusional mindset, weve got Irelandbeing painted as a cheat for refusing...to cut its corporate tax!

Preliminary estimates put the costof a Portuguese bailout at around80bn (70bn). If Lisbon does need arescue, the UK could be on the hook

for up to 14 per cent of the costs.ALLISTER HEATH: P2

BY JULIET SAMUEL

EUROZONE CRISIS

BP boss (centre, left) Bob Dudley signs the 10bn deal with Rosneft, as energy secretary Chris Huhne (second left, back) looks on Pic: REUTERS

BPS historic plans to search for oil inthe Arctic were blocked yesterday byits billionaire partners in Russia.

The embattled oil giants deal withRussian explorer Rosneft has been lefthanging by a thread by an internation-al tribunal, which thwarted the pair-ing at the request of Alfa AccessRenova (AAR), a group of oligarchswho own a 50 per cent stake in BPsjoint venture TNK-BP.

AAR yesterday won the ruling inSweden that prohibits BPs $16bn(10bn) share-swap and Arctic explo-ration deal with Rosneft from movingforward.

The legal block is a big victory forthe AAR billionaires, who claimedthat a deal with Rosneft unfairly shutsthem out of the potentially lucrativebut closely-held Arctic oil fields.

Rosneft, which is part-owned by theRussian state, estimates that the off-shore fields contain 5 trillion tonnesof crude oil and 10 trillion cubicmetres of gas.

The arbitration panel agreed withAARs claim that BPs partnershipwith Rosneft breaches the rights ofTNK-BP, and enforced a temporaryinjunction awarded in London last

month. We won, said an AARspokesperson.Chief executive Stan Polovets added:

Willfully ignoring the provisions of

BPS $16BN RUSSIADEAL IS SCUPPEREDBY MARION DAKERS

ENERGY

www.cityam.comIssue 1,350 Friday 25 March 2011 FREE

the shareholder agreement was a seri-ous misjudgment by BP that hasseverely damaged the relationshipbetween the TNK-BP shareholders.

AAR owners Mikhail Fridman,German Khan, Viktor Vekselberg andLen Blavatnik said BP chief executiveBob Dudley has harmed BPs reputa-

tion in Russia.Relations between AAR and BP haveagain soured since the Rosneft dealwas struck in January. AAR accused

the firm of sabotage after it refused tosend its members of the TNK board toa last-ditch negotiation meeting inBerlin.

Dudley, who hurriedly left his job atTNK-BP in 2008 amid claims that AARhad harassed him, is said to remainfully committed to investing in

Russia.Rosneft declined to comment.BP plans to return to the arbitration

panel with a revised deal, which

would keep the 10bn share swap butleave out any mention of an explo-ration deal, one source familiar withthe company said yesterday.

The share swap deal in its currentform will expire on 14 April if notcompleted.

The arbitration ruling, announced

at 6pm London time, sent BPs sharesin New York down 50 cents beforethey recovered the losses to close up1.25 per cent at $46.81.

BUDGETREVIEW

INFLATION SET TO

DEEPEN SPENDING

CUTS P4-P5

BUSINESS WITH PERSONALITY

JOIN OUR READER PANEL ATwww.cityam.com/panel

WIN A WEEKEND IN PARISDETAILS: P2

8/7/2019 Cityam 2011-03-25

2/36

News2 CITYA.M. 25 MARCH 2011

Nato to backno-fly zoneNATO states yesterday agreed toenforce a no-fly zone over Libya butstopped short of taking control of mil-itary air strikes as discussion ragedover who would lead the operation.

Battles between anti-regime rebelsand dictator Gaddafis forces inBenghazi, Misrata and Ajdabiyah con-tinued yesterday, but Nato secretary-general Anders Fogh Rasmussen saidthe alliances mandate did notextend beyond enforcing an armsembargo and the no-fly zone, thoughit could act in self-defence.

Reported civilian casualties fromthe air strikes have inflamed tensionsbetween western states and leadersare keen to formulate an exit strategy.

French President Nicolas Sarkozysaid the Libyan peoples future was

not our problem.The future of Libya, the political

choices of Libya, including what theydecide to do with Muammar Gaddafiand his henchmen is the problem ofthe Libyans, he said.

Air strikes hit Gaddafis tanks andbrought down a Libyan fighter jetthat breached the no-fly zone butfailed to stop shelling of Misrata, rais-ing fears of a humanitarian crisis.

Further reports suggested Gaddafissons and allies were reaching out towestern governments seeking ways toend the fighting peacefully yesterday.

BYALISON LOCK

WORLD

Why we shouldnt bail out Portugal

HERES a heretical thought: lets notbail out Portugal. The near-bankruptcountry has just seen its PrimeMinister resign after losing a key voteon his governments fourth austeritypackage in a couple of years, whileFitch has just downgraded the coun-trys credit rating. Yet the talk now isof a bailout even though Portugalsparliament has just refused to takethe pain. To agree to a rescue would beto send out the wrong message andwould force hard-pressed UK taxpay-ers to underwrite part of the bill.

A rescue package would need to be

worth a minimum of60bn-70bn tocover the countrys deficit and bondrepayments for three years. Part ofthis would be drawn from theEuropean Financial Stability

Mechanism, the 60bn rescue fundwhich is activated by majority votingand of which the UK is a member.Open Europe, the think-tank, esti-mates that the UKs share would rangefrom 810m to 3.7bn under a 60bnbail-out, and 945m-4.26bn under a70bn rescue deal. The UK would alsohave to contribute to any IMF bailout.

Portugals main problem is that itsunit labour costs are way too high,making its exports uncompetitive.Being a member of the euro, it cannotdepreciate its currency (the course ofaction taken by Britain during thepast three years). It cannot inflate itswages down (a strategy that Britainappears to be secretly pursuing, withthe Office for Budget Responsibilityand others predicting that take-homepay will continue to fall after adjust-ing for inflation). It certainly cannot

print more money to buy back its ownbonds (again, unlike the UK). The onlyway Portugal can readjust, therefore,is to start reducing wages the hardway in nominal, euro terms an inter-

nal devaluation. Yet even if this werepolitically possible, it would increasethe burden of Portugals existing pri-vate and public debt: if workers earn10 per cent less, and their mortgagesremain the same, interest paymentssuddenly become more difficult tobear. Taxes would also have to rise as aproportion of lower wages to meetexisting spending commitments.

The problem, of course, is that wagecuts are nigh-on impossible inPortugal, which means unemploy-ment will keep on going up. Portugalhas one of the most regulated labourmarkets of the Eurozone countries.Without substantial reform, rigiditieswill stop any downwards pressure onreal wages. The answer must thus be acombination of measures to deregu-late the economy as well as a partialdefault on the national debt.

The EUs strategy is to throw goodmoney after bad and to pretend thatthe only thing an over-leveraged coun-try that has priced itself out of globalexport markets needs is another loan.

This approach stands no chance ofsuccess. It is also important to realisethat austerity packages alone are anecessary condition for recovery butnot a sufficient one. Radical supply-side policies are also needed to boostgrowth, not just half-hearted fiscaltightening policies that end up hikingtaxes too much rather than taking anaxe to privileges and unaffordablespending commitments.

Of course, bond investors and finan-cial institutions will suffer if the EUallows Lisbon to default and forces aproper, well-managed restructuring ofits debt. But Portugal is too small to beanother Lehman Brothers. The bail-out culture must end as must thesocialisation of risk and the nationali-sation of losses. Enough is enough.

[email protected] me on Twitter: @allisterheath

WPP could be set for a sensationalreturn to the UK after boss Sir MartinSorrell said he will recommend it toredomicile from Ireland followingthe budget.

He said in an email: Weve lookedat small print and releases. Subject todraft legislation and enactment wewill recommend a return to the UK tothe board and shareowners.

Sources close to the firm told City

A.M. the move depends on ensuringWPP will no longer be subject to thedouble taxation on foreign incomethat drove it out of the UK in 2009.

He said WPP will wait until thenew rules announced by GeorgeOsborne on Wednesday are imple-mented and says it is likely to be 2012at the earliest before it returns.

WPP, the worlds biggest advertis-ing firm, says the rate of corporationtax is not a material consideration.

Its shares closed up 1.5 per cent at757p yesterday.

BY STEVE DINNEEN

ADVERTISING

WPP set for return to UKWPP boss Sir Martin Sorrell says he will recommend a UK return to shareholders

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 Alice Hepple

CommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

Head of Distribution Nick Owen

Editorial StatementThis newspaper adheres to the system ofself-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]

Dictator MuammarGaddafi continues tobattle Libyan rebels inMisrata, Benghazi andAjdabiyah

ONE FREELUXURY

WEEKENDTO PARIS

FOR TWOAPPLY TO JOIN OUR READERS PANEL.

In September, well put panellists

who have responded to at least 80 per

cent of surveys into a prize draw.

Full T&Cs available on request.

www.cityam.com/panel

WIN

BARCLAYS AT CENTRE OF LIBORINQUIRYBarclays is emerging as a key focus ofthe US and UK regulatory probe intoalleged rigging of benchmark inter-bank lending rates that are the refer-ence point for $350,000bn in financialproducts, people familiar with theinvestigation said. Investigators areprobing whether communicationsbetween the banks traders and itstreasury arm, which helps set the dailyLondon interbank offered rate, orLibor, violated Chinese wall rulesthat prevent information-sharingbetween different parts of the bank.

EX-INTEL MANAGER TELLS OF PROFITFROM INSIDER TIPSA former Intel manager testified thathe earned more than $150,000 intrading profits after his longtime

friend, Galleon hedge fund founderRaj Rajaratnam, learnt information

about the takeover of outsourcingcompany PeopleSupport.

SIEMENS TO SPLIT INDUSTRY ARMSiemens is poised to split its vastindustry business in two in order totap into the fast-growing demand forinfrastructure in the worlds largestcities. At an extraordinary superviso-ry board meeting next Monday, PeterLscher, the chief executive ofEuropes largest engineering con-glomerate, is expected to present aplan to shuffle parts of its industrybusiness into a newly created infra-structure sector, two people close tothe situation said.

BUFFETT SET TO MEET INDIANINSURANCE HOLDERSWarren Buffett, the chairman ofBerkshire Hathaway, will on Fridaymeet his new insurance policy hold-ers in the Indian capital following hiscompanys entrance into one of the

fastest-growing retail markets in theworld.

BUILDERS WIN APPEAL AGAINSTRECORD FINESThe Office of Fair Trading sufferedanother embarrassing blow yesterdaywhen the Competition AppealTribunal slashed more record finesthat it had imposed on constructioncompanies accused of illegal bid-rig-ging. Galliford Try had its finereduced from 8.33m to just under1.4m. Five other construction com-panies also had their fines cut bynearly 5m in total.

THREADBARE NEST WILL OFFER LOWEARNERS NO HOPE OF A BIG PENSIONThe flagship pension fund being setup to nudge millions of low to moder-ate earners into retirement saving forthe first time is aiming for a mini-mum investment return no moreambitious than preserving the real

value of what employees and employ-ers put in.

HUFFINGTON POST TO LAUNCH UKEDITION THIS SUMMERThe Huffington Post will launch a UKedition this summer, said its co-founder Arianna Huffington. MsHuffington said one reason sheagreed to sell the news website to AOLfor $315m (195m) last month was toprovide the financing to expand intointernational markets, such as the UKand Canada.

HAMMERSON PLANS 350M CITYTOWERHammerson has submitted plans for anew 350m residential tower andmajor office development that willdrive expansion of the Square Milebeyond its traditional boundaries. TheFTSE 100 company has revised its orig-inal plans for Bishops Place onShoreditch High Street and now aims

to develop a residential tower with243 apartments.

INVESTOR POOL LOSES MAJORITYCONTROL OF ROCHEThe Swiss family that has controlleddrug giant Roche Holding AG fordecades said one family member hasdropped out of the group's votingpool, meaning that the family poolhas lost majority voting control of thecompany. The pool, which unites thepublicity-shy descendents of compa-ny founder Fritz Hoffmann-La Roche,now hold 45.01% of Roche votes.

FANNIE REPORT WARNED OFFORECLOSURE PROBLEMS IN 2006Fannie Mae was warned in a 2006internal report of abuses in the waylenders and their law firms handledforeclosures, long before regulatorslaunched investigations into themortgage industry's practices. Thereport said foreclosure attorneys in

Florida had routinely made falsestatements in court.

WHAT THE OTHER PAPERS SAY THIS MORNING

8/7/2019 Cityam 2011-03-25

3/36

SHARES in BlackBerry makerResearch in Motion (RIM) fell 12 percent in after hours trading yesterdayafter it cut its earnings forecast forthe current quarter due to heavyinvestment in its new products.

Ontario-based RIM delivered a$934m (572m) net profit or$1.78 earnings per share inits fourth-quarter, whichended in February, up31 per cent from$710m or $1.27 pershare a year earlier.

But it said prof-its in the currentquarter, endingin May this year,would fall to$1.47-1.55 pershare as itincreased itsR&D spend onits new PlayBooktablet ahead ofits 19 Aprillaunch.

Co-chief executiveJim Balsillie said the

investment was laying a strong foun-dation for RIMs expanding marketopportunity. But the market viewedit as revealing deep concerns aboutthe performance of its new productsas it tries to keep up with powerfulrivals Google and Apple, with manyfearing it cannot maintain its market-

leading position.

BYALISON LOCK

TECHNOLOGY

CREDIT rating agency Moodys down-graded 30 of Spains smaller banksyesterday over concerns the nationshigh sovereign debt may prevent itfrom bailing them out in future.

It cut the ratings of 15 banks sen-ior debt and deposit ratings by twonotches and five by three or four, itsaid, with most banks outlook nega-tive. The move reflects the removal ofthe extraordinary level of systemicsupport of up to six notches thatMoodys had built in to their ratings.

The re-ratings do not affect Spains

three largest banks, Banco Santander,BBVA and La Caixa, it said.

BlackBerry

maker warnsof profit fall

SHARES in management consultancyAccenture rose 5.3 per cent to $54.73(33.55) in after hours trading yester-day after it said high client demandwould boost its full-year revenue andearnings forecasts.

Bookings in stood at $6.98bn, upfrom $6.3bn the previous quarter,chief executive Pierre Nanterme said.

Revenue in the second-quarter, tothe end of February, rose to $6.1bnfrom $5.2bn a year earlier while netincome rose to $566m or 75 cents pershare from $462m or 60 cents pershare a year earlier.

Accenture expects full-year earn-ings per share to reach between $3.22and $3.30 -- higher than a Decemberforecast of $3.08 to $3.16 and abovethe average analyst forecast of $3.14per share.

Accenture boostsearnings forecasts

ROADSIDE rescue business RAC hasbeen put up for sale by its insuranceowner Aviva as it divests non-coreparts of the company.

The RACs value has been placed atabout 600-700m, just over half the1.1bn Aviva paid for it in 2005, aftera series of sell-offs of its parts, includ-ing the BSM driving school. At Avivasresults presentation earlier thismonth, chief executive Andrew Mosssaid it would sell non-core assets thisyear to focus on 12 key markets.

JP Morgan is the bank believed to

have been appointed to sell the busi-ness.

Aviva puts RACarm up for saleMoodys cutsSpanish ratingsBANKING

INSURANCE

JAPANESE noodlebar chainWagamama wasyesterday gobbledup by private equi-ty firm Duke Streetfor 215m, sourcestold City A.M.

Seller Lion Capitalhad owned thechain since 2005,more than dou-bling its UK pres-ence. HuttonCollins and lendersGE Capital, Lloydsand Investec pro-vided additionalcapital to fund thedeal.

BYALISON LOCKCONSULTING

News 3CITYA.M. 25 MARCH 2011

WAGAMAMA SNAPPED UP

RIM forecasts

$5.2BN-$5.6BNrevenue for first-quarter

of fiscal 2012 compared to$5.6bn consensus

estimates

52.3MBlackberry shipmentsfor fiscal 2011, up

43 per centon a year ago

8/7/2019 Cityam 2011-03-25

4/36

Barclays Rate Promise. * Base rate means the Bank of England Bank Rate. As part of this promise, any upwards changes will be reflected in your interest rate within 30 days of the Bank of Englandannouncement; and, we will give you at least 60 days advance personal notice of any downwards changes in your interest rate following a change in the base rate. Golden ISA Issue 3 is a cashISA. Offer may be withdrawn at any time. Open from 1. Conditions and ISA eligibility criteria apply. Transfers-in cannot be made from existing ISAs. ISA allowance can change. The interest rate is variableand interest is paid monthly. Rates correct at date of print 09/03/2011. AER (Annual Equivalent Rate) illustrates what the interest rate would be if interest was paid and compounded once each year.Tax free indicates that interest is exempt from UK income tax provided all ISA conditions are met. To maintain high quality service and for security reasons we may monitor or record calls.Barclays Bank PLC is authorised and regulated by the Financial Services Authority (FSA). Registered No 1026167. Registered Office: 1 Churchill Place, London E14 5HP.

Get a high rate withBarclays new Golden ISAGolden ISA Issue 3

Barclays Rate Promise:The new Golden ISA Issue 3interest rate will follow thebase rate if it goes up ordown until 1st March 2012*.

With the added benefit ofinstant access to your money.

3.25% AER(variable)

3.20%Tax free p.a. (variable)

Includes a fixed-rate12 month introductorybonus of 1.00% tax free p.a.

Visit us in branchCall 0845 301 0342barclays.co.uk/cashisa

HIGH inflation will deepen spendingcuts that the government is bankingon to reduce the UKs deficit, theInstitute for Fiscal Studies (IFS) saidyesterday.

While departmental spending, inreal terms, allowing for inflation, wasdue to be cut by an average of 11.2 percent over four years according toOctobers figures, cuts are now esti-mated at 11.7 per cent.

Consumer price inflation has shot

up to 4.4 per cent in recent months,with the Bank of England concernedit could soon exceed five per cent.

In November the Office for BudgetResponsibility (OBR) predicted infla-tion of 2.8 per cent for this year, yetwas forced to revise the forecast up to4.2 per cent on Wednesday.

The governments spending plansare uncomfortably dependent onthe OBRs wider forecasts and judge-ments on the economy, the IFS direc-tor Paul Johnson said, referring to itsGDP forecasts and estimates of theeconomys output gap.

In a statement released to coincidewith chancellor George OsbornesBudget, the OBR admitted that dan-ger to the deficit reduction plan.

The biggest threat is the possibili-ty that we have over-estimated theamount of spare capacity in the econ-omy, now or in the future, it said.

If the output gap was roughly 1.5per cent of potential output smallerthan our central estimate then thegovernment would no longer be oncourse to balance the cyclically-adjusted current budget in five yearstime.

Soaring inflation willworsen cuts, says IFSBY JULIAN HARRIS

UK ECONOMY

Budget Review4 CITYA.M. 25 MARCH 2011

CITY VIEWS: WHAT DID YOU MAKE OF THE BUDGET?Interviews by Phoebe Torrance and Eric Wilkens

Osborne already set out his plans earlier this yearand he should stick to them. He did outline somegood proposals for businesses and drivers. The

budget is better long term because it will take awhile for regulatory changes to kick in.

JULIAN PHILLIPS | MITSUI SUMITOMO

"The 1p off of petrol wont make any real differ-ence, but the budget will improve the long-termforecast of the country. There is nothing in thebudget that impresses businesses, though. Idrather theyd cut more taxes."

COLIN FANTHAM | XCHANGING

It was a very positive budget, with tax changesfor corporations welcome, particularly the drop incorporation tax. Its a very good long-term plan,but George Osborne had his hands tied and realis-tically could do very little.

DAVID PORTER | SMARTSTREAM

The new budget is slightly good for lower incomeearners and smaller families, but worse for peoplewho make more money, who can expect to bepaying more in taxes. But with the current situa-tion, everyone seems to be suffering.

ROB WHITELEY | C.V. STARRBRITAINS triple-A credit rating couldbe in doubt if strong growth fails todeliver the governments deficit reduc-tion targets, the ratings agencyMoodys said yesterday.

Slower growth combined withweaker-than-expected fiscal consolida-tion could cause the UKs debt metrics

to deteriorate to a point that would beinconsistent with a AAA rating,Moodys said in a statement.

The governments fiscal watchdog,the OBR, was forced to revise down itsgrowth forecast for this year to 1.7 percent this week, from 2.1 per cent.

However, it still expects annualgrowth of 2.8 to 2.9 per cent from 2013to 2015.

Fellow rating agency Fitch issued a

warning over the growth forecasts,and subsequently its credit rating forthe UK.

The medium-term economic fore-casts still appear relatively optimistic,it said on Wednesday. If the economicrecovery proves weaker than project-ed, future Budgets may require addi-tional measures to ensure that thegovernment meets it ambitious fiscaltargets, it said.

Growth key to UKs credit ratingBY JULIAN HARRIS

UK ECONOMY

8/7/2019 Cityam 2011-03-25

5/36

Budget Review 5CITYA.M. 25 MARCH 2011

UK OIL explorer Premier Oil talkeddown the effect of the governmentsshock North Sea fuel profit tax yester-day, as it reported record profits of$129.8m (80.5m).

The firm has $1bn of taxallowances linked to its purchase ofOilexco, which it bought out ofadministration in 2009, chief execu-tive Simon Lockett said, meaning itdoesnt have to pay UK taxes until atleast 2015. The positive side of it is

that were still quite acquisitive and Iguess that means that youll getassets which are going to be a bitcheaper going forward, he added.

The FTSE 250 component said itremains on target to produce 75,000barrels of oil per day by 2012, thanks

to new discoveries in its Catcher f ieldin the North Sea.

Analysts re-examined all oil firmswith exposure to the North Sea yester-day. RBS cut Premiers net asset valueforecasts by two to four per cent butleft profit predictions untouched.

Premier shares gained four percent yesterday to close at 19.88.

Premier playsdown NorthSea oil charge

High-energy industrieshit by carbon price floor

ENERGY policy changes introduced inthe Budget will heap costs on energy-intensive industries, pressure groupswarned yesterday.

Energy-intensive manufacturers ofproducts such as steel, glass and paperwill see their costs soar as the carbonprice floor rises from 16 per tonne ofCO2 today to 30/tonne by 2020.

Jeremy Nicholson, director of theEnergy Intensive Users Group, saidfirms had very great concernsabout the tax. It threatens the com-petitiveness of UK manufacturingcompared to the rest of Europe andEurope is the only part of the world

that already subjects its companies toa carbon trading scheme, he said.

Chancellor George Osborne saidfirms would be shielded from pricerises by a wider discount to theClimate Change Levy, another tax onenergy use. But the TaxPayers Alliance(TPA) said the change was deeply mis-leading as the discount wasdecreased in 2009s Pre-Budget Reportand Osborne had simply returned tothat level. Those industries have onlyhad their original position.restoredand this does not mitigate the sub-stantial increase in costs resultingfrom the carbon price floor, said TPAdirector Matthew Sinclair.

BYMARION DAKERS

ENERGY

MANUFACTURING

OSBORNE WATCHING OIL FIRMS LIKE A HAWK

CHANCELLOR George Osborne said yesterday he will keep a close eye on the UKs petrolproviders to see that they pass on the 1p per litre cut in fuel duty to consumers. We willbe watching like a hawk to make sure that motorists get the benefit of the budgetchanges and make sure that there's no funny business, he told ITVs Daybreak. He isfunding the changes through a 12 per cent tax hike on North Sea oil producers profits.

NEWS | IN BRIEF

Germany drives Eurozone forwardBusiness activity in the Eurozone contin-ues to grow, fresh data revealed yester-day. The purchasing managers indexcame in at 57.5 for March down from58.2 in February, but still recording robusteconomic growth. The data suggest thatEurozone GDP rose 0.8 per cent in the

first-quarter of the year, but a rise of per-haps 1.5 per cent is signalled forGermany, said Chris Williamson ofMarkit, which runs the survey. Growth inthe periphery remained very subdued incomparison, he added. Input pricesjumped at their steepest rate since July2008, the survey said. Meanwhile, busi-ness confidence hit a three-year high inFrance, according to a separate survey.

Drop in US durable goods ordersUS durable goods orders decreased by$1.9bn (1.17bn), or 0.9 per cent, to$200bn last month after an upwardlyrevised 3.6 per cent in January, theCommerce Department said yesterday.Meanwhile, initial claims for state unem-ployment benefits slipped 5,000 to a sea-sonally adjusted 382,000. The four-weekmoving average of unemployment bene-fits dropped to its lowest level in morethan two and a half years.

Banks Dale: inflation could stickBank of England rate setter Spencer Daleyesterday defended his vote for higherinterest rates. Inflation pressures couldprove to be more stubborn than expected,Dale said.

ANALYSIS l Premier Oil

p

10 Jan 28 Jan 17 Feb 9 Mar

2,150

2,050

1,950

1,850

1,988.0024 Mar

FACT CHECKER |WITHMARION DAKERS

THE CLAIM: THE SHOCK RISE IN SUPPLEMENTARYTAXES FOR OIL FIRMS FROM 20 TO 32 PER CENTWILL MAKE PETROL PRICES AT THE PUMPS RISE

The chancellor said he will pay for a newfuel price stabiliser and 1p fuel tax cutwith a massive hike for companies produc-ing oil in the UK from the previous 20 percent up to 32 per cent from midnight yes-terday.Will motorists feel the benefit of the newtax scheme, or will oil firms simply passthe extra cost on at the pumps?

THE OIL MARKETThe oil market is international, and theproducer doesnt set the price the buyerdoes, Ernst & Youngs energy tax expertDerek Leith told City A.M. Only an organi-sation like OPEC or a large oil-rich nationlike Saudi Arabia can have any influence onthe price, or a surprise event like whats

happening in Libya.North Sea oil companies dont produce fuelin nearly enough quantities to influencemovements in the wholesale price of oil.Indeed, even if they threaten to halt pro-duction altogether in protest, the overallmarket is unlikely to suffer a big hit.

INTEGRATED COMPANIESFirms like BP, which have stakes in everypart of the oil business from the firstexploration, to refineries, to the garageforecourt, still face stiff competition fromthe supermarkets when it comes to sellingpetrol.George Osborne has also pledged to watchfirms like a hawk to prevent any furtiveprice hikes.

IMMEDIATE BENEFITRMI Petrol, the trade body that representsalmost 6,000 petrol forecourts in the UK,said the combination of the 1p fuel duty cutand the cancellation of the planned 5pinflation-linked rise will take effect at thepumps within a few days. However, it addsthat the soaring price of oil has alreadyadded 2p to the wholesale price of unlead-ed petrol this week.

MOTORISTS WONT FEEL THE PINCHBUT MIGHT BE HIT BY OTHER RISESThe global oil market means a taxin the UK wont affect the marketprice of fuel and therefore petrol.However, the chancellor can do lit-tle to prevent events in the MiddleEast continuing to pressure petrolprices.

THE VERDICT |

8/7/2019 Cityam 2011-03-25

6/36

THE insurance industry voiced con-cern yesterday at European regula-tors plans to run a new series ofstress tests on more than 200 com-panies across the region.

The second round of tests to checkhow well-capitalised insurers areagainst different risks was launchedby the European Insurance andOccupational Pensions Authority on

Tuesday. The new tests will be basedon the planned Solvency II legisla-tion, which requires insurers to holdmore regulatory capital against dif-ferent risks. They will be carried outby the Financial Services Authorityfrom now until the end of May.

But the Association of BritishInsurers branded the tests a distrac-tion from vital regulatory changethat would put extra strain on firmsracing to comply with other require-ments that are still to be finalised.

Rather than demand stress tests onthe basis of a yet to be agreed frame-work, it would be better to focus onfinalising the proposed rules and help-ing the industry put the infrastructurein place to make them work by 2013,said ABI director Peter Vipond.

PwC partner Philippe Guijarro saidthe tests would put a huge strain onthe industrys already stretchedresources while the unfinishednature of Solvency II at present mayrender the results unreliable.

Stretched insurers hit backat new EU stress test plansBYALISON LOCKINSURANCE


SWISS RE sought to reassure investorsworried about its large catastrophelosses this year with a substantial div-idend hike yesterday.

The reinsurer, which scrapped itsfull-year profit target this week aftertaking more than $2.5bn (1.53bn) inlosses from disasters in Japan andNew Zealand, has proposed raising its2010 dividend by 175 per cent.

The Swfr2.75 (1.86) a share pay-

ment, up from one Swiss franc ashare in 2010, will be paid on 26 April2011 if shareholders approve it at itsannual general meeting on 15 April.

The board said it reflected SwissRes improved capital base and prof-itability, as its economic net worthgrew 11 per cent to $30.7bn in 2010.

Swiss Re has also proposed buyingback 95m of its 180m authorisedshares and raising capital in future byissuing convertible bonds to the valueof 50m shares.

Swiss Re hikes itsdividend by 175pcINSURANCE

INVENSYS shares tanked yesterdayafter it announced the shock depar-ture of its chief executive UlfHenriksson.

The engineering company sank tothe bottom of the FTSE 100 leader-board amid speculation Henrikssonhad finally been axed for appearingto fuel speculation last Novemberthat Invensys was a possible targetfor China Southern Rail.

The indiscretion caused analmighty row and the board wasforced to rush out a statement deny-ing it was involved in any discus-sions.

Sources close to the company toldCity A.M. Henriksson had no say in hisdeparture, with the decision beingsolely down to the board.

They suggested the decision wasbased on the belief the former bosshad taken Invensys as far as he could.When he took control of the embat-tled firm in July 2005 its share price

was 124p. The price before his depar-ture was 357p.

However, its shares dropped 4.5 percent yesterday to 341.2p.

Henriksson has been replaced byformer chief financial officer WayneEdmunds.

Invensys chairman Sir Nigel Ruddsaid: I am delighted Wayne hasagreed to take on the role of chiefexecutive. I would like to thank Ulffor his hard work and achievements.We wish him well for the future.

The firm says it expects its resultsto be broadly in line with forecasts.

Shock exit of

Invensys bosshurts sharesBY STEVE DINNEEN

TECHNOLOGY

ANALYSIS l Invensys

p


370

360

350

330

340

320

341.2024 Mar

ULF Henrikssons tenure at Invensys came to anabrupt end yesterday after its board shocked the mar-ket by unceremoniously shepherding him out of thedoor.

During his time at the engineering giant he hasattracted criticism and praise in almost equal meas-ure. His supporters point to the steady rise in thefirms share price from 124p when he took thereins in 2005 to 357p before his departure.

However, critics argue Henriksson, knownas a turnaround specialist, was a poor fit forthe firm. They were given ample ammuni-tion after he appeared to stoke rumoursthat China Southern Rail could buy part ofthe firm.

Its shares tanked and it appears that hiscard may have been

marked from then on.

Henrikssons rein ends

ULF HENRIKSSON

BY STEVE DINNEEN

TECHNOLOGY

8/7/2019 Cityam 2011-03-25

7/36

8/7/2019 Cityam 2011-03-25

8/36

Phones provided at no additional cost on a 24 month minimum term contract. Subject to availability. Connection subject to status, credit check, direct debit and 24 month minimum term contract. Calls/texts made in UK to standard UK landlines/mobiles only. Calls to most 08 numbers cost 20.4p/min,or 35.8p/min for 0871. Calls to numbers starting 070 cost 51.1p/min. For a full list of charges for these numbers, see o2.co.uk/specialnumbers. Inclusive UK mobile internet monthly allowance is from 500MB depending on the tariff you choose. Excessive usage policy and terms apply, see o2.co.uk.

BlackBerryCurve9300

BlackBerryBold9780

Were better, connectedCall 0800 081 0496Visit o2.co.uk/shop or any shop

500 minutes, unlimited texts, 500MB data,

inclusive BlackBerry Messenger

Free BlackBerry

on a 24 month contract

25.53 a month

Exclusive

colour

NEXT yesterday gave a grim view of theconsumer outlook while warning thatits prices will be hiked to reflect thesurging cost of cotton.

The retailers spring and summer col-lection will see average prices rise by sixper cent.

Next reported a nine per cent rise inpre-tax profits to 551m in the year end-ing January. Cost savings boosted thefigures as the chain suffered a four percent fall in same-store retail sales.

Next forecast profit for the new finan-cial year to be between 520m and570m, in line with current marketexpectations.

Chief executive Simon Wolfson said:Retailing will feel like walking up thedown escalator we will have to workhard to stand still. Increases in VAT, cot-ton prices and labour rates in many ofthe countries in which we source meansthe price of our products are rising at atime when our customers are experienc-ing increased demands on theirincome.

Sales at Nexts retail division fell by 2.3per cent to 2.2bn, but revenues at NextDirectory, the home shopping catalogueand website, rose by 7.1 per cent to935.5m. Next Directory now accountsfor 27 per cent of total turnover and 40per cent of group profits. Despite Nextswarning over cautious consumers, ana-lysts gave a positive reaction to theresults and the companys share pricejumped four per cent to 2,043p.

Verdict retail analyst Maureen Hintonsaid: Its strategy is to give its investors agood return rather than going for con-stant growth in revenue. This is aided byits control of costs.

Next in bleaktrade update

Next chief executive Simon Wolfson warned prices would rise due to soaring cotton costs

BY JOHN DUNNE

RETAIL

Consumer News8

ANALYSIS l Next

p


2,200

2,100

2,000

1,900

2,043.0024 Mar

8/7/2019 Cityam 2011-03-25

9/36

Consumer News 9CITYA.M. 25 MARCH 2011

KINGFISHER yesterday unveiled a five-year plan to transform the businesswith massive growth and a campaignto breathe new life into the flaggingUK DIY market.

The bold blueprint was unveiled asthe B&Q owner reported a 22.5 percent rise in pre-tax profits to 670min the year to 29 January.

However total sales remained at10.5bn while there was a three percent drop in like-for-like sales in the

UK and Ireland.Chief executive Ian Cheshire said

the company, which trades under thename Castorama in France, said morethan 1,100 new outlets could beopened, with an expansion intoChina and India being eyed.

We are stepping up a gear. Wethink we have more to come from ourmarkets. He said the French marketwas proving more resilient as individ-uals had more savings. Meanwhile, ascheme to train people in DIY skillswould help B&Q.

Kingfisher also raised its full-yeardividend by 28.5 per cent to 7.07p.

Kingfisher inplan to boostglobal growth

UKs high street sales slipafter the January bounce

RETAIL sales dropped more sharplythan expected in February, officialdata showed yesterday.

Compared to January, sales weredown 0.8 per cent, the Office ofNational Statistics (ONS) revealed.

Stripping out the increase in autofuel sales, then the figure was downone per cent on the month, notedAlan Clarke, economist at BNPParibas.

In January, these core sales wereup 1.1 per cent compared toDecember.

A weak number always lookedlikely on the back of the plunge in

consumer confidence, and pricesthat are rising at double the pace ofhousehold income growth, Clarkeadded.

The result left the annualised risein sales at just 1.3 per cent, in termsof volume.

On a comparison of the last threemonths with the previous threemonths, which helps iron out volatil-ity, sales were narrowly up 0.1 percent.

The average level of retail sales vol-umes in January-February is 0.5 percent above the average in the lastthree months of 2010, saidCitigroups Michael Saunders.

BY JOHN DUNNE

RETAIL

RETAIL

Wake up and smell the instant coffeeCHRISTMAS 2010 will be remem-bered as Britains last big spendingsplurge. What better way to endalmost two decades of unsustain-able, debt-fuelled largesse than witha massive turkey dinner and tonnesof presents? Supermarkets couldbarely believe it as families spentmore than ever before on rich foodand booze; John Lewis notched uprecord sales. Austerity, consumersmuttered disbelievingly as theyrepeatedly tapped in their chip-and-pin code? What austerity?

Alas, it couldnt last. As the NewYear dawned, consumers woke upand smelled the coffee and it wasthe cheap, freeze-dried stuff. JustinKing, the J Sainsbury boss, spoke formost retailers when he said post-Christmas sales had fallen signifi-

cantly.It was always going to be like this.

The only real surprise is that it tookso long for the recession to catch upwith retailers. Take J Sainsbury,which has notched up five consecu-tive years of growth in margins,sales and profits despite theslump. In 2007, pre-tax profits were339m, rising to 434m in 2008,519m in 2009 and 610m in 2010.There is simply no evidence of theworst recession in Britains peace-time history. Tesco tells a similarstory, with profits rising from2.653bn in 2007 to 2.803bn in2008 and 2.917bn 2009. Again, theslump is nowhere to be seen.

Of course, some weaker rivals likeZavvi and Woolworths have fallen bythe wayside, providing a fillip for

others, especially the supermarkets.That has helped delay the day ofreckoning for some, although con-sumers have also struggled to acceptthat the debt-fuelled game is up.

Hiding is no longer an option.Spiralling inflation stoked by highercommodity prices, hiked taxes, con-strained consumer credit and fearover public sector cuts have com-bined to create a lethal brew.Yesterdays retail sales might havebeen worst than expected, butthings are going to get much, muchuglier. The party on the high streetis well and truly over.

[email protected]

BOTTOMLINEAnalysis by David Crow

ANALYST VIEWS: HOW WILL THE MARKETREACT TO THE GROWTH PLAN ? Interviews by John Dunne

CAROLINE GULLIVER | EXECUTION NOBLE

This is a reassuring set of results. An encouraging earnings-per-sharetarget implies that management believe they can generate consistentgrowth despite evident macroeconomic pressures. Buy.

MATTHEW MCEACHRAN | SINGER CAPITAL MARKETS

While we do not expect any changes to current year forecasts webelieve the market will react positively to the new stage of the develop-ment plan. They remain excited about growth prospects.

FREDDIE GEORGE | SEYMOUR PIERCE

We would like to be more positive on the stock, but in view of the diffi-cult economic outlook for the UK market and the likely increase in interestrates we choose to remain neutral for now.

Kingfisher chief executive Ian Cheshire will mastermind a huge revamp at the company

ANALYSIS l Kingfisher

p


280

260

240

220

261.4024 Mar

NEWS | IN BRIEF

Clinton Cards profit plungesClinton Cards yesterday posted a 70 percent fall in half-year profits to 11.7m.The greetings card and gift retailer saidthe tough retail environment will contin-ue to hit trade throughout 2011. Clintonis pinning its hopes on strong perform-ances in its main trading periods, includ-

ing around Mothers Day. The companyalso said it would be revamping some ofits stores in a bid to attract more cus-tomers.

M&S signs up ConranMarks & Spencer yesterday unveiled apartnership with the founder of house-hold furnisher Habitat as part of a moveto modernise its Home department.British designer Sir Terence Conran willoversee the design of furniture, bedding,lighting and kitchenware in the contem-porary section. M&S chief executiveMarc Bolland is overseeing the revampwhich is part of his shake-up of ranges.

Ted Baker to open China storeFashion group Ted Baker is to followother British brands into China, in anattempt to tap into the countrys grow-ing appetite for luxury Western goods.The announcement came as the compa-

ny posted healthy annual profit figures.For the year to 29 January the groupreported a sales rise of 14.7 per cent to187.7m. Pre-tax profit lifted from19.5m to 24.2m. Groups includingBurberry and Mulberry already operatein the country.

8/7/2019 Cityam 2011-03-25

10/36

worker in one of the poorest areasof East New York, Blankfein was the

first in his family to go to college,and 35 years on hes sitting pretty atthe top of one of the worlds biggestinvestment banks.

And with speculation rife yester-day that a Londoner MichaelSherwood is being positioned totake Blankfeins role in the future,it seems that Goldman is already onthe lookout for the capitals nextgeneration of banking talent.

SURREALISM

AND THE CITYAS springtime comes to London,City workers taking the opportunityto top up their vitamin D intake byheading outside over lunchtimemight just stumble across some-thing a bit strange.

From 1 April Dalis famous five-foot Alice in Wonderland statue willmake her home outside Moorhouse the Norman Foster-designed officedevelopment thats sprung up onthe corner of London Wall andMoorgate.

Since 1994 Alice, who is cast inbronze and was made in 1977, hasbeen travelling the world, stoppingoff in Florence, Rome, Singaporeand Hong Kong before ending up inthe heart of the City.

The outdoor installation will beaccompanied by an indoor exhibitof several more iconic Dali sculp-tures, plus prints and collagesincluding Tarot Cards.

The exhibition will run until 30June, after which Alice will leavethe City for an as yet unknown des-tination. Curiouser and curiouser

A NELL OF A TESTWITH this weekends annualBoat Race providing the sport-ing entertainment in SouthWest London, an alternativeevent in the capitals cen-tre is looking to attractwannabe actionheroes keen toprove their physicalprowess.

Budding super-men (and women)can join NellMcAndrew (right) andtest their mettle army-style on Saturday, whenLondons first SoldierChallenge traverses the capi-tals streets and offers aseries of typical military tri-als to civilians.

Kicking off at 11am onSaturday from Waterloo

Station, the course will lead partici-pants through a series of physical

and mental tasks designed to mimicfive phases of a soldiers life: recruit-ment, basic training, combat,adventure training and teamwork.

So if you didnt quite make theIsis or Goldie crews, but arent yetcontent to retire to the riversidewith a pint of Pimms, the SoldierChallenge could provide the perfectmiddle ground to work up andsweat and raise cash for a goodcause.

SINGING THE NEWSIF, like The Capitalist, youre feelinga little weary from trying to digestthe impact of George Osbornes100-page Budget yesterday, thenyoull be pleased to hear that helpis at hand.

Yesterday, South Wales account-ancy firm UHY Peacheys held itsannual Budget breakfast to helpclients understand the mainpoints for business, and senior taxpartner Steve Theaker (above) hitupon a unique way of getting hismessage across.

Taking to the stage withhis trusty guitar, Theaker

took the words out ofJohn Lennons mouth ashe sang Imaginetheres no Budget; noth-ing to comment on

before launching intoa deconstruction ofOsbornes sopho-more effort.

Despite thec r i n g e w o r t h ynature of the per-formance, TheCapitalisttips her hatto Theaker nonethe-less we dont imag-ine there are toomany accountantswho could sing thephrase significantaccelerated structuraldeficit reduction intune.

The video, needlessto say, is on YouTube.

BORIS SEEKS THE NEXT BLANKFEININ LONDONS POOREST POSTCODESANY City recruiters out there with anose for talent will be interested tohear about the latest initiative fromBoris Johnsons Fund for London ascheme to help disadvantagedyoung Londoners have a better shotat the UK jobs market.

Young London Working providesa central employment hub to con-nect jobless young people withtheir potential employers.

The scheme will give some of the22,915 Londoners between the agesof 18-24 that are currently claimingJobseekers Allowance access totraining, mock interviews, mentor-ing and work experience to easetheir route into positions thatwould have otherwise seemed unat-tainable.

The scheme is sponsored byinvestment bank Goldman Sachs,

agreeing with the Mayor ofLondons assertion that harness-ing the next generation instead ofsquandering their talents is in allour interests.

Its a scheme that should be closeto the heart of Goldman Sachs chiefexecutive Lloyd Blankfein, a classicexample of the American Dreamcome true.

Born the son of a Brooklyn postal

Salvador Dalis Alice in Wonderland is coming to the City of London

The Capitalist10

An accountants unique take on the Budget

EDITED BY

ELIZABETH FOURNIERGot A Story? [email protected] The Capitaliston Twitter: @citycapitalist

CITYA.M. 25 MARCH 2011

8/7/2019 Cityam 2011-03-25

11/36

8/7/2019 Cityam 2011-03-25

12/36

12

THE CHIEF executive of troubled fireengine provider AssetCo resignedwith immediate effect yesterday atthe request of the board

John Shannons ousting is the lat-est twist in a rescue saga that sawAssetCos investors force through a16m emergency share placement onWednesday.

Shannon, AssetCos largest share-holder after leading a managementbuyout in 2005, had clashed withinvestors after blocking the fundrais-ing on Monday, plunging the compa-nys future into doubt and causing itsshares to be suspended.

In a hastily-arranged court hearingthe evening after the companys gen-eral meeting, shareholders weregranted an injunction to force

Shannon to comply with the rescueplans terms. It included a pledge

from three key investors to supply10m if they could appoint a newexecutive chairman.

Following the request of the boardJohn Shannon has today resignedwith immediate effect, AssetCo saidin a statement.

Tudor Davies is now leading thecompany as executive chairman. TimWightman has stepped down as chair-man and Christopher Mills has joinedthe board as a non-executive director.

Shareholders were said to havegrown frustrated with Shannon sinceAssetCo admitted in February it wasstruggling to raise 4m in short-termdebt while it refinanced a 50m long-term loan facility. The problemsquickly grew, leading to a proposed8m and then 16m share placement.AssetCo now believes it requires anextra 3-4m of working capital inaddition to the 16m just raised.

AssetCos shares closed 3.6 per centdown at 13.5p on the news.

AssetCo chiefousted after

court defeatBYALISON LOCK

SUPPORT SERVICES

NEW PROPERTY companyAlmacantar could turn somefloors of the Centre Point towerinto luxury flats, after buying thetower out of administration.

Almacantar, set up last year byformer Land Securities executiveMike Hussey, has exchanged con-tracts on the Grade II-listed towernear Tottenham Court Roadunderground station.

The firm did not say how muchit paid for the tower, home to theCBI and oil firm Saudi Aramco,but previous reports have put theprice at 120m.

In the medium term, weexpect the building to provide

exceptional office accommoda-

tion at a point when demand forWest End offices will be high andcompetitive support low, saidHussey in a statement yesterday.

But it is understood thatAlmacantar has lined up talkswith Camden Council about get-ting planning permission to con-vert parts of the building intohigh-end residential space.

A source said the firm wouldinitially focus on improvingrental incomes from the build-ing, which currently has severalempty floors.

Centre Point was put in thehands of administrator Deloittelast year when ownerTargetfollow defaulted on a700m debt owed to Lloyds.

BYMARION DAKERS

PROPERTY

News

Centre

Point

towersold

8/7/2019 Cityam 2011-03-25

13/36

INVESTMENT banks have seen merg-ers and acquisitions (M&A) dealsbounce back with a vengeance in thefirst-quarter of 2011, but one of the tra-ditional stalwarts has fallen down theleague tables due to its exclusion frommajor deals.

Morgan Stanley has triumphed infirst place on the basis of global M&Avolumes the value of deals the bankworked on with Credit Suisse top-ping the European league and JP

Morgan winning the US ranking,according to the latest ThomsonReuters figures.

Bank of America Merrill Lynch hasjumped up the global M&A table fromeighth place last year to third this year,cementing its return to form follow-ing the teething pains suffered afterthe merger between Bank of Americaand Merrill Lynch in 2008.

BoA Merrill Lynch has pushedGoldman into fourth place globallyand it also currently claims top spot in

Bloombergs European underwritingtable.

BoA Merrill Lynch has had a run ofunderwriting business from Russia,having been on the recent float of VTB,a state lender. One banker put its suc-cess down to the stability of the equitycapital markets (ECM) business, whichhas seen a particularly low staffturnover.

Goldman has had a slow start to theyear, falling down to fourth from firstplace in the M&A rankings. A GoldmanSachs spokeswoman said it was stillearly and added that the banks per-

formance should be judged later in theyear. She also said that the banks movedown the Thomson Reuters M&Atables was partly due to its exclusionfrom the AT&T telecoms deal in the USwhere it traditionally advises Sprintand from its non involvement in theconversion of preferred stock in AIG.

Nomura, which does not feature inthe top ten, says it is still building up aglobal M&A business and that for uswe are building and are not activelyworried about the current tables.

First quarterM&A back upto 2007 levelsBY JULIET SAMUEL AND DAVID HELLIER

BANKING

NewsCITYA.M. 25 MARCH 2011 13

1 5 Morgan Stanley 202,657.2 70

2 9 JP Morgan 188,748.3 66

3 8 Bank of America Merril 149,692.0 694 1 Goldman Sachs & Co 143,548.0 79

5 2 Credit Suisse 139,224.7 54

6 3 Citi 138,846.1 50

7 34 Evercore Partners 114,741.1 8

8 6 Deutsche Bank AG 114,225.0 60

9 12 Rothschild 97,690.8 44

10 4 Barclays Capital 88,801.7 26

2011YTDRank

Q12010Rank Financial Adviser

RankValue US$

No.Deals

WORLDWIDE M&A RANKING 2011 YEAR TO DATE

TOP WORLDWIDE MERGERS AND ACQUISTIONS - 2011

Target and advisers Acquirer and advisers Value

AIG: Citi, Morgan Stanley, Rothschild, Shareholders US $59bnEvercore, BoA/ML

T-Mobile USA: Deutsche, AT&T: Greenhill , Evercore, JP Morgan US $39bnCredit Suisse, Morgan Stanley

Progress Energy: Lazard, BarCap Duke Energy Corp: JP Morgan, BoA/ML US $26bn

Fiat SpA-Auto: BarCap, Banca IMI, UBS, Citi, Shareholders Italy $18.5bnGoldman, Credit Suisse, UniCredit,

Credit Agricole, SocGen, BNP ParibasProLogis: Morgan Stanley AMB Property Group: JP Morgan US $15bn

Cargill: Credit Suisse, JP Morgan, UBS, Rothschild Cargill: Lazard US $14.9bn

NYSE Euronext: Perella Weinberg Partners, Deutsche Boerse: Deutsche, JP Morgan, US $10bnBNP Paribas, Goldman, Morgan Stanley Credit Suisse, SocGen

Centro Properties Group: Moelis, JP Morgan, BRE Retail Holdings: Wells Fargo, Deutsche, US $9.4bnUBS, Lazard, Flagstaff Partners BarCap

Lubrizol Corp: Citi, Evercore Berkshire Hathaway US $9.3bn

Reliance Industries: Goldman BP: Morgan Stanley India $9bn

John Mack, Morgan Stanley executive chair

8/7/2019 Cityam 2011-03-25

14/36


BHP Billiton yesterday revealeddetails of its $9.5bn (5.89bn) invest-ment plans for its iron ore and coaloperations.

The FTSE 100 miner announced abigger-than-expected $80bn capitalexpenditure plan last month, which

the firm said would pay for organicgrowth over the next five years

rather than blockbuster acquisitions.BHP said yesterday its Western

Australia iron ore project will beboosted to 220m tonnes per annumby new equipment, a rail link andport facilities costing a total of$7.4bn, of which BHP will shell out$6.6bn.

The firm has also given the greenlight to three coal projects in

Queensland, Australia, at a total costof $5bn. BHP will pay half of this

sum, with its partner Mitsubishi pay-ing the rest.

A $400m thermal coal mine inNew South Wales was also approvedyesterday.

BHP, which had threatened towithold investment in Australiaafter the government announced amining windfall tax, saw its sharesgain 1.4 per cent to 23.58 yesterday

after concessions to the tax wereannounced.

BHP Billiton unveils $9.5bn expansion plan

Book your viewing

Web: www.lqgroup.org.uk

Call: 0844 406 9800

Industrial and Provident Society 30441R exempt charity. Details correct at time of going to print March 2011. Your home is atrisk if you fail to keep up repayments on a mortgage, rent or other loan secured on it. Please make sure you can afford the

repayments before you take out a mortgage. * The fi gure quoted is based on part buy, part rent and on a percentage share. Thisis a guideline and may vary according to individual incomes and circumstances. See website for details.

Bromley BR2

Enterprise House,

from950* pcm

from760* pcm

Shooters Hill SE18

The Artillery,

Brockley SE4

Jude Court,

from

727* pcm

1 & 2 bedroom apartments

through L&Qs part buy,

part rent scheme

HEATHROW operator BAA said itplans to invest 50m on revising its

snow plans after an independentreport into the winter travel chaos yes-terday found that a lack of prepara-tion, equipment and communicationcaused most of the disruption.

The report by BAA non-executive

David Begg said the firms slowresponse to the snowy weather mustbe improved so Heathrow never shutsdown except for immediate safety orother emergency threats.

BAA said it has already changed itsresponse plan, and now has 269 peo-ple trained to clear snow, up from 117.

British Airways, which took a 50mhit from snow-linked cancellations,said it look[s] forward to discussing

with BAA its plans for strengtheningHeathrows capacity for coping withsevere winter weather.

Report slams BAA delaysBYMARION DAKERS

AVIATION

AUSTRALIAS booming mining compa-nies including BHP Billiton and RioTinto have won a major concessionover a plan to tax their profits, poten-tially saving them hundreds of mil-lions of dollars and helping coolindustry opposition to the tax.

Australian treasurer Wayne Swansaid yesterday the national govern-ment would repay current royaltiesthat the miners pay to state govern-ments, and refund any future royaltyincreases imposed by mining states.

The controversial 30 per cent taxon iron ore and coal mines withannual profits of $50m (30.9m) ormore is due to start in the middle ofnext year, and should raise $7.4bn inits first two years.

Smaller mining companies, howev-er, led by Fortescue Metals Group,remain strongly opposed to the tax,and continued to criticise the dealwith the global companies despitethe latest compromise.

It was a tax designed by BHP,Fortescues billionaire chief AndrewForrest said.

Policy should be broad ranging, itshould be fair and it should be basedon the constitution of being equalamong states and equal among com-panies. That hasnt happened here.BHP has literally written a tax foreveryone else to pay, he said.

Australiadilutes itsmining tax

UNITED Utilities, the largest listedwater utility, said trading in the sec-ond-half had been slightly ahead ofits expectations, putting it on trackfor a solid underlying performancefor the year.

The company said regulated rev-enue had continued the positivetrend from the first-half, but wouldbe slightly lower in the second,reflecting seasonal changes.

The full-year position representsa healthy financial performance inlight of the impact of the pricereview, said United Utilities, whichhas been asked by industry regulatorOfwat to cut prices.

Analysts expect the company toreport a full-year pre-tax profit of302m, on revenue of 1.6bn, accord-ing to a poll.

Capital expenditure will hit600m this year, United Utilitiessaid, though the firm said it isunlikely to meet its leak targetsthanks to the severe weather overChristmas.

Last month, Northumbrian Waterand Pennon had also said trading inthe second-half had been in line withestimates, despite the snowy condi-tions.

Shares in United Utilities closedup 0.9 per cent yesterday at 584.5p,valuing the firm at 1.99bn.

Solid salesfor UnitedUtilities

SIRIUS Petroleums shares closed flatat 5.62p yesterday, in its first day oftrading on AIM since its shares werecancelled in February to allow for itsfirst acquisition in Nigeria.

The firm was yesterday re-listed asan investing company with no opera-tions to allow the firm to change its

investment strategy and pursueacquisitions, it said in a statement.

Shareholders approved the newstrategy and readmission to AIM in ameeting on Wednesday.

Siriuss plans to purchase a 40 percent interest in the Ke oil field inNigeria fell through in December,though Sirius has maintained that itcould buy a stake in the future.

Sirius said in a statement yesterdaythat its first acquisition will take the

form of a reverse takeover, but did notgive any more details.

Sirius shares rejoin AIMENERGY

BAA chief executive Colin Matthews accepted there were things it could have done better.

BYHARRY BANKS

UTILITIES

BYMARION DAKERS

MINING

BYHARRY BANKS

MINING

ANALYSIS l United utilities

p


610

600

590

560

570

580

540

550

584.5024 Mar

ANALYSIS l BHP Billiton

p


2,700

2,500

2,300

2,100

2,358.0024 Mar

How much BAA will spend on snow defences50m

8/7/2019 Cityam 2011-03-25

15/36

SHARES in cigarette firm ImperialTobacco fell yesterday after the ciga-rette giant warned its revenue growthwill slow.

The company now expects first-halfrevenues to grow by two per cent ayear, compared to five per cent in thelast three months of 2010.

The maker of Lambert & Butler,West and Gauloises cigarettes attrib-uted the sluggish growth to a toughmarket in Spain and a shift in tradebuying patterns in Britain.

Martin Deboo, an analyst atInvestec, said: It is hard to charac-terise this as anything other than a dif-ficult statement from Imperial...Thenews from the two key markets of theUK and Spain is a material negative in

our view.Imperial could be further hurt bychancellor George Osbornes decisionto hike tobacco duty by inflation plustwo per cent, increasing the price of a20-pack of cigarettes to as much as 7.

A spokesman for the firm voiced

fears that the governments decision toban displays of cigarettes in shopscould also hit sales.

He said: As a result of the govern-ments plan, there is a real concernover counterfeiting. Well continuestepping up our efforts to get out theword about disproportional regulationtowards the tobacco companies.

Imperial, which makes over 300bncigarettes a year, said its global ciga-rette volumes had declined one percent in the past half year.

The firms shares lost 12p inLondon trading yesterday to close at1,910p.

Sluggish saleshurt Imperial

Featuring the worlds greatest flat race

Investec Derby Festival 3rd & 4th June 2011 Book now: 0844 848 3256 epsomdowns.co.uk

BY ERICWILKENS

CONSUMER

FOR MORE NEWS

News 15

www.cityam.com

GKNs chief executive Sir KevinSmith is to retire at the end of theyear, after safely steering the carparts-maker through an industry-wide crash.

Sir Kevin, aged 56, led the firmthrough a massive cost-cutting drivein the wake of the recession, cuttingnearly 6,000 jobs to stem annual lossesthat hit 130m in 2008.

This ruthless approach put the firmback on an even keel, and GKN earlier thismonth reported a pre-tax profit of 345m.

Sir Kevin, born in Lancashire and a life-longfan of Burnley Football Club, is expected to keephis job as a UK business ambassador after he stepsdown from the engineering group.

He has already visited Singapore several times sincetaking up the government-appointed role last year,and hobnobbed with Prince Andrew at the

British Business Awards ceremony in Shanghaiin September.

He was knighted for services to industryin 2007. Before working for GKN, SirKevin spent more than20 years at BAE Systems.

GKNs driver throughthe recession retires

SIR KEVIN SMITH

ANALYSIS l Imperial Tobacco

p


2,050

1,950

1,850

1,750

1,910.0024 Mar

BYMARION DAKERSPROFILE

8/7/2019 Cityam 2011-03-25

16/36


Weve added over 6,500 more peak seats on

the Great Northern route through longer trains

and extra services. Travel by train for a more

comfortable journey.

Find out more at moreseats.co.uk

BRITISH insurance consolidatorResolution hiked its dividend morethan expected, as it focuses more onsqueezing cash from its businesses,and said it was still mulling deals out-side the UK.

Resolution, created to buy underper-forming British life insurers andmerge them into a more profitablewhole, yesterday raised its final payoutfor 2010 by 15 per cent to 12.57p pershare, beating analyst expectations foran unchanged dividend.

The increase follows a doubling ofResolutions shareholder cash to1.07bn, helped by higher contribu-tions from its businesses as well as aone-off capital transfer.

Resolution, founded in 2008 by CliveCowdery, had a pre-tax operating prof-it for 2010 of 275m, up from 6m the

previous year.The increase reflected a full 12-

month contribution from FriendsProvident, which was acquired in late2009, as well as four months of earn-ings from the Axa businesses.

Resolution said its research intopotential takeovers had highlightedopportunities in asset managementand in the US and European lifeinsurance industries.

Dividend hike

as Resolutionlooks at dealsBYHARRY BANKS

INSURANCE

Credit Suisse boss Brady Dougan saw his total pay fall by a third on 2009 Picture: GETTY

BRITISH investment bank EvolutionGroup, which last year decidedagainst making a formal bid for rivalPanmure Gordon, said the thought ofmaking a new attempt on Panumrewas not on its mind.

In the companys first public state-ment on the matter since the originalbid fell through, chief executive AlexSnow said: Panmure is not on theagenda ... I have not even thoughtabout it.

Last October, Evolution decidedagainst bidding for Panmure follow-ing opposition from both Panmureitself and one of Evolutions mainshareholders.

Evolutions situation was compli-cated since it had to get the supportof Qatars QInvest, which has a 44 percent stake in Panmure.

Evolution reported yesterday thatadjusted operating profit for the yearending 31 December fell 75 per centfrom last year to 5.2m, but it raisedits dividend by 10 per cent to 2.75p.

Evolution says it wontmake a bid for PanmureBANKING

BANCO Popular, Spains third-largestlisted bank, and German insurerAllianz are creating a joint insurancecompany to manage over 11bn(9.68bn) in assets.

Popular will book capital gains of490m from the deal, which aspokesman said yesterday will beused to strengthen its balance sheet.

Spanish banks have been underclose scrutiny on concerns aboutpotential capital shortfalls after thecollapse of the property sector, forc-ing groups to shore up assets.

Populars agreement with Allianz,a long-time partner and shareholder,covers pensions and investment fund

management as well as the insurancebusiness.A new company, Allianz Popular, in

which Allianz will hold 60 per centand Popular the balance, will com-bine existing joint ventures in insur-ance and pensions with Popularsfund management operations.

The new venture is positive,although it will have little significantimpact on Populars balance sheet inthe short term, Renta 4 bank analystNuria Alvarez said.

BPI analysts flagged the capital

gains from the deal, which will boostPopulars generic provisions cushion,which, as in the case of many Spanish

banks, has been eroded over the past18 months due to rising bad loans.

Popular and Allianz in link upBYHARRY BANKS

BANKING

CREDIT Suisse boss Brady Dougan took$14m (8.67m) in pay in 2010, despitethe banks shares losing a quarter oftheir value.

Dougans fixed pay doubled toSwFr2.5m (1.7m) and was topped by aSwFr10.2m bonus, making him one ofthe worlds highest-paid bankers forthe second year.

But Dougans total pay ofSwFr12.8m was down a third from2009, when he also received sharesworth some SwFr71m under a five-year bonus plan.

Dougan was also not the highestpaid banker at Credit Suisse. That posi-tion went to Antonio Quintella, chiefexecutive of Credit Suisse Americas,who received total compensation ofSwFr15.6m.

His base pay is lower than that ofrival UBS chief executive OswaldGruebels, but Gruebel took no bonusfor the second consecutive year in2010, citing a fall in his banks shareprice. UBS shares lost 4.3 per cent in2010, while Credit Suisse shares fell by26.43 per cent. Credit Suisse cut thetotal 2010 bonus pool by 27 per cent toabout SwFr5.05bn.

Credit SuissesDougan gets

8.67m in 2010BANKING

ANALYSIS l Resolution

p


300

290

280

250

260

270

230

240

289.3024 Mar

ANALYSIS l Banco Popular Espanol

10 Jan2010 24 Jan 7 Feb 21 Feb 7 Mar 21 Mar

4.60

4.20

3.80

4.3724 Mar

8/7/2019 Cityam 2011-03-25

17/36

HAT DO GOLF,

OTOR SPORTND POKERAVE IN COMMON?

WEEKENDS ON BLOOMBERG:SKY 502, VIRGIN MEDIA 609

AND FREESAT 208

YOU CAN WATCH ALL THREE, AND MORE,ON BLOOMBERG TELEVISION. EVERY WEEKEND.

Bloomberg Television brings you business and market news during the week,

and now, sporting action at the weekend. THIS WEEKEND, tune in to the LIVE

coverage which kicks off with the OneAsia PGA Championship, the FIA GT1

World Championship and then, catch the latest from the Full Tilt Poker series.

OneAsia Indonesia

PGA Championship - LIVE

This weekend at 5am

FIA GT1 World Championship

from Abu Dhabi - LIVE

This Saturday at 9am

Full Tilt Poker

Every Friday/Saturdayat 11pm

8/7/2019 Cityam 2011-03-25

18/36

CABLE & WIRELESS Worldwides(CWW) shares plummeted more than14 per cent to 54.2p yesterday aftershocking the market with a profitwarning.

It downgraded its expectations forcore earnings next year on weaker-than-expected demand for voice servic-es and anticipated lower prices fordata services.

It said it does not expect to increase

its Ebitda in the next year, despite ana-lyst expectations that they will risefrom about 444m to 470m.

The company said it was beingsqueezed by higher rents and energycosts while it had to cut prices toretain basic data connection contractsand its voice business declined.

However, it said it was on track tohit the current years targets after astring of contract wins in the second-half. The blow comes after the firmhas already faced pressure from the

UK government from its spending cutslast summer. Shares in the group havefallen 29 per cent since it demergedfrom the former Cable & Wireless ayear ago.

Chief executive Jim Marsh said:Some of our competitors are beingvery competitive in their pricing inorder to dislodge us from our cus-tomers. We are not losing customers inthat respect. However, if other peoplein the market are being very aggressivein pricing we need to make sure we aregiving our customers fair pricing.

CWW tanksafter warningon its profitsBY STEVE DINNEEN

TELECOMS


M&C SAATCHI yesterday reported a 25per cent increase in full-year profits asit opened its first agency in Russia.

The advertising giant said it willopen a Moscow office, taking the num-ber of countries it operates in to 19.

The Russian move is a joint venturewith EMCG, one of Russias leadingindependent agencies.

M&C Saatchi the Tory party adagency, which was founded by broth-ers Maurice and Charles Saatchi in1995 saw its full-year revenues rise 21per cent to 125m, with its UK rev-enues climbing nine per cent.

It said its contract wins in the UKwere the strongest since 2004.

The agency says 2011 has startedwell, continuing the forward momen-tum from last year, but it remains cau-tious over the macro economicenvironment.

M&C Saatchi sees profitsleap as it grows abroad

M&C Saatchi Maurice and Charles have opened a Moscow branch Picture: ALAN DAVIDSON

BY STEVE DINNEEN

ADVERTISING

BT and TalkTalks High Court actionagainst the Digital Economy Act (DEAwill end today, with a judge expected torule on whether it is unfair in six weektime.

The firms are arguing that the legislation is unfair and was rushed throughparliament. A judge has been hearingsubmissions from relevant parties ovethe last three days.

Lawyers for BT and TalkTalk said theyare particularly concerned about aclause in the DEA that could force ISPsto suspend the accounts of users suspected of repeatedly infringing copyright.

They argue it could affect innoceninternet users and will pass unfaiadministration costs onto themAnother point of contention is that theonus is on internet users to prove theirinnocence if they are suspected of copy

right infringement.BIS says the costs will be split between

copyright holders, who will pay 75 percent, and ISPs who will be liable for therest.

BT and TalkTalk mounted a legal challenge against the act after it was passedduring wash-up the period betweenone parliament being dissolved andanother being formed. It was passed lasApril by 189 votes to 47 after a two hourdebate despite public outcry over its possible implications.

BTs High Courtaction againstDEA to close

TECHNOLOGY

ANALYSIS l Cable & Wireless Worldwide

p

10 Jan2010 24 Jan 7 Feb 21 Feb 7 Mar 21 Mar

78

74

70

66

62

54.2024 Mar

8/7/2019 Cityam 2011-03-25

19/36

News 19CITYA.M. 25 MARCH 2011

JefferiesAlix Bernard has joined the globalsecurities and investment banking

group as managing director forEuropean credit sales in Paris. She joinsthe firm from Liquid Capital Securities,

where she was head of European creditsales. Previously, Bernard spent fiveyears at Dresdner Kleinwort as head ofcredit sales for France and Benelux.

LV= Asset Management

The fund management arm of themutual insurance, investment andretirement group, has appointed IanHarvey as head of institutional busi-ness development. This is a newly cre-ated position for LVAM as it looks tobuild a presence in the institutionalmarket.

His most recent role was head ofpooled funds and defined contribution

at BNY Mellon Asset ManagementInternational where he had overallresponsibility for the $9bn pooled fundbusiness working with UK pensionfunds, charities and family offices.

Arbuthnot SecuritiesThe investment banking arm ofArbuthnot Banking Group, has recentlyappointed James McIntyre as a direc-tor in closed-end fund sales and PeterBrown, who joins the market makingdesk, covering closed-end funds.

McIntyre was previously on theboard of SAFEX and was also head ofderivatives at RAD Bank. Brown has

spent 17 years at JP Morgan (previous-ly Chase Manhattan and RobertFleming).

Jones Lang LaSalleThe commercial estate agent has

appointed two new EMEA researchdirectors from April. Robert Stassenwill be the new head of EMEA capitalmarkets research while Andrew Burrellbecomes head of EMEA forecasting.

Stassen joins from Credit Suisse,where he was he was a senior equityanalyst covering European propertystocks and Burrell was previously chiefeconomist at consultancy King Sturge.

CITY MOVES | WHOS SWITCHING JOBS Edited by Juliet Samuel

LOVEFiLMNick James has been appointed as new digi-tal technical development director at theonline film rental company. James will workalongside Lesley Mackenzie, group digitalofficer, on the technical co-ordination of new

device platforms, building technology part-nerships and further developing back officetechnical infrastructure.

He joins LOVEFiLM from twocashew, a mediaconsultancy responsible for the design anddeployment of video on demand products.

+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

Wall St advanceson earnings hopes

US stocks advanced yesterday asoptimism about upcomingearnings and investor buying ofthe quarter's top performers

lifted the S&P 500 above a key techni-cal level.

The S&P 500 broke above its 50-day

moving average at 1,305, leadinginvestors to believe the market mayhave absorbed the worst of the pull-back due to Japans earthquake andtumult in the Arab world, positioningstocks for another move higher.

Yes, there are legitimate concerns.Yes, there are legitimate headlinerisks, said Phil Orlando, chief equitymarket strategist at FederatedInvestors, in New York. But its entire-ly possible the market feels comfort-able that this seven per centcorrection we saw from mid-Februaryinto mid-March has priced those con-cerns in, and now we are starting tolook forward to the prospect of contin-ued economic growth and solid first-quarter profits.

The S&P 500 is up 24.8 per centsince the start of September butbriefly dipped into negative territoryfor the year recently as global con-

cerns pushed commodity prices up.The Dow Jones industrial average

gained 84.54 points, or 0.70 per cent,to end at 12,170.56. The Standard &Poors 500 Index climbed 12.12points, or 0.93 per cent, to 1,309.66.

The Nasdaq Composite Index rose38.12 points, or 1.41 per cent, to2,736.42.

Ken Polcari, managing director atICAP Equities in New York, said theS&Ps 50-day moving average hasacted as a point of resistance for thelast week and a half, and a close above1,305 will be bullish in the short-term.

Semiconductor stocks were amongthe best performers and helped boostthe Nasdaq after Micron Technologyposted a quarterly profit that toppedWall Streets forecasts.

Micron shares jumped 8.4 per centto $11.50 (7.04). The PHLX semicon-ductor index gained 2.5 per cent.

It was the second consecutive dayof gains for the market, with the S&P500 up 2.4 per cent so far for theweek. With the market near the endof the quarter, portfolio managerswill buy equities that have performedwell as they execute window dressing,and hedge funds will cover short posi-tions that are under pressure.

The S&P energy index is amongleading sectors for the quarter, withgains so far of 13.7 per cent. Tesorowas the top performer in the sectorfor the quarter, up 40.4 per cent.

The S&P technology index, up 3.1

per cent so far for the quarter, was up1.6 per cent yesterday.

RETAILERS were among the topperformers in a rally in Britainstop share index yesterday thattook the FTSE 100 back to levels

last seen just before the earthquakein Japan.

Results from Kingfisher and Nextshowed how some retailers can over-come tough trading conditions in theUK. Kingfisher, which hiked its divi-dend and reported a 23 per cent risein full-year profit, rose 7.2 per cent asDeutsche Bank said it was its top pickamong general retailers.

Deutsche Bank said it expectedgeneral retailers to outperform ashousehold spending growth exceedsexpectations in second-half 2011,despite current weak consumerindicators.

Britains retail sales fell more thanexpected in February, hit by thebiggest jump in prices in 17 years.

This presents a buying opportuni-ty, Deutsche Bank said.

Consumer spending forecastshave already been revised down toreflect the fiscal pressures and higheroil prices.

The bank estimated a one per cent

increase in interest rates should takea modest 0.2 per cent off household

income, adjusting for the impact ofrate hikes on interest income.

Deutsche Bank also said Marks &Spencer, up 3.7 per cent, could pro-vide insulation against rising interestrates given its market share acrossthe older demographic.

Next added four per cent inresponse to the fashion retailersgrowth forecasts.

The blue chip index rallied 84.99points, or 1.5 per cent, to 5,880.87, alsoboosted by a rush for energy and min-ing stocks as investors focused on

reconstruction opportunities in Japan.The final outcome of Japans disas-ter is unknown but any impact from aslowdown in consumer drivengrowth will be offset by the need torebuild in the region, Jimmy Yates,head of equities at CMC Markets said.

Larry Kantor, head of research atBarclays Capital, said in a note he gen-erally favoured equities over bonds,and developed market equities overemerging market stocks.

We favour developed market equi-ties because there is more room foreconomic growth without triggeringsignificant policy tightening.

The corrections following the dra-matic events of recent weeks have cre-ated attractive entry points.

A Reuters poll of 27 strategists fore-cast that Britains top share index isset to gain around eight per cent toDecember as the threats to the eco-

nomic recovery subside.Banks joined the rally, brushing

aside European debt concerns afterratings agencies Fitch and Moodysdowngraded their debt ratings onPortugal and 30 Spanish banksrespectively.Barclays rose 1.3 per cent, helpedby Credit Suisse repeating its outper-form rating on the stock in a note onEuropean banks.

On the downside, Invensys fell 4.5per cent after the British engineerousted chief executive Ulf Henriksson.

I guess (Henriksson's departure)takes some of the edge off bid specu-

lation, a London-based trader said,referring to suggestions byHenriksson in November that ChinaSouthern Rail could buy a stake.Imperial Tobacco shed 0.6 per cent,as the worlds fourth biggest cigarettemaker reported slowing growth inthe first-quarter of 2011.Cable & Wireless Worldwideplunged 14.4 per cent after down-grading expectations for core earn-ings next year.

Retailers and mining stockspower rebound in the FTSETHELONDONREPORT

THENEW YORKREPORT

p


6,100

5,800

5,700

5,500

5,600

5,900

6,000

ANALYSIS l FTSE5,880.87

24 Mar

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

ANALYSIS lENRC

850

1150

1050

950

10 Jan 28 Jan 17 Feb 28 Feb

p941.50

24 Mar

9 Mar 18 Mar8 Feb19 Jan

ENRCUBS rates the Kazakh miner buy with a 12-month target price of 13.ENRCs results on Wednesday met the brokers expectations, with earningsper share beating forecasts by 13 per cent due to exceptional items linked toan acquisition. UBS expects the firms costs to rise in line with the industryas it undertakes a $2.5bn capital expenditure project this year, whichincludes expansion in non-ferrous and logistics divisions.

ANALYSIS lDrax

380

400

420


p371.90

24 Mar


DRAXJP Morgan Cazenove rates the power generator underweight with a tar-get price of 360p. The broker thinks Draxs shares could slide further in theshort-term as the market absorbs the severity of the carbon floor priceannounced in Wednesdays Budget, and has reduced its underlying earningsforecast by 12.9 per cent for 2013, when the floor is introduced. The brokerestimates a cost of more than 100m for Drax by 2020.

ANALYSIS lJ Sainsbury

350

370

400


p 5,880.8724 Mar


J SAINSBURYNomura rates the supermarket neutral with a 365p target price. The bro-ker believes that Sainsburys stores had a particularly aggressive slowdownin the last three months of 2010, moving from two per cent growth in thethird-quarter to six per cent contraction in the fourth, based on full-year fig-ures out on Wednesday. However, Nomura has held its pre-tax profit predic-tion at 665m for the full-year, as it recently trimmed its forecasts.

8/7/2019 Cityam 2011-03-25

20/36

8/7/2019 Cityam 2011-03-25

21/36

Cooper defying the limits

Film

LIMITLESSCert: 15

hhhII

REMEMBER seeing that poster on theUnderground with the guy from TheHangover advertising something calledThe Clear Pill? Well that was actuallypart of the ad campaign for BradleyCoopers latest film, Limitless. Its a clevermarketing trick which the film itself livesup to. Cooper plays Eddie Morra, a down onlife writer living in New York.

He starts taking NZT-48, an illegal won-der drug which promises to unlock thebrains full capacity.

Suddenly Eddie, replete with new hair-cut and snappy wardrobe, can do anything.He finishes his previously overdue book infour days, becomes fluent in any languagehe chooses and makes big money on thestock market. This catches the attention ofbusinessman Carl Van Loon (Robert DeNiro), who soon gives Eddie a job.

His meteoric rise to near-superhumanprowess is, obviously, too good to be true.

Not only does NZT-48 have dangerous side-effects, it turns out that Eddies not theonly person addicted to it, with problemat-ic consequences.

Although its a shame De Niro is notgiven more to do, Cooper makes for anengaging lead, excellently capturing theamazement and increasing arrogance of a

very ordinary guy placed in a very extraor-dinary position.

Perhaps this is a touch too extraordinary:the conceit is scientifically tenuous at bestand requires a serious suspension ofdisbelief. But as long as you do this, its anengaging premise which makes Limitlessan above-average thriller thats still able tolaugh at its own ridiculousness.

Harriet Noble

Film

THE EAGLECert: 12A

hhIII

SET during the reign of Hadrian, thisaction adventure takes its cue from thesame story as last years Centurion: whathappened to the Ninth Legion, a fearsomeunit of 5,000 Roman soldiers who venturedinto the Scottish Highlands and disap-peared?

The incident (drawn from RosemarySutcliffes novel The Eagle of the Ninth)here inspires the emperor to build his walland declare Caledonia a no-go region.

Feisty young centurion Marcus Aquila(Channing Tatum) has other ideas though his old man was the leader of the Ninth,and Marcus wants to know what hap-pened.

Having proved his bravery in a viciousbattle early in the story, he heads northwith his personal slave, a young Celtnamed Esca, played by Jamie Bell.

This is a muddy, bloody trek through

some epic Scottish landscapes, but itnever becomes exciting.Bell does his best, but Tatum is simply a

void at the heart of the film, never becom-ing an interesting enough character for usto root for him. The dull script and plod-ding pace dont help.

Timothy Barber

cityam 2011-03-25

Documents