BUSINESS WITH PERSONALITY

Shareholder
unrest grows
over BAE deal
BAE SYSTEMS largest shareholder
yesterday spoke out to oppose the
defence groups 30bn merger with
EADS, with sources suggesting that it
would seek an overhaul of the
groups board if the deal failed.
The relationship between the two
has completely and utterly broken
down, said one source, so you
would expect there to be
consequences.
Neil Woodford, who manages
around 20bn for BAE investor
Invesco, has appointed Ondra
Partners, the investment bank, to
advise him on his strategy.
Ondra yesterday denied that the
asset manager was looking for a
counter bid.
Invesco, which owns 13.3 per cent
of BAE, has a number of reservations
regarding the merger, including
concerns over state involvement, deal
terms and its strategic rationale.
The firm is believed to be
confident that shareholders
representing more than 25 per cent
of BAEs equity enough to block a
deal have reservations about the tie-
up.
Woodford reckons BAE can be a
successful standalone company but
he is no fan of its recent heavy
acquisition policy.
He has past form in pushing for
change on some of Britains biggest
boardrooms, with links to
AstraZeneca boss David Brennans
departure and this summers shake-
up at G4S.
A source close to the BAE/EADS
transaction said yesterday that talks
with governments were ploughing
on and everybody involved was
working towards meeting the
deadline, which is 5pm tomorrow.
Osborne told party members the plan would help workers get shares and become owners of the company you work for
BUSINESS leaders last night raised
doubts about the governments plan to
let employers opt out of large chunks
of employment law in return for hand-
ing workers shares in their firm.
Chancellor George Osborne yester-
day told the Conservative party confer-
ence in Birmingham that the
government is targeting an April 2013
launch date for the employee-owner-
ship scheme, which aims to boost the
economic recovery by reducing the
risks associated with hiring new staff.
But his hopes of a speedy economic
recovery were dealt a blow last night,
as the International Monetary Fund
slashed its growth outlook to a 0.4 per
cent contraction this year, down from
0.2 per cent growth predicted in July.
And Sir Martin Sorrell, chief execu-
tive of advertising giant WPP, told City
A.M. he had some doubts about the
chancellors decision to focus on this
area of workplace rules: Greater
labour flexibility is to be welcomed, as
is lower capital gains rates and employ-
ee participation. However, the ques-
tion is whether it constitutes a
complete long-term strategy.
The emphasis still needs to be equal-
ly on the strategy for the long-term
and work still needs to be done on
areas such as education, technology,
infrastructure, immigration and tax
policy, he added.
www.cityam.com FREE
Under the proposal workers would
sacrifice their rights on unfair dis-
missal, redundancy tribunals and flex-
ible working hours but will be
rewarded with a stake in the company
they work for. When an employee cash-
es in their stake they will also be given
an exemption from capital gains tax on
shares worth up to 50,000.
If the employer does badly, the
shares that are being given to the
employee could become worthless,
said Patrick Stevens, tax partner at
Ernst & Young. Even if the gain on
the share price is relatively small, they
may not have been liable for capital
gains tax anyway.
Rebecca Briam of Gannons Solicitors
also felt the plans would struggle to get
off the ground, in part due to argu-
ments over the fair value of shares. Far
from saving on payroll expenses the
total costs for an employer may well
increase, she said.
John Cridland, director general of the
CBI, said it may be attractive for start-
up firms but was a niche idea.
Get shares and become owners of
the company you work for, Osborne
told the party yesterday. Owners,
workers, and the taxman, all in it
together workers of the world unite.
The scheme is aimed at fast-growing
small and medium sized business,
BY DAVID HELLIER AND
CATHY ADAMS
FTSE 100 M5,841.74 -29.28 DOW M13,583.65 -26.50 NASDAQM3,112.35 -23.84 /$ M1.60 -0.01 / 1.24 unc /$ 1.30 unc
SWAP RIGHTS FOR
COMPANY SHARES
ISSUE 1,734 TUESDAY 9 OCTOBER 2012
TIME TO TRY
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15 TIPS FOR THE TORIES
though any limited company will be
allowed to take part and employers
will be able to force new hires to accept
the contract. The Treasury has budget-
ed for 50,00075,000 people a year to
cash in shares related to the scheme.
Osborne also pledged to consult on
a generous new tax regime for shale
gas to ensure that Britain is not left
behind as gas prices tumble on the
other side of the Atlantic.
Osbornes spokesman said it would
be absolutely absurd if the UK did
not capitalise on its potentially lucra-
tive shale gas reserves.
MARK LITTLEWOODS ADVICE ON THE CONSERVATIVE MANIFESTO
BY JAMES WATERSON AND
JAMES TITCOMB
Firms raise doubts over Osbornes employee-ownership plans
MORE ON IMF CUTS: Page 3

allister.heath@cityam.com
Follow me on Twitter: @allisterheath
BORIS Johnson last night staged a
rapturous election rally at the
Conservative party conference,
pledging his loyalty to David
Cameron while leaving no doubts as
to his own popularity among Tory
activists.
Johnson entered the busy hall to a
standing ovation as the slogan
Mission Imborisible was displayed
over footage of the Mayor of
Londons ill-fated descent of a zip
wire during the Olympics.
But he used the platform to once
again insist that his contrary stance
on issues such as airport expansion
did not mean he was seeking the
party leadership.
It is inevitable that the mayor of a
great city will find himself saying
things that seem at variance with
national policies, he said. Of course
I am going to continue to lobby for a
long-term solution to the aviation
capacity problem. No-one should as a
result have any cause to doubt my
admiration for David Cameron.
Describing himself as the biggest
harvester of undeserved credit for
the Olympics, he declared his flat
disbelief at winning re-election in
May but celebrated his success in
defeating a cabal of semi-reformed
Marxists.
He told the rally, organised by the
TNK-BP partner look to sell stake
BPs billionaire partners in TNK-BP say
they want to sell or list their 50 per cent
stake in the business, creating more
uncertainty over the future of Russias
third-largest oil producer.
Total arm warns over inaccuracies
Total Oil Trading, one of the largest
groups of its kind, has warned of
inaccurate pricing in the benchmarks
for the energy market that underpin
billions of dollars of trading a day in
contracts such as Brent and West Texas
Intermediate.
StanChart targets sub-Saharan push
Standard Chartered is preparing to ramp up
its presence in sub-Saharan Africa in
response to growing investor demand for
the bank to expand outside its Asian
heartlands. StanChart will today outline to
investors its plans to at least double the
size of its African business within the next
five years. It will say it has $100m (62.4m)
to spend on 110 new branches in Kenya,
Ghana, Nigeria and five other markets over
the next three years and intends to hire 950
sales staff in its consumer businesss.
Investors scramble for Direct Line
Individual investors have staged a last-
minute rush to buy shares in Direct Line
in a fresh boost to the insurers hopes of
a successful flotation.
City fines to help war heroes
Millions of pounds of fines handed out to
City firms for abuses including the Libor-
fixing scandal will be channelled into
charities supporting the Armed Forces,
the Chancellor announced in his speech
yesterday.
Virgin warns of fresh chaos
Virgin Rail has told the Department for
Transport that transferring the West Coast
train franchise to a state-owned operator
threatens further chaos as it would involve
re-writing 150 contracts.
Call for piracy rules to apply to 4G
Software and entertainment firms have
called on Ofcom to expand the scope of a
forthcoming anti-piracy regime to cover
mobile operators, over fears that 4G will
facilitate growth in unlawful filesharing.
J&J facing cancer drug shortage
Johnson & Johnson applied for US and
European regulatory approval of a new
manufacturing process that would
provide a short-term fix to the supply
shortage of the cancer drug Doxil.
KBC to sell units in overhaul
Belgiums KBC Group is going back to
basics. The banking and insurance group
said yesterday it will overhaul its business
model. Several firms will be sold as it
works to repay 4.67bn (3.8bn) state aid.
GEORGE Osborne yesterday
confirmed his desire to restrict
housing benefit for people aged
under 25 as part of an attempt to
slash the welfare budget by a
further 10bn.
Osborne told the Conservative
party conference that reform is
necessary: How can we justify
giving flats to young people who
have never worked, when working
people their age are still living with
their parents because they cant
afford their first home?
To muted applause he also
confirmed that the rich would have
to contribute more to paying down
the deficit. Later an aide said that
the Treasury was considering new
taxes on the well-off, not just a
renewed crackdown on tax evasion.
There was little detail on what
other benefits might be cut
although the Institute for Fiscal
Studies, a think tank, suggested
that possibilities include a freeze
on all working-age benefits and tax
credits, as well as cuts in the
entitlements for large out-of-work
families.
Meanwhile transport secretary
Patrick McLoughlin used his
address to delegates to announce a
170m to clear 57 bottlenecks on
roads by the end of 2014, including
some on the M1 and approach
roads to Stansted airport.
Plan for housing
benefit cuts to
slash welfare bill
Boris Johnson spoke to an enthusiastic audience at a conference fringe event yesterday
2
NEWS
BY JAMES WATERSON
BY JAMES WATERSON
To contact the newsdesk email news@cityam.com
F
OR once, the government
managed to unveil a policy
yesterday that had not been pre-
leaked. George Osbornes latest
plan combines two ideas: it seeks to
better align staff and employer
incentives; and to make the labour
market more flexible.
Employers will be able to make new
job offers conditional on and offer to
existing staff a new deal. Employees
will be given between 2,000 and
50,000 in shares in the business,
exempt from capital gains tax on dis-
posal (whether they are also exempt
from income tax on receipt isnt
clear).
In return, the employees will give up
their UK rights on unfair dismissal,
statutory redundancy (leaving just
contractual notice periods), the right
to request flexible working and time
off for training, and be required to
EDITORS
LETTER
ALLISTER HEATH
Osbornes employment incentives idea is no game changer
TUESDAY 9 OCTOBER 2012
provide twice as much notice of a firm
date of return from maternity leave.
Yet all of this begs several questions.
If the coalition has decided that these
rights are bad for jobs, because they
increase the cost and risk of employ-
ing people, then why not reform them
across the board?
And if employee ownership is such a
good thing, then why not incentivise
it more radically? Why create this
strange quid pro quo, in a clumsy
attempt at ticking two boxes at the
same time (ownership and deregula-
tion)?
There are lots of practical problems.
The current annual tax-free capital
gains tax limit is 10,600; so the value
of the minimum share amount hand-
ed over would have to increase sub-
stantially for the tax incentive to
mean anything.
That may not be that absurd, of
course, as 2,000 worth of shares in a
start-up actually represents a large
stake, which in itself means that few
firms may be willing to hand this out
willy-nilly. If this is to be a mass-mar-
ket proposal, very few employees will
ever be offered more than the mini-
mum amount.
Ultimately, it is unclear how many
companies will want to take up this
offer. It is hard for privately owned
companies to operate with lots of
small employee shareholders unless
missal litigation could be replaced by
another threat: arguments over what
is a reasonable price for the shares
when the employee comes to sell his
or her equity.
It is extremely hard to determine
share prices for privately held firms.
Red tape could increase, rather than
decrease.
I wish I could be more positive about
this plan. But good ideas are being
ruined by being introduced via an
excessively complex, almost Brownite
scheme born of endless compromise
and riddled with problems and per-
verse incentives.
Osbornes idea will help a few suc-
cessful, high growth firms but it
wont be a game changer.
A great shame.
there is a prospect of a float or trade
sale.
Most small firms dont want to give
up equity. They may do so to bring in
star performers, but they will proba-
bly be reluctant to do so with ordinary
staff. The government often says it
wants to help micro-businesses by
reducing the risk of taking on staff;
but this wont help somebody hiring a
nanny or a cleaner.
For existing companies, there is
another problem: they would obvious-
ly like to be able to fire poor perform-
ing or trouble-making staff.
But these are the last people they
would like to give equity to. And what
would happen to sacked staff would
they keep their shares? This could be a
nightmare, especially for small firms
imagine a large number of disgrun-
tled minority owners.
Even worse, the risk of unfair dis-
ConservativeHome website, that the
party must stick to the programme
on the economy and electoral success
will follow. Johnson also took the
opportunity to announce that mem-
bers of the armed forces will now
receive free tube travel if they are wear-
ing their uniform.
He was also keen to attract high-paid
French workers fleeing recent wealth
taxes: Not since 1789 has there been
such terror and tyranny in France. I am
very keen to welcome talented French
people to London.
Earlier in the day cabinet minister
Ken Clarke had told a Channel 4 fringe
meeting that Johnson will need to act
more statesmanlike if he is to fulfil his
political ambitions: If he really wants
to be a prime minister for serious rea-
sons and not just getting his picture in
the paper more often, he really does
have to settle down and demonstrate
he can seriously deliver on some com-
plicated subjects.
This morning Johnson will give his
official speech. At the weekend an
opinion poll gave Johnson a net
approval rating of +30 per cent com-
pared to -21 per cent for Cameron.
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
IN BRIEF
Romney catches Obama in poll
nUS presidential hopeful Mitt
Romney has clinched a four point poll
lead on Barack Obama after his
barnstorming performance in last
Wednesdays debate, according to
the Pew Research Center. The latest
national poll, carried out from 4-7
October , gave Romney and Obama
both 46 per cent support among
surveyed registered voters, while
among likely voters Romney leads by
49 per cent to 45 per cent. Nearly
two-thirds of those surveyed by Pew
thought the Republican candidate
did a better job in last weeks debate.
Romney trailed by nine points (42
per cent versus 51 per cent) last
month. The election takes place on 6
November.
Court hears of UBS slush fund chat
nA UBS trader raised the issue of a
slush account in an electronic chat
with Kweku Adoboli months before he
was arrested over allegations he lost
the Swiss bank $2.3bn (1.4bn), a
London court heard yesterday.
Appearing as a witness at Adobolis
trial, Darren Bailey rejected as
ridiculous an accusation by the
accused former traders lawyer that he
ran a hidden trading book that served
as the template for Adobolis illicit
umbrella" account. Adoboli, 32, was
arrested on 15 September 2011, and has
pleaded not guilty to two charges of
fraud and two of false accounting. The
prosecution says he routinely exceeded
his trading limits and booked fake
trades into the accounts to mask his
true positions. The trial continues.
Boris uses fringe speech
to pledge loyalty to PM
THE IMF slashed its forecasts for
world growth yesterday, on worries
that gloomy data suggests a sus-
tained slump in the global economy.
World output will expand just 3.3
per cent during 2012, the interna-
tional body said, down from its July
estimate of 3.5 per cent.
And next year will see growth
rebounding to only 3.6 per cent,
blow the earlier forecast of 3.9 per
cent expansion in 2013.
A key issue is whether the global
economy is just hitting another
bout of turbulence in what was
always expected to be a slow and
bumpy recovery, or whether the cur-
rent slowdown has a more lasting
component, the IMF report says.
The answer depends on whether
European and US policymakers deal
proactively with their major short-
term economic challenges, it adds.
Familiar forces of fiscal consoli-
dation and fragile financial firms
were partly to blame, the IMF
claimed, but policy worries were
IMF cuts global
growth hopes
on weak data
BY BEN SOUTHWOOD
also a major cause of stagnation.
More seems to be at work...than
these [macroeconomic] forces
namely, a general feeling of uncer-
tainty, said IMF chief economist
Olivier Blanchard.
Worries about the ability of
European policymakers to control
the euro crisis and worries about the
failure to date of US policymakers to
agree on a fiscal plan surely play an
important role, but one that is hard
to nail down, Blanchard went on.
To overcome the dangers of uncer-
tainty the IMF calls for firm deci-
sions to be taken. In the US
policymakers must focus on both
reining in the deficit and avoiding
the fiscal cliff, it says, while
Eurozone policymakers should
make progress toward banking and
fiscal union in order to resolve the
debt crisis.
The only glimmer of hope was for
emerging markets though the IMF
cut its forecasts for Brazil and India,
emerging markets were still expect-
ed to grow four times quicker than
advanced economies.
Corporate governance mishap
puts Reckitt boss in spotlight
RECKITT Benckiser, the FTSE-listed
consumer giant, could face a probe
by the City watchdog after failing
to alert the stock exchange that
chief executive Rakesh Kapoor had
pledged 8.7m worth of shares
against a personal loan.
The company behind household
products such as Strepsil and
Gaviscon admitted yesterday that
in 2010 Kapoor had put up 203,433
shares as a loan made by Bank of
America Merrill Lynch.
BY KASMIRA JEFFORD Kapoor, who was head of
category development at the time,
made a further three transactions
so that today 239,000 shares out
of his total shareholding of
282,000 are set against the bank
loan. This breaches the Financial
Services Model Code, which
require companies to disclose
their directors share dealings.
Reckitt yesterday said it had
discovered the breach after a
periodical review of directors
past share transactions and
after following advice by
the FSA, had made a retrospective
disclosure.
A source close to the company
said the breach was an oversight
on behalf of the firm and that
Kapoor, who took over as chief
executive last year, had told
the board about the loan
two years ago. The FSA
said it is looking into
the claim but would
not comment on
individual cases.
YOUTUBE LAUNCHES TV CHANNELS
Rakesh Kapoor has led
Reckitt since last year
STATE AID is postponing a
necessary revolution in the
banking sector, leading to
stagnant returns, claims
consulting giant McKinsey in a
report out today.
Bank revenues grew just three
per cent last year down from
nine per cent growth in 2009 and
2010, and returns to equity dipped.
One key reason banks are not
undergoing the required radical
transformation slashing costs,
streamlining business operations
and searching out new growth is
the $1.7 trillion of direct state
support in the banking sector, the
consultancy says.
Aid is delaying
bank overhaul
BY BEN SOUTHWOOD
OIL giant BP has agreed to sell most of
its Texas City assets for $2.5bn
(1.6bn), severing ties with the refin-
ery where 15 people were killed in
2005 and raising funds for the firms
Gulf of Mexico clean-up fund.
BP said the sale to US-based
Marathon Petroleum would bring its
recent divestments to $35bn.
The London-listed firm wants to
sell off assets worth $38bn to pay
costs linked to an explosion and oil
spill at the Deepwater Horizon rig,
which killed 11 workers in 2010.
The Texas City refinery, which
produces 475,000 barrel per day, was
the site of one of the worst industrial
accidents in US history in 2005.
BP sells off its
Texas refinery
TUESDAY 9 OCTOBER 2012
3
NEWS
cityam.com
YOUTUBE is
launching 60 new
channels featuring
original content from
the BBC, ITN and
Endemol, extending
its original
programming
initiative in a bid to
draw consumers
away from
television. The new
online stations from
Britain, the US,
France, and
Germany, will also a
dedicated channel
for Jamie Olivers
(pictured) cooking
shows. YouTube,
owned by web giant
Google, has already
launched around 100
channels in the US.
BY MARION DAKERS
AN international banking supervisor
has warned that some countries will
miss a January deadline to implement
tough new capital and liquidity rules
for their banking sector.
It is clear that not all jurisdictions
will be ready in time, said Stefan
Ingves, chairman of the Basel
Committee for Banking Supervision
yesterday, as the group released its lat-
est progress report on the so-called
Basel III rules, due to be phased in
from January 2013.
But Ingves, who is also head of
Swedens central bank, said the group
was seeing continuing
signs of progress.
The new rules triple
the amount of core cap-
ital that banks should
hold against loss-
es, as well as
requiring banks
to build up their
buffers of highly
liquid assets.
Banks to miss
start date for
Basel III rules
BY ELIZABETH FOURNIER
CYPRUS came in for a hammering
last night as ratings agency
Moodys chopped its view of the
country, bringing it down from
Ba3 to B3 a three notch plunge.
The agency also gave a negative
outlook to the ratings, suggesting
they might fall yet further, citing
profound difficulties in the
Cypriot banking sector.
These difficulties which have
seen some 18 per cent of loans
moving into arrears could threat-
en public finances, as they are like-
ly to need government support if
they are to survive, Moodys says.
And shocks to banking are likely
to constrain the rest of the econo-
my, through restricted lending
growth, threatening the govern-
ment budget from the revenues
side of the equation.
The three largest Cypriot banks
would need 8bn (6.5bn) to
replenish their core tier one capi-
tal to 10 per cent, it says, which is
some 47 per cent of GDP.
This recapitalisation would bring
Cypruss debt to GDP ratio up to
around 140 per cent of GDP, the
firm says, one of the highest in
Moodys rating universe.
Moodys was particularly wor-
ried about the lack of an agree-
ment between Cyprus and the
so-called troika, made up of EU,
IMF and European Central Bank
representatives, on terms of a
bailout to enable the mediter-
ranean country to continue pay-
ing its debts.
The possibility of a Greek exit
from the single currency was also
a cause for concern. The sover-
eigns credit strength would be
greatly challenged if Greece were
to exit the euro area, because of
the severe impact it would have on
Cypriot banks and more generally
on the nationally economy, the
announcement read.
Moodys slashes
rating on Cyprus
BY BEN SOUTHWOOD
Ministers deny Spain
needs help as they
launch bailout fund
EUROZONE finance ministers
launched their permanent 500bn
bailout fund yesterday but said
Spain, the country widely expected
to be first to draw on it, was taking
steps to overhaul its economy and
did not need a bailout for now.
Moodys gave the European
Stability Mechanism (ESM) a long-
term issuer rating of Aaa last
night the same rating held by its
predecessor the EFSF. It gave a
negative outlook like all the
ESMs Aaa-rated members bar
Finland.
Arriving at a meeting in
Luxembourg also set to discuss
Greece and differences over how to
recapitalise Europes wobbly banks,
German finance minister Wolfgang
Schaeuble said Madrid had made it
clear it wanted no assistance.
Spain needs no aid programme.
Spain is doing everything necessary,
in fiscal policy, in structural
BY HARRY BANKS
reforms, he said as he arrived for a
gathering that will also discuss plans
to establish a single supervisor for
Eurozone banks.
Luxembourg finance minister Luc
Frieden took the same line but
added that if Spain were to make a
request for aid beyond the 100bn
already earmarked to recapitalise its
banks, it would be examined.
As well as Spains broad financial
needs, yesterdays meeting was
expected to discuss the budget goals
presented by Madrid last month,
which the EC has yet to endorse.
But one of the trickiest issues --
when the ESM rescue mechanism
should be allowed to directly
recapitalise banks and how it would
work in practice -- looked set to be
left aside. At a summit on 29 June,
EU leaders agreed that the ESM
should be permitted to pump capital
into banks directly once a single
supervisory mechanism under the
ECB is in place, possibly as early as
January next year.
Basel Committees
Stefan Ingves
GERMAN exports jumped even
more than expected in August,
amid growing signs that the
country is faring better than its
Eurozone neighbours.
Seasonally adjusted exports
jumped 2.4 per cent month-on-
month, far better than the
forecasted drop of 0.5 per cent.
And investor sentiment in the
core economy has picked up
further this month, according
to Sentix. Faith in the European
Central Banks bond buying
plans was partly behind the
morale index climbing to 6.4 in
October from 4.4 last month.
Sentiment also improved
across the Eurozone as a whole,
yet remained in negative
territory, moving from -22.2 this
month from Septembers -23.2.
Germanys economy ministry
said industrial production fell a
better-than-expected 0.5 per
cent on the month in August.
BY CITY A.M. REPORTER
ABOUT 8,000 demonstrators
chanted anti-austerity slogans and
hoisted banners warning Angela
Merkel she was not welcome in
Greece at a protest yesterday, the
eve of a visit by the German
chancellor.
Organised by labour unions fed
up with wage and benefit cuts, the
demonstration was called before
Merkel said she was coming to
Greece in a gesture of support for
Thousands of Greeks protest in
anger at Merkels visit to Athens
BY CITY A.M. REPORTER
the governments fiscal reforms.
But protesters did not miss the
opportunity to vent their anger at
Merkel, whose insistence on a
tough reform programme many
Greeks blame for their country's
plight. The main banner in front of
parliament was a large German flag
emblazoned with the words
Angela, you are not welcome!.
Greece is preparing extensive
security measures for todays visit,
Merkels first to Greece since the
debt crisis erupted in 2009.
TUESDAY 9 OCTOBER 2012
4
NEWS
cityam.com
Demonstrators turned out in force to tell Angela Merkel she was not welcome
Eurozone pain to dampen bank lending
ECONOMIC pain in the Eurozone is
set to be heightened by a collapse in
bank lending, according to an omi-
nous report released this morning
by Ernst & Young.
The audit firm estimates that
bank lending this year will have fall-
en twice as fast as during the after-
math of the financial crisis, with
under-pressure peripheral countries
enduring the most severe drops.
Overall lending will dip two per
cent in 2012, the report calculates,
with loans to households down by
6.6 per cent and loans to non-finan-
cial corporates declining by a more
modest 1.9 per cent.
Tight credit conditions will be
felt more acutely in the periphery:
lending is forecast to decline by 8.8
per cent this year in Spain and by
4.5 per cent in Italy, while in
Germany lending will expand by 1.3
per cent, E&Y said.
While the economic environment
is contributing to the credit freeze,
the post-crisis increase in red tape is
also affecting lending. Banks are
having to navigate through the
raft of new regulations and legisla-
tion which are designed to avoid a
repeat of 2008, the report says.
Andy Baldwin from Ernst & Young
adds: In response to market condi-
tions and regulation, banks are
beginning to retreat behind nation-
al borders which is fragmenting the
Eurozone financial system Policy-
makers need to be mindful of the
rising cost of regulatory compliance
and its macro-economic side
effects.
BY JULIAN HARRIS
Lending to non-nancial corporations
Forecast
France
Holland
Germany
Italy
Spain
0
-5
-10
5
10
15
20
25
%year
2016 2007 2010 2013
Data hints at
further gains
in Germany
CITY hopes for an uptick in the
stagnant mergers and acquisition
market are set to be dashed today as
figures reveal M&A appetite among
board executives has halved since
last year.
A study of 1,500 executives surveyed
in August and September by Ernst &
Young reveals interest in M&A deals
has fallen among senior executives
from 52 per cent to 26 per cent year
on year.
Low confidence in the business envi-
ronment and a wedge between what
buyers are expecting to pay for busi-
nesses are the two main reasons
behind the M&A freeze.
The economy is a huge negative
factor, said Rhys Phillip, a senior part-
ner in corporate finance at E&Y.
M&A is risky, its not like putting
your money into the bank and know-
ing what youll get back. Thats why
you have seen the proliferation of
share buy backs instead of M&A,
shareholders are risk averse.
The E&Y study also reveals those
looking to do a deal want to stay at
the lower end of the market. Half of
those hoping to do deals were for
ones worth $50m (31.2m) or less,
despite good valuation data.
Mark Gregory, E&Y chief economist,
said: Our analysis suggests that deal
volumes are 30-40 per cent below the
level we would expect given current
stock market valuations.
Confidence dip
halves interest
in M&A activity
BY MICHAEL BOW
BANK of America Merrill Lynch
(BAML) yesterday sounded a warning
on South Africa, cutting ratings
across the countrys investment sec-
tors.
The investment bank is now under-
weight on the country, after down-
grading South African consumer
stocks to neutral and keeping bank-
ing stocks underweight.
Amid the crisis-hit mining sector,
BAML downgraded the South
African resources sector from buy
to hold, adding that it does not
find a compelling case for the
industry.
Analysts also argued that the wage
battle being fought in the mining
sector could well spread beyond
resources into the public sector.
If the end result of the strikes is
just higher wages, then that means
we have plenty of strikes ahead of us
as contagion will keep spreading, it
said. The strikes have plenty of
downside if they are not contained.
Following strikes at its other opera-
tions, Anglo American Platinum yes-
BAML warns of
strikes impact
in South Africa
BY CATHY ADAMS
terday said 300 miners at its Kumba
iron ore unit are demanding a
monthly salary increase of 15,000
rand (1,056) above what they are
already earning.
Two months ago, the Kumba unit
agreed a two-year wage settlement
for an above-inflation increase of
between nine and 12 per cent for
workers.
Amplats is losing around 120,000
tonnes of iron ore production a day
thanks to the strikes at Kumba.
Meanwhile, South Africas union of
local government workers yesterday
gave notice to embark on a national
strike, as the unrest in the mines
spread to the public sector.
The action could lead to an indefi-
nite strike among workers on lower
incomes calling for parity in wages
across Africas largest economy.
Almost 100,000 workers, including
75,000 in the mining sector, have
gone on strike recently to demand
higher wages.
Elsewhere, Stuart Murray, chief
executive of strike-hit Aquarius
Platinum, yesterday resigned with
immediate effect.
TUESDAY 9 OCTOBER 2012
6
NEWS
cityam.com
TIMELINE OF SOUTH AFRICAN UNREST
10 AUGUST
Around 3,000 rock drillers down tools during
an illegal strike at Lonmins Marikana mine,
demanding 12,500 rand a month.
16 AUGUST
At Marikana, South African police kill 34
protestors and wound 78 in the bloodiest day
since apartheid ended.
10 SEPTEMBER
Over 15,000 miners go on strike at Gold Fields
mine west of Johannesburg. Strikes continue
at Marikana.
12 SEPTEMBER
The worlds largest platinum producer Anglo
American Platinum halts operations at
Rustenberg amid safety concerns.
18 SEPTEMBER
Lonmin miners secure a pay rise and agree to
end the ve-week strike. Unrest continues at
Gold Fields and Amplats.
5 OCTOBER
Amplats res 12,000 striking miners who fail
to turn up to a disciplinary hearing. Strikes
spread to its Kumba iron ore unit.
STRIKES HIT SOUTH AFRICA'S MINES
ANGLOGOLD
(VAAL RIVER &
WEST WITS):
EMPLOYS
35,000 people
STRIKE STARTED
20 September 2012
LONMIN (MARIKANA):
EMPLOYS
28,000 people
STRIKE STARTED
10 August 2012
KUMBA (SISHEN):
EMPLOYS
12,700 people
STRIKE STARTED
4 October 2012
AQUARIUS PLATINUM(AT KROONDAL):
EMPLOYS
4,868 people
STRIKE STARTED
14 September 2012
ANGLO
AMERICAN
PLATINUM
(RUSTENBERG):
EMPLOYS
200,000 people
STRIKE STARTED
12 September 2012
COAL OF AFRICA (ERMELO):
EMPLOYS
368 people
STRIKE STARTED
25 September 2012
GOLD FIELDS (KLOOF):
EMPLOYS
15,000 people
STRIKE STARTED
9 September 2012
RECRUITER Michael Page
International saw its share price yo-
yo yesterday as investors reacted to
its second profit warning this year
amid mounting third quarter loss-
es for its core businesses in UK and
Europe.
Shares climbed back four per
cent during the day to close at
363p having plunged in opening
trading from 368p to 348p
despite the recruiter admitting
full year operating profit would
fail to meet the 67.7m forecast by
analysts.
Yesterday, the white collar
recruiter, which places people in
professional services jobs, reported
an 11 per cent year on year fall in
third quarter profits down to
126.5m versus 142.7m on the
back of a poor Eurozone
performance.
Profits fell across the European
region, with Italy and Spain both
down 22 per cent compared to a
year ago. The UK, which accounts
for 23 per cent of its profits, saw a
Michael Page
cuts headcount
as profit sinks
BY MICHAEL BOW
10.9 per cent fall year on year.
Germany proved most resilient,
with profits falling by just six per
cent. The firms main source of
placements, finance and
accounting, saw a 16.8 per cent fall.
The 1.1bn company said the
number of people it employed had
started to fall, a potential avenue
to help offset the losses. It
remains key for us to manage our
cost base, principally headcount, to
reflect market conditions, chief
executive Steve Ingham said.
Smaller rival Robert Walters last
week posted a one per cent
increase in gross profit in the third
quarter.
DO YOU BELIEVE IN THE COALITIONS
ECONOMIC PLANS?Interviews by Faiza Malik
Yes I do, because I think they had to take some
very hard decisions and theyve gone about it
the right way. This government inherited a lot of debt; if
they hadnt taken the decision they have, then our triple
A ratings would have diminished.
These views are those of the individuals above andnot necessarily those of their company
JASON WINDIBANK
LLOYDS BANKING GROUP

I do as far as their cut backs in expenditure in

the public sector. Theres been too much
wastage, so that could be easily identied and brought
into control. One issue I do have is with the lack of gov-
ernment policy to stimulate businesses.
STEPHEN HANDS
BLOOMBERG
I dont think they are doing the right thing.
Some of their policies are misguided. Osborne
said that he wants workers to be shareholders in their
companies. This is utterly unworkable. In my view they
need to change the tax system and get rid of red tape.
SIMON PEARCE
BLUEROCK CONSULTANCY

CITYVIEWS
Michael Page International PLC
8Oct 2Oct 3Oct 4Oct 5Oct
350
355
345
360
365
370
375 p 363.80
8Oct
Tough macro growth environment struggling world growth, austeri-
ty impact, nancial sector slowdown is taking its toll on the recruitment sec-
tor. Headcount reduction is in place, and not just among clients. Broker
consensus gures are set to be trimmed.
ANALYST VIEWS

The poor outturn is a reection of Michael Pages bias towards perma-

nent placements, which saw an eight per cent reduction year on year. Michael
Page has the highest exposure to permanent placements of all the
stocks under our coverage.

Management indicated that activity levels remain robust but the time
to hire continues to push out, reecting a lack of condence from both compa-
nies and candidates in the current weak macro. There were signs of a
relative stabilisation creeping in towards the end of the quarter.

WHY IS MICHAEL PAGE

STRUGGLING?
By Michael Bow
MIKE VAN DULKEN ACCENDO MARKETS

CAROLINE DE LA SOUJEOLE SEYMOUR PIERCE

MIKE MURPHY NUMIS

TUESDAY 9 OCTOBER 2012
7
NEWS
cityam.com
MICHAEL PAGE GROSS PROFIT FALLS
43%
19%
20%
18%

Financial and Accounting
Legal, Technology, HR, Secretarial and Healthcare
Engineering, Property and Construction,
Procurement & Supply Chain
Marketing, Sales and Retail
Netherlands Italy Spain
UK France Germany
* Down on previous quarter
8
IN BRIEF
Daisy confident on sales rise
nBusiness telecoms company Daisy
Group said yesterday it would report
higher first-half revenue and that it
remained confident about its business
outlook for the second half despite
persisting pressure on certain mobile
connection commissions. The firm said
debt increased during the period due
to the acquisition of Worldwide Group
Holdings in April. Daisy had reported
revenue of 176m for the same period
last year.
Digital ads in double digit growth
nDigital advertising spend increased
12.6 per cent to 2.6bn in the UK in
the first half of 2011, research released
today shows. The Internet Advertising
Bureaus expenditure report in
conjunction with PwC said mobile was
the biggest driver of growth, rising
132 per cent to 181.5m, while video
advertising rose 43 per cent to 70m.
Search engine ads remain the biggest
spending area, accounting for 1.5bn.
WPP buys German digital agency
n Advertising giant WPP has bought
a majority stake in German digital
agency k102 as it continues to
expand its online footprint. The
investment will continue the
companys strategy of developing its
services in fast-growing and
important markets and sectors and
strengthening its digital
capabilities, the firm said yesterday.
k102, based in Dusseldorf, has
worked alongside WPP subsidiary
Grey since January 2010.
THE COMPETITION for the next gover-
nor of the Bank of England heated up
yesterday as the window for applica-
tions closed, with several high profile
candidates ruling themselves out.
Goldman Sachs economist Jim
ONeill who coined the widely-used
acronym BRICs said yesterday he
hadnt applied for the job.
And Australian central banker
Glenn Stevens had not been
approached by the Bank as a
potential candidate con-
trary to reports on
Sunday it emerged
yesterday.
This came after
Sundays revelation
that former top civil
servant Gus ODonnell
had not put his hat in
the ring, following
similar deci-
sions earlier
in the year
f r o m
Ca na di a n
central bank
Top candidates
exit race to be
next Bank boss
BY BEN SOUTHWOOD
boss Mark Carney, Standard Chartered
chief executive Peter Sands, and for-
mer Bank policymaker DeAnne Julius.
A panel of officials will now draw up
a shortlist from the remaining candi-
dates, interview their favourites and
recommend one applicant to chancel-
lor George Osborne.
The government will announce the
winner widely expected to be deputy
Bank governor Paul Tucker by the
end of the year.
Tucker has been the favourite
throughout the race, based on his 30-
year experience at the Old Lady and
his close links in the City, and has
shaken off concerns about his links
with the Libor-fixing scandal.
Close behind are Lord Adair
Turner, who became head of the
Financial Services Authority at the
height of the financial crisis, and
Sir John Vickers, the econo-
mist who orchestrated
post-financial crisis
banking reform.
WINTON Capital Management, the
firm founded by hedge fund star
David Harding, saw profits jump
23 per cent last year after it added
$11bn (6.9bn) to assets under
management in 12 months,
accounts show.
Harding, who last week publicly
revealed his 34m tax bill, helped
lead the firm to a 161.9m profit
in 2011 compared to 131.5m in
the previous year, propelled by an
increase in the companys assets
under management from $17bn to
$28bn.
The company was able to more
Hardings Winton Capital ups
dividend on back of profit rise
BY MICHAEL BOW
than double its dividend payout to
directors from 55.8m to 128.7m,
according to a filing at Companies
House.
Winton, which sponsors a series
of high profile academic and
sporting initiatives, was set up in
Kensington in 1997 to act as a
Commodity Trading Advisers
hedge fund.
Between 31 December 2010 and
31 December 2011 the firm grew
revenue from 282m to 350.6m.
The accounts show the firm also
halved its currency risk over the
year by reducing the amount of
non-sterling assets from 114m in
2010 to 64.6m in 2011.
David Harding was a pioneer of hedge fund strategies when he set up Winton in 1997
TUESDAY 9 OCTOBER 2012
cityam.com
NEWS
Deputy governor
Paul Tucker leads
the pack
COOKSON Group plunged 12.36 per
cent yesterday as it issued a profit
warning.
In an interim management state-
ment, the FTSE 250-listed materials
group warned that a weak perform-
ance in its engineered ceramics divi-
sion, which makes products for the
global steel industry, would cause it
to miss its forecasts for the year.
It cited weak steel production vol-
umes, which declined by three per
cent over the first half of the year
according to the World Steel
Association, for the profit warning.
Notably, production from the
Eurozone was 11 per cent lower year
on year.
Over half of Cooksons profits are
derived from the engineered ceram-
ics division.
Cookson has been considering
splitting its ceramics and perform-
ance materials units since the
spring in an effort to improve share-
holder returns.
It said yesterday that a business
review, including the potential
Troubled steel
markets harm
Cookson profit
BY CATHY ADAMS
demerger, was progressing well and
it expected to update shareholders
before the end of the year.
The loss from the engineering
ceramics business overshadowed
trading in the performance materi-
als and precious metals processing
divisions, which Cookson said yester-
day remained in line with expecta-
tions.
The industrial materials group
warned that the global economic
environment remained uncertain
and difficult to predict.
Broker N+1 Singer downgraded the
FTSE 250 firm from buy to hold
on the back of the profit warning.
Gloomy figures on steel production in Europe
make a strong case for a materials group split
O
NE looming breakup
overshadowed another for
Cookson Group yesterday. The
travails of the Eurozone led
the industrial materials supplier to
warn its full year performance
would be below expectations,
disappointing those who were
looking forward to the conclusion of
its strategic review and the potential
announcement of a breakup of the
group itself into two parts before the
end of the year.
Cookson still has two on-target
divisions: performance materials (for
electronics) and precious metals
processing. The worlds healthy
demand for electronics and assorted
upward price pressures on precious
metals should respectively augur
well for each continuing to perform
well. But these only accounted for 37
per cent of revenue between them in
the first half of 2012.
The groups engineered ceramics
division, on the other hand,
accounted for the other 63 per cent
of revenue and 61 per cent of trading
profit in the first half, before a
rough third quarter set it back,
mainly thanks to collapsing steel
production volumes in Europe in
July and August down 11 per cent,
according to the World Steel
Association. The divisions fortunes
arent helped by its exposure to the
alternative energy industry, both
solar, through its fused silica
business, and wind turbines,
through its foundry business.
Yesterdays shale gas tax
announcement from the chancellor
was a reminder of one ongoing
disruption to the economic viability
of green energy.
With no end in sight for Europes
woes, the US in the doldrums and
intimations of a Chinese slowdown,
the prospects for steel demand
arent great. But that also means the
case for splitting Cooksons better-
performing units starts to look more
compelling. Watch this space.
IN BRIEF
Total and Exxon exchange interests
n French oil major Total yesterday said
it had exchanged interests with
ExxonMobil in undeveloped North Sea
assets. Total will swap its interests in
four licences for several of Exxons
interests, including an interest in the
Oseberg field and the Dagny field. Total
will also pay cash compensation to
ExxonMobil. Following the asset
exchange, Totals stake in Oseberg, one
of the largest oil and gas fields in the
Norwegian North Sea, will increase from
10 per cent to 14.7 per cent.
Deezer secures 81m fundraising
n Music streaming service Deezer has
secured $130m (81m) in funding from
Access Capital, the owner of Warner
Music. The French company also said it
had hit 2m paying subscribers a year
after its worldwide launch. Unlike its
major rival Spotify, Deezer said it has
been profitable since 2010 thanks to
long and patient work with both the
record labels and the artists
themselves. The fundraising is Frances
biggest ever, and could strengthen links
between Deezer and Warner Music.
Big Yellow agrees debt restructure
n Storage firm Big Yellow yesterday
said it had taken out a 190m debt
facility which had seen it cut back its
borrowing. The new debt, from Lloyds,
HSBC and Santander, replaces a 225m
facility provided by the same three
banks and HSH Nordbank. Big Yellow
reported a 35.6m loss last year due to
writedowns linked to the introduction of
VAT on self storage payments. Chief
financial officer John Trotman said he
planned to use surplus cash to pay off
debt in the next two years.
BOTTOM
LINE
MARC SIDWELL
Cookson Group PLC
8Oct 2Oct 3Oct 4Oct 5Oct
525
550
575
600
625 p
539.00
8Oct
TUESDAY 9 OCTOBER 2012
9
NEWS
cityam.com
BRITISH Facebook game developer
King.com said yesterday it had seen
high double-digit growth this year
and that it has not been plagued by
the same problems that have hit US
rival Zynga in recent months.
King.com, which has become
Facebooks second biggest game
developer by users, has seen sales
explode in the last year, chief market-
ing officer Alex Dale told City A.M.
The firm, which is believed to be
considering a US flotation in 2013,
only moved into Facebook last year
after years spent making games for
other websites, but the platform has
become King.coms major source of
revenue in the last 12 months
due to the success of games
such as Bubble Witch Saga.
Accounts filed in Malta and
the UK show that Facebook
games, despite only picking
up since September last year,
accounted for around a third
of turnover in 2011.
King.com saw revenue of
44.7m (36.2m) in 2011, with
sales from Facebook gaming
Web game firm
King.com lifted
by Facebook
BY JAMES TITCOMB
accounting for just under 15m.
Profit was 2m, double the previous
year, although Dale said the figures
painted an historical picture of the
business, with Facebook now expect-
ed to account for the majority of sales.
We have seen high double-digit rev-
enue growth, and expanded from 110
to 330 staff [in 2012], Dale said.
King.com has also opened offices in
San Francisco, Malmo and Bucharest,
and invested heavily in mobile games.
Dale said King.com was not experi-
encing the same slowdown affecting
Facebook gaming giant Zynga
which has seen its share price fall 75
per cent in its 10 months as a public
company pointing to a change in
user habits away from time-consum-
ing games such as Zyngas Farmville.
There is a broadening of the audi-
ence that play games [on
Facebook], he said.
King.coms chief executive
Riccardo Zacconi has hinted at
a Nasdaq listing next year, but
Dale said there were no plans.
TUESDAY 9 OCTOBER 2012
10
NEWS
cityam.com
Hotels and restaurants fight off
insolvency but figures still rise
THE NUMBER of hospitality and
leisure businesses collapsing into
insolvency fell 15 per cent in the
third quarter compared with the
same period last year, but it
remains one of the worst hit sectors
so far this year, according to figures
released yesterday by PwC.
Overall, there were 1,464
insolvencies in the hotel and
leisure sector in the past 12
months, up from 1,304 last year.
The number of failures fell to 299
BY KASMIRA JEFFORD during July, August and September
from 336 in the same period last
year, driven by a reduction in the
number of pubs and restaurants
having to call time. But restaurants
were still the worst hit of all the
hotel and leisure sectors in the
third quarter with 156 insolvencies
across the UK.
Pubs and restaurants have had a
good quarter in the fight against
the recession. They continue to
combat drops in discretionary
spend by enticing consumers with
promotions like set menu vouchers,
happy hours, and multi-buy deals,
said David Chubb, PwC business
recovery partner. But he added that
the benefits of special offers can
backfire for businesses.
There are signs that consumers
are now expecting this and are
farming the offers without
spending on additional courses or
drinks which the promotion was
priced to entice.
The worst affected sectors last
quarter were construction, with
631 insolvencies, manufacturing
with 392 and 346 in retail.
Hospitality and leisure insolvencies on the rise in 2012
Insolvencies in the past 12 months compared with previous year
Restaurants
730
up
22%
Sports
86
down
13%
Travel & Tourism
56
up
47%
Bars
341
up
5.9%
Campsites & other
Total
insolvencies
compared to 1,304
in the same
period the year before
63
down
15%
1,464
Gambling
11
up
38%
Hotels
177
up
5.4%
CEO Riccardo Zacconi has
hinted at a Nasdaq listing
HTC posted a record profit drop
yesterday, as the smartphone maker
failed to keep up with Samsung and
Apple over the summer.
The Taiwanese firm said poor
sales of its flagship handsets had
led to a 79 per cent fall in profits,
from T$18.7bn (400m) to T$3.9bn
in the last quarter. Turnover fell 23
per cent to T$70.2bn.
HTC was the leading
manufacturer using Googles
Android software in the platforms
early years, but has been overtaken
by Samsung as Androids most
successful partner. While sales of
Samsungs Galaxy S3 phone have
beaten expectations, HTCs One
series has failed to make a dent.
New handsets
fail to lift HTC
BY JAMES TITCOMB
ITV yesterday announced it had
acquired Finnish TV studio
Tarinatalo, in what the company
called a key part of its
transformation plan as it bolsters
its production arm.
Tarinatalo, which co-produced
the 2007 Eurovision contest,
counts the Finnish version of
Dragons Den among its shows.
The deal, of undisclosed value,
expands ITVs footprint in
Scandinavia after it purchased
Norwegian studio Mediacircus.
Tarinatalo is a terrific fit as we
progress with growing our
business globally, said Paul
Buccieri, ITV Studios
Internationals managing director.
ITV takes over
Finnish studio
BY JAMES TITCOMB
L
UXFER Holdings, the Salford-
based speciality metals group
that last week became the
latest high-flying UK company
to list its shares on Wall Street,
missed out on a chance to ring the
opening bells at the New York
Stock Exchange (NYSE).
But it turns out the firm had a
very good reason for opting out, as
The Capitalist has learned that the
groups chief executive Brian
Purves had to make a tough call
between a moment of chiming
glory and witnessing the birth of
his very first grandchild.
In the end jetsetting Purves
decided to jump on a plane and
dash back to England on the day of
listing to welcome the new baby.
The company saw its shares rise
on its first day of trading on the
NYSE last week, so Luxfer has plen-
ty of happy news to raise a glass to
at the moment.
Fortunately the group, which has
46 per cent of its revenues in the
US, is planning both a
bell ceremony and
a street event in
New York later
this month,
which should
provide the per-
fect opportunity
to mark both
occasions.
Double celebration for Luxfer
11
cityam.com
TUESDAY 9 OCTOBER 2012
cityam.com/the-capitalist
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THERE are only a couple of weeks to go
until St Johns Ambulances flagship
black-tie City quiz evening, The Game, on
24 October. All proceeds from The Game
will support Teach the difference, SJAs
campaign to equip an entire generation
with first aid skills.
To book a table, please contact
game@nhq.sja.org.uk or call 020 7324
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To get you in the mood were asking
you to identify famous City landmarks,
with one successful entrant each week
winning a bottle of champagne.
Remember to email your entry to
win@cityam.com before close of play
today. To help you, theres a clue. This
holy ground wont break the bank.
Last week's lucky winner was Kimberley van
Amersfoort.
Family man
Brian Purves
IN BRIEF
Boost for mortgage lending
nThe number of mortgages available
to prospective home-buyers has
started to expand, according to the
Moneysupermarket website. The
group also claimed that lenders are
offering high loan to value (LTV) ratio
deals. Since April, there has been a 14
per cent increase in the number of 75
per cent LTV mortgages available,
rising from 636 to 725, it said. For
80 per cent LTVs, there has been a 17
per cent increase, from 381 to 446.
Stats office launches consultation
nThe Office for National Statistics
(ONS) yesterday launched its
consultation over possible changes to
how it calculates the retail price index
(RPI) measure of inflation. The ONS
has proposed four changes
surrounding the so-called Carli
formula, as well as regarding how
private rental costs are measured. The
consultations will close at the end of
November and recommendations are
expected in January 2013.
Swiss deflation starts to ease
nSwiss consumer prices fell 0.4
per cent in September compared to
a year earlier, according to official
data released by its Federal Statistics
Office yesterday. However, the data
contained some signs of recent
inflation, with prices picking up 0.3
per cent compared to August. We
expect consumer price inflation to be
positive again by the end of this
calendar year, commented Evelyn
Herrmann of BNP Paribas.
BRITISH shops received a boost last
month as retail sales sprung back to
life after a miserable summer on the
high street.
Like-for-like sales shot up 1.5 per cent
in September compared to the same
time last year, the British Retail
Consortium (BRC) said this morning
the strongest increase so far in 2012.
And total retail sales, which include
expansion in shop floor space,
jumped by 3.4 per cent last month.
In August the UKs retail sector was
hit by the Olympic Games, with like-
for-likes falling 0.4 per cent and total
sales rising by just 1.6 per
cent considerably
below the annual
rate of inflation.
The Olympics
distracted con-
sumers as hearts
and minds were
captured by sport-
ing triumphs, said
Stephen Robertson,
director general of the
BRC.
UK retail sales
bounced back
in September
BY JULIAN HARRIS
However, shopping has picked up
again since the Games ended. This
Septembers colder conditions con-
trast sharply with the heatwave a year
ago, giving clothing and footwear
sales a major boost as shoppers stock
up early on coats, boots and knitwear,
Roberts explained.
Yet sunnier weather at the begin-
ning of the month also contributed to
an early improvement in grocery sales,
the figures showed.
David McCorquodale of KPMG,
which helps compile the data, added:
After a turbulent year on the UK high
street, Septembers sales figures bring
much needed relief for retailers.
Retailers will now be hoping that
the consumer finds some confidence
for 2013 to drive sales for the next
three months.
Over the three months to September
a measure intended to iron out
monthly volatility like-for-like sales
rose 0.5 per cent compared to the
same period in 2011, while total sales
were up 2.4 per cent.
BRCs Stephen Robertson said
cold weather sold more clothes
THE WORLD Bank slashed its
estimates for Chinese GDP growth
yesterday, yet separate business
survey data showed a healthy
rebound in the countrys service
sector last month.
HSBCs latest purchasing
managers index (PMI) for Chinas
services industry climbed to 54.3
in September, up from 52 in
August, it revealed yesterday.
The higher the PMI score above
50, the faster the sectors growth.
The improvement was driven by
a morale-boosting increase in
firms levels of new business.
BY JULIAN HARRIS
Yet Chinas economic boom is
nonetheless believed to be easing,
with the World Bank saying that
Chinese GDP will expand by 7.7
per cent this year half a
percentage point lower than its
previous forecast in May.
However, the group still expects
Chinese growth to spring back to
above the eight per cent mark
next year.
Meanwhile, growth across the
whole of the East Asia and Pacific
region will mean continued falls in
poverty, with fewer than one in
four people (24.5 per cent) living
on $2 per day next year down
from 28.8 per cent in 2010.
TUESDAY 9 OCTOBER 2012
13
NEWS
cityam.com
The business survey showed Chinese services growing at the fastest rate since May
Report says shortage of homes
in London will stunt job growth
LONDONS housing shortage is set
to become severe enough to harm
job creation in the capital, a report
claimed this morning.
Living conditions will become
more cramped with young people
forced to stay in the rental market
for even longer, according to
Cluttons, a group of consultants
and chartered surveyors.
Large increases in demand for
London housing over the next
decade and beyond will not be
matched by a rise in supply, the
report says.
While London is home to even
BY JULIAN HARRIS
more workers than at the
economys last peak in 2007, the
supply of housing has ground to a
halt.
House building is still only at
three-quarters of the level it was
between 2000 and 2007, it says, even
though around 400,000 jobs have
been created in London since the
turn of the century.
Private renting in the capital has
doubled over the past two decades
as sky high house prices have
prevented workers from taking their
first steps onto the property ladder.
Decision makers have to
question whether Londons
potential to maintain its position as
a world city is being curtailed by
such a limited supply of housing
stock, said Cluttons Julian Briant.
The answer can only be yes.
Tony Pidgley of the house-
building Berkeley Group argued
that 80,000 new jobs could be
created by plugging the gap in
Londons housing shortfall.
Eye-watering house prices in
London are already putting a huge
strain on the cost of living, added
Duncan Stott of Priced Out, a group
calling for more affordable housing
in the UK.
The prospect of prices rising
even higher is of deep concern to
the priced out generation.
LONDONS tourism hotspots have
been hit hard by a combination of
Britains wettest summer for 100
years and the distraction of the
Olympic Games, an industry group
revealed yesterday.
Visitor numbers to London
dropped by an average of 15 per
cent in the three months to August
2012 compared to the same months
in 2011, according to the
Association of Leading Visitor
Attractions (ALVA).
In the first couple of weeks of
BY FAIZA MALIK
the Olympics, some of the key
central London attractions
experienced a huge fall of up to
61 per cent in visitor numbers
compared to the same weeks
last year, said Bernard
Donoghue, chief executive
of ALVA.
And the sometimes
grim weather did not
help. The gardens and
leisure sector which
includes Kew Gardens and London
Zoo saw a 21.3 per cent slump in
visitor numbers.
In the heritage and cathedrals
sector, with locations such as the
Tower of London and St Pauls
Cathedral, tourist numbers
dropped by 20.3 per cent,
knocking their retail sales by
20.2 per cent.
The Olympics fortnight
was one of their worst
trading periods in living
memory for Londons
tourist attractions,
Donoghue added.
Chinas service sector rebounds
yet World Bank cuts forecasts
ECONOMIC growth is set to pick
up in the UK even as it weakens
across the Eurozone, the
Organisation for Economic Co-
operation and Development
(OECD) said yesterday.
The Paris-based group released
its latest composite leading
indicators, designed to predict
economic turning points in the
near future.
The Eurozones indicator
slipped to 99.4 in August, from
99.5 in July, where the 100 level
represents the long term average
rating.
OECD figures foresee an uptick
in British economic prospects
BY CITY A.M. REPORTER
The UKs rating edged up
slightly to 100.1 in August, from
100 the previous month, while the
US and Japan also recorded levels
of 100 or higher.
Across the OECD area as a
whole, the outlook fell moderately
from 100.2 to 100.1, continuing a
downward trend from Aprils
figure of 100.4.
The latest OECD leading
indicator ties in with the view that
the UK economy exited recession
in the third quarter but still faces
a tough job to develop significant,
sustainable growth, commented
economist Howard Archer of IHS
Global Insight.
SURVEYORS expect the housing
market to pick up towards the end
of the year, according to a leading
survey released this morning.
Sales expectations have jumped
to their highest level since May
2010, the Royal Institution of
Chartered Surveyors (RICS)
announced today.
The net balance of surveyors
expecting a higher number of
home sales in the coming three
months soared to +26 per cent in
September, up from 13 per cent.
They are also slightly less
downbeat about prices, with a net
balance of nine per cent predicting
that house prices will fall over the
coming three months, up from -12.
Surveyors predict green shoots
for housing market by year end
BY CITY A.M. REPORTER
Prices are still dipping but at a
much lower rate than seen in
previous months, commented
RICS director Peter Bolton King.
The survey showed that yet again
London was the only region to
record rising house prices in
September, with prices declining in
every other recorded UK region.
Despite sinking prices to date
across much of the UK, a separate
survey by the website Zoopla
showed that nearly two thirds (63
per cent) of homeowners believe
that house prices in their area will
rise over the next six months.
The average homeowner foresees
a 3.4 per cent rise in their local
property prices over the next six
months, even though several
surveys show prices declining.
Key tourist attractions knocked
by rainy summer and Olympics
St Pauls saw its revenue hit
during the Olympic Games
SAUSAGE-maker Cranswick yesterday
said underlying turnover in the six
months to 30 September rose five per
cent as cash-strapped shoppers opted
to buy lower-priced meats like pork
over chicken or beef.
The company, which supplies gour-
met sausages, charcuterie, pastries
and sandwiches to retailers including
Tesco and J Sainsbury, said total sales
were up six per cent when including
contributions from Kingston Foods,
which Cranswick acquired in June.
Sales grew 7.4 per cent in the first
quarter, but slowed to around three
per cent in the second half, which
Cranswick warns of hike
in pig prices as sales lift
BY KASMIRA JEFFORD analysts attributed in part to slow-
down in fresh pork sales after a wash-
out summer led to less barbecues and
picnics.
The meat producer warned that ris-
ing animal feed prices and new EU leg-
islation to raise pig welfare standards
will lower the supply of pigs and push
prices higher, sending shares down
almost six per cent yesterday.
The EU rules, which call for a more
humane treatment of livestock and
include banning of sow stalls, are
already in place in Britain but will be
implemented in the rest of Europe
from January 2013.
Cranswick said it had started discus-
sions with customers to pass on price
increases. Analysts at Peel Hunt
warned that in a tough consumer
environment, retailers are likely to
resist passing higher prices on to cus-
tomers.
IN BRIEF
Norges acquires Meadowhall stake
nNorways sovereign wealth fund said
yesterday it has bought London &
Stamfords 50 per cent stake in
Meadowhall shopping centre for 348m,
entering into a joint venture with its co-
owner British Land. Norges Bank
Investment Management, which runs
the Government Pension Fund, said the
deal values the Sheffield mall at 1.5bn,
including debt. British Land will
continue to manage the centre.
LaSalle buys 31m Edinburgh hotel
nLaSalle Investment Management has
forward purchased a new hotel
development in an historic Edinburgh
site destroyed by fire a decade ago for
31.6m. Construction of the Ibis hotel at
the Cowgate fire site, called SoCo,
officially kicked off yesterday and is due
to be finished in December 2013. The
regeneration project will also see new
shops and restaurants built on the
derelict site, creating around 200 jobs.
Persimmon buys Hillreed Homes
nPersimmon announced yesterday it
has acquired Hillreed Homes, a regional
housebuilder operating in the south
east of England, for 35.7m. The Kent-
based firm focuses on family housing
and has a land bank extending to
approximately 3,400 plots. Mike Farley,
chief executive, said Hillreeds high
quality family housing complemented
its existing Persimmon, Charles Church
and Westbury Partnerships brands.
Waverley administrators axe jobs
nAround 685 staff at drinks wholesaler
Waverley TBS have been made redundant
after administrators were unable to find a
buyer for the business. Deloitte said the
company, whose customers include Hilton
Hotels, will continue to operate with a
reduced workforce of 97 employees as it
focuses on selling its assets. The private-
equity owned group called in
administrators last week, blaming tough
trading conditions in pubs for its demise.
TUESDAY 9 OCTOBER 2012
14
cityam.com
LONDONREPORT
US stocks fall
in Columbus
Day light trade
U
S stocks slipped in light
trading yesterday, pulling back
from recent five-year highs
ahead of an earnings season
expected to be weak.
Trading volume was the lowest so
far this year in a full session as the US
government and the bond market
were closed for the Columbus Day
holiday. About 4.1bn shares changed
hands on the New York Stock
Exchange, the Nasdaq and NYSE MKT,
compared with the year-to-date daily
average of 6.54bn to last Friday.
Stocks were pressured throughout
the day as the World Bank cut its
growth forecasts for the East Asia and
Pacific region, and warned that the
slowdown in China could worsen and
last longer than many analysts expect.
Analysts expect third-quarter earn-
ings to fall for the first time in three
years even though the S&P 500 gained
5.8 per cent during that period. Such
a forecast might call into question
whether the rally can be sustained.
Certainly there have been a lot of
downward revisions in earnings in
general, said Peter Jankovskis, of
OakBrook Investments LLC in Lisle,
Illinois. Some people are predicting
that we may see an overall decline in
earnings, so there may be some defen-
sive posturing and profit-taking.
The reporting season begins in
earnest today with Alcoa, which is
expected to post a break-even quarter
compared with a profit of 15 cents per
share a year ago.
The Dow Jones industrial average
fell 26.50 points, or 0.19 per cent, to
13,583.65 at the close. The S&P 500
lost 5.05 points, or 0.35 perc ent, to
1,455.88. The Nasdaq Composite
dropped 23.83 points, or 0.76 per cent,
to end at 3,112.35.
B
RITISH blue chip shares dipped
yesterday with growth-linked banks
and miners hit by concerns about
earnings and the global outlook,
although analysts said the markets
uptrend would resume soon.
UK banks fell 1.2 per cent, while mining
stocks were down 0.4 per cent after the
World Bank cut its growth forecasts for
China and as investors prepared for third-
quarter earnings, which kick off in the
United States today with results from alu-
minium company Alcoa.
According to Thomson Reuters data,
earnings for the US S&P 500 companies
are forecast to have fallen 2.4 per cent
from a year earlier, the first drop in three
years. The earnings season in Europe will
pick up in the second half of October.
Cookson Group, which makes products
for the global steel industry, and recruiter
Michael Page yesterday became the latest
UK firms to issue profit warnings.
Cookson shares plunged 12.4 per cent
while Michael Page shed 0.6 per cent.
Traders and analysts said the index had
potential to bounce back again soon as the
overall trend remained positive. Expected
developments such as Spain seeking a
bailout and some clarity on the US fiscal
cliff of spending cuts and tax rises could
lift investors appetite for risk, they said.
The market saw choppy trade, with the
FTSE 100 paring losses late in the session
to end 29.28 points, or 0.5 per cent, lower
at 5,841.74, after falling to a low of
5,818.76.
The index, which has traded in a broad
range of 5,630-5,930 in the past two
months, is up nearly 5 per cent this year
and has gained 11 per cent since a low in
June.
FTSE falls as banks and miners hit
by concerns over earnings outlook
BESTof theBROKERS
EasyJet plc
2Oct 3Oct 4Oct 5Oct 8Oct
p 630
620
610
600
590
619.50
8 Oct
DEUTSCHE BANK
Deutsche has given
easyJet an upgrade from
hold to buy, based
on a positive update and
its new allocated seating
plan, and has increased
its target price by 17 per
cent to 745p.
DASHBOARD CITY
NEW YORK
REPORT
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
FTSE
2Oct 3Oct 4Oct 5Oct 8Oct
5,900
5,880
5,860
5,840
5,820
5,800
5,841.74
8 Oct
Burberry Group PLC
2Oct 3Oct 4Oct 5Oct 8Oct
p 1,040
1,030
1,020
1,010
1,000
1,017.00
8 Oct
SEYMOUR PIERCE
Seymour Pierce
maintains its hold
rating for the luxury
fashion retailer, judging
it a long term growth
story despite its recent
profit warning, and sets
a target price of 1,200p.
British American Tobacco PLC
2Oct 3Oct 4Oct 5Oct 8Oct
p
3,350
3,325
3,300
3,275
3,250
3,225
3,200
3,175
3,287.50
8 Oct
NOMURA
Despite its bearish
stance on the tobacco
sector, Nomura retains a
buy rating for BAT,
saying it is likely to
outperform Imperial and
reach a target price of
3,506p.
Dechert
Lewis Ho has been appointed to
Decherts Hong Kong office as a
partner in the corporate and
securities practice. He was
previously partner at the
Simmons & Simmons Beijing
office. He has represented
international pharmaceutical
companies including
GlaxoSmithKline and Novartis,
served as vice chairman of the IP Working Group of the
European Union Chamber of Commerce in China from
2009-2011 and is an honorary legal adviser to the Hong
Kong Association of the Pharmaceutical Industry.
Grant Thornton
The business and financial adviser has announced the
appointment of Nick Andrews as a partner in its forensic
investigations team. Andrews has over 30 years
experience of accounting, investigations and forensic
work. Most recently, he led another firms UK dispute
advisory practice for 10 years. He is a fellow of the Institute
of Chartered Accountants in England and Wales, who have
accredited him as an expert witness and forensic
accountant.
Alliance Trust
Duncan Squire has joined the investment company as its
head of performance and risk. He has nearly 20 years
experience in perforance, risk and portfolio analysis and will
report to the Katherine Garrett-Cox, chief executive of
Alliance Trust. He was formerly head of investment
performance and risk at Fidelity Worldwide Investment and
had previously worked for UBS and Newton Investment
Management in risk management and portfolio analytics.
M&G Investments
The institutional investor has added to the distribution
team of its fixed income business with the appointment of
Annabel Gillard as UK sales director. Gillard was previously
head of UK institutional business development at Union
Bancaire Orivee. Prior to this, she worked at SWIP and
Baring Asset Management. She is also a board member of
the CFA Society of the UK.
WHOS SWITCHING JOBS Edited by Annabel Palmer
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
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S
PEAKING in Budapest, the
Foreign Secretary William
Hague recently announced
that cyber-crime is one of the
greatest global and strategic
challenges of our time. In July, the
director general of the Security
Service Jonathan Evans stated that
cyber security ranks alongside
terrorism as one of the four key
security challenges facing the UK.
There is no getting round the fact
that nationally and globally we need
to raise our game.
And Im not talking about short-
term investment and one-off security
reviews. The only way we can get to
grips with cyber-crime is by taking a
long-term strategic approach.
In saying that it has never been
easier to be a cyber-criminal the
I
F YOURE keen to catch sight of
what the Conservative party might
look like in a decades time, you
should make your way to the
Sonata room at the Hyatt Hotel in
Birmingham at half past seven this
evening. A fringe meeting there,
organised by the Institute of Economic
Affairs and the Free Enterprise Group
of market-leaning Conservative MPs
will spell out their radical ideas for the
sort of policies which should be
included in the 2015 manifesto.
Of course, the headlines of the con-
ference are being driven by day-to-day
issues of political management: are
the rumblings against Camerons pre-
miership registering at all on the
Richter scale? Has the vital debate
about airport capacity in the South
East merely become a cypher for
whether you would prefer Dave or
Boris as Tory leader? Can Osbornes
negative poll ratings fall any further?
However, what is becoming increas-
ingly clear is that the coalitions dreary
day-to-day approach preaching the
need for dramatic reductions in public
spending, but not producing them is
cityam.com/forum
Tax thresholds should
rise with earnings, taking
many middling earners
out of 40 per cent tax
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

16
TUESDAY 9 OCTOBER 2012
MARK LITTLEWOOD
Taking a long view: Radical ideas
for the Conservatives manifesto
failing to deliver us to the sunlit
uplands we were originally promised.
The UK economy remains stuck in the
foothills.
Dire economic times demand imagi-
native out-of-the-box thinking. A
flatlining economy necessarily
expands the envelope of what is politi-
cally possible. It also obliges politicians
to take greater risks. A steady as she
goes strategy is no longer intellectual-
ly credible, nor is it likely to curry
favour with an increasingly disillu-
sioned, even desperate, electorate.
Among the ideas being put forward
by the Free Enterprise Group this
evening are ensuring that tax thresh-
olds rise with earnings, taking those
on reasonable but middling incomes
out of the 40 per cent tax bracket; find-
ing a way to introduce a brake on
future governments ratcheting up
colossal debts; helping small business-
es escape the throttling consequences
of red tape; and a novel approach to
economic immigration through the
issuing of enterprise cards.
The authors of the report readily con-
cede these are all ideas in their embry-
onic development, not a fully detailed,
minutely costed policy platform. But
the direction of travel is clear. Kwasi
Kwarteng MP, the groups convenor,
argues that fostering free enterprise
through reforming public spending,
cutting taxes and getting the welfare
budget under control needs to be at
heart of our political agenda. The
Prime Minister and chancellor might
claim to sympathise with such senti-
ments, but Kwarteng and his col-
leagues in the Free Enterprise Group
appear to be willing to start undertak-
ing the intellectual legwork to match
the soundbite.
If we want to help companies get off
the ground, we need to allow them to
be flexible and risk-taking, not to
make it a terrifying prospect to move
from sole trader status to taking on a
few employees. Why not allow the first
dozen employees of any start-up to be
treated as self-employed for the pur-
poses of employment law and taxa-
tion? True, such employees would not
have the rights and privileges afforded
to those who work in established
industries or in the public sector, but
isnt this preferable to leaving them on
the welfare rolls?
And if we are really serious about get-
ting people off welfare and into work,
the reforms presently being intro-
duced by Iain Duncan Smith will need
to be seen as a first step, not the final
word. The insanity of a system which
often makes a life on benefits more
lucrative than a life of gainful employ-
ment will, the coalition promises us,
be ended. But this is not sufficient.
Those who are able to work, but
presently seem incapable of finding
employment, should be expected to
spend around 30 hours a week work-
ing in the community which provides
for them. This leaves plenty of time
over to apply for jobs and will also help
to promote a culture of working.
In his speech yesterday, George
Osborne made a half-smiling, half-seri-
ous call for the workers of the world to
unite. Hot on the heels of Ed Miliband
invoking Disraeli and a One Nation
agenda, one might assume that poli-
tics has been turned on its head. But
the truth is that Britain needs a work-
ers party in the true sense of the word.
One which rewards grafters and
strivers. Todays manifesto suggestions
by the Free Enterprise Group show
there are some Conservatives who
wish their party to position itself in
just this way. Their ideas should be
challenged, refined, welcomed and
applauded.
Mark Littlewood is director-general of the
Institute of Economic Affairs.
foreign secretary hammered home
the point that the time for sitting on
the sidelines debating how much
time and resources can be spared is
well and truly over. His statement
should send a chill down all our
spines especially those running
British companies. After all,
businesses are in the eye of the
storm, last year picking up three
quarters of the UKs 27bn cyber-
crime bill. Evidence suggests things
will get even worse.
It is important to recognise the
steps that the financial sector is
taking to get its house in order,
exemplified last week when banks
participated in the European
Unions biggest financial security
exercise.
But still, a walk through many
offices will reveal employees
working on computers equipped
with USB and DVD drives that have
write capability as standard, as well
as office infrastructures with little
partitioning of data to limit access
based on appropriate need and
security clearance. Cloud
computing, social media and remote
devices all offer new business
opportunities, but also provide
different ways for fraudsters to
compromise company systems.
Some senior executives are still
not engaging with the dangers
facing their organisations only
signing-off investment to combat
what they perceive to be the existing
threat, while technology is moving
so quickly that a new and more
formidable foe is already knocking
at their doors. Boardrooms must
move beyond the quick fix and
instead seize the initiative and look
for a fresh approach to the issue of
data security and the future fraud
threats coming from the internet.
Hague has announced that the
government is spending 2m on a
new cyber-crime centre and the
Home Office has already placed
economic crime as one of the four
pillars of the new National Crime
Agency. These are important steps
and I look forward to my force
assisting in their development. At
the City of London Police we are part
of the International Cyber Security
Protection Alliance, set-up to help
governments, law enforcement and
businesses get a head-start on cyber-
criminals. Closer to home we are
confronting frauds exploiting the
latest technologies, supported by our
National Fraud Intelligence Bureaus
cyber-crime desk.
While it is vital that we think big
and look beyond our shores to face-
down this criminal epidemic, we
must also all take responsibility for
keeping our own house in order.
Adrian Leppard is commissioner for the
City of London Police.
ADRIAN LEPPARD
Businesses need to wake up to the real and present danger of cyber-crime
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17
TUESDAY 9 OCTOBER 2012
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Public services
[Re: Lessons to be learnt from
governments rail franchise fiasco,
Thursday]
Only the free market provides the
incentives necessary to create an efficient
operation. It is a public servants incentive
to create complex organisations that voters
cant always understand and thus the
argument will remain better management
rather than better incentives.
Tobias Wahl
There is no reason whatsoever that a public
enterprise cannot be run professionally.
But it would mean a complete rethink of
the current administrative system.
Carl Bennett
Taxing wealth
[Re: Fiscal crisis wont go away until taxes
and benefits balance, Monday]
Taxing income flows, rather than wealth, is
unfair on the cash rich but asset poor. They
cannot acquire assets due to the asset
boom especially in housing, which is
artificially propped up to ensure that the
borrowings secured by financial
institutions on these assets dont go
underwater. With regards to negative
effective tax rates, look at the costs of
living the actual costs, rather than the
manipulated official figures compared
with wage growth. The benefits these
people are receiving are not welfare for
them, theyre welfare for their employers.
Carl Thomas
A
S INVESTORS and
companies steer a course
through social and
economic turmoil, it is
understandable that they
are cautious of new markets. But,
despite the volatility of the Arab
Spring, it would be a missed
opportunity to ignore the Muslim
world.
There are 1.8bn Muslims globally;
the majority are spread across the 57
countries of the Organisation of
Islamic Cooperation (OIC), along
with substantial populations in India
and China. Within the OIC, 40 per
cent of the population is under the
age of 25, and it is this demographic
that is driving change and growth.
In its spirit of entrepreneurship,
the Muslim world now resembles
Latin America a few years ago. Start-
ups are common. In Beirut, Cinemoz
provides access to the Arab worlds
largest online catalogue of films and
TV shows. In Dubai, the news service
Diwanee provides Arabic news for
women.
Large multinationals have also
made successful entries into the mar-
ket. Microsoft has created an
Egyptian outsourcing business,
employing 65,000 people and gener-
ating more than $1bn (618m) in
annual revenues. McDonalds has
three times more customers in the
Arab world than in the whole of
Europe. However, many companies
are still nervous about how they will
be received by Muslim consumers.
But there are already strong links
between the West and the Muslim
world. Islamic finance is a $2.1 tril-
lion global industry, and the halal
industry is estimated to be worth
over $500bn with products pro-
duced in such diverse locations as
Malaysia, Brazil and New Zealand.
There has never been such a great
opportunity for trade between
Muslim and non-Muslim countries.
TOP TWEETS
Boris v Dave summed up: @David_Cameron
follows @mayoroflondon (and only 3 oth-
ers); @mayoroflondon follows 4,543 but not
@David_Cameron.
@davidschneider
Allowing German and French governments to
hold 18 per cent in merged BAE is like allow-
ing Napoleon to own the UK liveries before
Waterloo.
@Steven_Woolfe
I am starting conference with this new
Twitter feed about my role as Conservative
Leader. I promise there wont be too many
tweets...
@David_Cameron
(The Prime Ministers first tweet)
Is Osborne right to encourage employees to
trade workplace rights for tax-free shares?
YES
Employees owning shares in their employer is good for the business
and can help drive the right behaviours. At first glance this new
proposal seems simple and generous, and will be of particular
interest to start-ups. But its success will depend on the detail and
consultation will be crucial. For example, since start-ups are not
generally listed, they may not have an easily accessible share
valuation. Preparing valuations could be costly and time
consuming. Another issue is whether or not acquiring the shares in
the first instance will cause an income tax liability for the
employees. Generally, unless individuals pay full value for shares
acquired from an employer, the value of the shares will be a taxable
benefit. The government has a real opportunity to make this an
attractive plan by either waiving any income tax on acquisition or
deferring this tax until the shares are actually sold.
Carol Dempsey is a partner at PricewaterhouseCoopers.
Carol Dempsey
NO
Kayte Lawton
The employee-ownership scheme may appeal to a few high-
growth start-ups but it probably wont make much difference to
most companies, whose big problem is a lack of demand rather
than red tape. The CBI has said it is a niche idea and not
relevant to all businesses. Its not clear why parts of the
coalition government are so concerned about employment rules
and other regulations on businesses. The UK has one of the least
regulated labour markets in the OECD and, according to a recent
survey commissioned by the business department, just 6 per
cent of SME owners think that regulation is the main obstacle
facing their business. Rather than fiddling around with
employment law, the chancellor would be better off focusing his
attention on boosting growth with a major programme of
infrastructure investment.
Kayte Lawton is a senior research fellow at the IPPR.
RAPIDresponses
The Muslim world
is opening up for
Western investors
Muslim consumers mirror global
consumer trends for social responsi-
bility, integrity and transparency,
offering businesses the chance to tar-
get multiple customer segments.
Like in the West, young Muslim men
and women also welcome new
brands and companies. They appreci-
ate being engaged by companies that
earn their loyalty through local
investment, empathy and courage.
Nevertheless, there are distinct
challenges. As Western investors
become increasingly risk-averse, for-
eign investment has slowed. Hurdles
to overcome include the perception
of corruption, government red tape,
and furtive interests controlling busi-
ness policy. The way to address these
issues is through dialogue and a
drive for more transparency.
Investors must also overcome
bureaucracy, access to capital and
the difficulty of developing talent. As
stability returns to the Muslim
world, investors that have already
built relationships will gain most.
This is one of the reasons why bring-
ing Muslim and non-Muslim busi-
ness people together, at events like
the World Islamic Economic Forum,
is so vital.
Collaboration in trade and invest-
ment will promote peaceful coexis-
tence, as well as allowing both sides
to mutually benefit. I hope that we
are at the start of a promising, long-
term partnership.
Tun Musa Hitam is the former deputy
prime minister of Malaysia and chairman
of the World Islamic Economic Forum.
TUN MUSA HITAM
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TUESDAY 9 OCTOBER 2012
18
cityam.com
E
ARNINGS season is
underway. This week,
investors will learn about
the health of some of the
biggest US companies.
There is an air of pessimism.
According to analyst surveys,
earnings last quarter are expect-
ed to drop 2.4 per cent, and we
may see more losses reported
than profits for the first time in
four years.
But some have found reasons to
be sanguine: US unemployment
fell below the stubborn 8 per cent
barrier in September, and July
and August readings were revised
significantly. On the back of that,
the Dow Jones Industrial Average
index and S&P 500 both
approached highs not seen since
2007, and are up around 25 per
cent in the last 12 months.
However, this rally may be short-
lived.
LACKING METTLE
Investors are nervous about
industry bellwether Alcoa, which
reports after todays closing bell.
The leading producer of alumini-
um has a lot of exposure to
China, where the slowdown has
reduced demand for industrial
metals. Shares have shed 8 per
cent over the last 12 months, and
there may be further downside.
The price of aluminium has
been steadily declining over the
last two years and this will
inevitably hit the companys
earnings. Stephen Briggs of BNP
Paribas feels that the growth out-
look is quite painful, and theyll
struggle to make money.
YUM YUM
Yum! Brands, the owner of Pizza
Hut and KFC, is the worlds
largest chain of restaurants with
over 38,000 restaurants in 120
countries, and it also reports
today. Like Alcoa, it has plenty of
Pessimism will engulf
US corporate earnings
Third quarter reporting kicks-off this week
American shares are
set for gloom, says
Yogesh Chadnarana
TRADING MANAGEMENT WEALTH
THE TIPSTER
Chequered outlook for Burberry
C
ONCERNS over a slowing global
economy have affected
Burberrys performance in
Asia, a key growth market for
the luxury retailer. The stock, down
36 per cent from its all-time highs in
April, has come under further
pressure after the World Bank
reduced growth forecasts in Asia.
Capital Spreads quotes a price of
1,011.4p-1,013.6p for Burberry.
Travis Perkins is likely to report
a grim outlook when it gives its
interim management statement on
Friday. Combined with weak
consumer confidence, the owner of
Wickes is likely to be affected by
poor weather over the summer,
which will have impacted sales
volumes. However, given recent
drives to improve cost efficiency in
its specialist merchandising business,
traders will be looking for progress.
Shares are up nearly 40 per cent this
year and trade towards the top of
their 52-week range. ETX Capital
quotes a price of 1,080.38p-
1,080.61p for Travis Perkins.
Ubiquitous high street baker
Greggs issues an interim
management statement on Thursday,
and traders will be wondering
whether the flagging fortunes
revealed in the last update will show
any signs of improvement. The
heralded defeat of the pasty tax
failed to have a significant impact in
the summer. Shares have gained
about 3 per cent this year, and are
hovering in the middle of their 52-
week range. GFT Markets quotes a
price of 515p-517p for Greggs.
It appears that the countrys
appetite for chocolate is returning.
After a volatile year that has seen
over 30 per cent wiped from its share
price, investors are cautiously
optimistic about sales growth from
Thorntons. Spreadex quotes a
price of 30.39p-31.61p for Thorntons.
YOGESH CHANDARANA
is a relatively safe play for those
betting that US housing has bot-
tomed out.
There is more uncertainty
around JP Morgan: a lawsuit
brought by the New York attor-
ney general over alleged mort-
gage security fraud by Bear
Stearns (now owned by JP
Morgan), and potential fines for
Libor manipulation bring legal
and regulatory risk. But Straite
thinks that overall, they are
pretty safe, and can deal with
these issues. Traders will want
guidance regarding share buy-
backs, which were suspended in
the wake of the London Whale
trading scandal, which resulted
in losses of $2bn (1.25bn). A
resumption of that programme
may boost shares.
Banks may be a bright spot, but
generally it looks like a season of
gloom for US equities. By the
quarter end, we might also see
just how reliant American mus-
cle is on Chinese steroids.
exposure to China, where it earns
half of its revenues.
Yum has bucked the trend and
grown phenomenally since the
start of the crisis. Shares have
doubled since the beginning of
the 2009 as the company posi-
tioned itself more towards emerg-
ing markets. This year alone,
shares have risen by 30 per cent,
although they are off highs seen
in April. The company is expected
to post a profit, so any dips in the
share price may represent a good
entry point for traders.
BET ON THE BANKER
Banks are expected to be a bright
spot during this earnings season,
and analysts predict a 5.5 per
cent growth in earnings, accord-
ing to FactSet. Two banking
titans will report on Friday.
Wells Fargo provides one-third
of all new mortgages in the US
and has seen strong mortgage
refinancing recently. Richard
Straite of Atlantic Equities says it
fx360.com
AMERICAS FISCAL CLIFF MAY
BRING A NEW LEVEL OF PAIN
Dow Jones Industrial Average
2008 2009 2010 2011 2012
14,000
13,000
12,000
11,000
10,000
9,000
8,000
7,000
13,560.69
8Oct
twitter.com/fx360 facebook.com/fx360
The contents of this column are provided for general information purposes only. One should consider the appropriateness
of the information in light of their own objectives, financial situation or needs before trading. CD11UK.074.010612
NEAL GILBERT
SENIOR MARKET STRATEGIST, GFT
T
HE term fiscal cliff may have
only been coined as a phrase
by Ben Bernanke as recently as
eight months ago, but its likely
to be used more frequently as
we head into the year-end. If US
legislators fail to act, a combination of
sharp tax hikes and public spending
cuts could have the potential to wreak
havoc on the US economy, knocking
back any emerging green shoots of
recovery and threatening to plunge the
worlds largest economy back into
recession. So, the significance of falling
off a fiscal cliff is certainly worthy of
the dramatic name.
As we saw in August 2011, politicians
in Washington arent averse to a
degree of brinksmanship. Dragging out
the resolution of the debt ceiling fiasco
ultimately resulted in Standard and
Poors downgrading the US. Whats
more, the legislation that followed only
seemed concerned with ensuring that
politicians get re-elected next month.
Its probably time investors started
looking around to see where the
emergency exits are located.
Imposiing severe tax hikes, aiming to
collect around half a trillion dollars in a
single year already labelled by some
as Taxmageddon will likely be the
most obvious move from the
government. The average US
household will see annual taxes jump
by $3,500 (2,183) money that will
head into government coffers rather
than into investments which would
prop up stock markets, or into cash
registers of retailers. The hikes will hit
every household except the elderly,
who are largely reliant on social
security. But the overall tax take will
only rise by 2 per cent, to 18 per cent of
GDP thats around the rate that it
averaged in the second-half of the last
century.
The second aspect of the fiscal cliff is
the accompanying raft of government
spending cuts: employee layoffs and
reductions in spending across the
board including some high profile
areas, such as defence will result in
higher unemployment, reduced
spending and lower levels of saving.
We should be bracing ourselves for a
fallout in equity markets as equity
prices slump in response to fewer
inflows be this a result of consumers
not spending, or government contracts
drying up. Bear in mind that the Dow
Jones Industrial Average has been
trading around five-year highs of late,
largely driven higher by successive
stimulus measures, including the
suppressed tax rates in the domestic
economy. There is certainly space for a
degree of reversion here.
There is also an argument to suggest
that failure to tackle the fiscal cliff
could result in further downgrades
from ratings agencies, on the basis that
politicians arent giving the situation
the due attention that it deserves.
Any resulting downside pressure to
the dollar would help support the
countrys export market (and maybe
even put the brakes on imports too).
Furthermore, any dollar weakness
should be limited by the fact that for
the first time in years, a sharp
reduction in the deficit can be
produced, in turn giving a little more
credence to the fact the dollar isnt on
the verge of spiralling into obscurity.
As the worlds largest economy, the
US has never been in the same risk
bracket as some European states where
the market loses confidence and
borrowing costs spiral to unsustainable
levels. But investors must be wary of
the impact that this could have on US
equities, although the story for the
fortunes of the dollar could very well
be different certainly after any initial
uncertainty is put to bed.
S&P 500
2008 2009 2010 2011 2012
1,500
1,300
1,100
900
700
The quality of the US labour market is in decline, writes Craig Drake
Romney emerged victorious from the first presidential debate
into the non-farm figures.
The headline jobless figure is an impor-
tant one, and has the potential to influ-
ence whether Barack Obama will be
ousted by Mitt Romney, his Republican
opponent. It also has an impact on US
monetary policy. The open-ended quan-
titative easing programme unveiled by
the Federal Reserve in September com-
mitted the central bank to monthly
asset purchases of $40bn (24bn) until a
substantial improvement is seen in the
US labour market. But underneath the
headline grabbing number, the quality
of those jobs and the cyclical nature of
the labour markets make this number
not all that it seems. The biggest jobs
increase came from part-time workers
up by 582,000 in September. But the U6
unemployment rate often seen as
more inclusive as it also counts the num-
ber of people who have given up looking
for work, as well as those in part-time
work but looking for full-time work
has been stuck at the 14.7 per cent mark
My pick: Long New Zealand dollar-dollar
Expertise: Combining fundamental and technical analysis
Average time frame of trades: A few hours to a few days
The Aussie-dollar long trade, after violently gyrating
between gains and losses for two weeks, was closed for 100
pips: the surprise Reserve Bank of Australia rate cut was the
nail in the coffin. A new long New Zealand dollar-dollar
position was taken at $0.8175. Im gearing up for a US dollar
sell-off in October with new stimulus measures expected
from China (as the new leadership comes into play), as well
as a positive market reaction from a Spanish bailout request.
ANALYST PICKS
Obamas isnt the only job at risk
B
ARACK Obamas re-election
hopes were given a boost on
Friday with a strong non-farm
payroll print, coupled with a
significantly improved
unemployment rate. With less than
a month until the US presidential
elections on 6 November, the
crucial employment survey gave the
Obama camp an unbelievable fall in
unemployment falling to 7.8 per
cent from 8.1 per cent in August
and 8.3 per cent in July.
The 7.8 per cent figure brings the
jobless rate below the level when
Obama took office in January 2009.
The serendipitous nature of these
numbers has raised a few eyebrows
most publicly those of former
General Electric chief executive Jack
Welch, who accused the Chicago
machine of manipulating the num-
bers to make up for Obamas poor
debate figures. But conspiracy theo-
ries aside, it is worth delving deeper
STRATEGIST
ILYA SPIVAK
My pick: Stay short Aussie-Canadian dollar
Expertise: Combining fundamental and technical analysis
Average time frame of trades: 1 week to 6 months
I sold Aussie-Canadian dollar at Ca$1.0441 on 14 August, to
trade expectations of a pick-up in US economic growth,
coupled with a slowdown in China. I added to the position at
Ca$1.0370 on 24 August as the down move resumed after a
brief rebound. Prices have now taken out support at
Ca$0.9998 and stand to challenge the Ca$0.9932-55 area
marked by the 61.8 per cent Fibonacci expansion level and the
23 May swing low. A break below that exposes Ca$0.9851.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Short euro-dollar and Aussie-dollar; long dollar-yen
Expertise: Combining fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
I moved too early on the sterling-dollar short last week. The
pair is overbought and offered a break, but risk aversion
didnt take. I booked my dollar-yen long from 77.60 for 100
pips. I would like a further channel break above 79. The
euro looks increasingly dubious and an eventual break
below 1.2825 support seems inevitable. In the event of a
short-lived risk run, Ill look for an Aussie-dollar short from
its trendline at Au$1.0500.
for a number of months. That the
worlds largest economy is becoming
a nation of part-time employees is a
worrying trend, not just for policy
makers, but for world markets that
rely on US demand.
PUNTING ON MITT
The election in a month will undoubt-
edly move markets, but how much
and in what direction is difficult to
judge. An analysis of Democratic and
Republican tax change proposals by JP
Morgan suggested up to a 14 per cent
gain if Republicans win and a 14 per
cent drop if Obama remains in the
White House. However, if you fancy
your election winning predictions
more than your stock picking,
Sporting Index currently gives a
spread of 13.5 to 15 points for Romney
to be the next President of the United
States and 315 to 320 points for
Obama to win the electoral college
ballot.
TUESDAY 9 OCTOBER 2012
19
cityam.com
CURRENCY STRATEGIST
CHRIS VECCHIO
Champagne: is
bigger better?
W
HEN you think about buying a
bottle of Champagne, which
names immediately spring to
mind? Bollinger? Moet &
Chandon? Brands like these carry a hefty
price tag but whether their wines are
better than the cheaper alternatives is up
for debate. You can buy a bottle of Tesco-
branded Champagne for under 20; a
perfectly fresh and tasty wine from the
Union Cooperative in Avize. This is the
largest cooperative of local Champagne
producers and they create wines for the
likes of Tesco, Sainsburys and even some
of the big Champagne brands. On the
other hand, Avize is also home to a few
independent Champagne houses,
including Champagne de Sousa, whose
wines sell upwards of 50. Are the
independent and cooperative wines any
different? Yes and no.
On a recent trip to the Champagne
region of France, I stayed in the village of
Dizy just outside Epernay. In Dizy, the
hillsides are covered in a blanket of vines
as far as the eye can see. Small headstones
rest at the end of the rows of vines, telling
you who the grapes belong to, and
billboards sit either side of the roads
advertising local Champagnes. I decided to
visit one local producer to see if his wines
could stack up against the well-known
names. He told me that he sells 75 per cent
of his grapes to one of the major
Champagne houses and the rest he uses to
produce his own wine. I suggested that if
this is the case, surely the Champagne
houses that buy his grapes would produce
a wine that tastes very similar to his own.
The short answer is: yes. While there will
be subtle differences due to the individual
blending, the wine would be very similar if
not completely indistinguishable.
While it is very nice to have a
bottle of the 99 Vintage from
Pol Roger chilling in the fridge
for a special occasion (and I
agree that such wines demand
the price tag), finding a
Champagne suitable as an everyday
quaffer isnt as daunting as it sounds
and really shouldnt be expensive.
With a touch of trial and error, you
will soon see some of the cheaper
options are actually just as good if not
better than the premium brands.
LIFE&STYLE
TUESDAY 9 OCTOBER 2012
20
cityam.com
FOOD & DRINK
SIMPLY
WINE
JOHN SIMPER
City A.M.s wine industry expert
Fish Market may look a bit like
an aquarium but the food is ace
T
HE FISH Market is one of the
four new creations by
restaurant group D&D to have
found a home in the newly
renovated Old Bengal Warehouse.
Alongside the fish restaurant sits
the New Street Grill, a low lit saloon
style meat house; The Old Bengal
Bar, a cool, vibrant cocktail bar; and
a wine merchant and caf, which
employs an ingenious wine oyster
card system.
After being greeted by the matre d'
d, youre transported from the
damp, cold London streets into the
fresh seaside interiors of the Fish
Market. Painted a teal blue, with
rough wooden furniture and big
pales of sauces adorning each table,
the Fish Market has a cheery, beachy
feel to it. This is not, however, your
normal fish & chip restaurant: this is
something altogether classier. There
are no newspaper wrappers, or grey
peas mushed to a pulp, no greasy
chips or seagulls scavenging for your
food. I had plaice goujons with tartar
sauce to start, a generous portion by
anyones standards, which disap-
peared at break-neck speed.
Counter-intuitively, I invited some-
one who doesnt like fish and a mild
panic spread over my guests face, as
she looked over the menu and at the
bar, laden with colourful crus-
taceans. Luckily, Fish Market caters
for fish-phobic friends, with a variety
of meat and vegetarian alternatives.
Despite her carnivorous tastes, she
ordered the prawn cocktail, which
was thoroughly enjoyed.
The second course was just as good.
The cod and leek fishcake was crisp
and flavoursome, served with a
creamy, rich mustard sauce and soft,
fluffy mash potato. My meat-eating
friend ordered the fillet of steak a
huge chunk of succulent meat,
although it was served a little on the
bloody side for my taste.
We fully planned to abstain from
dessert until we spotted the choco-
late hot cake. Thank God we did it
was to die for. The warm chocolate
and nut cake, served with hot rich
chocolate sauce and vanilla ice
cream, was also divine.
Following the meal, the bar staff
humoured us late into the night.
This could be the enthusiasm of the
new job or perhaps it is the mantra
of the Fish Market; only time will
tell. I will certainly be back to find
out.
RESTAURANT
FISH MARKET
Old Bengal Warehouse, New Street, EC2
Tel: 020 3503 0790
FOOD hhhhi
SERVICE hhhhi
ATMOSPHERE hhhii
Cost per person without wine: 30
AMUSE
BOUCHE
BRUCE WILSON
Wild boar was extinct for hundreds of years. Now its back, learn how to enjoy it
O
CTOBER is here and if youre
feeling adventurous, its a
great time to try Wild Boar.
Not because its in season
(unlike most game, wild boar
doesnt really have a season), but
because the accompaniments that
go best with it are. Wild
mushrooms, beetroot, juniper,
chestnuts, apples, plums, pumpkin
all those things that go well with
pork go even better with wild boar.
Like pork, only with a stronger,
gamier, more savoury flavour, its a
meat that can be used in a variety
of ways from adding a new twist
to classics like burgers or meatballs
(sage works particularly well with
it, as does a sauce with slightly
more acidity to balance the
gaminess), to sausages, terrines,
pt and curing. Being wild, it
tends to be a lot leaner than
commercially farmed pork, but this
makes it tougher and drier as well
so it also lends itself well to long,
slow cooking at low temperatures
in stews, hotpots or ragus.
However, its a meat you
rarely see on
restaurant menus or
in butchers shops in
this country (its
generally only
available through
specialist game
dealers). Its far
more popular on the
continent, and any wild
boar you do get over here
will often come from
France, Germany or Italy
where its a real speciality.
The population in Britain is
relatively low, having become
extinct several hundred years ago
and re-introduced at various
times, most successfully in the
New Forest, Forest of
Dean and the
Kent/Sussex border. It
is largely seen as a pest
by landowners and
farmers, although
farming wild boar (if
thats not an oxymoron)
appears to be growing in
Britain.
Its quite a few years ago
now, but I still vividly
remember having Wild Boar
liver at St Johns restaurant, served
with dandelion leaf salad and
chitalings, which was a very strong,
intense flavour, and quite coarse,
but worked beautifully with the
sharp dressing of the salad. More
recently, wild boar with peaches at
Wild Honey was delicious. I have
yet to try wild boar roasted in a pit
for two days as they do in Africa
and other parts of the world (not
that practical for a London
restaurant) but, as people become
more interested in food, it could be
time for wild boar to stage a real
comeback.
Try some wild boar on Bruces menu.
Visit paternosterchophouse.co.uk for more.
Albany Bell discovers posh fish & chips at their best at the new Old Bengal Warehouse
Head chef, Paternoster Chop House
21
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Basketball 10.30pmRussian
Premier League Review11pm
ESPN FC Press Pass 11.30pm
World Series of Poker 1.30am
UFC 3.30amUFC: The Ultimate
Fighter 4.30amPlanet Speed
5am-6amGRAND-AM Road
Racing
SKY LIVING
7pmCriminal Minds 8pmBritain
& Irelands Next Top Model
9pmStyled to Rock 10pm
Criminal Minds 11pmBones
12amSupernatural 1amNothing
to Declare 1.50am Passport
Patrol 2.40amMedium3.30am
Bones 4.20amAmericas Next
Top Model: All-Stars 5.10am-6am
Passport Patrol
BBC THREE
7pmTotal Wipeout 8pm
Creationism: Conspiracy Road Trip
9pmDont Tell the Bride 10pm
Cuckoo 10.30pmEastEnders: Phil
refuses to help Lola and Billy.
11pmFamily Guy 11.45pm
American Dad Weekend Viewers
Vote No 8 12.10amAmerican Dad
Weekend Viewers Vote No 7
12.30amCuckoo 1amDont Tell
the Bride 2amRussell Howards
Good News 2.30amCelebrity
B****slap News 2.50am-3.50am
Creationism: Conspiracy Road Trip
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8.30pmThe Big
Bang Theory 9pmNew Girl
9.30pmSuburgatory 10pmThe
Cleveland Show11pmRude Tube
12amThe Big Bang Theory 1am
Rude Tube: Viral Ads 2.05amThe
Ricky Gervais Show2.30amHow
I Met Your Mother 2.55am
Scrubs 3.20am90210 4amOne
Tree Hill 4.40amBeing Erica
5.20am-6amSwitched
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8.30pmCajun Pawn Stars
9pmStorage Wars 9.30pm
Storage Wars: Texas 10pm
Seeking Salvage 12amAmerican
Pickers 1amStorage Wars
1.30amStorage Wars: Texas 2am
Seeking Salvage 3amSwamp
People 4amThe Last Days of
World War Two 5amPawn Stars
5.30am-6amAmerican
Restoration
DISCOVERY
7pmFlying Wild Alaska 8pmFast
n Loud 9pmWheeler Dealers
10pmOne Car Too Far 11pmGold
Divers 1amWheeler Dealers 2am
One Car Too Far 3amSons of
Guns 3.50amWheeler Dealers
4.40amRaging Planet
5.30am-6amMeerkat Manor
DISCOVERY HOME &
HEALTH
7pmDr Oz 8pmIm Pregnant and
55 Years Old 8.30pmIm
Pregnant and a Hoarder 9pm
Embarrassing Bodies 10pm
Untold Stories of the ER 11pm
Kids Hospital 12amEmbarrassing
Bodies 1amUntold Stories of the
ER 2amKids Hospital 3amIm
Pregnant and Maybe Having a
Dwarf 4am-6amA Baby Story
SKY1
8pmRoad Wars 9pmStrike Back:
Vengeance 10pmFILMOceans
Thirteen 2007. 12.20amRoad
Wars 3.05amUK Border Force
4.45amBest of Oops TV
5.35am-6amAirline
BBC2 ITV1 CHANNEL4 CHANNEL5
S
A
T
E
L
L
I
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&
C
A
B
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6pmBBC News
6.30pmBBC London News
7pmThe One Show
7.30pmEastEnders: BBC News
8pmHolby City
9pmCHOICE The Paradise
10pmBBC News
10.25pmRegional News;
National Lottery Update
10.35pmThe Town That Never
Retired
11.35pmFILMWonder Boys:
Drama. 2000. 1.20am
Weatherview1.25amSign Zone:
Watchdog 2.25amSign Zone: The
Town That Never Retired 3.25am
Sign Zone: Celebrity MasterChef
3.55am-6amBBC News
6pmEggheads
6.30pmStrictly Come Dancing
It Takes Two
7pmThe Story of Wales:
Furnace of Change
8pmThe Great British Bake
Off: The semi-final.
9pmIan Hislops Stiff Upper
Lip An Emotional History of
Britain
10pmLater Live with Jools
Holland
10.30pmNewsnight: Weather
11.20pmToday at Conference
11.50pm The Choir: Sing While You
Work 12.50am BBC News
4am-6amBBC Learning Zone
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale: Charity and
Carl shake on a deal.
7.30pmCHOICE The Martin
Lewis Money Show
8pmFILMMamma Mia!
Musical comedy, starring
Meryl Streep. 2008.
10.10pmITV News
10.40pmLondon News
10.45pmFILMParenthood:
Comedy drama, starring Steve
Martin. 1989.
1amJackpot247; ITV News
Headlines 3amGolden Balls
3.50am-5.30amITV Nightscreen
6pmSimpsons 6.30pmHollyoaks
7pmNews 7.55pm4thought.tv
8pmDouble Your House for Half
the Money 9pmJewish Mum of the
Year 10pmCHOICE Fresh Meat
10.55pm8 Out of 10 Cats 11.45pm
Random Acts 11.50pm C4 Comedy
Presents: Them from That Thing
12.25amEuropean Poker Tour
1.20amHannah 1.25amBoxing
1.55amSailing 2.20am
International Volleyball 3.10am
Bullrun: Cops, Cars and Superstars
3.40amBritish F3 4.05amInside
Endurance: The Brownlees
4.35amFIM Superbike World
Championship 2012 5amBrief
Encounters of the Sporting Mind
5.10am-6.05amLondon Triathlon
6pmHome and Away
6.30pm5 News at 6.30
7pmEmergency Bikers:
5 News Update
8pmThe Hollywood Hillside
Strangler: Born to Kill?:
5 News Update
9pmPerson of Interest
10pmCSI: NY
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11.55pmCSI: Crime Scene
Investigation
12.45amForensic Files
1.10am SuperCasino 3.55amGreat
Scientists 4.20amHouse Doctor
4.45amMichaelas Wild Challenge
5.10-6amWildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6 7 8
9 10
11 12 13 14
15 16
17 18 19 20
21
22 23
24 25
10 26
30 13
13 14
6 24 3
45
6 12
45
16 8 15
19 9
14 29
27 11
8
14
11
10
16
14
16
21
7
7
12
43
10
22
44
8
23
6
9
11
7
35
4
10
17
10
ACROSS
1 Squads (5)
3 Fatigued (5)
6 Vicious angry
growl (5)
8 Trades for
money (5)
9 Mail (4)
11 Japanese dish
of thinly sliced
raw sh (7)
13 Engage in
espionage (3)
15 Inhale audibly
through the nose (5)
17 That girl (3)
19 Customers (7)
21 Sneering look (4)
22 Forbidden (5)
23 Sketched (5)
24 Our Friends in the
___, TV series (5)
25 Deserving of a
scratch (5)
DOWN
1 Long pointed teeth (5)
2 Changes shape as via
computer animation (6)
3 Showed to be
right, proven (9)
4 Toy gures (5)
5 Powdery (5)
7 Garment worn
around the hips,
usually by men (9)
10 Grin (5)
12 Anti-tobacco
organisation (inits) (3)
14 Animal kept for
companionship (3)
16 Small vicious
animal employed in
unearthing rabbits (6)
17 Glossy fabric (5)
18 Glowing fragment
of wood or coal left
from a re (5)
20 Bright and pleasant (5)
L
I
G
W
E F
H
Y
T
4

4


4

S L A P S P H O T O
E S L E W E R
X K A L M A N A C
T W A I N P S
E N G R I E V E
T A C T Y D E L I
L E A V E S R D
P L U K A S E
L A T E R A L N A
I C O N L D L
T A T T Y Y E A R S
6 9 9 1 7 9 8
1 2 8 5 1 2 3
2 8 5 7 3 6 4 1 9
1 4 2 5 3
4 9 8 6 4 2 6 9
2 8 1 8
1 6 3 2 2 1 3 4
6 8 7 5 9
9 6 4 3 5 1 7 2 8
5 1 2 8 3 8 9
8 9 1 9 7 1 5
4
4
4
4
4
4
4
4
4
The nine-letter word was
CRUSADING
T
E
R
R
E
S
T
R
I
A
L
S
A
T
E
L
L
I
T
E
&
C
A
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
TUESDAY 9 OCTOBER 2012
THE PARADISE
BBC1, 9PM
A baby is abandoned in the store, and
Morays first thought is to turn the
childs appearance into a marketing
opportunity. Drama, with Emun Elliott.
THE MARTIN LEWIS MONEY
SHOWITV1, 7.30PM
The financial journalist presents
money-saving tips to help consumers
cope with the current economic
climate.
FRESH MEAT
CHANNEL4, 10PM
New series. Kingsley reinvents himself
for spring term. Meanwhile, JPs friend
from Exeter delivers earth-shattering
news.
TVPICK
WEMBLEY and the Olympic Stadium
are among three London venues on
the longlist for use when England
hosts the Rugby World Cup in 2015.
Twickenham is the other on the
17-strong list, which will be cut to 12
and controversially does not include
Welford Road, the home of Leicester
Tigers. Cardiffs Millennium Stadium
is one of just three specialist rugby
arenas, along with Gloucesters
Kingsholm and Twickenham.
Leicester is represented by the citys
football ground, a decision Tigers
chairman Peter Tom called
disappointing and confusing.
Olympic venue
set for Rugby
World Cup use
ENGLAND Under-21 manager Stuart
Pearce is facing the sack just months
after looking well placed to succeed
Roy Hodgson as manager of the sen-
ior side, City A.M. understands.
Pearce could lose his job if the
team fail to win a two-legged play-off
against Serbia on Friday and Tuesday
week and clinch a spot at next sum-
mers European Championship. His
current contract expires in nine
months and he admitted in
September that the Football
Association was yet to begin talks
with him over an extension.
The former Three Lions full-back
has been groomed as a future senior
England manager since being
appointed to Fabio Capellos back-
room team in 2008, having been
Under-21 coach since the previous
year. He was handed the role of man-
aging Team GBs football squad at the
London 2012 Olympics, reaching the
quarter-finals, in what was seen as
another step on his career progres-
sion towards the top job.
Pearce even took charge of the sen-
iors in Februarys friendly against
Holland at Wembley, a 3-2 defeat, fol-
lowing the resignation of Capello ear-
lier that month. Having initially
played down his readiness to succeed
the Italian, Pearce then talked up his
desire to remain in caretaker charge
for Junes European Championship,
as the FA dragged its heels over choos-
ing Capellos replacement.
The appointment of Roy Hodgson
in May ended Pearces immediate
hopes, however, and he has since
found himself frozen out of the sen-
ior coaching set-up.
Stuart Pearce, in charge of the Under-21s since 2007, has less than a year on his contract
TUESDAY 9 OCTOBER 2012
22
SPORT
cityam.com/sport
BY FRANK DALLERES
@cityam_sport
FINAL 2013
TWICKENHAM 25TH MAY
TICKETS AVAILABLE AT TICKETMASTER.CO.UK OR
0844 847 2492 #bepartofit
Secure your place today for the biggest club rugby nal on the planet,
and a sell out for the last ve years.
PASSION
FOR THE
PASSION
EXCLUSIVE
BY FRANK DALLERES
PearceEngland
dream in ruins
as axe hovers
2015 VENUES LONGLIST
Villa Park, Birmingham; Brighton
Community Stadium; Ashton Gate, Bristol;
Millennium Stadium, Cardiff; Coventry
Stadium; Pride Park, Derby; Kingsholm,
Gloucester; Elland Road, Leeds; Leicester
City Stadium; Olympic Stadium,
Twickenham, Wembley Stadium, all
London; Old Trafford, Manchester;
StadiumMK, Milton Keynes; St James Park,
Newcastle; St Marys Stadium,
Southampton; Stadium of Light, Sunderland
23
Cleverly out to send a statement
nBOXING: WBO light heavyweight
champion Nathan Cleverly, of Wales,
insists next months fight in LA with
Ryan Coyne is his opportunity to send
a statement to his rivals.
Bolt plans to defend sprint titles
nATHLETICS: Jamaicas Usain Bolt
has revealed he plans to defend his
100m and 200m sprint titles at the
2016 Olympics. He said: To do three
[sprints], that is the focus.
LIVERPOOL manager Brendan
Rodgers has criticised the
vilification of Luis Suarez after the
forward was on Sunday accused of
diving against Stoke City.
The Uruguay international
theatrically fell in the Stoke penalty
area during their 0-0 Premier League
draw away to Liverpool at Anfield
but Rodgers has been exasperated by
criticism of the forwards behaviour
when an apparent stamp by Robert
Huth on Suarezs chest has been
largely overlooked and consequently
gone unpunished.
I find it incredible that in nearly
all the coverage about Luis Suarez,
very little focus has been placed on
the fact that he was actually the
victim of a stamping incident within
the first five minutes of the game,
said Rodgers.
I believe some people need to
develop a sense of perspective and I
also believe in this moment the
vilification of Luis is both wrong
and unfair.
Rodgers riled
by vilification
of Suarez dive
LIVERPOOL midfielder Jonjo Shelvey
has been rewarded for this seasons
fine form with the first England call-
up of his career as he and Ryan
Bertrand were respectively promoted
as cover for the injured Frank Lampard
and Kieran Gibbs.
Lampard remains in the squad but is
considered a doubt for Fridays World
Cup qualifier with San Marino at
Wembley after limping out of
Chelseas weekend victory over
Norwich with a knee injury but it is
the withdrawal of Arsenals Gibbs with
a thigh problem that has prompted
Bertrands arrival.
The defender is the understudy to
Ashley Cole at Chelsea who was
yesterday charged with misconduct by
the Football Association after taking to
Twitter to describe the organisation as
a bunch of t***s. Cole has until 4pm
on Thursday to respond to the charge
but remains in the squad despite
facing a domestic ban and it is thought
that regardless of his decision, England
manager Roy Hodgson will make the
ultimate call on if he is to be
considered for selection.
In addition to Ryan Shawcross and
goalkeeper Fraser Forster, Shelvey is
one of three uncapped individuals in
Hodgsons squad. The midfielder has
been an impressive figure for Liverpool
in what has been a difficult start to the
season and it is significant that he has
been included ahead of Manchester
Citys Gareth Barry, a veteran of 53
caps, whose England career may
consequently be over.
G
ARY PLAYER, Bobby Locke,
Ernie Els; South Africa have
produced some magnificent
golfers over the years and that
conveyor belt just keeps on producing
great talents.
The latest to announce himself is
Branden Grace, the 24-year-old from
Pretoria who took his seasons tally
to five tournaments with an
emphatic victory at the Dunhill
Links Championship on Sunday.
His 22-under-par was a
tournament record and came just
seven days after he had claimed the
Origins of Golf title on the Sunshine
Tour in his native country.
Thorbjorn Olesen came closest to
denying him and even drew level on
the back nine, but Grace then found
an extra gear to pull away from the
Dane and win by two strokes.
ASTONISHING
Its turning out to be a fantastic 2012
for him. Outside the worlds top 300
players at the start of the year, he is
now ranked 37 and could yet even
pip Rory McIlroy and Justin Rose to
the Race to Dubai prize.
With a handful of tournaments to
play, Grace is less than 800,000
behind the Northern Irishman. Its a
tough ask for him, but he has given
himself a chance and the fact that
he is anywhere near those two is
testament to his astonishing rise.
Grace is another product of the
Ernie Els Foundation, the academy
that counts Major winners Charl
Schwartzel and Louis Oosithuizen
among its alumni. He has the
Schwartzel swing, is a great driver
and his attitude looks very good;
there is nothing missing from his
game. Grace can match them both
and go as far as he wants.
Sam Torrance OBE is a multiple Ryder
Cup-winning golfer and media
commentator. Follow him on Twitter
@torrancesam
cityam.com
TUESDAY 9 OCTOBER 2012
BY DECLAN WARRINGTON
BY DECLAN WARRINGTON
RALLYE DE FRANCE - ALSACE.
YOU CANT CONTROL THE ELEMENTS,
BUT YOU CAN WIN THE RALLY.
Congratulations to the winners of the Rallye de France - Alsace.
In on road rallying, driving conditions can suddenly change at any moment
of the race, so drivers need to have confidence in their tyres ability to cope.
MICHELIN tyres with their excellent grip give them that confidence,
whatever the weather or terrain.
You can also benefit from the expertise Michelin has derived from
motorsport with the MICHELIN Pilot Sport 3.
Experience the performance at www.michelin.co.uk/experience-the-performance
The FA have charged Ashley Cole
GOLF
COMMENT
SAM TORRANCE
Amazing Grace could be best
yet of Ernies finishing school
IN BRIEF
Results
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I am obviously disappointed because I want to play for my country
but I am not ready to retire yet, and will just keep working hard
Manchester City midfielder Gareth Barry on his latest omission from the England squad

Shelvey wins England call as Cole is charged by FA

IN BRIEF