BUSINESS WITH PERSONALITY
TRAVEL
Issue 1,346 Monday 21 March 2011
AIR STRIKES RAIN
DOWN ON GADDAFI
LIBYA CONFLICT
▲
BY STEVE DINNEEN
LIBYAN capital Tripoli burned last
night after a second wave of air strikes
by Allied forces.
Anti-aircraft fire could be heard
throughout the night despite
Gaddafi’s government claiming to
have ordered an unlikely ceasefire.
RAF Tornados and US stealth
bombers rained down missiles on
Libyan tanks and anti-aircraft muni-
tions, killing dozens of Gaddafi troops.
Loyalists closing in on the rebel
stronghold of Benghazi turned and
fled after a wave of devastating strikes
crippled a battery of tanks.
Smoke was seen billowing out of a
building inside Gaddafi’s personal
compound in Tripoli, with the dicta-
tor’s whereabouts unknown.
US officials insisted they are not
specifically targeting the despotic
leader, saying a direct attack would go
beyond mandates in the United
Nations Security Council resolution.
Nato has been unable to agree on
action against Gaddafi, with nations
including Germany and Turkey raising
doubts about the validity of an attack.
David Cameron last night chaired a
meeting of the government’s Cobra
emergencies committee in Downing
Street to discuss the UK’s next move.
Meanwhile the Arab League voted
again in favour of the Allied action
despite appearing to waver in its sup-
FTSE 100 ▲5,718.13 +22.02 DOW ▲11,858.52 +83.93
BA’S NEW BOSS GIVES US
HIS FIRST INTERVIEW
KEITH WILLIAMS TAKES OFF P17
Vehicles belonging to forces loyal to Libyan dictator Muammar Gaddafi explode after an air strike by coalition forces Picture:REUTERS
port for the attacks, which its chief
called “the bombardment of civilians”.
At least four Qatari planes joined UK,
French and American air forces
patrolling the no-fly zone.
Stocks across the Middle East rose
despite the raids after Saudi King
Abdullah pledged to hand out a fur-
ther £57bn to his citizens in an
attempt to quell simmering tensions
in the country.
The move follows a separate £22.8bn
NASDAQ ▲2,643 +7.62
www.cityam.com
decree last month after tensions in
neighbouring Bahrain threatened to
spill into the country.
The Saudi index rose by more than
4.5 per cent to 6343.8, while Dubai and
Qatar both gained 2.6 per cent. Abu
Dhabi made a small gain but conflict
in Bahrain dragged its stocks 1.6 per
cent lower.
Meanwhile, Yemeni president Ali
Abdullah Sale, who has been in power
for more than three decades, sacked
£/$ ▲1.62 +0.01 £/¤ t1.14 -0.01 ¤/$ ▲1.42 +0.02
his cabinet after continuing protests.
At least 45 people were killed in
Yemen on Friday after plain-clothes
gunmen fired on protesters in the
bloodiest clashes to date.
Brent crude for May delivery rose as
high as $116.19 a barrel last night.
Crude for April rose as much as $2.12
to $103.19.
Meanwhile Hamas fired 50 rockets
into Israel, its heaviest barrage in two
years. Israel responded with air strikes.
DISCOVER THE
EASTERN
GLAMOUR OF
HONG KONG P23
FREE
Osborne to
soften blow
of fuel costs
BUDGET 2011
BY DAVID CROW
GEORGE Osborne’s Budget will con-
tain a raft of measures designed to
mitigate the soaring cost of fuel.
The chancellor has scrapped plans
to raise air passenger duty (APD) for
the fourth time in three years, City A.M.
understands.
He had been expected to increase
the tax on holidaymakers and busi-
ness travellers in line with the retail
price index (RPI) measure of inflation.
That would have brought the APD
on a business class ticket to Australia
to £179, a £9 increase.
But with airlines already planning
to raise their fuel surcharges in
response to surging oil prices, the
chancellor decided to remove the
increase from Wednesday’s Budget.
The decision to freeze APD at cur-
rent levels – essentially a real-terms tax
cut – will cost the Treasury around
£150m, although Osborne could miti-
gate the cost by widening the APD net
to include private and corporate jets.
Meanwhile, Osborne is expected to
scrap a planned above-inflation
increase in fuel duty, which would
have added up to 5p to a litre of petrol.
Yesterday, he said he was “looking
very carefully” at whether he could
afford to “do something” about the
duty hike.
The chancellor is keen to neutralise
attacks from Labour opponent Ed
Balls, who has put rising fuel prices at
the centre of an attack on the rising
cost of living. BUDGET: P4-5
Certified Distribution
31/01/11 - 27/02/11 is 107,265
 2 News
How to reverse Britain’s slow decline
EDITOR’S LETTER
ALLISTER HEATH
GEORGE Osborne’s Budget must deliv-
er a range of market-friendly policies
to increase the rate of return on invest-
ment in the UK. That is the message
from a group of economists, including
Derek Scott, for years Tony Blair’s eco-
nomic adviser, in a paper for the
Reform think-tank. Their analysis of
Britain’s accelerating relative decline,
which started even before the bubble
burst, is sobering. Scott is a gifted econ-
omist who spent years battling Gordon
Brown and Ed Balls; had Labour lis-
tened to Scott, Britain today would be a
very different, much wealthier place.
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Allister Heath
David Hellier
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WHAT THE OTHER PAPERS SAY THIS MORNING
RIO PLANS RUSSIAN DIAMOND PUSH
AS IT EYES ALROSA TIE-UP
Rio Tinto is planning a push into
Russian diamond mining, eyeing a
tie-up with Alrosa, the state-owned
miner, as the global industry looks
ahead to rising demand from China
amid tight supply constraints. The
company declined to comment on its
intentions or on wider reports that
Tom Albanese, chief executive, had
travelled repeatedly over the past year
to Russia, a country where Rio has no
operations.
UKAR TO SEEK MORTGAGES ADMIN
ROLE
UK Asset Resolution, the company
charged with shrinking the troubled
loan books of Northern rock and
Bradford & Bingley is hoping to
secure a future beyond winding down
the £80bn portfolio by running mort-
gages for other lenders.
His explanation of the financial crisis
as a massive intellectual error by cen-
tral banks draws on the work of
Bernard Connolly (now of Connolly
Global Macro Advisors, the London-
based economist who most precisely
saw the crisis coming) and the
Austrian economics of F.A. Hayek. It is
highly compelling.
Between 1974 and 1997, the UK went
from being the 18th largest economy
measured by GDP per capita to the
16th, out of 25 OECD countries. This
was a dramatic break with decades of
decline; the legacy of the supply-side
reforms of the 1980s meant that the
UK continued to improve its perform-
ance for several more years after that.
By 2005, the UK ranked 12th out of 34
OECD countries, having overtaken the
United States, Germany, France and
Italy, though this performance was
partly inflated by the bubble.
Crucially, the UK’s renewed decline
was apparent even before the bubble
burst, with tax, spend, educational
and regulatory policies emerging as a
Plans to slash
safety red tape
POLITICS
▲
BY JENNY FORSYTH
HEALTH and safety inspections are
to be cut by a third in a bid to cut
costs for low-risk businesses.
As part of a raft of rule changes to
be announced by employment min-
ister Chris Grayling today, the gov-
ernment will instruct inspectors to
concentrate their efforts on high
risk locations, like major energy
facilities, and employers with poor
health and safety records.
The government has also prom-
ised a comprehensive review of
health and safety laws, with a view
to cutting out unnecessary red tape.
Meanwhile, a new register of qual-
ified consultants will be brought in
to cut out untrained “cowboys”,
along with a new online scheme to
help small, low risk employers.
EU PLANS FRESH TRANSPARENCY
RULES
Europe is set to impose mandatory
transparency measures for ming and
forestry companies, requiring them
to detail their financial relationships
with foreign governments, a top
European Union official has told the
Financial Times. In an interview,
Michel Barnier, the EU internal mar-
ket commissioner, said the move
would come as Brussels revised exist-
ing rules on transparency in autumn.
MILLER IN REFINANCE TALKS AS IT
EYES FLOTATION
The UK’s biggest privately owned
housebuilding and construction com-
pany has started refinancing talks
with its lenders in a move that paves
the way for a possible stock market
debut. Miller Group, which built
1,915 homes across the UK in 2010
and had sales of £631m, has been pri-
vately owned throughout its 77-year
history, but appears to be considering
a public listing.
drag on GDP per capita: Britain’s rela-
tive position has dropped every year
since 2005. By 2009, the UK had fallen
back to 16th, overtaken by Sweden,
Finland, Germany and Belgium, with
the effects of the crisis kicking in.
There are other fascinating revela-
tions in the report. Out of the 27 OECD
countries, only Greece, Estonia and
Denmark had worse household sav-
ings ratios during 1995-2008.
Manufacturing has declined so much
in Britain because wage costs per unit
of output have gone up (in part
because of regulations and wage rises)
at a time when they were falling in the
UK’s main rivals, including Germany,
the US and Japan. Financial services, by
contrast, are the most productive sec-
tor of the UK economy at £308,000 in
economic value per head (the reason
why wages are so high in that indus-
try). Finance has become increasingly
productive, with employment remain-
ing constant as a percentage of total
UK employment since 1978 (at roughly
4 per cent), while the sector’s contribu-
Grayling will say: “Of course it is
right to protect employees in the
workplace, but Britain’s health and
safety culture is also stifling busi-
ness and holding back economic
growth... These measures will help
root out the needless burden of
bureaucracy.”
British Chamber of Commerce
Director General David Frost said:
“Simplifying and codifying health
and safety laws will help employers
spend less time on tick box exercises,
and more time focusing on growing
their businesses.”
Employment minister
Chris Grayling has
ordered a review of
Britain’s health and
safety laws
IMF CHIEF FEARS FISCAL CRISIS IF
SOARING DEBT IS NOT REINED IN
Western governments face a sharp
surge in borrowing costs as their debt
mountains hit the highest levels
since the Second World War, the
International Monetary Fund said
yesterday. In a blunt speech, John
Lipsky, the IMF’s first deputy manag-
ing director, said that advanced
nations ran the risk of a “fiscal crisis”.
THORNTONS SHRINKS PRODUCTS TO
BATTLE COMMODITY PRICES
Thorntons has become the latest con-
fectioner to shrink the size of its
products to help to guard profits
against ever higher commodity
prices. The company has begun to
reduce the weight of some of its
inlaid box chocolates sold in super-
markets and its own shops, meaning
that an average sized box contains
one or two fewer chocolates.
tion to GDP has increased by 6 per cent
in the last 15 years. But finance’s eco-
nomic value per employee may not
hold up as leverage declines to a more
reasonable level.
What of the crisis? Interest rates
were kept too low by central banks,
while the launch of the euro and
China’s manipulation of exchange
rates helped fuel asset bubbles. For
interest rates to return to “normal” –
and for them to rationally balance the
cost of spending today with that of
spending in the future, rather than
distort everything – anticipated rates
of return on investments need to rise
to ensure profitability at the new,
higher, interest rates. This requires
lower tax rates, reduced employment
regulations, a less restrictive planning
system and more besides. The answer,
Scott and his colleagues argue, is
“more capitalism, not less.” Brown
ignored Scott – let us hope Osborne
doesn’t make the same mistake.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Eric Daniels has been cut from the Aviva shortlist after investor complaint
Daniels cut from Aviva list
INSURANCE
▲
BY JENNY FORSYTH
FORMER Lloyds chief executive Eric
Daniels has been dropped from the
shortlist for insurance group Aviva’s
chairmanship after an outcry from
shareholders.
Some of the company’s biggest
investors complained after news last
week that Daniels, who stepped down
from Lloyds last month, could suc-
ceed Lord Sharman when he leaves in
2013.
MOST BRITONS DESCRIBE THEMSELVES
AS MIDDLE CLASS
Most Britons now claim to be middle
class, as research shows that the pro-
portion of people who describe them-
selves as working class has dropped to
less than a quarter. Seven out of 10
people view themselves as belonging
to middle Britain, compared with a
quarter a generation ago. Only 24 per
cent of people describe themselves as
working class, according to the survey
carried out by the new research com-
pany BritainThinks.
SAFE NUCLEAR DOES EXIST AND CHINA
IS LEADING THE WAY WITH THORIUM
A few weeks before the tsunami
struck Fukushima’s uranium reactors
and shattered public faith in nuclear
power, China revealed that it was
launching a rival technology to build
a safer, cleaner, and cheaper network
of reactors based on thorium.
CITYA.M. 21 MARCH 2011
NEWS | IN BRIEF
Japan’s Nikkei 225 opens up
The Nikkei 225 opened up 2.72 per cent
in early trading in Tokyo to hit 9,206.75.
The positive reaction followed news
yesterday the Japanese government
plans to dedicate up to 10 trillion yen
(£78bn) in crisis lending to businesses
to help them finance day-to-day opera-
tions and repair damage from last
week’s deadly earthquake and tsunami.
The government can provide special
financing in the form of low-interest
loans or interest payment subsidies
backed by public funds when a natural
disaster or other event triggers major
economic instability. SEE JAPAN P9
Facebook buys London’s Snaptu
Facebook has agreed to buy Snaptu, a
London-based application developer for
mobile devices that have fewer capabili-
ties than smartphones, for up to $70m
as the world’s largest social network
focuses on expanding its mobile servic-
es. The site has been increasingly focus-
ing on building up its mobile phone
services for its 500m users, last week
hiring a member of Google’s corporate
development team to lead its M&A
activities.
Daniels has been criticised for his
role in Lloyds’ disastrous takeover of
the debt-laden HBOS. The govern-
ment now has a 41 per cent stake in
Lloyds Banking Group.
Other names who have reportedly
been considered for the role include
former Labour ministers Lord Davies
of Abersoch and Lord Myners.
Aviva, the UK’s biggest insurer, is
now believed to have narrowed its
shortlist to three candidates, with a
formal decision expected in a couple
of weeks.
METS OWNERS ACCUSE MADOFF
TRUSTEE OF DISTORTING EVIDENCE
The owners of the New York Mets
struck back at the trustee recovering
money for Bernard Madoff's victims
late yesterday, accusing him in court
of ignoring evidence and fabricating
allegations that they overlooked
warnings about the Ponzi scheme.
Team owners Fred Wilpon and Saul
Katz and their associates issued a 107-
page response to the $1bn lawsuit
filed by trustee Irving Picard.
FERRERO MAY CONSIDER STAKE IN
PARMALAT
Italian candy maker Ferrero is eyeing
a potential investment in Parmalat as
part of a push by Italy’s business and
political establishment to keep the
dairy firm, once at the centre of
Europe’s biggest-ever corporate scan-
dal, in Italian hands, according to
Italian bankers.
CITYA.M. 21 MARCH 2011 News 3

AT&T snaps up US
Diageo chief execu-
tive Paul Walsh is
considering buying
tequila brand Jose
Cuervo as part of

arm of T-Mobile
the firm’s global
acquisition spree.
Picture: GETTY

has a stake.

▲
TELECOMS
BY STEVE DINNEEN
AT&T will buy the US arm of T-Mobile
in $39bn (£24bn) deal that will see
Deutsche Telekom receive around
eight per cent of AT&T’s equity and
$25bn in cash.
The deal will give AT&T an extra
34m customers, making it the biggest
network in the US and surpassing bit-
ter rival Verizon, in which Vodafone
It is understood AT&T can increase
the cash component of the deal as
long as Deutsche Telekom accepts at
least five per cent of AT&T’s shares. A
Deutsche Telekom executive will join
the AT&T board as part of the deal.
The announcement will mean a
bumper payday for AT&T’s advisers
Greenhill, JP Morgan and Evercore
Partners. The deal is not expected to
fully close for another 12 months.

Diageo turns
atre sale
to tequila for 48 hour the
its next buy starts 10am today
includes the phantom of the opera, jersey boys & clybourne park

comment yesterday.
▲

M&A
BY MARION DAKERS
DRINKS group Diageo is considering
a bid for tequila firm Jose Cuervo,
people with knowledge of the compa-
ny confirmed yesterday, as part of
chief executive Paul Walsh’s multi-bil-
lion pound acquisition spree.
Diageo, which already distributes
Cuervo on behalf of the Beckmann
family that owns the brand, is said to
be considering a $2bn (£1.2bn)
takeover offer.
The move comes just a week after
the company was linked to Polish
spirits group Stock, as it attempts to
broaden its reach in emerging mar-
kets to offset flagging domestic sales.
Diageo, the maker of Johnnie
Walker whisky and Smirnoff vodka,
last month also agreed to buy
Turkish spirits firm Mey Icki for
£1.3bn.
Walsh halted Diageo’s share buy-
back programme in 2009 to help
fund the company’s war chest.
Cuervo has been tightly held by the
Beckmann dynasty for six genera-
tions, but is now said to be in talks to
appoint Barclays Capital to help it sell
off the company. BarCap declined to
Cuervo and Diageo signed a joint
venture in 2003, with the former pay-
ing $100m for a 50 per cent stake in
Diageo’s Don Julio tequila brand.
Drinks firms have undertaken a
spate of takeovers and consolidation
in recent months as companies look
to shelter from faltering sales.
The spirits arms of consumer
goods group Fortune Brands is
expected to be put on the block later
this year, while France’s Rémy
Cointreau told the market last
month it was in exclusive talks to sell
its champagne business to EPI.
Diageo declined to comment yes-
terday, while Jose Cuervo’s head
office was not available for comment.
ANALYSIS l Diageo
1260 p
1143.00
1220 18 Mar
1180
1140
1100
20 Dec 21 Jan 21 Feb 11 Mar

JJB prepares HMV to set out

for crunch vote its rescue plan
▲

RETAIL
JJB creditors will vote tomorrow on
restructuring plans that could decide
whether it can stay in business.
It is expected to get the seal of
approval after its biggest landlord,
FTSE 100 firm Hammerson, threw its
weight behind proposals in a company
voluntary arrangement (CVA).
Under the terms of the deal land-
lords who lose out through long-term
contracts being cancelled will receive
between 25p and 29.2p for every
pound they are owed, with up to
£7.5m being paid out depending on
JJB’s performance over the next two
years.
RETAIL
ENTERTAINMENT giant HMV is con-
sidering selling its book chain
Waterstone’s as part of a rescue plan
to be revealed to its banks this week.
The group is thought to be consid-
ering the options of selling
Waterstone’s, which could be worth
up to £75m, a share issue and more
store closures.
HMV has issued four profit warn-
ings since September and has told
lenders it is in danger of breaching its
banking conditions after the end of
the financial year in April. Offers are limited; once they’ve gone, they’ve gone. Sale ends at 10am, 21st March and ends 10am 23rd March 2011.
It forecast it would finish the year Available on selected dates at selected shows only. Subject to availability and conditions, booking fees and or transaction fees may apply.
For a full list of participating theatres and terms and conditions please visit www.lastminute.com
with net debts of £130m.
 4 Focus on Budget CITYA.M. 21 MARCH 2011

Growth forecasts to be cut

commented Investec’s Philip Shaw. resist the temptation to grant any and challenging road to fiscal bal-
▲

UK ECONOMY
BY JULIAN HARRIS
BRITAIN’S projected rate of economic
recovery will be downgraded by the
government’s fiscal watchdog this
week, analysts expect.
In November the Office for Budget
Responsibility (OBR) predicted 2.1 per
cent growth for 2011 – considerably
above most recent independent fore-
casts.
“We suspect that the OBR will lower
its shorter-term GDP projections,”
The Organisation for Economic Co-
operation and Development (OECD)
last week revised down its estimate of
British growth, from 1.7 per cent to 1.5
per cent for this year.
However, the OECD insisted that the
chancellor is right to continue with
immediate spending cuts – the policy
dubbed “Plan A”.
And today another group of leading
economists is expected to urge further
austerity.
Chancellor George Osborne must
“give-aways” in this week’s budget, the
Ernst and Young Item Club will say.
The deficit for the whole fiscal year
will come in at £140.2bn, Item expects
– around £8bn below the Office for
Budget Responsibility’s (OBR) official
forecast.
However, the slowdown in growth
risks the “very small margin for error”
in achieving the government’s fiscal
mandate over the whole course of par-
liament, it believes.
“It is still very early days on the long
ance,” according to Item’s chief econo-
mist Andrew Goodwin.
The government’s net borrowing up
to this month is released tomorrow,
one day ahead of the chancellor’s
budget and the OBR’s new forecasts.
Total government debt will peak at
69.1 per cent of British GDP, according
to the latest OBR projections.
Item is also expected to call today
for the chancellor to commit to
remove the 50p tax rate once public
finances have sufficiently improved.

Chancellor: no tax hikes ECONOMISTS’ VIEWS: HOW SHOULD THE

BUDGET ENCOURAGE GROWTH? Interviews by Julian Harris
or extra spending cuts DAVID KERN | BRITISH CHAMBERS OF COMMERCE

not going to be asking for more tax

“ ”
Make recruitment easier and allow faster planning decisions. Lower the
youth minimum wage and scrap employment regulation, to encourage jobs.
▲

POLITICS
increases or more spending cuts.”
CHANCELLOR George Osborne yester- The chancellor batted away sugges-
day indicated he would not put up tions from the Labour party that he TOM CLOUGHERTY | ADAM SMITH INSTITUTE

“
taxes or make further spending cuts should cut spending less quickly in
in the Budget on Wednesday. the face of lower growth forecasts,

He said that last year’s Budget had
been a “rescue mission” that had
taken the country out of the “fiscal
danger zone”.
Osborne added: “But now we’ve got
insisting it would be a “huge mis-
take” to halt the deficit reduction
programme.
But shadow chancellor Ed Balls
accused Osborne of being a “brash
”
Cutting red tape is like a free tax cut so we need a lot of that – espe-
cially for small businesses that cannot simply suck up regulatory burdens.
HOWARD ARCHER | IHS GLOBAL INSIGHT

“
to move from rescue to recovery and and cocky gambler” who was making
reform... I don’t have to come back decisions that were good for “short-

”
and ask for more this year. So I can term politics” but bad for long-term A raft of small reforms could still be perceived in total as pro-business in
say in the Budget later this week, I’m growth. the long term. Plus more to come once the fiscal situation improves.
A Daimler Brand

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70.6(4.0), combined 20.8(13.6)-58.9(4.8). CO2 emissions: 316-127 g/km. Model featured in image is a Mercedes-Benz C 180 CGI Executive SE Saloon (manual) at £26,050 on-the-road with optional
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CITYA.M. 21 MARCH 2011
Osborne plans
crackdown on
tax avoidance
BUDGET 2011
BY DAVID CROW
GEORGE Osborne is set to step up his
attempts to tackle tax avoidance in
the Budget on Wednesday, City A.M.
understands, as part of a raft of meas-
ures designed to prove he is tough on
the wealthy.
A Treasury source yesterday said
there would be “all sorts of anti
avoidance” measures in the Budget
including plans to crack down on
“disguised remuneration”.
Osborne is expected to target a
kind of offshore trust used by some
high earners to top up their pen-
sions.
These so-called Employer-Funded
Retirement Benefit Schemes (EFRBS)
are currently not subject to the same
pensions taxation regime as regis-
tered schemes, although Osborne is
likely to subject them to income tax
at 50 per cent.
The chancellor is also expected to
announce a fresh assault on non-
doms, people who come from over-
seas and pay UK tax on their UK
earnings but no tax on their foreign
income.
Currently, non-doms must pay an
annual levy of £30,000 after they
Focus on Budget 5
A BUDGET FOR GROWTH | WHAT MEASURES COULD THE CHANCELLOR INTRODUCE THIS WEEK?
Chancellor George
Osborne is likely to ● National insurance to be merged the Middle East, the planned increase of 1p designed to encourage business growth.
take a tough line on with income tax on a litre on petrol may be put on hold.
tax avoidance when The chancellor is expected to signal his ● Public sector reform
he delivers the intention to allow employers to pay nation- ● Air passenger duty frozen Private companies could be allowed a
Budget this week. al insurance and income tax in a single The chancellor is also expected to freeze greater role in the running of some
Picture: GETTY combined payment. air passenger duty, although he could apply government sector services, in an attempt
it to corporate and private jets. to stimulate enterprise and efficiency.
● Apprenticeships
In a bid to tackle the ● Personal allowance increase ● Foreign-earned profits left alone
high number of young The tax free allowance could get an Large corporations may be tempted back
“NEETS” (not in employ- incremental rise to around £8,000. to these shores by a pledge to
ment, education or train- tax less from overseas profits.
ing) 50,000 ● Non-domiciles to be targeted
apprenticeships could be The government may turn to higher ● Cigarettes and alcohol
funded by the state. taxes on so called “non-doms”. Smokers and drinkers are like-
ly, yet again, to face even higher
● Freeze on fuel duty ● Planning regulations relaxed taxes. However, the ailing pub
In response to escalating fuel prices, still The construction industry could get a industry could be helped by
facing upward pressure from instability in boost from a cut in planning restrictions, lower taxes on weak beer.
have lived in the UK for seven years,
but Osborne is considering widening
the net to include those who have
been in the UK for less than seven
years.
However, the chancellor is likely to
THE
earn plaudits from Britain’s corpo-
rates when he unveils plans to
reform the regime governing taxa-
LUXURY
tion of foreign-earned profits.
He is expected to overhaul the so-
called Controlled Foreign Companies
SALE
(CFCs) regime so that multinational
corporations can keep the lion’s
share of profits they make overseas.
It would be a huge coup if the
chancellor could prove that his Flights and holidays in
reforms of the CFCs system had con- First and Business Class.
vinced a multinational that quit the
UK in recent years to move back Book by 22 March at ba.com
onshore.
WPP, Shire and UBM have left the
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plumbers’ merchant Wolseley and
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Last night, sources close to WPP
scotched suggestions that chief exec-
utive Martin Sorrell was poised to
announce plans to bring the advertis-
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of outbound departure and varies by destinations. Bookings must be made by midnight on 22/03/2011 for travel between 11/03/2011 and
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 6 News CITYA.M. 21 MARCH 2011

Net borrower
Vickers not banks targeted
convinced by in Libor probe

bank lobbying
BANKING

▲
BY JULIET SAMUEL
INVESTIGATIONS into the possible
“manipulation” of data relating to the
London Interbank Offered Rate (Libor)
are likely to focus on banks that were
net borrowers during the financial cri-
▲

REGULATION the ICB had moved away from break-
BY JULIET SAMUEL ing up ownership of banks but is
mulling the costs and benefits of a
THE Independent Commission on subsidiarisation model.
Banking (ICB) has dismissed an indus- The news that Vickers’ Commission
sis rather than lenders, an industry
source told City A.M. yesterday.
UBS has said that it was subpoenaed
The Fed’s Ben Bernanke has given the go-ahead for capital spending Picture:REUTERS by US and Japanese regulators regard-
ing Libor investigations. Barclays, Bank

Fed ruling sees US banks

try estimate that breaking up whole- has shrugged off the Oliver Wyman of America and Citi are also thought to
sale and retail business activities report will disappoint banking chiefs, have been subpoenaed.
would cost the UK’s main banks who have been keen to emphasise that But banks that were net lenders
£12bn-£15bn, City A.M. has learned. rising costs of capital from regulations would have no reason to falsify their

rush to increase dividends

A report produced by Oliver Wyman
as part of a bank lobbying effort and
submitted to the ICB as evidence has
said that the cost of implementing a
subsidiarisation model – whereby
banks must capitalise their retail and
wholesale operations separately –
are likely to be passed on to con- borrowing costs, according to the
sumers. Oliver Wyman also produced source. Banks with heavy borrowing
evidence for Lloyds’ submission on the requirements, by contrast, may have
competitiveness of the high street had a motive to give falsely low esti-
banking industry. mates of their costs in order to avoid
The ICB declined to comment. spooking investors. Of course, this
BANKING dend hikes, share buybacks and pay- doesn’t mean they actually did this.
▲

would cost the UK’s five major banks a
total of £12bn-£15bn.
But the ICB thinks the figure “isn’t
reasonable”, said an insider, and that
it contradicts other more reliable cost
estimates submitted as evidence.
The Commission is due to publish
an interim report revealing its
thoughts so far on 11 April. The inter-
im report will be the first window into
its thinking since a speech by Sir John
Vickers in January, which showed that
ANALYSIS l Barclays BY JULIET SAMUEL backs of government aid. Libor is calculated from data sub-
340 p 282.10 Firms queued to take advantage of mitted to the British Bankers’
330
18 Mar US BANK investors are set to benefit the decision: JP Morgan, Goldman Association (BBA), all of which is pub-
320 from a wave of dividends and share Sachs, Wells Fargo, State Street and lished. Its publication means the inves-
310 buybacks after the Federal Reserve Bank of New York Mellon all tigation will consider whether
300 finally lifted its blanket ban on announced share purchases or increas- collusion between banks took place,
290 “increased capital distributions” by es in their dividends. because it would have been risky for
280 financial institutions. But Citigroup has so far stayed aloof any firm to submit faulty numbers
270
American banking stocks were up from the rush to spend its accrued cap- that it knew others might challenge.
260
across the board on Friday after the ital. BoA said that it would request per- Since UBS was subpoenaed, there
250
Fed concluded its review of their capi- mission for a “modest” dividend hike has been widespread speculation over
20 Dec 21 Jan 21 Feb 11 Mar tal plans and gave permission for divi- in the summer. which other banks are being probed.

:LQGRZVŠ/LIHZLWKRXW:DOOVŒ7RVKLEDUHFRPPHQGV:LQGRZV

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 :
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 8 News CITYA.M. 21 MARCH 2011

Japanese disasters shook markets too much

ingly, with the FTSE 100 dropping end of 2008, had £398bn of outstand- in the medium to longer term the In fact, I’ve been surprised by the
over six per cent in six sessions before ing assets in Japan. How much of that rebuilding of Japan’s north east will number of commentators who, while
showing some composure at the tail has been endangered by events that be a source of GDP positivity and acknowledging the enormity of the
end of the week. have affected at most eight per cent could help draw the country out of its human tragedy and devastating
The question though as to whether of Japan’s economic output? long term deflationary malaise. destruction of economic capacity in
such a rapid fall as this was rational is You might ask if the UK will be hit Won’t British companies figure in the Japan, have welcomed the opportuni-
not so easily answered. by the breakdown of the Japanese reconstruction in some ways? ty to take a look at the valuation of
Looking at the pure economic ties export leviathan that has been inter- So why did global markets fall so equities following the rout in share
CNBC COMMENT between Japan and the UK for rupted more by ensuing power cuts aggressively? The pragmatic answer is prices. Some of the most cautious
instance, it’s hard to justify why UK than the earthquake, tsunami and that nerves were already frayed by investors have been waiting for an
STEVE SEDGWICK stocks should fall so heavily.
According to Jefferies Fixed Income,
ongoing nuclear crisis? Maybe – but
you have to remember times have
events in the Middle East and North
Africa, ongoing unanswered ques-
entry point for months now and are
picking up stocks across the board.

T
he ongoing sequence of the UK has an exposure to Japan changed. In 1990 the UK was the tions over the sustainability of As HSBC’s Stephen King puts it:
tragedies in Japan has under- equivalent to one per cent of GDP, number five global destination for European and US debt levels and per- “Knee-jerk economic and financial
standably shaken investor senti- made up of exporting goods and serv- Japanese goods. By 2009 it wasn’t in haps by the fact that the equity mar- reactions to shocks and disaster often
ment heavily. In two days last ices, in addition to income derived the top ten, according to an HSBC kets had in some cases doubled off fall wide of the mark.”
week the Nikkei lost 17 per cent and from investments. report looking at IMF trade statistics. their March 2009 lows. Japan may Steve Sedgwick co-anchors Squawk Box
markets around the world fell accord- On another level the UK, as of the Some economists have argued that just have been the last straw. Europe weekday mornings on CNBC

Arcus aims to
bid for Forth
by Arcus last May before the due dili-

▲
M&A
gence stage.
BY MARION DAKERS
Forth, which runs a string of ports
ARCUS Infrastructure Partners aims in Scotland and owns 400 acres of
to announce a formal £744m takeover land in Edinburgh, saw its shares
offer for FTSE 250-listed Forth Ports close at £16.07 on Friday, valuing the
tomorrow, alongside the target’s full- firm at £733m.
year results, a source familiar with
the company confirmed yesterday. ANALYSIS l Forth Ports
Arcus, which already owns a 22.8 1,650
p
1,607.00
per cent stake in Forth, is likely to 18 Mar
keep its offer in line with the £16.30
1,550
per share indicative bid announced
earlier this month after undertaking
WITH UP TO 33% OFF THIS SPRING two weeks of due diligence.
The indicative offer included a 20p
1,450

per share dividend, taking the total

YOU C AN AFFORD TO PUT YOUR FEET UP payment per share to £16.50. 1,350
Forth rejected a £14 per share
B O O K BY 7 T H A P RIL F O R S TAYS B E T W EEN 18 T H M A RCH A N D 3 0 T H J U N E takeover bid from a consortium led 20 Dec 12 Jan 1 Feb 21 Feb 11 Mar

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#
Hampton by Hilton Dunblane Hydro† £96 £79
Hampton by Hilton Braintree –– £52 Birmingham Star City # –– £43 Hilton Sharm El Sheik Fayrouz Resort £70 Partners’ offices this morning to
▲

SUPPORT SERVICES
INVESTORS in fire engine owner
AssetCo are expected to rally round
the firm today as it puts the finishing
touches on its £26m share sale.
#Quote SB9 for Hampton by Hilton hotels. Breakfast at Hampton by Hilton is only served until 10am. *Not applicable at Hampton by Hilton hotels Prices featured are per room per night for weekend The company held a board meeting
stays. †These prices are only available midweek. The Spring 2011 promotion offers special terms for bookings made between March 7 and April 7, 2011 at participating hotels in the Hilton portfolio
of brands in Europe, Middle East and Africa for the weekend of 18 March 2011 and, with some variations and black-out dates, for stays of one or more nights between April 1 and June 30th 2011. On yesterday to work out the details of
offer is a general discount of up to 33% off the best available B&B rate except for Hampton Hotels where the discount is up to 20%. At participating hotels in the UK and Ireland the above reduced
rates will also apply to the dinner first night bed & breakfast rate, which has a minimum 2 night length of stay. All stays must be fully paid-for, non refundable at time of booking and must be booked at
the fund-raising, which is needed to
least 7 days in advance. Featured rates include VAT. Subject to availability. Rates may fluctuate based on exchange rate. For full terms and conditions go to hilton.co.uk/city. Normal Hilton Minibreaks pay creditors and top up capital.
Policy also applies including kids stay and eat for free and a second room for under 18s at half the rate of the first room for same category rooms. For full Minibreak Policy terms and conditions go
to hiltonminibreaks.com Shareholders are due to meet with
© 2011 Hilton Worldwide
management at broker Arden
count the votes for the latest cash
injection, and are expected to
approve the plan.
AssetCo warned on Friday that it
needed more funds despite its
planned £16m share placing and
emergency funding from Lloyds
Banking Group.
The firm recently rejected takeover
interest from a Middle Eastern
investor, calling it “opportunistic”.
CITYA.M. 21 MARCH 2011
EDF chief says
no delay to UK
nuclear plans
▲
ENERGY
BY MARION DAKERS
EDF’s chief executive insisted yester-
day that the firm’s plans for nuclear
power in the UK would not be delayed
after the crisis at the earthquake-hit
Fukushima plant in Japan.
“[O]ur plans, to be clear, are
undimmed because UK needs nuclear.
And the question for me is not to
make a pause.” Vincent de Rivaz told
the Andrew Marr show.
“What we have said through years
of debate - and it was a very open
debate – is that nuclear is not the sin-
gle solution, but there is no solution
without nuclear.”
EDF owns 14 nuclear reactors in the
UK and hopes to bring four more
online from 2017.
However, energy secretary Chris
Huhne reiterated that nuclear power
could become more difficult to fund
in the UK in the wake of the crisis in
Japan.
In Japan, white smoke was still
escaping from reactor 3 at the
Fukushima Daiichi nuclear plant, and
the International Atomic Energy
Agency said the situation remains
very serious.
Workers successfully linked several
reactors to power cables last night,
raising hopes that the internal cool-
ing systems can be brought back into
use.
More than 21,000 people are now
officially dead or missing, and fears of
contamination grew after the author-
ities found higher than normal
radioactivity in raw milk and spinach
plants in the Fukushima area.
ANALYSIS l EDF
27.46
33
€ 18 Mar
31
29
20 Dec 7 Jan 27 Jan 16 Feb 8 Mar
Burnt-out cars in Sendai after the 9.0 magnitude earthquake Picture: GETTY
Quake could cost Japan’s top car
firms £600m in lost production
have been built during the stoppages,
▲
AUTOMOTIVE
though Goldman thinks the firms can
DISRUPTION from the Japanese earth- go some way to catching up, given
quake and tsunami could cost the that the plants were not running at
country’s top four carmakers up to full capacity before the disaster.
£600m, according to Goldman Sachs Nissan resumed production on
estimates. Friday, while Toyota and Honda hope
Toyota, Honda, Nissan and Suzuki to restart on Wednesday. Suzuki is due
are unlikely to suffer any major oppor- to start work again today.
tunity loss, said GS analyst Kota General Motors said at the week-
Yuzawa in a note, but production stop- end that it would suspend all non-
pages are set to dent profits by £45m, essential spending and cut
or 6bn yen, a day for Toyota and production in Spain and Germany in
£15.2m a day for the rest. response to the quake on 11 March, as
The loss of finished cars in the disas- the effects are felt throughout the
ter could also cost several billion yen. supply chain.
An estimated 155,000 cars would WEALTH MANAGEMENT: P18
News 9
Countries could
intervene again
to help the yen
CURRENCIES
▲
FOREIGN exchange traders will be
closely watching the yen’s movement
today following the G7’s dramatic
intervention to stem the currency’s
gains late last week.
Traders are on alert for further cen-
tral bank moves to ease any runaway
increases in the yen, which if left
unchecked would make Japan’s
exports more expensive and put fur-
ther pressure on its economy.
Friday’s move by the G7, in which
the countries poured in an estimated
$25bn, was the first joint intervention
in currency markets since the G7
came to the aid of the newly launched
euro in 2000.
Some analysts feared that a massive
repatriation of Japanese money to pay
for the repairs needed would put
upward pressure on the yen.
Meanwhile, Societe Generale ana-
lysts said in a note yesterday they were
confident in the Japanese economy’s
eventual recovery.
“We still find the most likely out-
come to be a V-shaped profile with the
upcoming data seeing a very sharp
decline followed by a sharp accelera-
tion as reconstruction and the
replacement of consumer durables
gets on the way,” they said.
Tokyo’s markets remain closed for a
holiday today.

CITYA.M. 21 MARCH 2011
Dinu Bhatessa, founder of Mint Leaf restaurants
The Hinduja Group’s Gopi Hinduja
A NIGHT TO
CELEBRATE
ASIANS IN
BUSINESS
FRIDAY night saw big hitters from London’s
Asian community come together for the
Asian Business Awards, which celebrated
the UK’s most successful Asian entrepre-
EDITED BY
ELIZABETH FOURNIER
GOT A STORY? EMAIL
thecapitalist@cityam.com
L-R Business secretary Vince Cable with Ratheesan Yoganathan, CEO of Lebara Mobile; Ramniklal Solanki,
editor-in-chief of Eastern Eye; TV presenter Nikki Bedi; and Zarir Cama, group general manager of HSBC
neurs and their business success stories
with dinner and a discussion forum at the
Park Plaza Westminster Bridge.
The top award of the night – for Asian
business of the year – went to telecoms
operator Lebara, which allows low-cost
international calls to be made direct from
mobile phones. Chief executive
Yoganathan Ratheesan picked up his com-
pany’s award from business secretary
Vince Cable.
Also honoured at the annual event were
ex-steel magnate and City restaurateur
Dinu Bhattessa, the owner of the Mint Leaf
lounges and winner of this year’s Asian
Business Restaurant of the Year.
The night also saw the launch of the
2011 Asian Rich List, put together by the
The Capitalist
Asian Media and Marketing Group, which
provided a fascinating insight into the con-
tribution that Asian businesses make to the
UK economy. The list was unsurprisingly
topped by steel billionaire Lakshmi Mittal,
who runs the ArcelorMittal empire from
his Berkeley Square offices and is estimated
to be worth more than £15bn.
Second on the list was the Hinduja fami-
ly, whose diverse business interests range
from wealth management to energy and
defence. Gopi Hinduja – joint owner of the
family group alongside brother Sri – attend-
ed Friday’s award ceremony, and gave atten-
dees an insight into his success on an
after-dinner panel discussion alongside
Arora hotels founder Surinder Arora and
former Priory Group chief Dr Chai Patel.
11
BILL OF THE WEEK
A WELL-EARNED lunch for four
City lawyers also provided a
boost to Friday’s Red Nose Day,
when the hungry fundraisers
matched the amount of their bill
at Vivat Bacchus with a donation
to the Comic Relief appeal.
Fresh from a sponsored five-mile
run around the City, which raised
more than £3,000, the lawyers
descended on the Farringdon
branch to replenish their energy
reserves with a late lunch. Dining
on main courses including
guinea fowl and Springbok, they
ensured hydration levels were
topped up with a £600 bottle of
Château Latour ’95. The meal
was finished off with a round of
the restaurant’s special Red
Nose Day desserts – a delicate
praline mousse topped with
caramelised nasturtium flowers
– with profits from the dish
going straight to the Comic
Relief appeal.
 12 News
Dyson expected to split
Punch Taverns into two
▲
LEISURE
BY MARION DAKERS
DEBT-SADDLED pub chain Punch
Taverns will announce plans to splin-
ter off its best-performing ventures
tomorrow, a person familiar with the
company said yesterday.
Chief executive Ian Dyson’s long-
awaited review of the firm is said to
have considered several options,
including spinning off the directly
managed pubs under the Spirit Group
banner into a separate listed company.
This would leave Punch with
around 6,000 leased pubs, which
could then be closed or sold off to help
tackle its £3bn debt pile.
Punch’s bondholders and their
adviser Rothschild are also lining up
buyers in case Dyson decides to simply
default on the loans and hand over the
securitised pubs.
Spokespeople for the bank and
Punch both declined to comment yes-
terday.
CITYA.M. 21 MARCH 2011
ANALYSIS l Punch Taverns
78 p 68.95
18 Mar
76
74
72
Punch Taverns boss Ian Dyson will unveil a strategic review tomorrow
70
68
66
64
Pub group is a tale of two halves
20 Dec 21 Jan 21 Feb 11 Mar
WHICH PUNCH Taverns would you income was down by 6.1 per cent in
buy shares in if Ian Dyson goes the quarter and 7 per cent over 28
through with his plan to split the weeks, while the trading statement
firm in two? The managed speaks of “disposals” and “decline”.
division – which would be renamed By way of excuse, the firm prom-
Spirits – performed admirably in ises a “strategic review” tomorrow.
the twelve weeks to 5 March. Like- It is clear that Dyson has one
for-like sales were up 8.6 per cent, option: to unleash the managed
with food adding 11.7 per cent and pubs business, which is well-posi-
drinks 7 per cent. The trading tioned to capitalise on growing food
update for the second quarter was sales, while managing the decline
peppered with words like “invest- of the tired leased division.
ment”, “excellence” and “refurbish-
ment”.
The leased division tells a more
downbeat tale. Like-for-like net
BOTTOMLINE
Analysis by David Crow
CITYA.M. 21 MARCH 2011 News 13

Bank defends success of QE NEWS | IN BRIEF

Squeeze tightens on households
Household finances have plummeted at
the sharpest rate for two years – and
licked their wounds by repairing capi- in velocity – the speed of money circu- the average amount of cash Britons
▲
Rush to avoid hike in stamp duty
Millionaires in London are scrambling to
snap up properties before the rise in
stamp duty, according to the latest
Rightmove house price index released
today. Across the whole market in the
capital, asking prices were down 1.5 per

UK ECONOMY
BY JULIAN HARRIS
THE Bank of England has defended its
policy of quantitative easing, arguing
that the £200bn asset-buying pro-
gramme successfully propped up the
money supply following the financial
crisis.
“Sectoral evidence suggests that
asset purchases are broadly working
via the balance sheets of households
and companies to contribute to an
increase in nominal spending,” the
Bank said in its latest quarterly report,
published today.
At the start of the recession, banks
tal and liquidity positions on balance
sheets. Such banking sector stabilisa-
tion prompted a “negative shock” to
the money supply to the tune of
£160bn, the Bank estimates.
Along with post-credit crunch cau-
tion over lending, the reduction in
money movement was “offset by the
positive impact of asset purchases on
broad money.”
The Bank’s monetary policy com-
mittee (MPC) undertook the purchas-
ing of assets “in order to increase
nominal demand and so inflation,”
the report says.
The Bank also noted a sharp uptick
lation – which some analysts have
claimed could hold an inflationary
threat for the UK.
“Velocity has indeed picked up,
climbing 2.1 per cent during 2010 –
the largest annual rise since 1979,”
said Henderson’s Simon Ward.
The sudden upturn “is in contrast to
the long run downward trend
observed in velocity since the 1980s,”
the Bank’s report says.
Meanwhile, banks remain ahead of
schedule in their repayments of loans
made under the Special Liquidity
Scheme in 2008. Over £94bn of the
£185bn has already been repaid.
have available to spend dropped at a
record rate in March, according to the
Markit household finance index released
today. The slump left households at
their most pessimistic since the survey
began in February 2009, Markit said.
There was also worrying news for the
jobs market, as the survey reported the
sharpest decline in job security for eight
months. Furthermore, price pressures
continue to squeeze British households,
with around 82 per cent of respondents
reporting a monthly increase in prices
paid for goods and services. Inflation
expectations dipped only slightly com-
pared to January’s record high.
cent in March on the previous month –
yet are still up 3.8 per across the quarter
as a whole, the survey said. “Bonus driv-
en buyers and stamp duty savers looking
to invest in bricks and mortar,” said
Miles Shipside of Rightmove. “Shortages
of quality property remain, resulting in
keen competition and speedy sales in the
capital – it’s a performance that
struggling estate agents in the rest of
the country are watching with jealousy.”
Annualised asking prices rose by just 0.9
per cent across the UK, compared to 1.6
per cent in London. Average prices in the
UK are £231,790, compared to
£424,307 in the capital.

The number of millionaires in the UK has risen

by 17 per cent since 2008, new data reveals
There are now 619,000 million-
aires in the UK, up from
528,000 in 2008, new figures
from Barclays Wealth revealed
today. And 86,000 people in the
UK have wealth in excess of
£5m, its wealth map shows. The
majority (46 per cent) of UK-
based millionaires live in London
and the South East. The number
of millionaires will grow by one
third by 2020, Barclays expects.
Population with wealth in excess of £5m
London, East and South East:
47,000 people
South West & Wales: 10,000 people
North West: 9,000 people
Yorkshire: 7,000 people
Scotland: 7,000 people
Midlands: 5,000 people
North East: 1,000 people

millionaires: millionaires:

40 ,000 14 ,000
2008-2010 growth 2008-2010 growth
of millionaires: of millionaires:

18% 17%

millionaires:
millionaires:
44
64,000
,000
2008-2010 growth
2008-2010 growth of millionaires:
of millionaires:
16%
16%
millionaires:

92 ,000
2008-2010 growth
of millionaires:
millionaires:
15%
78 ,000
2008-2010 growth
of millionaires:
millionaires:
16% 287 ,000
2008-2010 growth
of millionaires:

19%
 14 News
City tipped to become UK’s biggest recruiter
CITY COMMENT
MICHAEL BEAR
R
EPORTS that recruitment across
the financial and business servic-
es sector will pick up in coming
months are particularly welcome
given that unemployment hit a 17-year
high last week.
It is a sign of increasing confidence
that a new survey indicates the City will
be the UK’s biggest recruiter over the
next quarter. Over 1m people already
work in financial services (and a further
600,000 in related professional services)
with around two-thirds employed out-
side London.
The City is playing a vital role in driv-
ing the UK recovery and helping create
jobs needed to address cutbacks in the
public sector.
In my visits overseas I am delighted
that we are generally held in high
esteem but the City can not be compla-
cent if we are to remain strategic part-
ners with key growth markets.
That is why, in line with the govern-
ment’s emphasis on commercial diplo-
macy, I am currently promoting our
services alongside a senior business del-
egation in South East Asia.
We have much to offer, and the
stakes are high. The City accounts for
£42bn in net exports, half the UK’s
deficit on trade and goods. This positive
figure could increase considerably if we
strengthen our financial ties with
developing markets such as Malaysia,
Taiwan and Vietnam.
There are particularly strong oppor-
tunities in green infrastructure and car-
bon trading, especially as these
countries have set out to meet strict
emissions targets without compromis-
ing economic growth.
The UK has valuable experience to
offer across the whole spectrum of
green finance, encompassing banking,
investment, legal, consulting and
accounting services. By working togeth-
er, we can deliver the mechanisms
needed to overcome bottlenecks that
could constrain future growth across
South East Asia.
But while I am in the region, of more
pressing concern is the current situa-
tion in Japan following the recent
earthquake and tsunami.
Many people in the City work daily
MARTIN ON
THE MARKETS
MARTIN SLANEY
A
FTER the extreme volatility
experienced last week in the
equity, forex and commodity
markets, following on from the
disastrous earthquake, tsunami and
ensuing nuclear crisis in Japan, we
look set to take another hit on the
open this morning, on the first day of
trading after military action was
launched against Libya after a
ceasefire was broken by Gaddafi.
In out-of-hours trading, GFT is fore-
casting the UK’s FTSE 100 index to
open down 12 points from Friday’s
close at 5,706. The German DAX is
quoted to open down 15 points at
6,649 and the French CAC is called
down 10 points at 3,800.
The European bourses had their
biggest weekly drop since July in the
ANALYSIS l Dax Index
7,600
p 6,664.40
7,400
18 Mar
7,200
7,000
6,800
6,600
6,400
30 Dec 20Jan 16 Feb 10 Mar
BEST OF THE BROKERS
ANALYSIS l Taylor Wimpey
43 p
42 39.88
41 18 Mar
40
39
38
37
36
35
21 Feb 28 Feb 7 Mar 14 Mar
TAYLOR WIMPEY
Deutsche Bank rates the housebuilder
“buy” with a target price of 53p. The bro-
ker says in its review of the UK building
sector that the firm’s recent mortgage
deals with 95 per cent loan to value
could pave the way for others, easing
lending conditions for buyers this year.
To appear in Best of the Brokers email your research to notes@cityam.com
CITYA.M. 21 MARCH 2011
with colleagues and clients in Japan
and our thoughts and prayers are with
all those affected. As an engineer my
charity appeal this year supports RedR,
the disaster relief charity that trains
and provides experienced humanitari-
ans to help in such emergencies. RedR’s
members are currently offering relief
programmes on the ground, and tech-
nical and relief worker recruitment
services to organisations responding.
It will be incredibly difficult but I am
sure that with international assistance
the Japanese people will recover from
this terrible tragedy.
Michael Bear is Lord Mayor of the City of
London
aftermath of the tragedy in Japan.
Despite a joint intervention by the
G7 in the foreign exchange market for
the first time since 2000 in a successful
attempt to halt Japan’s soaring curren-
cy, investors are unlikely to rush back
into equities just yet. The
uncertainties surrounding unrest in
the Middle East and North Africa are
still very much a factor, not least the
anxiety that the UK could be entering
a prolonged drawn-out war following
the commencement of an air assault
on Libya by the Allies. Investors will be
watching developments closely for
news of any retaliation.
The UK budget is announced on
Wednesday, and although Chancellor
Osborne is unlikely to introduce any
material changes to existing policy,
there is scope for some surprise by way
of a rumoured fuel duty stabiliser or
even merging income tax and
National Insurance.
Elsewhere a plethora of economic
data from the US is scheduled for the
next few days, with existing and new
home sales, durable goods orders, job-
less claims and finally GDP on Friday
all adding to the volatile mix.
Martin Slaney is director of global
dealing operations for GFT.
ANALYSIS l FTSE 5,718.13
6,100
p 18 Mar
6,000
5,900
5,800
5,700
5,600
5,500
20 Dec 12 Jan 1 Feb 21 Feb 11 Mar
ANALYSIS l Legal & General Group
124 p
109.90
120 18 Mar
116
112
108
21 Feb 28 Feb 7 Mar 14 Mar
LEGAL & GENERAL
Standard & Poor’s rates the insurer “hold”
with a target price of 126p. The broker
expects cash generation to make only mar-
ginal progress in 2011, with the UK deliver-
ing flat growth at best. However, it thinks
L&G’s invesment management operation
has long-term growth potential.
CITYA.M. 21 MARCH 2011 News 15

CITY MOVES | WHO’S SWITCHING JOBS Edited by Juliet Samuel in association with

estate and investment structures.

BAE Systems
Paula Rosput Reynolds (pictured) has joined the
defence firm’s board as a non-executive, an
appointment that will take effect from 1 April.
Reynolds has spent more than 20 years in the
energy sector, including roles as president and
chief executive of AGL Resources in 2002 and
Safeco Corporation. She took on the job of vice-
chairman and chief restructuring officer of
American International Group in 2008 and is
also a former non-exec of Coca-Cola.
Eversheds
Clive Jones, a partner at the law firm,
has been promoted to head of tax in its
London office, a role he will take up
from the start of May this year.
He joined Eversheds in February
2008 after 14 years with Clifford
Chance. He will replace Sue Taylor,
who is retiring at the end of this finan-
cial year. Jones has particular experi-
ence in advising on the tax issues
involved in UK and international real
Capco
The financial services business and
tech consultancy has hired Gary
Goldberg as a director in its capital
markets team. He will join the firm in
order to develop its prime services and
hedge fund clients in the UK.
Goldberg has worked in financial
services for the last 16 years, most
recently as head of front office tech-
nology for BlueCrest Capital.
Ocado Group
Simon Belsham has joined the online
supermarket as head of non-food, mov-
ing from Tesco, where he was a direc-
tor of multichannel development with
a focus on non-food products.
At Ocado, Belsham will sit on the
group’s management committee and
report to the executive board.
He has also worked previously as a
consultant for Capgemini and received
an MBA from Harvard Business School.

To appear in CITYMOVES please email your career

updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
morganmckinley.com

Companies face £7 trillion

debt pile due in five years
Basel III ruling.
▲

BANKING
BY ALISON LOCK The collapse of markets for debt

INDEBTED companies face a scramble
for capital as they try to refinance
$11.5 trillion (£7.15 trillion) of loans
globally in the next five years, a
report showed today.
But the supply of capital is likely to
be limited, as banks hold nearly
$6 trillion of maturing debt and will
be negotiating their own refinancing
ISA
ISA
instruments such as collateralised
debt obligations has also hampered
banks’ efforts to lend.
“Increased regulatory pressures
will constrain banks’ abilities to fund
their lending activities as cheaply as
before, and will require greater capi-
tal to be held against liabilities,” said
Deloitte partner and head of debt
advisory, James Douglas.

efforts alongside raising extra regula-
tory capital, Deloitte’s “A tale of two
capital markets” study found.
UK banks alone hold £500bn of
wholesale term debt due for renewal
by the end of 2012 and need to raise
their core Tier 1 capital ratios to seven
per cent by 2013 to comply with the
metric
metric
Almost two-thirds of the debt owed
by global banks is due by 2015.
A spike in highly-leveraged buyout
and takeover deals in 2006 and 2007
immediately before the financial cri-
sis has left many companies bur-
dened with high levels of bank debt
on five-year maturity cycles.

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CITYA.M. 21 MARCH 2011
The new British Airways boss says
the business is ready for take-off
After years of cost
cutting, and the
Iberia merger, Keith
Williams wants to
focus on growth
IT is time for a fresh start. That was the
message from Keith Williams, the new
boss of British Airways, as he gave City A.M.
his first ever interview since becoming
chief executive of Britain’s 37-year-old flag-
carrier. One can forgive Williams for want-
ing to turn a page: his predecessor Willie
Walsh, who has moved upstairs to run BA
owner International Airlines Group (IAG),
will be a tough act to follow.
Famously pugnacious, Walsh took on
the trade unions in his drive to cut cabin
crew costs and piloted the massive merger
with Iberia, which led to the birth of IAG.
But Williams, who has spent the last
five years as Walsh’s chief financial offi-
cer, insists there is much work to be done.
The airline, he says, is on the cusp of great
things.
“BA is on the edge of some tremendous
opportunities due to our merger with
Iberia and partnership with American
Airlines (AA),” he says when we meet in a
small pine meeting room in the firm’s
Waterside headquarters near Heathrow.
“BA has not grown for some consider-
able period of time. It’s time to put some
growth back into this business.”
Williams is in a good position to take
the long view. He first joined the business
in 1998 as group treasurer, and helped
steady the country’s largest airline during
the industry slump after the 9/11 terror
attacks three years later.
As CFO, he helped Walsh sell loss-mak-
ing units, negotiate BA’s tie-ups with
Iberia and AA, and work out a complex
settlement to pay down its £3.7bn pension
deficit.
He officially took over from Walsh on 21
January. But Williams is keen to explain
why the business must look beyond the
Walsh era.
“This has been a ten-year journey,” says
Williams, a small, wiry man with an easy
manner.
“Over that time the company has been
shrinking. BA had not grown in an indus-
try that, despite recessions, has grown
globally at about three to five per cent a
year over the long term.”
He points out that when he joined the
CV | KEITH WILLIAMS
Age: Early fifties
Work: A chartered accountant at Arthur
Andersen and then worked at Boots;
Reckitt and Colman; Apple Europe; joined
British Airways in 1998 as group treasur-
er and tax, promoted to chief financial
officer, became chief executive in 2011
Education: Liverpool University, read his-
tory and archaeology and obtained a first
class honours degree
Family: Married, with two grown up chil-
dren
Lives: Windsor
Hobbies: Works out at his local council
gym, goes to the theatre, movies
WORDS BY ROGER BAIRD
firm it employed 65,000; he now heads a
workforce of 36,000.
Over the last decade the business has
sold off its German unit, Deutsche BA, its
French business, Air Liberté, and its
domestic business BA Connect to concen-
trate on what it does best – flying business
and first class passengers long- and short-
haul. The business is now 15 per cent
smaller that it was a decade ago, he says.
But after years of downsizing, Williams
is determined to grow the airline, and has
a £5.5bn pot of cash earmarked for invest-
ment over the next five years.
It has put in orders for 24 state-of-the-art
Boeing 787 Dreamliners – which made its
first flight yesterday – and 12 Airbus
A380s. The firm is also revamping all of its
first, business and economy cabins, which
will include new in-flight entertainment
systems in all parts of the plane.
There will be new routes as well, includ-
ing a new long-haul flight to Rio de
Janeiro and another to Buenos Aires.
These two routes provide an insight into
how the BA-Iberia merger will work. Prior
to the merger, observers wondered if BA
would leave South American routes to
Iberia, who are strong in this region.
But Williams is clear that if BA can run
a profitable direct route from London it
will do so.
“Rio and Buenos Aires are strong point-
to-point routes. Demand from London to
these cities is strong. But other routes to,
say, Chile, may see passengers from
London transfer in Madrid and then fly on
from there,” he expains.
It seems that Williams’ relationship
with his opposite number at Iberia, Rafael
Sánchez, is set to be one that mixes coop-
eration with a healthy dose of competi-
tion.
“BA has its own business plan, and
Iberia has its own plans, which will be
reviewed by IAG. To some degree I am
fighting for resources with Rafael at
ANALYSIS l IAG
320
280
240
200
British Airways chief Iberia,” he says, with a glint in his eye that
executive Keith suggests he will relish the battle.
Williams in the Williams will also be working more
grounds outside the closely than ever before with American
airline’s Waterside Airlines. Together the pair will run an
headquarters near hourly service between London and New
Heathrow York at peak times.
Williams’ role will be to run the airline
Picture: day-to-day and improve its premium prod-
Micha Theiner ucts, but the allocation of funds and merg-
/City A.M. ers and acquisitions will be handled by
Walsh and his IAG chairman Antonio
Vazquez.
As Williams shows us around the
Waterside offices, he shares a joke with
several members of staff along the way
and it’s easy to believe the reports that he
is more easy-going than the combative
Walsh. Is his management style more con-
sensual? “I think I am fair.”
But one issue that will test his equanim-
ity to its limits is the two-year cabin crew
strike over pay and manning levels that
has so far led to 22 days of strikes that cost
the airline £150m.
Some of the Unite-backed strikers have
welcomed Williams’ replacement of
Walsh, who has become a hate figure for
some workers.
“BA has its Williams says he wants to establish a
“working relationship” with all of the
own business trade unions, but for those who think he
will be a soft-touch he has a stark warn-
plan, Iberia ing: “I agreed with Willie’s position on the
strike. The pay and conditions of our cabin
has its own crew must be put on a equal footing with
the rest of the industry.”
plans. To Unite began its fourth ballot for indus-
trial action at the start of this month. The
some degree poll will close at the end of the month,
and is expected to come out in favour of
I am fighting more strike action.
Williams and his negotiating team met
for resources Unite earlier this month for the first time
since the vote was launched. He described
with Iberia.” the talks as “constructive.” But there
seems little sign of a solution in sight. The
News 17
“BA is on the
edge of some
tremendous
opportunities.
It’s time to
put some
growth back
into this
business.”
p
219.10
18 Mar
20 Dec 12 Jan 1 Feb 21 Feb 11 Mar
truth, though, is that with each strike the
airline is able to run increasingly more of
its network. The talks did not include
Walsh, but Williams says, “I can call on
him whenever I like. But we have decided
that industrial issues should lie in the
operating companies.”
After two years of record losses, due to
the economic crisis, which saw the firm
lose £531m last May and £401m the year
before, the airline’s finances are now mov-
ing in the right direction.
In the first nine months of this finan-
cial year, the business turned a pre-tax
profit of £157m, compared to a £531m loss
for the 12 months period last year.
Williams believes this puts the airline
in a strong position. Global airlines tend
to closely mirror the world economy. And
to that end he sees strong growth
prospects in Latin America, Asia and the
Middle East this year, where the crisis has
had the least impact and where increasing
numbers are flying more regularly.
He adds that he sees “some growth” in
the US but muted growth in Europe of
around one to two per cent over the next
12 months.
But this still provides opportunities
both at BA and its parent IAG, says
Williams. “The industry needs consolida-
tion, and I hope IAG will be part of that.
The industry has to become more global.”
In the past, governments have guarded
the independence of flag carriers as sym-
bols of national pride. But Williams says
governments are less willing to “keep writ-
ing cheques” in these tough economic
times. That could lead to more opportuni-
ties for BA as it picks off troubled national
carriers.
It has taken ten tough years but
Williams is adamant that BA is ready for
the next stage of its evolution. He wants it
to become a predator again. If he and
Walsh pull it off, we will be seeing a lot
more of IAG in the years ahead.
18 CITYA.M. 21 MARCH 2011

Wealth Management Spread Betting |

THE TIPSTER
RICE, PIGS Nuclear risk
OIL AND
CARS threatens
W
ITH world soft commodity
prices rising, there is one that
has been difficult to get expo-
sure to – rice. Origo, a private
equity investor in China, has acquired
approximately a 25 per cent stake in
China Rice. This firm, a processing and
distribution group, plans to create a
supply chain
nationwide brand associated with good
margins. Technology companies reliant on
Exposure to the rice market must
surely be a good thing, with rising Asian Japanese components could be hit by
demand and dwindling fresh water sup-
plies. It takes 5,000 litres of water to
grow a kilo of rice. Spreadex offers a
current uncertainty, says Philip Salter

June price of 41.1p-44.54p.
Entertainment One produces the
Peppa Pig cartoons, which generated
over £200m in retail sales in 2010, mak-
ing it the best selling cartoon character.
Broker estimates are positive, and could
be somewhat conservative if Peppa Pig
takes off in the US, where ETO has an
agreement with Nick Jr, a kids channel.
ETO isn't a one trick pony though, with
other popular cartoons such as Ben and
Holly's Little Kingdom and police drama
Rookie Blue. Spreadex offers a June
quote of 151.3p-153.9p.
AIM-listed oil explorer Gulf Keystone
Petroleum saw its share price rocket to
an eight month high after significant ini-
tial oil flows from its Shaikan block well
in Kurdistan. The stock has since moved
over 20 percent to 153p, however more
detailed results will show the true valua-
tion of the well. With these fundamen-
tals in mind there could be further
upside. Capital Spreads quotes 151.8p-
153.0p.
The impact of the Japanese earth-
quake, tsunami and ongoing nuclear cri-
sis is starting to be felt on a truly global
scale as supply chain disruption begins to
bite. Reports are now circulating that
General Motors has had to suspend pro-
duction at some of its factories owing to
a parts shortage but with the shares
now trading below last year’s IPO price,
will cavalier traders be tempted to seek
the buying opportunities? Current IG
Index price on GM is $31.40-$31.48.
Craig Drake
W
ith nuclear uncertainty
hanging over Japan, sup-
ply chains reliant upon
technological compo-
nents made there have been severe-
ly disrupted. Japanese exporters
have suffered, while companies
reliant upon the country are
weighing up their exposure and
searching out alternative suppliers.
These are uncertain times for tech-
nology companies across the
world.
Sony, Hitachi, Fujitsu, and many
other Japanese technology compa-
nies have taken a serious hit, shut-
ting factories across the country. It
is not just a matter of production
“but physically being able to get
them out, as the country faces
power cuts and transport prob-
lems” says Angus Campbell of
London Capital Group. Across Asia,
companies reliant on Japan have
been impacted – Toyota Motor in
Thailand has slowed production
due to a bottleneck of supplies.
Beyond the region, focus has
shifted to technology companies
reliant upon components from
Japan. Protective polarizer film for
LCDs is only made in Japan, while
for many other components
Japanese production dominates.
The country makes 90 per cent of
the world’s Bismaleimide Triazine
(BT) resin, used in chips and circuit
boards and so important in mobile
devices, which is of particular con-
cern. Companies reliant on NAND
flash chips, DRAM microcon-
trollers and LCD panels are also
being evaluated.
The Dax index has been hit by
the crisis. As Alastair McCaig of
WorldSpreads says, the DAX is
“seen as an indirect way of invest-
ing in Asia” because of the exten-
sive exports of the German
tmanufacturers that make up this
index. The aftermath of the earth-
quake has added to existing con-
cerns of rising oil prices with the
Dax down 9.5 per cent from its 18
February high. The Dax volatility
index hit its highest level in nine
months last Tuesday.
The Nasdaq 100, the tech heavy
US stock index, should also be
watched closely. Last Monday it
dropped a little (0.5 per cent),
although it has since recovered. If
sentiment changes, or events in
Japan take a turn for the worse,
both could take a tumble.
The Fukushima Daiichi nuclear
plant’s alert level was upgraded on
Friday, with France’s nuclear safety
authority especially worried. There
were some signs of improvement
on Sunday, however. Hopefully, the
technologically savvy Japanese will
be able to contain the crisis. If it
gets worse, however, global tech-
nology firms will suffer even more
disruption in their supply chains.

THE WEEK AHEAD in association with

COMPANY NEWS ECONOMICS NEWS POLITICAL NEWS

l Campari will be hoping
for a good mix of results
on Monday.
l On Tuesday, Cairen
Energy will announce. The
oil and gas exploration
and production company
will be hoping to strike
great results from the ris-
ing energy prices.
l The fashion group
Inditex will announce on
Thursday.
l On Thursday,
Resolution, the Guernsey
investment vehicle,
announces its results.
l Koenig & Bauer
announces on Friday. It is
the oldest printing press
manufacturer in the
world, founded in 1817.
l Today, US existing
home sales for February
will be released, while on
Wednesday US new home
sales will be released.
l CPI figures and public
sector net borrowing fig-
ures for February will be
released on Tuesday.
l Minutes from the 10
and 11 March Bank of
England meeting will be
released on Wednesday.
With a split established in
the MPC, they will make
interesting reading.
l On Friday, Germany will
release its monthly IFO
Business Climate Survey
for March. The IFO is one
of the country's and the
wider Eurozone’s key busi-
ness sentiment surveys.
l Today, there will be a
public accounts meeting
on the 2012 Olympics.
Expect more questions
than answers.
l Members’ salaries will
be discussed in the House
of Commons on Monday.
Turkeys won’t vote for
Christmas.
l The main event is on
Wednesday when the
Chancellor George
Osborne delivers the
budget. Expect heated
debate across the floor.
l Lord Lawson of Blaby
will lead a debate in the
House of Lords optimisti-
cally titled: Government
policies to promote enter-
prise, growth and rebal-
ancing of the economy.
CITYA.M. 21 MARCH 2011
T
It pays to know HMRC’s
stance on trading gains
Traders should be aware of the different tax status
of their spread and CFD profits, writes Craig Drake
O
NE of the biggest draws of spread
betting over traditional share
dealing is the former’s tax sta-
tus. Although the Treasury is
currently searching under each and
every rock and stone in the search for
revenue, it is highly unlikely that
spread betting will lose this position.
Spread betting is tax free for the con-
sumer in the UK, as long as it does not
constitute your main source of income.
As such, most spread betters are able to
escape the 18 per cent capital gains tax
(CGT) that must be paid by sharehold-
ers on traditional share trading.
Many essential Revenues from spread betting are also
components are princi- free of stamp duty and commission on
pally made in Japan each trade.
According to IG Index “spread bets as
far as a customer is concerned are treat-
ed the same way as a bet in horse rac-
ing, and as such you do not pay tax on
your gains. At the same time, you can-
not write off your losses against tax.
Customers are not liable for stamp duty
as we as a provider pay duty direct to
HMRC.”
Contracts for difference are treated
differently. Providers do not pay duty
on CFDs in the way that they do on
spread bets and the cost is borne by
traders in the form of CGT, though the
first £10,100 is exempt from tax (this
includes all taxable gains, not just
those from CFDs). Any losses can be
written off against your tax bill.
Due to the constantly shifting status
of tax law, investors should always do
their due diiligence. In common with
all things financial, it is prudent to
have your accountant on speed dial to
maximise your take home profits and
to avoid an unwelcome knock on the
door from the taxman.
19
VOLATILITY IN
OIL REQUIRES
A STRATEGY
SHAI HEFFETZ
HEAD OF INTERTRADER.COM
HE latest turmoil in the Middle East has sparked
a rally in oil prices, introducing daily changes and
overall volatility we haven’t seen since 2008. It’s
only in the last few years that oil trading became
readily available to retail traders, allowing us to bene-
fit from changes in price, if we get it right.
Oil prices are driven by both technical and funda-
mental factors. The difference between oil production
and consumption is around 1 per cent – that’s it.
Therefore any potential change to supply or demand
has an immediate effect on price, especially when a
country like Saudi Arabia – producing around 10 per
cent of the world’s oil – suffers from internal unrest.
We have two main oil contracts traded on world
exchanges. West Texas Intermediate (WTI) oil,
sourced in the US for domestic consumption, and
Brent crude, sourced in the North Sea and serving as
the global benchmark for the physical trading of oil.
As a result, one strategy that can be employed is
called the “WTI-Brent arb”. When trading is in busi-
ness-as-usual mode the difference between the two
contracts tends to remain roughly constant. That
means it is possible for a diligent trader to identify
when this equilibrium is broken and accordingly trade
the two contracts in different directions until equilibri-
um is restored and extract a profit.
Another way, which may bear more risk, is to chal-
lenge this equilibrium based on fundamental events.
The current turmoil in the Middle East may affect pro-
duction and therefore could cause the Brent price to
rise, but why would WTI rise with it when the latter
is produced and consumed in the US? WTI might be
expected to go up, yet should it rise at the same rate
as Brent?
If you want to learn more, join us this Wednesday
at 2.30pm for an hour-long online seminar on oil.
Register on our website at www.intertrader.com
The views and comments in this article are not the
views of InterTrader.com. The provision of this infor-
mation should not be construed in any circumstances
as a recommendation or solicitation to buy or sell any
security or financial instrument.
 20 Wealth Management | Markets CITYA.M. 21 MARCH 2011

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 Business Features | Entrepreneurs
THE RISE OF
THE BRAND
ASSASSIN
DOUG RICHARD
SERIAL ENTREPRENEUR
A
FTER receiving a healthy sum of birthday money from
his rather indulgent grandparents, my son resolved to
spend it on an Xbox 360. PC World was a full £25
cheaper than my usual first stop shop, Amazon. Deal
done, order placed, but no item arrived. Days passed, phone
calls were made, confusing emails received and a seemingly
endless merry-go-round of broken promises from customer
services.
The final straw came when a promised call back never
materialised. I took my ire to Twitter:
“If you ever want to see a dysfunctional organisation at
work try ordering from the PC World website. Nothing’s
arrived and no way to track.”
It was duly retweeted, but not nearly enough to satisfy my
anger; so I continued.
“Are you listening PC World. #ecommercefail! I will go to
my grave before I order from you again. #votewithyourfeet.”
This attracted more attention and I was made aware of a
representative on Twitter from the Dixons Group – owners of
PC World. I directed a tweet his way, and to my surprise he
made contact and apologised. My order was cancelled and
he offered a full refund.
Amazon got my son’s business that evening, and the Xbox
arrived next day. I await my promised refund from PC World.
I have subsequently told this story to the 350 heads of the
ad agencies that make up one of the largest advertising net-
works in the world. As you read this you are one more person
who knows this story, amplifying my voice to tens of thou-
sands who have gained a negative view of PC World online.
Last year I spoke at length about social enterprise. There
was an upsurge of interest by people who attended School
for Startups events in starting a social enterprise. Most were
very clear on their social mission but only a few had realised
that the emphasis in the phrase “social enterprise” is on
“enterprise” not “social”. Social is the adjective in that sen-
tence.
To be a successful social enterprise you must first be a suc-
cessful enterprise. You have to do well to do good.
Over the last few decades, new stakeholders have
appeared as they have acquired a voice to which companies
have had to respond.
If you run a social enterprise you intentionally add a voice
or amplify one that exists. What concerned me last year was
that the idealists who were attending my course were like
kids in a candy store. They would line up every social good
along the path to profit, but with so many hands stretched
out on the path to profit by the time the revenue stream
reached the profit, there would be no profit.
The challenge I asserted is that a social enterprise is dou-
bly hard to run: it asks for two bottom lines or, more precise-
ly, it asks for a bottom line despite an intentional diversion on
the path from revenue to profit. You must be even more
focused and efficient than a normal business if you intend to
serve two masters.
Increasingly, this is a challenge facing not only those who
choose to be social, but every company with a reputation to
protect. Historically, the challenge facing those who want to
hold a company to account is that they could not create
awareness. They could not get attention.
But something radical has happened recently. The rise of
social media has amplified the individual voice and equally
importantly has provided the means for individual voices to
become a collective at nearly no cost: we are all one
Facebook group or one hashtag away from aggregating
protests of a similar kind.
It is not that power has been redistributed. It’s just that
there is more power around.
Every customer with a grievance is a guerrilla and every
person who has been driven mad by a bad customer service
experience is a brand assassin. Each individual has the poten-
tial to tell a story – to push a domino that will cause a revolu-
tion. There is simply more power around and the amount the
company has hasn’t changed: which means that they are no
longer so powerful.
In the new world order, every CEO must ask if it’s worth
angering a customer.
A smart CEO is always assessing risk versus reward. And
the only rational response to the potential for embarrassing
failures or intentional evil is to reappraise the risks of doing so
in a world where everyone is a whistleblower.
The question is no longer whether we can afford to make
a profit for profit’s sake. Rather, it is becoming evident that,
just as social enterprises must do well to do good, so too
every business will have to do good to do well.
21
Consultancy from the
business commandos
Ex-marine Damian
McKinney speaks to
Donata Huggins about
starting his business
D
AMIAN McKinney rings me from his
boat off the coast of Guadalupe. This
ex-Royal Marine commando turned
entrepreneur tells me that he has
always wanted to have a video conference
from a boat, wearing a shirt and tie, pre-
tending he’s in the office. “This is close
enough,” he laughs.
After a 20-year military career in the Gulf,
Bosnia and battling the narcotics trade in
Central America, management consultancy
is not the industry you would imagine a
man like McKinney ending up in.
McKinney couldn’t really imagine it
either: “I never wanted to be a consultant. I
actually don’t like consultants. I’ve always
thought you should be prepared to do busi-
ness for real.” But despite this view, at the
age of 37, McKinney left the military at the
rank of lieutenant-colonel and started the
firm McKinney Rogers. The company now
operates in 14 countries with over 200 staff.
“I left the army because I had reached an
age and rank where I only had about four
years of action left,” McKinney explains. “I
don’t want to sound like a warmonger, but I
thrive on adrenaline and crisis situations.”
He tells me how rewarding it is to take con-
trol of a crisis: “In 1991, at the end of the
Gulf war, during the Kurdish uprising, I was
given 30 days to set up a refugee camp and
move 240,000 refugees. With 150 guys we Lieutenant-colonel turned entrepreneur
did it. Now that’s real work.”
“I had this idea that if you wanted to go get on and do it.” McKinney loved the The business grew from there. “Soon
into business from the military, you had to challenge: “We hit 32 per cent. Akers told they wanted me to do what I did for
do it before you were 37. To be honest, when me to just go off and do this for real.” Johnnie Walker across other Diageo
I left, I really didn’t know what I was doing. So McKinney, alongside a business part- brands.” McKinney Rogers now has
I thought if I worked in management con- ner, set up shop in his attic. Within two Walmart, JPMorgan and Bacardi as clients.
sultancy, I could see what lots of different weeks, Diageo rang, asking him to do “So much of consultancy is like the mil-
businesses were like, then I could pick one what he had done for Barclays for their itary. You have to get inside the minds of
and then get to work climbing its corporate Johnnie Walker brand. “I had no idea how your competitors, understand their moti-
ladder.” powerful word of mouth is. I was a bit vations and know the environment you’re
But McKinney explains that he was frus- naive in that way.” operating in.”
trated by the new role almost immediately:
“On my first morning, I was taken along to CV | DAMIAN MCKINNEY
a client meeting and at the end of it, I had to
turn to my colleague and say, I have no idea Age: 51 Awards: MBE 1986; Keeper of the Quaich for
what you’re talking about. I’m not a stupid Born: Uganda work on Johnnie Walker; Times Fastrack
man, but what on earth is the end stage you Lives: Barbados with my Krissi, children and 2009, 2010; Queen’s Award for international
want to reach with this client? And he
turned to me and said, there is no end
animals performance 2010
stage.” Studied: BSc City University, MA Kings Motto: “Never accept 'it can not be done’”
It wasn’t until he landed a project with College, London First ambition: Commando
Barclays that he got a taste for consultancy: Number of staff: Around 200 (including Drinking: Bacardi Mojito
“I started working with the corporate direc- associates) Reading: “History and adventure books. I just
tor Martin Akers and he could tell I was frus- Idol: Marcus Aurelius Caesar “He was a val- finished 'The Long Walk' by Slavomir Rawicz
trated. So he doubled my revenue-increase ues based leader” (his escape from a Russian Gulag in 1941)
target from 7 to 14 per cent and told me to
ENTREPRENEURS NEWS | IN BRIEF
TRAINING YOUNG ENTREPRENEURS FOREIGN ENTREPRENEURS GIVEN PASSPORT FUNDING ENTERPRISE WORKSHOP
Deloitte, 3i, Diageo and McKinsey are back- The government has offered wealthy foreign The British Library’s Business and IP Centre
ing a new training programme to encourage entrepreneurs a fast track to settle in Britain. is hosting workshops on getting funding.
young people to be more entrepreneurial. The New immigration rules say that overseas Paul Grant, the former director of the ven-
programme is selective and runs for one year investors willing to keep £5m in a British bank ture capital firm Capital Partners will be giv-
from September. It is aimed at motivated account will be allowed to stay in the country ing a talk on starting a business without
young people interested in business. 25 can- indefinitely after only three years. Those who external capital and another on how to
didates will have a 12-month internship with create 10 jobs or achieve an annual turnover of obtain funding. These will be held on
an entrepreneur. In addition, they will take £10m a year for their UK business will also be Thursday 24 March and Thursday 7 April
part in training seminars and events run by eligible to settle after three years. The normal respectively. Tickets are £25 and they are
business schools and the sponsoring compa- procedure lasts five years. The home secretary held in the late afternoon to evening at the
nies. For more information visit www.newen- said she would not limit the number of wealth British Library. For information visit
trepreneursfoundation.com creators who can come to Britain. www.thefundinggame.co.uk
 Lifestyle
22 In association with
| Travel
Left: Domaine de
Cyrano, Provence.
Right, the plush
interior.
French fancy
in the villa of
your dreams
Manor house or windmill, France can
be your oyster, says Zoe Strimpel
T
HERE is no shortage of villa
rental services in France. But few
provide access to the country’s
most beautiful properties in the
way that Pure France, a company
founded by two Brits tired of the Anglo
slog, does.
With 400 properties, from the rustic
to the grand to the minimalist and
modern spread over the Languedoc,
Burgundy and the Loire Valley, the
Dordogne and Provence and the Cote
d’Azur, there is literally no slice of the
French idyll you can’t have, and at a
reasonable price, too.
The founders, Dan Jones and Hugh
Atkins (formerly Britain’s youngest
yachtmaster and a professional skip-
per, and an advertising exec, respective-
ly), began the business in France by
helping to rent neighbours’ houses out.
Their portfolio now makes staying in a
hotel seem foolish – the choice,
grandeur and rental price of the prop-
erties is staggering.
One of our favourites is Domaine de
Nerige, whose British owner had to
beat a path through the undergrowth
to get to the derelict property. It’s now a
beautiful five-bedroom with blue shut-
ters and an enormous pool looking out
over the Languedoc, set in 18 acres of
Manoir des Sines: think distressed white
wardrobes and rustic chic in the Dordogne.
CITYA.M. 21 MARCH 2011
lush forest. From €2,195 per week.
At the very top of the scale, especial-
ly for wine lovers, is Domaine de
Cyrano (pictured above) near Toulon
in Provence. A once-ruined manor
house set amid 1,000 acres of vine-
yards, Cyrano has had a multi-million
pound renovation by one of France’s
top architects and now has two swim-
ming pools, a cinema room, a dining
room for 24 people and lots of elevated
terraces with views of the vineyards. A
nice touch are the six bottles of
Domaine de Cyrano that await guests
on arrival. It sleeps 14, from €7,780 per
week.
The nine-bedroom Manoir des Sines
(pictured below) is another jaw-drop-
per, set in the Dordogne countryside.
A pool and jacuzzi, outdoor table ten-
nis, cinema room and copious terraces
make it the ultimate party pad. The
main house has an arresting stone
staircase, oak floorboards and beamed
ceilings. Sleeps 18, €2,880 per week.
You don’t have to rent a chateau –
there’s a gorgeous windmill for two in
the Languedoc, for example, from
€1,025 per week and numerous other
options to fit a variety of budgets and
group sizes. Party in France this sum-
mer, folks. www.purefrance.com.

CITYA.M. 21 MARCH 2011
HONG KONG
GLAMOUR
Beatrice Aidin enjoys the thriving city
“
L
EFT for Buddha,” said the
sign. But the one directly
beneath it read: “Right for the
discount outlets”. This is the
visitor’s dilemma in Hong Kong,
with its mix of spirituality and bla-
tant consumerism. And how to com-
bine the two with all the bars and
restaurants? We chose to answer this
question by opting for the luscious
consumer option, via two of the city’s
most glamorous hotels.
First up: the Langham Hong Kong –
sister to the luxurious London hotel.
Fragrance of Chinese ginger flower is
wafted through the foyer to signal
that you have arrived, in all senses of
the word.
The second signal of your arrival in
the world of the global elite – after
the plush rooms, of course – is the
Langham Club, a rather clever
arrangement whereby for an addi-
tional payment of around £50 a day,
you can breakfast, lunch, cocktail,
work and socialise from 6.30am to
11pm.
After spending the day touring the
city on the famous Star Ferry, with a
quick dinner mainly consisting of
peanuts in the stunning Mandarin
Oriental bar, we slept like babies. The
next morning began with a swim in
To get in, you have to knock on a big black heavy
door, and a pair of electronic eyes decides
whether they like the look of you
l The Peninsula
TRAVEL NOTES | by Zoe Strimpel
In association with
the rooftop pool, breakfast of
poached eggs and shrimp dumplings.
A morning of sight-seeing led to
considerable hunger. After a quick
change of wardrobe we settled in for
a two-Michelin star lunch at the
Langham’s T’ang Court restaurant.
We had angelic dumplings with deli-
cate flavours and spices; sliced lobster
in hot and sour chilli soup and roast-
ed suckling pig that wiped any mem-
ories of previous versions off the
palette. And at £30 per head, it was
excellent value.
No rest for the weary as the luxury
safari continued with a visit to the
Peninsula Hotel, where we went
straight downstairs to the wonderful-
ly eccentric Salon de Ning. First of all,
to get in you have to knock on a big
black heavy door, and a pair of elec-
tronic eyes decides whether they like
the look of you.
Salon de Ning is a bar based
around the life of the glamorous
(although entirely fictitious) Madame
Ning. Over a Ning Sling cocktail, we
hopped from each room, looking at
the original bottle of Chanel No. 5,
her jewellery, clothes in Le Boudoir,
her après-ski chalet area, the African
hunting lodge and the Boiler Room
where dancing is mandatory.
BA’s American
shuttle
British Airways
and American
Airlines have
combined forces
to create a
transatlantic
shuttle service.
The most dra-
matic change is to
the Heathrow to
New York route: pre-
viously nearly half of all
flights were departing at
the same time, leaving gaps of up to
three hours between services; now they
will depart every hour, on the
hour, from 1pm to 8pm. Starts 27
March.
AMARANTO AT THE 23
FOUR SEASONS
PARK LANE
REVIEWED TOMORROW
It was too early to get stuck into the
dancing, so we went up to the top of
l The Langham Hong Kong
the Peninsula, to the Felix restaurant
and bar, not only offering outrageous
cocktails but also views of the Hong
Kong harbour lights.
We relished the idea of returning
later that night, but ventured out for
some city cuisine in the meantime.
For the third time that day we went
on the Star Ferry and took a taxi to
Indochine 1929, a restaurant special-
ising in Vietnamese cuisine, styled in
homage to the French colonial era.
Salt and pepper soft-shelled crab,
fried fish Hanoi style and stunning
spring rolls soaked up some of those
cocktails and we rolled into a taxi to
our glorious beds at the Langham,
once more to sleep like babies in the
heaven-scented sheets. Left: the Lounge and right, the
The Leading Hotels of the World Library.
(www.lhw.com) offers stays at the
Langham, Hong Kong from £174 per room
per night based on two people sharing a
double room. A Superior room at the
Peninsula costs from £435. THINK ROOMS... with
www.peninsula.com
The exterior is NOVOTEL HONG KONG
among Hong Kong’s
grandest. Left: a
NATHAN ROAD KOWLOON 4*
view from upstairs. 348 Nathan Road | Kowloon | Hong Kong
Step off Hong Kong’s famous ‘Golden Mile’ and into the
sleek and stylish Novotel Hong Kong Nathan Road. Ideally
located opposite the Temple Street Night Market and
conveniently beside a mainline MTR station, this hotel is
an escape in the heart of the action. The contemporary
décor creates a lovely tranquil feel whilst Square
restaurant and Tasca bar provide the perfect atmosphere
to relax in.
ROYAL PLAZA HOTEL 5*
193 Prince Edward Road West | Kowloon |
Hong Kong
The Royal Plaza Hotel is a bit of a show-stopper. And it’s
not just because of its central location, deluxe
Become like a accommodation and striking views. Amongst other
delights, the outdoor Roman pool with underwater music
beach tomato provides the kind of indulgence we like, and it’s directly
As we start to tentative- linked to one of Hong Kong’s largest shopping centres –
ly look towards sum- for a whole world of retail therapy.
mer, there is a new
authority on every-
thing beach-related to THE ROYAL PACIFIC HONG KONG 5*
get us daydreaming 33 Canton Road | China Hong Kong City |
about exotic holidays.
beachtomato.com is a Tsim Sha Tsui | Kowloon | Hong Kong
new website dedicated On the bank of Hong Kong’s world-renowned Victoria
to beach fashion, eti- Harbour, The Royal Pacific stands in a truly impressive
quette and culture – con- location. As you’d imagine the views from this hotel are
ceived by founder of luxury something else, whether they be of the harbour on one
travel site blacktomato.com Tom side or the lush Kowloon Park on the other. Inside is well
Marchant and his fashion editor girl- worth a mention too, providing a luxurious, modern and
friend Kirsty Hathaway. Start planning stylish stay.
your beach outfits, and what beach
you’ll wear them on at www.beach- To book your stay at any of these fabulous hotels, or to discover a whole world of other
tomato.com. accommodation possibilities, visit LateRooms.com or call 0161 831 3894.
 24 Lifestyle | TV& Games CITYA.M. 21 MARCH 2011

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm Bang Goes the
Theory; BBC News
8pm EastEnders 8.30pm Libya’s
Lost Revolution: Panorama 9pm
Waking the Dead 10pm BBC News
10.25pm Regional News 10.35pm
CHOICE Mrs Brown’s Boys
11.05pm Late Kick Off 11.35pm
FILM A Bronx Tale: 1993;
Weatherview 1.30am Sign Zone:
Silk 2.30am Sign Zone: Romancing
the Stone: The Golden Ages of
British Sculpture 3.30am Sign
Zone: Life in a Cottage Garden with
Carol Klein 4am-6am BBC News
6pm Eggheads
6.30pm Royal Upstairs
Downstairs
7pm Nicolas Sarkozy:
President Bling Bling?
8pm University Challenge
8.30pm Raymond Blanc’s
Kitchen Secrets
9pm The Secret War on Terror
10pm Never Mind
the Buzzcocks:
Jack Whitehall guest hosts.
10.30pm Newsnight; Weather
11.20pm FILM Cabaret: 1972.
1.20am An Island Parish
1.50am BBC News 4am-6am
BBC Learning Zone
6pm London Tonight 6pm The Simpsons 6pm Home and Away
6.30pm ITV News 6.30pm Hollyoaks 6.25pm OK! TV
7pm Emmerdale 7pm Channel 4 News 7pm 5 News at 7
7.30pm Coronation Street 7.55pm 4thought.tv 7.30pm CHOICE How Do They
8pm The Lakes 8pm Dispatches: Train Journeys Do It? 5 News Update
8.30pm CHOICE from Hell 9pm One Born Every
8pm The Gadget Show;
Minute 10pm Heston’s Chocolate
Coronation Street 5 News at 9
Factory Feast 11.05pm The Event
9pm Law & Order: UK
12.05am Music on 4: Russian 9pm FILM Romeo Must Die:
10pm ITV News at Ten
Standard Originals Presents Martial arts thriller,
10.30pm London News 12.35am Music on 4: 4Play: MRS BROWN’S BOYS
starring Jet Li. 2000.
10.35pm Real Crime with Mark Diagram of the Heart 12.50am BBC1, 10.35PM
Austin: Yvonne Fletcher – Justice European Poker Tour 1.45am
11.20pm FILM Death Race: Dermot’s pre-marriage nerves get the
Betrayed 11.35pm River Monsters Rome Wasn’t Built in a Day Sci-fi thriller, starring better of him as he locks himself away
12.35am The Zone; ITV News 2.40am Royal Deaths and Diseases Jason Statham. 2008. in a cupboard, and Rory’s secret is
Headlines 2.35am UEFA Champions 3.35am Codex 4.30am The Bible: 1.20am SuperCasino 4.05am The revealed to his mother.
League Weekly 3.05am A History 5.25am Chrono- FBI Files 4.55am Animal Rescue
The Jeremy Kyle Show Perambulator 5.40am-6.05am Squad 5.10am Wildlife SOS
3.55am-5.30am ITV Nightscreen Wogan’s Perfect Recall 5.35am-6am House Doctor

SKY SPORTS 1 10pm WWE: Late Night – SKY LIVING in a tricky position. 10.10pm Extreme Engineering 4.40am
SATELLITE & CABLE

6.30pm The Sky Sports Years
7.30pm Live Football League:
Milton Keynes Dons v Peterborough
United (Kick-off 7.45pm). 10pm
Prizefighter Boxing 10.30pm The
Sky Sports Years 11.30pm Premier
League Review 12.30am
Netbusters 1am SPL Round-Up
1.30am Football League 3am
Sports Unlimited 4am Watersports
World 5am-6am Max Power
SKY SPORTS 2
6.30pm Thinking Tackle
7.30pm Live Superleague Netball
10pm Soccer AM: The Best Bits
11pm Boots ‘n’ All 12am
Superleague Netball 2.30am
European Tour Golf 3.30am
PGA Tour Golf 4.30am-6am
Wonderful World of Golf
SKY SPORTS 3
7pm Masters Tennis. The BNP
Paribas Open final. 9pm NASCAR
Bottom Line 11pm WWE: Late
Night – Afterburn 12am WWE:
NXT 1am Live WWE: Late Night
– Raw 3.15am-4.15am Premier
League Review
BRITISH EUROSPORT
6.30pm Champions Club 7.45pm
Eurogoals 8.15pm MotoGP
10.15pm Trial Bikes
11.20pm-12.30am Champions
Club
ESPN
6.30pm Talk of the Terrace 8pm
Major League Soccer 9.45pm
ESPN Kicks: Scottish Premier
League 10pm Between The Lines
10.30pm ESPN Pardon the
Interruption 11pm ESPN Game
of the Week 11.30pm ESPN
Press Pass 12am Beach Soccer
4am ESPN Game of the Week
4.30am ICC Cricket World
Magazine 5am Baseball Tonight
5.30am-6am ESPN Press Pass
7pm Ghost Whisperer 8pm
Nikita 9pm America’s Next Top
Model 11pm Criminal Minds
12am CSI: Crime Scene
Investigation 2.40am Charmed
4.20am Four Weddings
5.10am-6am Maury
BBC THREE
7pm Total Wipeout 8pm Freak Like
Me 8.30pm Snog, Marry, Avoid?
9pm How to Live with Women
10pm EastEnders 10.30pm Kara
Tointon: Don’t Call Me Stupid
11.30pm Becoming Human
12.20am Family Guy 1.05am How
to Live with Women 2.05am Kara
Tointon: Don’t Call Me Stupid
3.05am Total Wipeout 4.05am
Snog, Marry, Avoid?
4.35am-5.25am Becoming Human
E4
7pm Hollyoaks 7.30pm Friends
9pm Glee. Sue puts the Cheerios
Great British Hairdresser 11.15pm Raging Planet 5.30am-6am How
Skins 12.25am Scrubs 1.15am Does That Work?
Accidentally on Purpose 1.55am
Skins 2.50am Rick & Steve: The DISCOVERY HOME &
Happiest Gay Couple in All the
World 3.15am Reaper 4am The
HEALTH CORONATION STREET
7pm A Baby Story 8pm How
OC 4.45am-6am Switched ITV1, 8.30PM
Clean Is Your House? 9pm Peter and Leanne return home to find
HISTORY Trauma Unit 10pm Untold an out-of-work Janice in their flat, and
7pm How the Earth Was Made Stories of the ER 11pm Critical Maria prepares to apologise to Frank
8pm Pawn Stars 9.30pm Mud Condition 12am Trauma Unit for the sake of Underworld.
Men 10.30pm Pawn Stars 11pm 1am Untold Stories of the ER
American Pickers 12am Mud 2am Critical Condition 3am A&E
Men 1am Pawn Stars 3am 4am Bringing Home Baby
MysteryQuest 4am UFO Files 5am-6am A Baby Story
5am-6am Ancient Discoveries
SKY1
DISCOVERY 8pm Road Wars 9pm Ross
8pm How Do They Do It? Kemp: Extreme World 10pm
8.30pm How It’s Made 9pm Spartacus: Gods of the Arena
Airplane Repo 10pm Dual 11.15pm Extraordinary Illnesses HOW DO THEY DO IT?
Survival 11pm Monsters Inside 12.15am Border Invasion USA CHANNEL5, 7.30PM
Me 12am Bear Grylls: Born 2.10am Road Wars 2.40am Robert Llewellyn finds out how
Survivor 1am Deadliest Catch Glenn Martin, DDS 3.30am a company in the Netherlands
2am Weaponology 3am World Lost 4.20am The Filth Files manufactures some of the world’s
War One in Colour 3.50am 5.10am-6am Sell Me the Answer largest propellers.

COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

QUICK CROSSWORD
    

SUDOKU KAKURO
8 16 22 11 24 33 18
5 4 6
21   
35 10
Place the numbers from 1 to 9 in each empty cell so that each 7 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 7 29
16 21
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 45
   
above or to the left of it.
You can only use the digits 1-9 10 14 14
  and you must not use the
28 24
19     
same digit twice in a block. 32 17 34 11
 The same digit may occur 14 15 8 
13 11
    more than once in a row or
column, but it must be in a
45
 
11 22
    separate block.
9 12
12 15
     24 7 17
 

 ACROSS DOWN
1 Country, capital 1 Knife used in
   
 WORDWHEEL E E
Damascus (5)
4 Afghanistan’s
capital city (5)
dissection (7)
2 Wireless (5)
3 Intense (5)
Using only the letters in the Wordwheel, you have
  ten minutes to find as many words as possible,
E A 7 Intense feeling of love (6) 5 Desert, leave (7)
9 Chief port of Yemen (4) 6 Deplete (3,2)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters D 10 Ripped (4) 8 Crosspiece that

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
C D 11 Drive from behind (6)
13 Swindle (4)
strengthens the
frame of a vehicle
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
C N 15 Behind schedule (4)
and prevents
injury in case of
17 American gangster ___
QUICK CROSSWORD 8 7 9 2 2 3 1 6
overturning (4-3)

T B H S K I E R
5 2 3 1 4 1 2 9 SUDOKU         
Parker, who teamed up
with Clyde Barrow (6)
12 Gift (7)
6 1 4 8 9 6 14 Abstract part of
E A R L O B E N A
9 8 6 1 3 2 1
         20 Wash with a mop (4)
E O R N T C          something (7)
T O N G S S W E D E 1 2 4 6 5 8 3 21 Capital of Italy (4)
H Z E A R R 8 3 2 4 6 7 1 9 5
         16 Distinctive
22 Repeat aloud from
WORDWHEEL
B E T R O T H E D          smell (5)
9 2 4 5 7 8 6
A M A I S F          memory (6)
B L E N D O T T E R
5 1 1 3 8 3 1 18 Follows orders (5)
1 3 2 4 1 2 The nine-letter word was          23 Caribbean country (5)
U D I N I A
         19 Artless (5)
T A S H A N N O N 9 8 2 6 8 1 2 4
ENACTMENT 24 Broad thin piece of paper,
S Y L P H L G C 7 9 6 8 9 7 8 5         
used for writing (5)
 Sport
TIMELINE | PASS THE ARMBAND
Feb 2010: John Terry sacked as England
captain following off-field revelations. Rio
Ferdinand replaces Terry as skipper.
June 2010: Ferdinand suffers a freak knee
injury in training and is ruled out of the
World Cup. Steven Gerrard is named as cap-
tain for the tournament.
June 2010: Terry publicly announces that
the team are to approach Fabio Capello in a
meeting to discuss what is going wrong at
the World Cup. Capello denies this, forcing
Terry to apologise.
Nov 2010: Terry reveals he does not believe
he will ever captain England again.
Feb 2011: Ferdinand picks up a calf injury
during the warm up to Manchester United’s
defeat to Wolves and has not played since.
Feb 2011: Frank Lampard wears the cap-
tain’s armband in England’s 2-1 friendly win
over Denmark. Ashely Cole and Gareth Barry
both lead the side in the second half despite
Terry playing the full 90 minutes000.
Mar 2011: Capello confirms that Terry will
return as the full-time England captain for
the Euro 2012 qualifier with Wales.
Capello’s got his Terry timing
all wrong, insists Redknapp
▲
FOOTBALL
BY JAMES ANDREW
TOTTENHAM manager Harry
Redknapp has criticised Fabio
Capello for his handling of the
England captaincy issue.
John Terry was reinstated as the
permanent skipper on Saturday
night having been stripped of the
position last year following his off-
field behaviour.
Rio Ferdinand, who will miss
Saturday’s Euro 2012 qualifier with
Wales due to injury, replaced Terry
as captain and Capello opted to
hand the armband back to the
Chelsea defender on a full-time
basis.
And Redknapp, who is the
bookies favourite to replace
Capello after next summer’s
tournament, says the timing
of the decision is hardly ideal.
“Maybe the timing and
everything else is not per-
fect,” he said. “It’s made a big
fuss over it when we could
have left it with whoever. Rio
is injured, Steven Gerrard is
out, but Frank did a great job
in the last game. But maybe
“DEFEAT FEELS LIKE I’VE HAD
MY HEART RIPPED OUT”
WOOD REVEALS THE EXTENT OF
BATTERED ENGLAND’S PAIN: PAGE 26
with the other two lads missing
he felt it was time to give it back
to John. Terry had his year’s
punishment; he missed cap-
taining us in the World
Cup. If he (Capello) thinks
he’s the best man for the
job then give it back to
him.
“I wish him all the
best with the job. He is
a great captain and
he’s a real leader.”
With Ferdinand
injured Capello felt the
time was right to re-
Terry has been rein-
stated as England
captain by Capello
Picture: GETTY
appoint Terry saying he had served
his punishment.
But Capello’s failure to speak to
Ferdinand before announcing the
decision has been roundly criticised,
but the Italian has defended his
actions saying he tried to speak to
the Manchester United centre back
at Old Trafford this week.
He said: “I tried to meet Rio at the
Manchester United game. I hope I
will meet him in the future to speak
with him personally and privately,
not by phone because I think by
phone is not so good.”
JARVIS’ SHOCK ENGLAND CALL: P27
25
RBS
6 NATIONS
ROUND-UP
Trimble inspired by
passionate O’Connell
BRITISH LIONS skipper Paul
O’Connell delivered an inspirational
speech before Ireland’s crushing vic-
tory over England, according to team-
mate Andrew Trimble.
Irish wing Trimble revealed how
O’Connell “always has something spe-
cial to say” whenever they face
England.
“He’s always massively motivated
and that inspiration filtered through
to the rest of the team. Everybody was
unbelievably up for it,” Trimble said.
Bryne frustrated by
Wales campaign
WALES full-back Lee Byrne has voiced
his criticism of his side’s RBS 6
Nations campaign.
Speaking after the 28-9 defeat to
France at the weekend, Byrne said:
“We just didn’t turn up. We know we
are a better team than that, so it is a
disappointing finish,” he said.
The defeat saw Wales drop from
second to fourth in the table and
Ryan Jones added: “Collectively we
have got to better on big occasions.”
Robinson sounds a
World Cup warning
SCOTLAND head coach Andy
Robinson has warned his side about
potential slip-ups against Georgia and
Romania when the Rugby World Cup
starts in September.
Scotland ended their RBS 6 Nations
campaign with their first win of the
tournament, beating Italy 21-8, but
Robinson said afterwards that there
was still “a lot of hard work to be
done” before the World Cup.
He said: “The games against
Romania and Georgia will be crucial –
they are potential banana skins.”
26 Sport CITYA.M. 21 MARCH 2011

Wood: Defeat left me heartbroken

RBS pretty unacceptable at this level
6 NATIONS against a quality team like that.
They were under a lot of pressure
BY JAMES GOLDMAN but fair play to them, they came
out and delivered.”
ENGLAND flanker Tom Wood Those sentiments were echoed
revealed defeat in Dublin on by James Haskell who admitted the
Saturday left him feeling like his “bitter memory” of England’s
“heart had been ripped out”. defeat could be his last in the RBS 6
The emergence of the Nations championship.
Northampton foward had been one The Stade Francais flanker is cur-
of the highlights of England’s RBS rently in discussions about activat-
6 Nations campaign, but Wood and ing the option of an extra year in
his teammates had no answer to Paris.
the Irish onslaught which termi- Haskell knows he would be risk-
nated their Grand Slam hopes. ing his international future by
“It pretty much felt like I’d had remaining in France because
my heart ripped out because the England will not select players
Grand Slam was there for us and
we just weren’t good enough,” said
based abroad from the start of next
year. RBS 6 NATIONS
the 24-year-old, for whom the He said: “Whatever happens TEAM PLD W D L F A PTS
resounding 24-8 defeat represented with the World Cup or where I sign England 5 4 0 1 132 81 8
a first defeat at Test level. as a club – whether I stay in France France 5 3 0 2 117 91 6
“We didn’t come here for scars or come back to England – this Wood, right, suffered
and lessons, we came here for a could be my last Six Nations. his first Test defeat on Ireland 5 3 0 2 93 81 6
Grand Slam but we got it wrong “This will be a bitter memory for Saturday Wales 5 3 0 2 95 89 6
and it’s a bitter pill to swallow. We a long while. I am so bitterly disap- Scotland 5 1 0 4 82 109 2
got caught cold really which is pointed by the way we played.” Pic: ACTION IMAGES Italy 5 1 0 4 70 138 2

SPORT | IN BRIEF
New York joy for Farah the spot. Suarez produced
ATHLETICS: Mo Farah pro- a stinging finish from a
duced a brilliant sprint fin- narrow angle to make it
ish to win the New York two with fifteen minutes
half-marathon on his debut left before Mensah was
over the distance. The Brit sent-off for the home side.
sealed victory in one hour
and 23 seconds. The win Gers win League Cup
caps a fantastic fortnight FOOTBALL: Rangers
for Farah who just two defeated Old Firm rivals
weeks ago was celebrating Celtic in the final of the
winning the European League Cup after Nikica
indoor title over 3,000m. Jelavic scored a dramatic
winner in extra-time. The
Suarez boosts Reds scores were level at the
FOOTBALL: Dirk Kuyt and end of normal time after
Luis Suarez scored the Joe Ledley cancelled out a
goals that gave Liverpool a Steven Davis’ strike.
2-0 win over Sunderland
at the Stadium of Light. Rose slumps in Florida
Kuyt scored a controversial GOLF: Third-round leader
first-half penalty after ref- Justin Rose endured a
eree Kevin Friend initially nightmare final round,
awarded a free-kick for shooting 74, as American
John Mensah’s foul on Jay Gary Woodland clinched
Spearing before changing victory in the Transitions
his mind and pointing to Championship in Florida.

Results
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email sport@cityam.com
CITYA.M. 21 MARCH 2011
Capello calls for Wolves star
Jarvis ahead of Wales clash
▲
FOOTBALL
BY JAMES GOLDMAN
WOLVES winger Matt Jarvis last night
received his first England call-up
ahead of the Euro 2012 qualifier with
Wales and the friendly against Ghana
at Wembley on 29 March.
With Theo Walcott and Adam
Johnson ruled out through injury,
Capello has handed Jarvis his chance
to compete for starting spots with
Luiz helps to lift
the Blues again
CHELSEA 2 Victory moved Chelsea back to
MANCHESTER CITY 0 game less, but Ancelotti moved to
▲
FOOTBALL
BY JAMES GOLDMAN
CHELSEA manager Carlo Ancelotti
sent out mixed signals regarding his
future at the club after second-half
goals from David Luiz and Ramires
secured victory over Manchester City.
Chelsea chief executive Ron
Gourlay revealed yesterday that the
Italian’s position would be reviewed
at the end of the season.
Ancelotti, whose contract expires
next year, initially appeared relaxed
at Gourlay’s comments, which came
hours before Chelsea roared back into
Premier League title contention,
before admitting his future
might be out of his hands.
He said: “Let’s see
where we are at the
end of May, then
we’ll judge the
coach and other
people at the
football club.
“I’m happy in
this moment, so
I think we will
continue.”
But he added,
before producing a
‘cut-off’ gesture: “If
one party – the club or
myself – is not happy to con-
tinue, I think we’ll have to [see].
“I know very well that this team
slept for two months and, in that
moment, I had fantastic support from
the team.”
The only ones in danger of sleeping
at Stamford Bridge yesterday were the
fans who had to wait until the 68th
minute for the deadlock to be broken.
Manchester City, as they have done
away from home against all of the
other Champions League contenders
this season, set their stall out to
defend and hardly registered as an
attacking force.
They looked likely to escape with
point until the outstanding Luiz
added to his burgeoning reputation
by heading home substitute Didier
Drogba’s free-kick, and the increas-
ingly impressive Ramires rubber
stamped the victory with an emphat-
ic finish past Joe Hart after a jinking
run had taken him away from Joleon
Sport 27
Bell set for Sri Lanka test
“It will be a big challenge. But we’ve
▲
CRICKET
BY JAMES ANDREW had success there in the recent past,
and we hope we can do it again.
ENGLAND batsman Ian Bell is relish- “The guys are desperate to win. We
ing the challenge of facing Sri Lanka saw that in the last game against the
Aaron Lennon and Ashley Young in a in the quarter-finals of the World Cup West Indies, that even after a long
26-man squad. ENGLAND SQUAD and insists he and his teammates will winter the guys are desperate to keep
Tottenham star Lennon is included battle through the fatigue in a bid to progressing in this tournament. We
for the first time since England’s last Goalkeepers: Foster, Green, Hart. win the tournament. can beat anyone on our day.”
qualifier against Montenegro in Defenders: Cahill, Cole, Dawson, Jagielka, India beat the West Indies yester-
October. Johnson, Lescott, Terry, Walker. day to confirm that England would WORLD CUP | QUARTER FINAL DRAW
However, more notable is the face the joint hosts in the knock-out
Midfielders: Barry, Downing, Jarvis,
return of new Liverpool striker Andy stages before a possible meeting with 23 Mar: Pakistan v West Indies (Mirpur)
Carroll, who impressed Capello huge- Lampard, Lennon, Milner, Parker, Wilshere, either South Africa or New Zealand in
ly when he made his full senior debut Young. Forwards: Bent, Carroll, Crouch, the semi-finals. 24 Mar: Australia v India (Ahmedabad)
in the 2-1 friendly defeat to France at Defoe, Rooney. Bell said: “We’re pretty excited 25 Mar: New Zealand v South Africa (Mirpur)
Wembley last November. about playing Sri Lanka in Sri Lanka. 26 Mar: Sri Lanka v England (Colombo)
Lescott and Aleksandar Kolarov.
within nine points of leaders
Manchester United having played a
play down talk of Chelsea mounting a
late bid to defend their Premier
League crown.
“We have nine games to play and
we have to do our best,” he said. “We
have to try to win every game.
Manchester United won on Saturday
so the gap’s the same.
“Now there’ll be an international
break. When the players come back,
I’d like to see the same spirit and atti-
tude.”
If there was a downside to Chelsea’s
third straight league win it was the
limp display of Fernando Torres, who
has now gone seven games without a
goal for his new club since his British
record £50m move from Liverpool in
the January window.
The Spaniard started in
attack but was replaced
by Drogba with 20
minutes remaining
having failed to
test City goalkeep-
er Hart.
Torres looked
bereft of confi-
dence whenever
he got within
shooting range
but Ancelotti said:
“He doesn’t have to
lose his confidence.
We have to be patient,
and so does he. The goal will
arrive.”
While Torres’ problems persist
Chelsea’s Brazilian duo, Ramires and
Luiz (inset), continue to thrive much
to Ancelotti’s delight.
“Luiz and Ramires had fantastic
performances and fantastic goals,”
said Ancelotti. “Ramires is improving
very well. Luiz’s goal was a surprise.
Defensively, he worked with fantastic
tempo for a long time.”
TOP SIX
TEAM PLD W D L F A PTS
Man Utd 30 18 9 3 64 30 63
Arsenal 29 17 7 5 59 29 58
Chelsea 29 16 6 7 53 24 54
Man City 30 15 8 7 45 27 53
Tottenham 29 13 10 6 41 34 49
Liverpool 30 13 6 11 41 36 45