BUSINESS WITH PERSONALITY

THE BUDGET HOTELIER WHO GEEK SPEAK

HOW NEW SMART
IS GROWING TRAVELODGE TECHNOLOGY IS
TAKING OVER
GUY PARSONS INTERVIEW P24 THE HOME P31
Issue 1,311 Monday 31 January 2011 www.cityam.com FREE

EGYPT CRISIS TAKES

ITS TOLL ON MARKETS
WORLD ANALYSIS l Abu Dhabi Securities
▲

BY STEVE DINNEEN
EGYPTIAN President Hosni Mubarak
clung with a grim determination to
power last night as pressure on him to
step down intensified.
Outbursts of violence escalated as
anti-government protests threatened
to descend into chaos, sending mar-
kets tumbling across the region.
At least four prisons were stormed
by armed raiders and the Egyptian
Museum in Cairo was among the tar-
gets of looters.
The Egyptian military, which has
been praised for its restraint, moved to
show its strength yesterday, with
troops fanning out in an attempt to
quash the violent outbursts and jets
flying overhead.
Countries including the US, Israel,
Turkey and Canada sent aircraft to
evacuate their nationals, while British
foreign secretary William Hague
advised against non-essential travel to
Cairo, Alexandria and Suez.
Opposition leader Mohamed
ElBaradei called for patience when he
addressed protestors in the capital yes-
terday, promising “change is coming
in the next few days”.
The Nobel peace prize winner has
been asked by opposition groups to try
to force through a national unity gov-
ernment by working with authorities.
Markets across the Middle East fol-
lowed the lead of the Egyptian index,
2,750
2,650
2,550
1/11/2010 1/12/2010 1/1/2011
ANALYSIS l Dubai Financial Market
1,700
1,600
1,500
1/11/2010 1/12/2010 1/1/2011
ANALYSIS l Saudi Stock Exchange
6,800
6,600
Protesters on top of an Egyptian tank call for President Mubarak to stand down Picture: REX
6,400
which was closed yesterday after months. the weekend.” 6,200
falling 16 per cent in two days last The main Abu Dhabi market fell 3.7 Israeli stocks suffered their biggest 1 /11/2010 1 1/12/2010 1/1/2011
week. per cent, continuing a two week nose- one-day fall since November 2008,
Dubai led regional declines as its dive. with an index of 25 blue-chip stocks on ANALYSIS l Brent Crude Oil $/barrel
index fell 4.5 per cent to a 21-week low, Martin Slaney, director of global the Tel Aviv Stock Exchange ending 3.8
100
with companies exposed to Egypt dealing operations at GFT, said he per cent lower.
among the biggest losers. expects the FTSE 100 to open down 49 US oil prices surged more than four
Saudi Arabia’s index fell to a three- points this morning, adding: per cent on Friday, with analysts fear- 90
month low in initial trade, but subse- “European stock markets are all ing disruptions to the Suez Canal, the
quently rose to end 2.4 per cent higher, expected to trade lower on the open waterway that is responsible for ship-
rebounding following Saturday’s 6.4 this morning, following the height- ping around a million barrels of crude 80
per cent drop, its largest in eight ened turmoil witnessed in Egypt over and refined oil every day. 1/11/2010 30/11/2010 31/12/2010

FTSE 100 ▼5,881.37 -83.71 DOW ▼11,823.70 -166.13 NASDAQ ▼2,686.89 -68.39 £/$ 1.58 ▼-0.01 £/¤ 1.17 ▲+0.01 ¤/$ ▼1.36 -0.01 Certified Distribution
29/11/10 till 02/01/11 is 98,444

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 2 News CITYA.M. 31 JANUARY 2011

Middle East enters critical few days NEWS | IN BRIEF

EDITOR’S LETTER
ALLISTER HEATH
WE must all hope that the protests in
Egypt – and increasingly, across the
Middle East – will lead to a blossoming
of democracy and individual liberty in
a region scandalously deprived of free-
dom for so long. There is nothing more
uplifting than to see mass uprisings
against hated dictators; in moments
such as these, there can be no doubt-
ing the liberating power of modern
technology.
Unfortunately, we also know from
history than not all revolutions are an
improvement – in some cases, one bru-
tal tyranny is replaced by another.
Investors and markets will thus
remain on tenterhooks, with equity,
debt, commodity and currencies all
affected by increased risk-aversion. Oil
prices could spike further if traders
fear that trade flows could be disrupt-
ed. Geopolitics is always the wild card
in economics. Many people had been
predicting another major crisis in the
Middle East – yet hardly anybody
thought it would be triggered by a rev-
olution in Tunisia. The week ahead
will be crucial.
LINGUA FRANCA
AS the world changes, emerging mar-
kets become all-powerful and the West
declines, what we must teach our chil-
dren must also change. One area
where this is definitely true is foreign
languages, an area in which the UK
has an especially appalling record. The
problem, however, is not merely that
too few people speak, read and write in
a language other than English – but
that when children actually do learn
another tongue, they tend to be guid-
ed towards the wrong ones. They
should be learning Mandarin, Spanish,
Hindi or Arabic, rather than French
(ironically, the only one of those I
myself master) or even German.
There are, of course, good as well as
bad reasons for the UK’s general mono-
lingualism. The fact that English is the
lingua franca – a near-universal auxil-
iary language and the primary means
of communication in business –
means that the costs of not knowing
any other language are much lower for
Brits than they are for the Dutch or the
Poles. And while it would be great to
see more people learning more lan-
guages, especially for the increased cul-
tural understanding that bi- or
trilingualism inevitably gives one –
there are other, even more important
priorities. For instance, ensuring that
more people learn to write and spell
English properly would be a good start,
given the preposterous inability of mil-
lions of native speakers to master apos-
trophes and other basics.
A language is primarily a means of
communicating – if one has nothing
to communicate, and no knowledge to
share, it doesn’t really matter how
many languages one can speak.
Technical knowledge, better education
in science and mathematics, practical
skills – and my own favourites, better
knowledge of economics and finance –
would be more useful to an 18-year old
than a smattering of one of the minor
European languages. A better under-
standing of history, law and other sub-
jects would also be great.
Some schools now offer Mandarin.
But the stark fact is that the languages
spoken in the fastest-growing parts of
the world – Asia, Latin America, the
Middle East – are spoken fluently by
no more than a tiny proportion of
Britain’s 18-year olds. Yet when they
turn 40, it will be as common for them
to work for a Chinese or Indian or
Brazilian firm as it is to work for
American or German bosses today. Our
schools need to adapt, and fast.
allister.heath@cityam.com
Follow me on twitter: @allisterheath
Ocado moves towards profit
Grocery delivery service Ocado is expect-
ed to report a significant reduction in its
losses when it reports its first annual
results as a listed company tomorrow.
Annual pre-tax losses at the online retailer
are predicted to be around £11.6m in the
year to November 2010 – less than half of
the £25.5m reported a year earlier.
EU closes contract law consult
The consultation period closes today on
controversial EU proposals to harmonise
contract law across Europe. The move –
designed to promote cross-country online
trading – would segregate non-contractu-
al clauses, meaning different legal systems
could apply to parts of the same agree-
ment. City law firm Allen & Overy has
warned that reform could cause confusion
for consumers, and that retraining lawyers
in a new code would incur huge costs.
BSM saved by the AA
The UK’s largest driving school, British
School of Motoring, has been rescued by
rival AA, which will pay a nominal fee to
help save the failing business. A deal is
expected this week, with the BSM brand
kept, and the AA taking on its liabilities.

7th Floor, Centurion House,

24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
WestLB is set
for a breakup
Email: news@cityam.com www.cityam.com
Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor David Crow
Night Editor Katie Hope
Business Features Editor Marc Sidwell
BANKING The breakup of WestLB -- once
▲

Lifestyle Editor Zoe Strimpel

Sports Editor Frank Dalleres BY HARRY BANKS Germany’s most powerful public sec- Boparan chief Ranjit Singh Boparan has offered 73p a share for Northern Foods
Art Director Craig Gaymer tor bank -- does not come as a sur-

Northern Foods plans vote

Pictures Alex Ridley STRICKEN German lender WestLB is prise.
headed for a breakup as time runs The European Commission has
Commercial out to find a solution for the bank as demanded a change of ownership at
Sales Director Jeremy Slattery a whole, two people familiar with the WestLB by the end of 2011, in return
Commercial Director Harry Owen matter said yesterday. for a state bailout the lender got in
Head of Distribution Nick Owen If no buyer for the whole lender the financial crisis.
can be found -- and at present no Sources had said last week that a M&A However, it is understood that
▲

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potential candidates are in sight -- all
risky assets will be split off and a core
bank doing business with savings
banks will remain.
WestLB businesses such as invest-
ment banking and international
banking will be wound down unless a
buyer turns up, they said, adding the
WestLB’s bad bank is likely to be used
for this purpose.
But talks between the owners over
who will cover the costs are still ongo-
ing.
breakup of the lender could only be
averted with extra time.
But the European Commission
made it clear on Wednesday that it
will not extend a 15 February dead-
line to restructure the bank.
The deadline for the remaining
four bidders to submit offers in an
ongoing auction is 11 February.
China Development Bank and buy-
out firms Blackstone, Apollo and J.C.
Flowers are said to have handed in
preliminary offers.
BY MARION DAKERS
NORTHERN FOODS is still due to hold
a shareholder meeting today to vote
on its proposed merger with food
manufacturer Greencore, despite its
board switching to recommend a
rival takeover bid by Boparan more
than week ago.
The Northern investor meeting can
only be called off with the permission
of Greencore, under the terms of the
merger announced in November.
Northern is keen for the meeting to
take place so shareholders can deci-
sively reject Greencore before the
firm can best Boparan’s 73p per share
bid.
Greencore’s AGM is also set to take
place in Dublin today, though one
source familiar with the company
said its shareholders will not have a
vote on the merger.
The Takeover Panel would not com-
ment on a live case, while Greencore
and Northern declined to comment.

WHAT THE OTHER PAPERS SAY THIS MORNING

BANKS WATCH BARCLAYS’ COCO PLANS
Big banks on both sides of the
Atlantic are weighing whether to fol-
low Barclays as it pushes ahead with a
plan to pay bonuses with innovative
bonds, dubbed cocos. According to
several banks present at last week’s
World Economic Forum in Davos, the
idea of using contingent convertible
notes as a remuneration tool is gain-
ing ground. Pending regulatory
approval, Barclays aims to unveil the
coco bonus plan next month.
TREASURY SEES RED OVER GREEN BANK
Chris Huhne is at loggerheads with
the Treasury over the size and scope
of the green investment bank, as offi-
cials seek to thwart his attempts to
ensure it operates as a fully fledged
bank. The Treasury has already ear-
marked £1bn for the bank, to be
spent on green infrastructure proj-
ects such as renewable energy.
SIMPLIFY VISAS FOR CHINESE
Luxury retailers are pressing the gov-
ernment to tackle visa bottlenecks for
Chinese tourists, claiming bureaucra- DESMOND REVIVES ENDEMOL DEAL CIRQUE MAY LEAP FOR NEW PARTNER BORDERS DELAYS JAN PAYMENTS
cy is causing shoppers to shun Big Brother is expected to return to Cirque du Soleil, the modern circus Cash-strapped Borders Group said
London stores in favour of centres British TV screens this summer after troupe which has transformed the way that it will delay January payments
such as Paris and Milan. Retail spend- Endemol, the reality show’s owner, the once old-fashioned theatrical event to vendors, landlords and others, as
ing in the UK from Chinese visitors restarted talks with Channel 5 owner is viewed, would be willing to sell a fur- indications grow that the book-
topped £350m last year, according to Richard Desmond over a new broad- ther 10 per cent equity stake to a strate- seller could be headed for bank-
Global Blue, a financial services com- casting deal. Endemol is keen to strike gic partner, founder Guy Laliberté has ruptcy court. The number two US
pany, but retailers including Harrods, a deal because its investors, led by admitted. In 2008, Dubai-based private bookstore chain said the move was
Selfridges and Fortnum & Mason Goldman Sachs, face a battle to retain equity investor Istithmar World Capital intended to preserve liquidity as it
argue this could be far higher if the control of the company. A group of and real estate developer Nakheel works to restructure its finances.
UK visa process was simplified. American hedge funds, including bought a 20 per cent stake in Cirque The company said it “understands
Apollo Management and Avenue from Laliberté for an estimated $500m the impact of its decision on the
MERCK UNVEILS SHAKE-UP Capital, have secretly bought up close (£315m). affected parties,” but wants to work
Merck, the German pharmaceuticals to 40 per cent of its debts. with creditors and others to bolster
company, is considering the sale of its SFO HAS £2M TO ENFORCE BRIBERY ACT its prospects.
consumer health business and has BEER CHIEFS TO SHARE OUT £730M The Serious Fraud Office’s (SFO) abili-
started overhauling its approach to Executives at Inbev, the beer giant ty to enforce the new Bribery Act has GENERICS EYE BIOLOGICS
clinical drug development as part of a behind Budweiser, are set to share an been questioned after it emerged that Generic drug makers are expecting
shake-up designed to boost its flag- extraordinary €850m (£730m) payday. the agency will have just £2m a year to copies of biological drugs to
ging share price. Karl-Ludwig Kley, The potential windfall comes from an enforce the pending legislation. The become a multibillion dollar mar-
chairman of the executive board, sig- incentive scheme that the board intro- amount of funding will raise ques- ket in the near future. But a lack of
nalled the changes as his reshuffled duced when Inbev, the brewer behind tions about how effective the legisla- clear regulation and the high cost
executive team begins work on a Stella Artois, bought Anheuser Busch tion will be in catching and deterring of research may damp their
“road map” to improve performance. in 2008. corruption. prospects.
CITYA.M. 31 JANUARY 2011 News 3

MPs launch finance

Michael Sherwood
will receive
amongst the most
lucrative bonus
packages of any

education group
UK-based banker
this year
Picture: ALAMY

MP Justin Tomlinson and launched

FINANCIAL
LITERACY CAMPAIGN
BY ELIZABETH FOURNIER
THE first all-party political group
(APPG) in support of financial educa-
tion for young people will be launched
today, with more than 100 MPs expect-
ed to pledge their support for financial
education to be on the UK curriculum.
The group, set up by Conservative
with the Personal Finance Education
Group and Martin Lewis, aims to pro-
vide a forum to discuss how education
can be provided to UK students.
Speaking to City A.M., Martin Lewis
said it was brilliant that the APPG had
so much interest.
“Few people disagree that financial
education is important but it’s hard to
make it compulsory,” he said. “But 100
MPs aren’t easy to ignore.”

Goldman’s UK
chief awarded “BE SIMPLER THAN
WHAT COULD

bonus of £9m
”
chief financial officer David Viniar
▲

BANKING
BY STEVE DINNEEN
MICHAEL Sherwood, Goldman Sachs’
head of UK and Europe, has been
awarded a bonus of $14.4m (£9m).
The payment of free shares, which
will not fully vest until 2016, dwarf
even the bonus paid to Goldman
chief executive Lloyd Blankfein.
Sherwood’s payout represents a 60
per cent premium on his stock award
the year before, according to filings
with US regulators.
The 45-year-old banker from
Highgate joined Goldman in 1985.
The move has been seen as the lat-
est sign that US banks are moving
away from some of the austerities
imposed by the financial crisis.
Blankfein saw Goldman triple his
base salary and award him $12.6m of
stock. He is now receives base pay of
$2m, up from $600,000 last year.
The shares awarded to Blankfein
amount to a 42 per cent increase
from the $8.9m all-stock bonus he
received for 2009.
However, this year’s bonus is far
below the $67.9m he received for
2007.
Goldman also raised the salaries of
and chief operating officer Gary
Cohn to $1.85m. Both executives pre-
viously earned a base salary of
SPREADS?
$600,000.
The pay hikes came even after the
bank’s profit fell 38 per cent in 2010
to $8.35bn.
Meanwhile, Royal Bank of Scotland
(RBS) boss Stephen Hester looks set to
NOTHING.
receive far less than his US counter-
parts.
Despite a government call for an
end to banker bashing, his bonus –
expected to be around £1m – is likely
to be paid into a new “share bank”
scheme, which could deny him a
cash bonus for the duration of his
tenure at the lender.
The scheme will tie his bonus to a
series of strict performance targets. If
adopted it could also affect RBS’s
chief financial officer Bruce Van
Saun.
RBS boss Stephen
Hester’s bonuses could
from now on be paid
into a new “share
bank” scheme.

Dividends will Oil firms to set

jump this year up safety body
▲

MARKETS
DIVIDEND payments from listed com-
panies are set to rocket this year,
reversing a two year downward trend.
Payments have been hit by the
financial meltdown and the Gulf of
Mexico disaster but will spring back
this year, according to a new study by
Capita Registrars.
Dividend payments will hit £63bn –
still lower than the amount paid in
both 2007 and 2008 but far above the
£56.5bn paid out last year.
BP is one of the top dividend payers
in the country and still ranked seventh
last year despite making only one pay-
ment. BP DIVIDEND: P9
OIL
OIL firms will create an industry body
responsible for overseeing safety in a
bid to win around its battered public
perception.
The industry is now discussing
whether the body should be linked to
the American Petroleum Institute.
That organisation was criticised for
by the official enquiry into the
Deepwater Horizon disaster.
The US government will maintain
an independent supervisory role over
the industry.
The plans have been drawn up by a
group of executives chaired by a man-
ager from Royal Dutch Shell.
 4 News
De La Rue vulnerable to
takeover if new CEO fails
▲
MANUFACTURING
BY JULIET SAMUEL
DE LA RUE’S newly won freedom from
bid talk could only be a temporary
reprieve if its new chief executive, Tim
Cobbold, is unable to turn the firm
around, says a source familiar with
the matter.
De La Rue was only able to fend off a
bid by its rival, Oberthur Technologies,
last week by persuading shareholders
that the firm’s new management
would be able to push its value back
up to levels seen before a contract with
its major client, the Reserve Bank of
India (RBI), was suspended in July.
Oberthur dropped its bid last
Monday after its revised offer of 935p
per share was rejected. The withdraw-
al followed an aggressive campaign to
persuade shareholders that the likely
loss of the RBI contract made
Oberthur’s offer the best exit available.
After the contract’s suspension was
announced in July, De La Rue’s share
CITYA.M. 31 JANUARY 2011
price plummeted 27 per cent from a
norm of 900p to around 650p.
Analysts say that new chief execu-
tive Cobbold now has a maximum of
two years to revive the firm’s value,
with both shareholders and Oberthur
likely to keep a keen eye on its results
in May.
Oberthur has mulled bids for its
rival several times over the last six
years. Shareholders could look to the
firm to step back into the fray if their
concerns are not addressed.
ANALYSIS l De La Rue
900 p 686.50
28 Jan
800
700
600
1 Nov 19 Nov 9 Dec 31 Dec 21 Jan
De La Rue’s new chief Tim Cobbold has to persuade shareholders that rejecting
Oberthur’s bid, a 27 per cent premium to its current share price, was the right decision
end wo rth
a week
talking about
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based on 2 sharing in February 2011. lastminute.com acts as an agent for ATOL protected operators,
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CITYA.M. 31 JANUARY 2011
Lansley stands by NHS reforms
POLITICS
▲
BY DAVID CROW
ANDREW Lansley, the health secre-
tary, yesterday admitted that his plans
to shake-up the NHS carried a certain
degree of risk, but insisted the real
danger was putting reform on the
back burner.
He said the coalition would contin-
ue to increase spending on health in
real terms, but that the NHS still need-
ed to be overhauled.
“We don’t get the results we should
compared with other European coun-
Balls defends
Labour record
on economy
POLITICS
▲
BY DAVID CROW
ED Balls, the recently-appointed shad-
ow chancellor, yesterday launched a
staunch defence of Labour’s economic
record, insisting that high levels of
public spending had not exacerbated
the financial crisis.
“There was no call from the
Conservatives at the time, or from
anyone else really, to have a fiscal
tightening in that period [2007]. We
went to the crisis with low debt,” Balls
said on the Andrew Marr show yester-
day.
In a combative performance, Balls
accused George Osborne of “crush-
ing” the economy with spending cuts
and a hike in VAT and called on the
chancellor to chart a different course.
“Osborne has got to get out of this
denial where he thinks there’s only
one approach. There’s no doubt he’s a
good politician, but is he a good chan-
cellor? Good chancellors are flexible,
they change their minds when the evi-
dence changes,” Balls added.
tries; if we did we would save thou-
sands of lives,” he told the Andrew
Marr Show.
Health unions have hit out
at the plans, due to be debat-
ed by MPs today.
The Health and Social
Care Bill, published earlier
this month, will see consor-
tia of GPs control of most of
the NHS budget from 2013,
with responsibility for “buying
in” the bulk of hospital services for
their patients.
All 151 primary care trusts and
Meanwhile, Balls audaciously
claimed that Mervyn King, governor
of the Bank of England, did not agree
with the government’s fiscal tighten-
ing.
He said: “I think if the governor...
was to come out and say the country’s
on the wrong track, that would cause
a crisis. I don’t think that Mervyn King
in his heart of hearts really believes
that crushing the economy in this
way is the right way to get the econo-
my moving.”
King has repeatedly backed the
coalition’s spending cuts, most recent-
ly as last week, often earning accusa-
tions of political bias.
Balls also said that Labour would
not keep the 50p top rate of tax per-
manently, and backtracked from calls
to lower the top rate threshold from
£150,000 to £100,000.
Matthew Hancock, a Conservative
MP and former adviser to Osborne,
said: “Ed Balls still can’t accept that
Labour didn’t live within their means,
and he can’t accept that Labour would
be cutting this year.”
strategic health authorities will be dis-
banded under the plans.
Lansley (pictured) said: “I did-
n’t say there wasn’t risk. Of
course there’s risk because
there’s change. But actually
if we don’t change, the
greater risk is that these
problems that we have at
the moment that we have
to deal with won’t be solved.”
The reforms would result in
a redundancy bill of £1bn, he said,
but savings would reach £5bn over the
course of the parliament.
Shadow chancellor claims Mervyn King
doesn’t agree with austerity measures
ANALYSIS | Ed Balls’ performance shows he is still
a master of obfuscation, writes David Crow
JUST weeks into the job, and Labour’s
new shadow chancellor is beginning to
shape the argument on the economy far
more than his predecessor Alan Johnson
ever did. But Ed Balls’ key arguments are
disingenuous at best. Here City A.M. picks
them apart.
1. High levels of public spending did not
cause the financial crisis.
“Do I think that... too much spending
caused the crisis? Absolutely not.”
Barclays boss Diamond
coached by Mandelson
▲
POLITICS
LABOUR peer Lord Mandelson
coached Bob Diamond, chief execu-
tive of Barclays, ahead of a high-pro-
file public hearing earlier this month.
Mandelson, who once said
Diamond was the “unacceptable face
of banking”, is understood to have
offered only “informal advice” and
did not receive any payments for his
services.
A classic straw man argument. No-one
says that overspending by Labour caused
the crisis. But the IFS and OECD say the
UK entered the crisis with one of the
biggest structural deficits in the world,
meaning it hit the country far harder.
2. I agree with Mervyn
I think [Mervyn King’s] been quite right
not to raise interest rates. But it’s very
important that he resists pressure – and
we’ve had it from the Conservative
News 5
Diamond made waves at the
Treasury select committee, where he
was grilled by influential MPs, by sug-
gesting it was time for banks to stop
apologising for their role in the finan-
cial crisis.
Mandelson, who managed Labour’s
unsuccessful re-election campaign,
has taken a handful of private sector
jobs after new leader Ed Miliband
effectively closed the door on a return
to front bench politics.
Ed Balls took over
as shadow chancel-
lor following the
resignation of Alan
Johnson, who quit
front bench politics
for personal rea-
sons
Picture: BBC
party – to raise interest rates.
Balls knows that the Bank of England will
likely have to raise interest rates this year:
this kind of statement suggests Labour
will try to pin the blame on the Tories.
3. Mervyn agrees with me
I don’t think that Mervyn King in his
heart of hearts really believes that crush-
ing the economy in this way is the right
way to get the economy moving.
Simply untrue. King has gone to great
lengths to back the government’s austeri-
ty measures, occasionally to the conster-
nation of his colleagues. If King were to
repeat his support, Balls would say he
was only trying to reassure markets.
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CITYA.M. 31 JANUARY 2011 News 9

TNK-BP moves
BP set to pay to block $1.8bn
first dividend share payout
ENERGY

since Gulf spill

▲
RUSSIAN shareholders in TNK-BP have
called an extraordinary board meet-
ing to discuss cancelling a $1.8bn
(£1.1bn) dividend payment, half of
which would have gone to British
partner BP.
▲

ENERGY
BY MARION DAKERS
BP is expected to restart its dividend
payments alongside its quarterly
results tomorrow, its first since the
Gulf of Mexico spill last April.
Analysts are expecting BP to report
income of more than $5bn (£3.15bn)
for the last three months of 2010.
Chief executive Bob Dudley has
strongly hinted that a shareholder pay-
out is on the cards, saying in an inter-
view when he started the job in
October that the board would discuss
restoring a dividend payment in the
first quarter of 2011.
BP has cancelled dividend payments
totalling £5.4bn in the wake of the
Deepwater Horizon explosion, which a
US commission said was caused by
“systematic failures of management”.
Analysts have predicted a 10 per
cent drop in production compared to a
year ago, thanks to the drilling mora-
torium in the Gulf of Mexico and to
BP’s ongoing asset sell-off to pay for
the clean up.
A Daimler Brand
However, one poll of analysts pre-
dicted an underlying net income of
$5.09bn for the quarter, which would
be a 16 per cent rise compared to the
final quarter of 2009, on the back of
soaring oil prices.
The gains would mean a pre-tax loss
of $4.5bn for the year, allowing for
fluctuations in the price of oil – the
firm’s first annual loss in 20 years.
Analysts have scaled back their esti-
mates of how much the Gulf spill will
cost BP, after the compensation fund’s
head predicted that only half of its
$20bn pot will be needed.
ANALYSIS l BP 486.80
520 p 27 Jan
480
440
1 Nov 19 Nov 9 Dec 31 Dec
Bob Dudley is expected to reinstate part of BP’s dividend
Smaller on just about every score:
but oil major’s future is looking up
LEANER and more focused. That is
the vision for BP that Bob Dudley
will sketch out when he unveils
fourth quarter numbers tomorrow.
Of course shareholders know that
what the chief executive really
means is smaller – on just about
every count.
The dividend will make a come-
back, albeit at just 7¢ a share – half
the pre-disaster level. And analysts
expect production to be down by a
tenth at 3.6m barrels a day. The
moratorium in the gulf and $20bn
of asset sales have taken their toll
on BP – once the biggest producer
of the private oil majors.
Dudley was right to do some seri-
21 Jan
ous pruning; now shareholders
need to see a strategy for growth.
Elsewhere, things are looking up.
Costs from the oil spill are likely to
be lower than thought; the oil price
is strong; the deal with Rosneft
shows BP is serious about explo-
ration; the beginning of the end is
here.
BP’s shares have recovered from
lows below 300p a share, closing at
486.8p on Friday. But we think
there is some way to go and rate the
stock a “buy”.
BOTTOMLINE
Analysis by David Crow
The latest twist in the feud between
BP and the Russian shareholders in
the joint venture comes after BP said
it had offered its partners in TNK-BP
an arbitration meeting, ahead of a
court hearing that could overshadow
its results tomorrow.
AAR, a Russian consortium that
owns half of TNK-BP, will hear tomor-
row whether the High Court has
granted it an injunction blocking BP’s
$16bn (£10bn) share swap and explo-
ration deal with Russia’s state-owned
oil group Rosneft.
AAR believes the agreement could
breach TNK-BP’s right to first refusal
on BP’s activities in Russia.
But BP has written to TNK-BP chief
executive and AAR member Mikhail
Fridman to request a “fast track” arbi-
tration meeting in Sweden to try and
smooth the path for its Rosneft deal.
“Under the shareholder agree-
ments, the process for settling dis-
putes if they can’t be settled within
the shareholders is to go to independ-
ent arbitration in Sweden,” a BP
spokesman said yesterday.

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 The Capitalist
10 CITYA.M. 31 JANUARY 2011
EDITED BY
JULIET SAMUEL
GOT A STORY? EMAIL
thecapitalist@cityam.com

CITY GOES FOR GREEN AS PUBS VIE

WITH BANKS TO WIN ECO AWARDS
AN eclectic mix of London City stal-
warts and independent businesses
will come together on Thursday to
celebrate their green credentials, at
the City of London Corporation’s
annual Sustainable City Awards.
Competing across 12 categories are
banks, asset managers and construc-
tion groups – alongside a slew of
smaller enterprises that make up
more than half of the shortlist.
The Farsight Award is the one that
the banking world has the biggest
stake in, with microfinance projects
at JP Morgan up against sustainability
research by Sarasin Bank and
Unicredit, Deutsche Bank’s water
market study and Credit Suisse’s look
at electric vehicles.
Responsible investment is reward-
ed too, with Newcastle-based ethical
investment co-operative Shared
Interest facing competition from F&C
Asset Management’s program to pro-
mote socially responsible investment.
The ceremony, hosted by
Environment Agency chair Lord
Smith, will take place at Mansion
House, with the diverse list of invitees
bound to lead to some interesting
dinner table conversations.
Where else, for example, would
you find magic circle law firm

Cafe Spice Namaste will take on FTSE 100 firms to battle for the Sustainable City awards

Linklaters shortlisted for its responsi-
ble waste management alongside
Mexican restaurant Wahaca and com-
postable food-packing firm Vegware?
IN DE-NILE
Looking for some off-the-beaten track
travel tips? Look no further than a
recent column by author David
Nicholls published on the Guardian
then, was to go somewhere a little dif-
ferent... a place where we could both
explore the city and also swim,
snorkel and lie very still for no appar-
ent reason.”
As for his city exploration, he
enthuses about the capital’s mar-
kets: “This was Cairo at its most
exhilarating, a riot of noise, smells
and colour... It’s a vibrant, commer-
cial metropolis, and the frustrations
are a small price to pay for the won-
ders and surprises of the place.”
The account makes an interesting
contrast with the Foreign Office’s
current travel narrative, also issued
on Saturday: “We advise against all
but essential travel to Cairo,
Alexandria, Luxor and Suez.”
Each to their own, eh?

Egypt: family friendly? Picture: Reuters
site on Saturday. But where is it that
the intrepid Nicholls suggests as a
family-friendly holiday destination?
Er, none other than “Egypt: A short-
haul family adventure”.
Notwithstanding the riots rocking
the country this week, Nicholls is
keen to explain the rationale for his
recommendation: “The challenge,
A FINE VINTAGE
As years go, 2009 will rarely be remem-
bered as a classic. The economy was
still in the grip of recession and the
Labour government was thrashing
around in its protracted death throes.
But for wine buffs, 2009 could go
down as the best vintage of the last
decade. Even while the pick of the
bunch is still in the barrel, connois-
seurs are snapping up this year’s must
have Burgundy. Get in fast before it’s
all gone...

BILL OF THE WEEK

WINNING a major contract served as the

occasion for this Belgian company to
splash out at Boyd’s Restaurant and Bar
recently. The hungry diners were relatively
restrained in their celebratory booze, rack-
ing up only one bottle of Cristal at £250.
But they made up for it with a bevy of
sambucas, a couple of bottles of Puligny
Montrachet and one Vidal ice wine.
They balanced their diet with an army of
platters, ranging from the hearty (venison
pie) to the indulgent (Cambridge cream
and cheese platters) and thence to the
leafy (dressed leaves) for a total of
£1,147.
CITYA.M. 31 JANUARY 2011
Russian firms
look to raise
cash in City
▲
CAPITAL MARKETS
BY RICHARD PARTINGTON
RUSSIAN state-owned bank VTB has
become the latest business from the
country said to be planning a listing
in London.
The bank is thought to be planning
a $3.7bn (£2.3bn) initial public offer-
ing (IPO), as a series of firms from the
country look to raise cash on the
London Stock Exchange.
The Russian state stepped in to pur-
chase part of the bank, which is run
by chairman and chief executive
Andrey L Kostin, during the height of
the financial crisis, and is now look-
ing to sell between eight and 10 per
cent of its 77 per cent holding.
And Russian steel pipe maker
Chelpipe will this week announce a
price range for its floatation, after it
first revealed its intention to list in
London earlier this month.
Advised by JP Morgan, the firm is
looking to raise up to $1bn with a 40
per cent sale of the company.
Mining firm Russian Copper is also
News 11
BHP and Rio
investors go
cool on deals
MINING
▲
INVESTORS have written to BHP
Billiton and Rio Tinto to say the min-
ers should ditch ambitions for mega
deals in favour of multi-billion
pound share buyback schemes or
higher dividends.
said to be preparing for a fundraising The shareholders have asked for
in London, which could value the commitments from the group’s
firm at around $3bn. boards that they use their strong bal-
The firm is looking to issue global ance sheets to return cash to
depository receipts (GDRs) in an effort investors.
to raise $500m-$750m. Andrey L Kostin’s VTB bank could raise cash with a London listing The investors are said to have
Credit Suisse and Deutsche Bank moved to pre-empt another spate of
are said to be leading the listing. ANALYSIS | RUSSIAN FUNDRAISINGS IN LONDON deals in the mining sector that ana-
Analysts have said Russian compa- lysts and investment bankers have
nies could raise around $30bn in 2011 Company Name Valuation Date predicted.
given the right market conditions, up Some shareholders have told the
from $5.5bn in 2010, as firms look to companies they were prepared to
London to raise cash. Russian Copper $3bn TBC vote down the re-election of key
Several more industrial firms have board members if they did not agree
also recently announced an intention Chelpipe $2.5bn Early Feb to the commitments.
to list in London or have priced offer- BHP, the world’s largest miner,
ings. scrapped a hostile offer for Canadian
Steel giant Severstal last week Nord Gold £3.2bn First quarter 2011 fertiliser maker Potash in November
announced the price range for the (owned by Severstal) and revived a $4.2bn (£2.6bn) share
listing of its Nord Gold mining unit. buyback.
The company, majority owned by Over the last five years the compa-
billionaire Alexey Mordashov, hopes HMS Hydraulic $1.5bn Early Feb ny has returned $25.7bn to share-
to raise as much as £811m with a 25 holders in dividends and buybacks.
per cent share issuance. Rio is in talks with Africa-focused
Russian pump manufacturer HMS Koks $2.6bn Early Feb coal miner Riversdale over an agreed
Hydraulic and pig iron producer Koks $3.9bn bid.
also announced their intention to list VTB $3.7bn TBC BHP and Rio both declined to com-
in London earlier this month. ment.
 12 News
Less than half
of City jobs
are in finance
▲
FINANCIAL SERVICES
BY JULIAN HARRIS
FINANCIAL companies in the City and
Canary Wharf stimulate a vast and
varied range of jobs outside the sec-
tor, according to official figures seen
by City A.M.
Less than half (44 per cent) the jobs
in London’s main financial districts
were in finance and insurance in
2009, with 232,682 other jobs exist-
ing in support services and sectors
such as retailing.
“For every financial services head
office job there are other jobs created
in the City and Canary Wharf – from
retail, hospitality and professional
and public services,” said Chris
Cummings of promotional body
TheCityUK.
“The same is true across the UK,
and that’s why we must preserve and
develop the UK’s role as a global
financial services hub,” said
Cummings.
In the City and Canary Wharf,
CITYA.M. 31 JANUARY 2011
EMPLOYMENT IN FINANCIAL DISTRICTS
Square Mile to
get 15 mins of
free Wi-fi a day
▲
EXCLUSIVE
BY STEVE DINNEEN
WI-FI hotspot provider The Cloud will
launch a program tomorrow offering
everyone in the Square Mile 15 min-
utes of free wi-fi a day.
The move is the first major
announcement by the firm since it
there were 18,300 jobs in hotels and was snapped up by Sky last week for
restaurants and 18,800 jobs in whole- almost £50m. Sky plans to use The
sale and retail trade, according to Cloud, which has around 22,000
data compiled by the Office of hotspots across the UK, to compete
National Statistics (ONS). with the wi-fi operations of rival BT.
Many of the related jobs rely on the A spokesman from The Cloud said:
financial sector, Cummings said. As “It is expected that more than 350,000
the recession started to bite, a seven City workers will be able to take advan-
per cent fall in financial jobs coincid- tage of the free 15 minutes.
ed with a 22 per cent drop in adminis- “Based on the success of the same
tration and support activities, the offer in Glasgow, which experiences
figures showed. thousands of log-ins every day, The
And employment in the City fringe Cloud is expecting the initiative to
also receives knock on effects, the have overwhelming appeal.”
data suggests. As City finance employ- Stuart Fraser, policy chairman at the
ment rose by 4,000 between 2006 and City of London Corporation said:
2007, finance jobs in fringe areas “When it was launched in 2007, City-
increased by 4,600. wide wi-fi coverage significantly
enhanced the Square Mile as a place to
FAST FACTS | CITY JOBS do business, providing substantial ben-
efits not only for City workers but also
● The City and Canary Wharf provide 18,300 for visitors and residents alike.
jobs in hotels and restaurants (2009). “Offering all users 15 minutes of
● And a total of 232,682 non-finance jobs. free wi-fi coverage every day, The
● Just 44 per cent of jobs in the two areas are Cloud’s latest initiative will provide a
directly in finance and insurance. greater range of connectivity options
for all users within the City.”
CITYA.M. 31 JANUARY 2011
Corporation
renews call for
third runway
▲
TRANSPORT
BY JULIAN HARRIS
URGENTLY needed expansion of
London’s aviation capacity should be
provided by existing airports such as
Heathrow, the City of London
Corporation said today.
Passenger demand will increase
with economic recovery, it said, argu-
ing that time is too short to wait for a
new airport in the Thames estuary.
Mayor Boris Johnson favours the
construction of a new airport in the
south east.
“A new hub airport could offer a
possible long-term solution but such a
project would take decades to become
fully operational,” said Stuart Fraser of
the City of London Corporation.
“We are operating in a competitive
market, where talented individuals
and institutions are highly mobile,” he
added. “London and the UK cannot
afford to stand still while our rivals
across the globe are building for the
future.”
At the 2007 peak, 140m passengers
passed through London-serving air-
ports. This fell to 130m in 2009 due to
the effects of the recession, yet
demand, particularly from businesses,
is set to rise this year.
“Most firms interviewed suggest
that their demand for air travel has
now returned to positive territory and
further increases will be fuelled by
business growth,” Fraser said.
Expansions to London City Airport,
Stansted, and Gatwick should be con-
sidered alongside Heathrow, they said.
The group admitted that this could
involve “potentially unpopular deci-
sions,” but argued that “limited con-
nectivity, reduced service quality and
price pressures” could undermine
London’s competitive position.
However, the coalition government
continues to oppose the construction
of a third runway at Heathrow. “We
have made clear that we do not sup-
port the construction of additional
runways at Heathrow, Gatwick or
Stansted,” a department for transport
spokesperson said.
STUART FRASER: P25
Mayor Boris Johnson and trans-
port secretary Philip Hammond
would prefer a new airport to
expansion at Heathrow.
Picture: REUTERS
News 13
April tax hikes
will harm rich
the most: study
▲
ECONOMICS
BY JULIAN HARRIS
WEALTHY people will be hardest hit by
fresh tax hikes being introduced in
April, the Institute of Fiscal Studies
(IFS) said today.
The richest tenth of the country will
lose on average three per cent of their
net income because of the changes,
while most others will lose just one
per cent, the IFS revealed.
And 750,000 more people will be
affected by the higher rate of tax, as
the government brings down the
threshold at which the top rate kicks
in.
High earners will suffer from the
increase in national insurance contri-
butions, and restrictions on the
amount that can be invested tax free
in pensions.
“Those with the highest incomes
have already been hit by the new 50p
rate on incomes above £150,000 and
the loss of the personal tax allowance
for all those with incomes over
£100,000,” the IFS noted.
Changes to child tax credits will
result in a massive hike in marginal
tax (from just over 30 per cent to over
70 per cent) for 175,000 working age
adults with an annual income of
around £40,000.
“The set of the changes coming in
April is complex and the pattern of
gains and losses reflects this,” said
James Browne, economist at the IFS.
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CITYA.M. 31 JANUARY 2011 News 15

ECONOMISTS’ VIEWS: WILL BANK LENDING

INCREASE THIS YEAR? Interviews by Julian Harris

JAMIE DANNHAUSER | LOMBARD STREET RESEARCH

“ ”
We expect the availability of bank lending to improve slowly
over the course of 2011. Bank balance sheets, particularly capital lev-
els, are looking much healthier than two years ago.

ALISTAIR MILNE | CASS BUSINESS SCHOOL

“ Banks need to regain the lost skills of identifying good busi-

”
ness lending opportunities. But rectifying this requires a culture
change, and could take, say, five years or more.

IAN STEWART | DELOITTE

Hoping for a
prosperous New Year?
“ Survey data suggest credit availability for larger businesses

”
improved in 2010. But to rebalance away from consumption and debt
we will have to get used to lower rates of credit growth.
Apply now and get a head start with up to 2 years free business banking.
If you’re starting a business and opening a business current account or
if you move your business current account to HSBC before 28 February 2011,
you could receive an extra 6 months free business banking on top

New mortgage
of the everyday 18 months free banking*.

This offer is available to businesses whose annual turnover from account

opening is projected to be above £100,000 and below £1m and meets
that threshold in the first 12 months.

loans set to dip year, according to the Nationwide,

Speak to a Business Specialist today
Call 0800 032 4739
Visit www.business.hsbc.co.uk
▲

UK ECONOMY
BY JULIAN HARRIS
MORTGAGE approvals could have fallen
to their lowest level in around two
years, according to City economists
awaiting the Bank of England’s latest
data on bank lending, released tomor-
row.
Yet the Bank’s figures for December
may signal a steady rise in lending to
businesses, some analysts said.
which also releases its latest house price
figures this week.
Net mortgage lending for December,
announced by the Bank tomorrow, is
forecast to have slowed to £0.7bn. “This
is expected to be the consequence of Sale Terms & Conditions and standard product terms apply. *During your free business banking period, we will not charge you an account maintenance
both muted new mortgage activity as fee or for payments into your account covered by our standard account charges. Additionally, we will not charge you for making internal transfers, cash
withdrawals (this is for UK transactions only, some self-service machine operators may charge a levy) and payments from your account by cheque,
well as people making increased repay- Business Debit Card, Direct Debit, Standing Order and Bill Payments. During the free business banking period, no credit interest is payable.
ments,” Archer said. All applications for bank accounts are subject to approval. Lines are open 8am to 10pm every day (except Christmas Day, Boxing Day and New Years
However, the tight supply of credit to Day). To help us continually improve our service and in the interest of security, we may monitor and/or record calls. Issued by HSBC Bank plc.
AC20520
businesses could loosen through the

“We think mortgage approvals
slipped to 42,000 in the month,” said
Deloitte’s Ian Stewart, while Howard
Archer of IHS Global Insight has said
that approvals are expected to fall to
45,000 – which would still be a 20
month low.
“This would be substantially below
the 70,000--80,000 level that has been
considered consistent with stable
house prices,” Archer said, adding that
the long term average (since 1993)
stands at around 90,000 approvals per
month.
House prices fell by 3.4 per cent last
@
year, even for small and medium-sized
companies.
“The Bank’s latest credit conditions
survey pointed to a continuing improve-
ment in the availability of bank credit
for private non-financial corporations,”
said Jamie Dannhauser of Lombard
Street Research.
“The most pronounced rise came in
lending to small and medium-sized
enterprises, with further easing expect-
ed in the first quarter of this year.” And FOR MORE NEWS
a Deloitte survey “shows that demand
for credit among larger UK corporates is
starting to stir,” Stewart added.
www.cityam.com
CITYA.M. 31 JANUARY 2011
Candy Brothers development One Hyde Park is home to some of the most expensive flats in London
London’s top
homes regain
some value
▲
PROPERTY
BY MARION DAKERS
THE TOP end of the London proper-
ty market made a broadly strong
start to 2011, with the most expen-
sive 25 per cent of houses adding an
average of 0.2 per cent in value in
the last month, according to
research seen by City A.M.
A tightening supply has helped
push prices up, with 15 per cent
fewer houses on the prime market
since October, says research by prop-
erty website Primelocation.
Prime prices in Camden, Merton
and Hammersmith & Fulham have
risen the most – by more than five
per cent in some areas.
However, the recovery is uneven,
with the most valuable 25 per cent
of properties in Westminster,
Kensington & Chelsea and Islington
losing value in January.
Prime houses in these three areas
lost 1.3, 0.6 and 0.1 per cent of their
value respectively during January.
The most expensive 10 per cent of
properties in central London lost 1.4
per cent in January and now average
£3.34m, which is still around 2.5 per
cent higher than in January 2010.
Property experts tip residential
as a prime target for investment
▲
PROPERTY
PROPERTY investors plan to cash in
on the fragile parts of the residential
market over the next 12 months,
according to survey figures released
today.
Just 13 per cent of the 146 proper-
ty professionals surveyed by Investec
believe that residential property val-
ues will go up in the next year.
Almost half (49 per cent) expect
average prices to decline, and one in
eight predict a fall of between six
and 10 per cent during 2011.
Housing was ranked the most
attractive buy for property investors
this year, with retail and leisure
Property 17
House-sellers Reach out
see flat prices
▲
PROPERTY
MORE homeowners expect their Morgan Stanley
house to lose value this year than in
2010, according to new figures pub-
lished by property website
staff
Rightmove.
Fewer than one in four people
looking to sell their house think
EaZVhZhjeedgi
their property will rise in value this
year, compared with more than half
(53 per cent) in January 2010.
Around a third of the 28,000
respondents believe their house will
lose value in 2011, while 38 per cent Many thanks to City AM
Picture: PA think it will stay broadly flat.
for their support with this advertisement.
However, the fall in values is less
pronounced than during
September, when top London prop-
erties suffered a 2.4 per cent drop in
the space of a month.
The prime London market reflects
a patchy recovery for high-end prop-
erty values in the rest of the UK,
which suffered a 0.2 per cent overall
drop in January.
South-east England saw the most
dramatic drop in values in the coun-
try, with the average prime house
losing 0.9 per cent to average
£556,000.
The average property in England
and Wales has lost 2.2 per cent com-
pared to a year earlier according to
Hometrack data last week.
But the Royal Institute of
Chartered Surveyors also found last
week that the decline in house
prices could be slowing down as the
rate of properties coming on the
market drops.
Andrew Smith, research director
at Primelocation, said: “With the
expectation of a healthy City bonus
season as well, prices at the top of
the market look set to continue
their strong run while the mass
market remains fragile.”
properties ranked joint second best.
One in three investors surveyed
expects yields to increase this year,
while 14 per cent predict a drop.
The findings support a poll of
economists by Reuters last week that
suggested a decline of around two
per cent in average UK house prices
over the next year.
Gary Dobson of Investec’s
Structured Property Finance division
said: “Residential property values in
the UK remain depressed compared
to their peak.
“This should create some great
opportunities for investors as they
take advantage of low valuations
and higher yields.”

7 L UHG R I
V W D Q G LQ J
LQ
Terms and Conditions apply. Subject to status. The Platinum Charge Card is offered by American Express ® Services Europe Limited. Registered Offi ce: Belgrave House, 76 Buckingham Palace Road, London SW1W 9AX, United Kingdom. Registered in England and Wales with Company Number 1833139.
Fund managers win
larger pay packets
▲
FUND MANAGEMENT
BY RICHARD PARTINGTON
PAY for fund managers is rising more
quickly that profits, according to
research by PricewaterhouseCoopers
(PwC).
Asset managers have been reward-
ing staff with increased bonuses in
order to keep top talent from moving
elsewhere, despite profits rising at a
slower pace.
Compensation costs as a percentage
of net revenue have increased by four
per cent over the last financial year,
according to 22 firms surveyed by
PwC. Yet two thirds of firms said they
had experienced a fall in profits.
Annual bonus spend as a percent-
age of pre-bonus operating profits also
rose substantially, with a nine per cent
increase on average and as much as 20
per cent for some firms.
Many firms were found to have lift-
ed pay freezes imposed following the
financial crisis to avoid losing top tal-
ent, in the hope that keeping the best
staff will lead to increased profits in
the future.
Forty per cent of asset management
firms increased bonus pools last year
and a third reduced bonus spend.
However, more than half of the
asset managers surveyed said they had
deferred bonus payments for staff,
with payments being made in shares
and funds to align reward with busi-
ness performance.
PwC renumeration director Tim
Wright said: “Despite many firms
spending more than the previous year
on bonuses, base salaries are still being
negotiated up.
“Ultimately asset management and
banking share much of the same tal-
ent pool and new hires expect base
salaries to be aligned. This in turn is
pushing existing employees to
demand pay hikes as they notice mar-
ket rates have increased.”
18 News
Pressure rises on
F&C ahead of vote
▲
ASSET MANAGEMENT
BY ALISON LOCK
WITH just three days to go before
F&C Asset Management’s board-
room showdown with activist share-
holder Sherborne Investors on
Thursday, mood in the City has
swayed toward the F&C board.
Early enthusiasm for Sherborne’s
proposed board takeover, replacing
chairman Nick MacAndrew with its
founder Edward Bramson, has been
replaced with caution as investors
weigh their options.
Sherborne is supported by key
investor Aviva, and shareholder serv-
ice ISS concluded Bramson’s pres-
Yell’s Bob Wigley is now Skrill’s non-executive chair
ence on the board would benefit
shareholders in the long term,
despite his lack of asset manage-
ment expertise. “Bramson has a very
good track record as a turnaround
specialist,” it said. “Relevant board
experience is more important than
industry experience.”
Many F&C investors are keen to
see what fresh blood could do – but
Sherborne has raised concerns by
apparent misjudgements in its view
of F&C. It has come under fire for
arguing that F&C’s purchases of
REIT Asset Management and
Thames River Capital were expen-
sive and contributed little to assets
under management and earnings.
▲
Picture: Micha Theiner/ CITY A.M
CITYA.M. 31 JANUARY 2011
Analysts see the Thames River deal
as a transformational move that
should boost F&C by adding a high-
growth, high-margin firm with an
ambitious leader, Charlie Porter.
And as a people business, Porter rep-
resents exactly the sort of talent F&C
would suffer from losing.
Singer Capital analyst Sarah Ing
said F&C was dogged by structural
challenges dating back to its divest-
ment from Friends Provident, but
the board’s strategy was sound.
“F&C is constrained by its struc-
ture,” she said. “But management
has invested in high margin busi-
nesses. Short of breaking the firm
up, it is unclear what would help.”
Skrill appoints
Wigley ahead
of potential IPO
RETAIL
ONLINE payments provider Skrill
has appointed Yell chairman Bob
Wigley as its non-executive chair-
man ahead of an anticipated stock
market listing later this spring.
Wigley, the former chairman of
Merrill Lynch until it was taken over
by Bank of America in 2009, will
help to oversee the development of
the business.
Skrill, which operates the
Moneybookers brand, is said to be
considering an initial public offer-
ing (IPO) as one of its options to
raise cash and further grow its busi-
ness.
A float could raise as much as
€200m (£171.6m) for the firm, giv-
ing it a market capitalisation of
between €400m and €500m.
The e-wallet provider has seen
strong growth since it established
in 2001, with profits rising at 62 per
cent annually.
 CITYA.M. 31 JANUARY 2011
F&C Asset
Management
chairman Nick
MacAndrew (left)
is fighting an
attempt to replace
him with
Sherborne founder
Edward Bramson
Authorised in the United Kingdom by the Financial Services Authority under the Payment Services Regulations 2010 (reference number 415532) for the provision of payment services.
CITY MOVES | WHO’S SWITCHING JOBS
Edited by Juliet Samuel
KPMG
Dr Nicola Mazzarotto (pictured) has been
appointed as head of competition economics
for financial advisory and accountants KPMG.
The appointment means that he is now a direc-
tor in the firm’s economics practice. He joins the
firm from the competition commission, where
he performed economic analysis for eight years
on several high-profile mergers, including a deal
between BSkyB and ITV. He has also worked
for the OECD and European Commission.
Tui Travel now be driving growth in a similar
Katha Callaghan has been
appointed as business develop-
role for TUI.
ment manager of TUI Travel’s edu- Royal London Asset
cation division – one of the world’s Management
largest in student travel. She will The investment management divi-
report to Steve Clift, the division’s
development director.
Having previously been business
sion of the Royal London Mutual
Insurance appointed Quentin
Smith as marketing & communica-
development manager for Sunsail,
Le Boat and the Moorings, she will
tions manager with immediate
effect. Smith joins from Old
SPECIALISTS IN GLOBAL
PROFESSIONAL RECRUITMENT
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
News 19
ANALYST VIEWS: WHAT IS THE LIKELY OUTCOME FOR F&C? By Alison Lock
HAYLEY TAM | CITI DAVID MCCANN| NUMIS
“ “
Whatever happens, it is likely to Regardless of who wins the vote, it
cause continued disruption to ongoing opera- is hard to see any short-term share price
tions. If Sherborne loses the vote it will create upside, but very easy to see significant short-
a share overhang of about 17 per cent, which term downside risk. If Sherborne loses, the
will need to be disposed of – but it will allow share price could fall 30 to 44 per cent, as
existing management to continue to run the Sherborne, Aviva and other supporters’ stakes
company with minimum disruption. If F&C become stock overhangs. If Sherborne wins,
management loses, it will enter a new period we expect Millennium BCP to withdraw its
” ”
of uncertainty that may or may not assets under management and an 11
lead to longer-term value creation. per cent stock overhang from Eureko.
SARAH ING | SINGER CAPITAL
“ Short of breaking the firm up to sell off low-margin businesses, it isn’t clear what F&C should do differently
to address the current issues. Incumbent management has tried to invest in high margin businesses and isn’t to blame
for F&C’s low valuation, which is largely a result of legacy issues, such as lack of organic growth in its funds due to
”
ongoing insurance outflows and a lot of lower margin institutional business. F&C has also lost large chunks of assets
over recent years.
in association with
Mutual Asset Managers where he
was investment communications
manager.
Man Group
The hedge fund manager has
appointed Miriam Tai has head of
its consultant relations in the US.
She will report to Raffaele Costa.
We’l l help you get your hand s
She joins the firm from BlackRock,
in to wn .
where she was director of global
consultant relations. She has eight
on so me of the ho tte st tic ke ts
years of experience in financial
services, having also worked at ame r ican exp ress .co.uk /po tent ial
Barclays Global Investors and
Goldman Sachs.
or se ar c h ‘p ot en t ia l’
Nomura
The investment bank has added
Sandor Hau as a managing direc-
tor to head up high yield and dis-
tressed credit in the Americas.
He comes to the bank from
Realise
Goldman Sachs, where he was
also a managing director.
the TM
potential
+44 (0)20 7557 7245
morganmckinley.com
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CITYA.M. 31 JANUARY 2011 News 21

Businesses can’t blame it all on weatherman

decade later business leaders are fol-
lowing their lead.
In December it snowed in the UK.
In January we heard that people
bought fewer Airfix models and
drank less beer.
Nationwide fourth quarter retail
sales were flat, representing the
CNBC COMMENT worst Christmas showing on record,
apparently because of the weather.
REBECCA MEEHAN I can’t help but suspect some busi-
nesses are leaning a bit too heavily on
start with? Or what?
To be fair, it was particularly cold
in December, and parts of the coun-
try shut down completely, but we’re
not talking about a natural disaster
here. After a few days the snow melt-
ed and we were back to normal. And
the quarter is still three months
long.
A natural disaster has a more per-
manent effect – altering the produc-
tive capacity of the country affected.
extra tax to pay for it.
Notwithstanding the death toll and
the human impact on those left to
rebuild, the floods are estimated to
trim Australia’s growth by half a per-
centage point this year.
Compare that to the UK. A few days
of snow turned an expected fourth
quarter growth story into headlines
of the economy actually shrinking by
0.5 per cent. The Office of National
Statistics stopped short of blaming it
fall outside the environmental
effects. For instance, December mort-
gage approvals fell to a two-year low.
Surely that’s nothing to do with
snow?
And consumer confidence in
January was the lowest in two years.
If we really did see a big impact
from the weather, the figures will
rebound instantly. And it will be
interesting to see how much of the
leftover demand will appear in

W
ON’T blame it on myself, I’ll
blame it on the weather-
man”. So sang rubbish Irish
girl group B*Witched in
their 1999 number one hit. Over a
this excuse. Even with the snow
effect, what happened to the expect-
ed uptick in retail ahead of the
January VAT rise? Did we over-esti-
mate the strength of the recovery to
Australia’s floods washed away
crops, closed mines, ruined homes,
business premises, roads and rail-
ways. Reconstruction will cost vast
amounts of money and will require
all on the white stuff, adding that the
figure was “significantly affected” by
weather – it said it knocked 0.5 per-
centage points off GDP.
The test comes with indicators that
January’s retail figures.
B*Witched never had another num-
ber one after they blamed it on the
weatherman. Businesses take note.
Rebecca Meehan is an anchor at CNBC

Alpha snaps
up Massey in
£4.5bn deal
Crutchfield said the deal would create
▲

MINING
BY HARRY BANKS
ALPHA Natural Resources has agreed
to a $7.1bn (£4.5bn) deal to buy Massey
Energy, which was rocked by a deadly
coal mining accident last year.
The deal – the latest in a wave of
consolidation sweeping the industry –
creates the second largest US coal
miner by market value, holding 110
mines and combined coal reserves of
5bn tonnes. The deal is expected to be
completed in mid-2011.
Massey shareholders will receive
1.025 Alpha share for each Massey
share in addition to $10 a share in
cash, for a value of about $69.33 a
share, the companies said. That repre-
sents a 21 per cent premium over
Massey’s closing share price of $57.23
on Friday.
Surging Asian demand for coal to
fuel steel mills and power plants has
made the sector one of the hottest
for dealmaking over the past year.
After the acquisition, Alpha will be
the largest supplier of metallurgical
coal, which is used in steel making,
in the US.
Alpha chief executive Kevin
HOW WE LED THE WAY ON MECOM
MEDIA
VETERAN IN
PUSH TO
REPLACE
LOCKE AS
MECOM
CHAIR
a global player in metallurgical coal –
a commodity the company believes
should continue to generate profits for
some time.
“In terms of the next decade, the
world is going to remain structurally
undersupplied in high-quality metal-
lurgical coal. There’s just not going to
be any massive new supply coming
on,” Crutchfield said. When David Jewitt
Massey, based in Richmond, was on life support,
Virginia, put itself on the block in his wife needed our
November after posting a wider-than-
expected third-quarter loss as a result support as well.
of the explosion that killed 29 miners
at its Upper Big Branch mine in West When David Jewitt suffered a
Virginia in April. stroke, his wife knew they had
insurance, but had no idea how
ANALYSIS l Massey Energy Company to make a claim.
p 57.23
60 27 Jan Still in a state of shock, she
called Aviva, where she spoke to
55
advisor Mike Matwiejczyk. The
50
first thing Mike did was simply
to talk through the situation.
45 Then he started to sort her
practical problems.
1 Nov 19 Nov 9 Dec 31 Dec 21 Jan
At Aviva, we believe that
insurance isn’t just a financial
business. It’s a service that people
call on at some of the most
difficult moments in their life.
Maybe it’s because we try to
treat our customers this way
that we have so many of
them – more than 53 million,
in 28 countries.

28th
January
2011

youarethebigpicture.com
29th January 2011
29th January 2011
MECOM APPOINTS STE
PHEN
DAVIDSON WILL BE DAVIDSON AS CHAIRMA
N
MECOM
THE INTERIM CHAIR AT
29th January 2011
LOCKE AS
DAVIDSON REPLACES
MECO M HEAD
 22 Focus on Davos CITYA.M. 28 JANUARY 2011

Davos leaders
on defensive
as risks loom
Regulation dominated the agenda at Davos Picture: REUTERS DAVOS 2011 Meanwhile, Prime Minister David
Cameron had to defend the coali-
BY JULIET SAMUEL tion’s ambitious cuts programme

THERE IS CHANGE GLOBAL leaders flew back to their

home countries yesterday to face up
to the twin risks of high unemploy-
after economists at the WEF said that
the UK was already in a double-dip
recession.

IN THE AIR: IT’S

ment and rising inflation that
marked the World Economic Forum
(WEF) in Davos last week.
The conference tried to sound an
TIME FOR GROWTH optimistic note, with trade between
emerging markets flourishing and
advanced economies coming out of
The spectre of unemployment
also loomed large, with protests in
Egypt and Tunisia underscoring the
threat of civil unrest if leaders fail
to address the problem of young,
economically marginalised popula-
tions. Overall unemployment is esti-

ANDREW MOSS recession, but many of the keynote

speakers were forced to make reac-
tive speeches in light of global
mated at nine per cent but among
young people it is thought to be
much higher.
GROUP CHIEF EXECUTIVE, AVIVA

What has the mood been like there is too much.

Q&A threats.
German Chancellor Angela Merkel
and French President Nicolas Sarkozy
teamed up to defend the euro, with
The Egyptian finance minister
Youssef Boutros-Ghali was forced to
cancel a planned appearance at a
breakfast meeting due to the riots,

Q. at Davos this year? Where do you stand? Merkel declaring on Friday: “If the with the issue of youth unemploy-

A.
The key point for me is that euro fails, Europe will fail.” ment in the Mahgreb being raised in

A.
There was an interesting change insurers are regulated appropri- Merkel also indicated support for his absence.
in the air compared with the last ately. We’re fundamentally not Sarkozy’s calls earlier in the week for And adding to leaders’ woes was
banks and our core activities don’t pose
couple of years. While no-one is more regulation of commodity mar- the prospect of rising inflation due
a systemic risk to the financial system.
getting over-confident about our future kets due to price inflation: “The to quantitative easing. “Money is
economic prospects, there was some The insurance industry has fared well volatility of commodity prices is not gradually becoming not worth the
through the recent financial turmoil. It’s
sense that it is time to think about only dangerous for those who sell paper it’s printed on,” said China
right that capital should be tested
growth again. However, I think there is a them but those who buy them,” she Investment Corporation president
against the actual economic risks in the
recognition that this growth must be said. Gao Xiqing.
sustainable. business. We’re supportive of this
approach - it’s what Solvency II is based

Japan welcomes downgrade

What kind of measures would on - but capital requirements over and

Q. you like to see to improve

sustainability in the private
sector?
above this would not be logical.

What’s your view on the eco-

A.
Business needs a longer term
focus from board level down- Q. nomic outlook, and what
does that mean for Aviva?

A.
wards: sustainability needs to Looking around the world we
WORLD ECONOMY
▲

become part of the corporate DNA. The
benefits for the economy and society
more broadly are clear and quantifiable.
As an insurer, we’re very alive to this –
ours is a long term business. The deci-
sions we take today have an impact on
our customers’ financial well-being
decades into the future.
Regulation has been raised
see a patchy multi-speed recov-
ery. While a number of markets
are experiencing difficult economic con-
ditions, we're seeing evidence that some
confidence has returned. Customers
have been focused on paying down per-
sonal debt, but we’re starting to see
people return to saving. They still have
concerns about the future and that
makes them more provident. The sav-
BY JULIET SAMUEL
THE Japanese finance minister Banri
Kaieda used the last day of the World
Economic Forum in Davos to claim
that Standard & Poor’s downgrade of
Japanese debt this week was “good
timing”.
The minister said that the down-
Japan’s government debt for 2010 is
estimated at well over 200 per cent of
its GDP. Its deficit is lower than some
others’, at seven per cent, but there
are concerns that the debt is simply
too large to address in light of slug-
gish growth.
Earlier in the day, Japanese Prime
Minister Naoto Kan – who took over in
the job in June – had emphasised that
inward-looking,” he said to delegates.
“This spirit of opening up the
nation is now called for in Japan. With
this belief, this year, I have set ‘the
third opening of Japan’ as a grand
objective. One specific policy is the
promotion of economic partner-
ships,” he added, indicating that the
government would promote the Doha
free trade negotiations and the trans-

Q. repeatedly in Davos, with

some saying we need to regu-
late further, and others concerned
ings ratio is going up and we’re well
positioned to serve customers’ changing
needs.
grade would help to spur public
debate towards tackling the debt .
“Japan’s fiscal situation is very dif-
Japan is eager to open up its economy
further by signing free trade agree-
ments.
Pacific partnership agreement.
The S&P downgrade threw the spot-
light on Japanese public debt,
ficult and... the tax and national debt “There is growing concern in Japan embroiling the country in a global
balance need to change. That will be a that in the midst of its economic stag- sovereign debt crisis that has so far
step forward,” he said during a panel nation the minds of its people, includ- focused mainly on the eurozone and
Davos tweets ... discussion. ing the youth, are becoming the US deficit.

@nouriel 7.30pm
I am off to London after a week in Davos for the WEF.
G20 is turning into G0 as countries disagree on major
Turner to banks: expect KPMG delegate
global policy issues
a regulatory onslaught supports quota
@davos 1.23pm
▲

DAVOS
Davos 2011 media stats: 103k mentions up 102% on
2010. 45k Twitter mentions up 200%. Social media REGULATION
▲

the multiplier #WEF ^am. BY MARION DAKERS
Financial Services Authority chair-
@Mlifestyle 9.24pm man Adair Turner has warned banks
Davos, is a get together for historically rich nations try- that a slew of regulation is on the way
ing to figure out how to beg or steel from the nations to reassure the public that the finan-
that will be rich in future cial crisis will not happen again.
Speaking at Davos, Lord Turner said
that banks aiming to escape further
regulation by moving abroad believed
@jdickerson 6.20pm “a complete fantasy” and pledged to
Before Twitter how did the people at Sundance keep crack down on unregulated areas of
up with what the people at Davos were doing? finance.
“There are still important elements
of the prudential regime to put in
place, such as shadow banking: we
have to do more work and the indus-
try has got to accept that,” Lord
Turner told the Telegraph in an inter-
view.
Turner was responding to speakers
from the banking world who had told
the World Economic Forum that addi-
tional regulation could stifle global
growth.
Lord Turner told journalists that
the variety of debates at Davos this
year was a sign of success:    “[W]hen
the world gets gripped by one big
theme it usually either means there’s
a big disaster or else people are get-
ting in the grip of some new irra-
tional exuberance.”
RACHEL Campbell, global head of
human resources for KPMG and one of
the firm’s delegates to the World
Economic Forum, said that she sup-
ports the conference’s imposition of a
quota for women this year. The quota
required the event’s main sponsors to
bring one female delegate among
their five spots. “I’m supportive of the
initiative – anything that helps get
women access to networks,” said
Campbell. “I wish there were more
women here without a quota. And I’d
have been quite against targets and
quotas a few years ago. But seeing the
experiences of my female colleagues,
I’m becoming firmer in my view.”
In
association
with
CITYA.M. 28 JANUARY 2011
Swiss police divert train
to arrest Davos protesters
DAVOS
▲
BY JULIET SAMUEL
ANTI-capitalist rioters overran one of
the main train stations in Davos over
the weekend, protesting that the
World Economic Forum (WEF) was a
platform for business and political
leaders that “exploit the planet”.
Delegates on their way home from
the conference had to go around the
crowd as the protesters clashed with
riot police armed with both rubber
bullet shotguns and handguns.
Despite their enthusiasm, however,
the protesters numbered fewer than
the 2,500 delegates to the WEF.
Brady plan for Greece debt
EUROZONE CRISIS
▲
BY HARRY BANKS
The EU, the IMF and the ECB are
working on a solution to reduce
Greece’s debt along the lines of the
Brady plan, which rescued Latin
America from bankruptcy in the
1980s, according to reports.
Speaking at the World Economic
Forum in Davos on Friday, Greek
finance minister George
Papaconstantinou said there were
informal talks to find ways to reduce
Greece’s debt burden without
restructuring it, including a debt
buyback.
Greece became the first eurozone
Having boarded trains to leave
Davos, protestors handed out leaflets
saying: “Worldwide heads of state are
meeting in Davos in order to celebrate
themselves and advance global
exploitation and oppression. The trail
of destruction stretches over the entire
planet.”
One train carrying protesters out of
town was diverted and held for nearly
an hour as armed police with their
faces covered boarded and arrested
passengers. They held them in the
snow and sub-zero temperatures for
searches before taking them to police
stations and questioning them over
the course of three hours.
country to receive an EU/IMF bailout
in May, receiving €110bn (£94.3bn) in
loans after it was forced out of capi-
tal markets due to its massive gov-
ernment debt and budget deficit.
Under the three-stage plan, Greece
would borrow from the eurozone’s
new rescue fund to buy back Greek
bonds currently owned by the ECB
and private bondholders at about 75
per cent of their nominal value.
The EU and the International
Monetary Fund (IMF) would then
extend the maturity of their bailout
loans to Greece to 30 years. Private
lenders owning more than €100bn of
Greek bonds would be invited to
extend their maturity.
Above, left to right:
Richard Gnodde,
Goldman Sachs; Paul
Achleitner, chief exec
of Allianz; John
Ridding, chief exec of
the FT; Scott Kapnick,
managing partner of
Highbridge Capital
Management.
Osborne: turmoil
without cuts
▲
POLITICS
CHANCELLOR George Osborne yes-
terday reiterated his defence of the
coalition’s cuts programme after
warning at the World Economic
Forum that the UK must not be
seduced by “siren” calls to go easy on
the deficit. Osborne said: “If on
Monday morning I went to parlia-
ment... and said, ‘I’m abandoning
the deficit reduction plan that
Britain set out last year’, what do you
think the reaction would be? Within
minutes Britain would be in finan-
cial turmoil.”
Focus on Davos
Diary
Juliet Samuel in Davos gives us a behind-the-scenes glance at what
really went on as the global elite descended on the small Swiss town
LIQUIDITY INFUSIONS
Famous for the harsh schedule
inflicted upon its toiling delegates,
this year’s party merry-go-round at
Davos was no exception. Drinks and
well-watered dinners kick off from
6pm, with the central Belvedere
hotel boasting around a dozen ven-
ues for simultaneous drunken rev-
elry. They then proceeded to a
collection of “nightcaps” at 10pm,
and usually end in a raucous sing-
along at Hotel’s Europe’s Piano Bar
in the not-so-small hours.
So who can lay claim to this
year’s party highlights? CNBC
bagged an impressive bevy of chief
executives at its event on the sec-
ond night, with Deutsche Bank’s
Josef Ackermann and Prudential’s
Tidjane Thiam sticking around to
the small hours. And props must go
to Standard Chartered for its Asian-
themed nightcap, which featured
half a dozen
elaborately lit
ice sculptures
(including a
Buddha head)
and delicious
fresh fruit cock-
tails.
McKinsey
meanwhile,
dropped its
exclusive entrance
policy around mid-
night after handing
out dozens of psyche-
delic necklaces and bringing in a
big band booked till the small
hours.
Few could boast the exclusive
location nabbed by business PR
supremo Matthew Freud, however,
who held his gig in a log cabin at
the top of the funicular (Davos’ cliff
railway that takes passengers 300m
up into the mountains for a few
minutes’ ride). Luckily the cham-
pagne at the top more than made
up for the oddness of having one’s
ears pop on the way to a party.
DAVOS BABIES
It’s not just the wizened, middle-
aged execs keeping up the party
spirit, however. They’re helped
23
along by a flock of youthful types
who make up the “One Young
World” crowd, a kind of “junior
Davos” organisation that aims to
bring the over-achieving under-25s
together for networking events
throughout the year, with the next
event being in Zurich in September.
Luckily for aspiring City whizz kids,
they’re recruiting for attendees to
hear keynote speakers that will
including Kofi Annan, Desmond
Tutu, Lazard chairman Ken Costa
and Bob Geldof. It seems there’s no
escaping a new generation of Davos
progeny.
THE LOUNGE-OFF
Following on from a previous item
about Davos’ many sponsored
lounges, we hear that there was
some fierce lounging rivalry
between two of the big-four
accountants, KPMG and
PricewaterhouseCoopers. Their
styles could hardly have
been more different:
KPMG boasted a
collection of
stately decora-
tive additions
to the break-
fast room with
a view out onto
the Alps and a deli-
cious free lunch buf-
fet everyday.
But rival
P r i c e w a te r-
houseCoopers went for something
that little bit more stylish. The PwC
“Thought Cafe” offered the wander-
ing delegate a dreamy subter-
ranean landscape dressed in
erratically cut strips of white nylon,
lit in funky pink and orange and
stretched into canopies and cubby
holes for important meetings. And
the achingly cool white leather and
see-through plastic furniture was
complemented by several pointless-
ly large tubs of overripe oranges, for
those feeling guilty about their
fruit intake.
Yet it wasn’t the nylon or the
fruit that won the day so much as
the PwC lounge’s ready access to
power sockets for laptop-users.
After all, the Davos crowd is ever a
 24 News WORDS BY ROGER BAIRD CITYA.M. 31 JANUARY 2011

The budget hotel chain boss who

says that bigger is certainly better
How Travelodge “The last set
CEO Guy Parsons of talks [with
plans to expand his Whitbread]
business as the were a
economy recovers complete
non-starter.
There would
N
O wonder Guy Parsons, Travelodge’s
boss, was feeling so chipper about
life when we met earlier this month. have been
He had just announced that very
same day a £300m investment to build a competition
further 35 hotels this year, which will
expand his empire to 495 hotels with issues.”
35,841 rooms by next Christmas.
Also, the key part of his empire, the
London hotels which he describes as “the
engine” of the firm, emerged from reces-
sion in the third quarter of last year and
are motoring ahead. Parsons says London
accounts for “around one third of sales”
and “over one third” of profits.
Despite the downturn and uncertainty,
the hotel boss still thinks his firm can
grow to 70,000 rooms and 1,000 hotels by
2020. Last year the chain became the
biggest operator in Edinburgh with 11
hotels. The business is set to add another
five to its 38 hotels in London to offer the
most rooms in the capital by the middle of
this year.
“During the recession we increased the
size of our development team,” says
Parsons, a youthful looking 46-year-old,
who joined the firm in 2004 after stints at
Accor, Cadbury Schweppes and Whitbread
and stepped up to the top job last summer.
He replaced Grant Hearn, who moved up
to become executive chairman. “We
thought this would be a time to seize
opportunities,” says the new chief.
A relaxed Parsons is sitting in a suit and
an open-necked shirt in the firm’s second-
floor London base on High Holborn. were affected more than we thought they Travelodge chief massive spike in bookings. The same thing month sealed a deal to restructure $2.5bn
Last year the business, part of the state- would be. During the last recession, in the executive Guy Parsons happened when Take That released their (£1.6bn) in debts. When does Parsons
owned private equity group Dubai early 2000s, we were not really affected. in the firm’s London UK tour dates last October.” expect the business to be sold?
International Capital (DIC) – it bought the Also, the speed at which the whole of the base on High Holborn But he does rail at the notion that budg- “I genuinely don’t know,” he says. “My
firm at the height of the market in 2006 hotel industry, from five star downwards, et hotels attract a downmarket clientele. focus is on driving the business forward.
for £675m – may have opened 70 hotels. started to offer discounts took us by sur- Alex Ridley/ CITY They are in actual fact the middle class on There is no pressing need to sell the busi-
But it is true to say that the group has con- prise.” A.M. the lookout for a bargain, he says. ness. There will not be a firesale. DIC has
tinued to expand throughout the reces- The firm will release its 2010 results The hotel chief adds: “Around 65 per put its finances in order.”
sion and into the current fragile recovery. next month, but Parsons is encouraged. cent of our guests are on leisure trips. However, Parsons adds that the hotel
The chain, which employs 5,500, has He says: “Last year was one of recovery. Their average salary is £45,000. They are business generally runs on nine-year cycles
undoubtedly been affected by the reces- But we managed to outperform the rest of used to staying in hotels. They buy wine from peak to trough. We are nearing the
sion. In 2009, the group posted underlying the hotel market in every month in 2010. online, they ski, and they read what we end of a trough, he adds, and will enter
profits 20 per cent down at £45.7m. London has performed strongly. In used to call the broadsheets.” three to four years of strong growth. It
When the downturn hit the hotel indus- December the snow had an impact on us, The chain operates an airline-style book- would make sense to sell in that period,
try in 2009, Parson says: “Budget hotels in common with a lot of other businesses.” ing system: the further out you pay for a Parsons point out.
Parsons continues: “This year has started room, the cheaper it is. In a sale period, Whitbread is often mentioned as a suit-
well. Though I think the second half of the you can pay as little as £9, but if you turn or for Travelodge since the pair held abort-
CV | GUY PARSONS year will be stronger for us.” up on the day at one of its central London ed £900m takeover talks in 2008.
The hotel boss says occupancy rates in hotels you would have to fork out over But Parsons is fairly confident the larger
his London business are already back to £100 for a clean, small functional room. group will not renew its interest.
Age: 47 their 2008 peaks, with York, Edinburgh, To keep his moving prices competitive, He says: “Personally, I thought the last
Bath and Bristol also doing well. Other key his sales teams check web prices three set of talks were a complete non-starter.
Work: 1990-1997: various roles, rising to cities, however, such as Manchester, times a day, not just against its larger Lawyers on both sides soon found there
director of sales, marketing and opera- Birmingham and Leeds are underperform- budget rival Whitbread-owned Premier would be competition issues. We would be
tions, Accor; 1997-2000: marketing direc- ing. Parsons still forecasts that by the mid- “During the Inn, but against local three and four star able to set prices for a large part of the
dle of this year the overall group will be hotels. industry.”
tor, Travel Inn; 2000-2003: sales and
marketing director, Whitbread Hotels; back to its 2008 peak occupancy levels. recession we The chain was started by the old He adds: “I think that deal has gone
High occupancy rates of around 80 per Trusthouse Forte in 1985, as a roadside away. I talked to Alan Parker [Whitbread’s
2003-2004: managing director, TGI
Friday’s; 2004-onwards: various roles, ris- cent are a key figure for Parsons. Once a increased the hotel beside a Little Chef on the A38, near previous chief executive] when he was leav-
hotel consistently hits this level it allows Lichfield. But since 2004 the business has ing the company and we came to agree
ing to chief executive in 2010, Travelodge. him to push up rates at that particular size of our focused on more lucrative city centre sites, that a deal would not be possible. I do not
venue and to look at plans to build another and now only 20 per cent of their portfolio know what Andy Harrison [Whitbread’s
Education: Leeds University, read history in a neighbouring catchment area. development can now be described as roadside business- current chief executive] thinks, but I have
The Travelodge boss adds he is under no es. met him a few times and he has not men-
Family: Married with five children. illusions why people stay at his no frills team. It was The group was taken over by Granada tioned it.”
hotels. He says: “People don’t stay with us and then by UK buyout firm Permira, So it seems that Parsons’ strategy is to
Lives: Wimbledon. for the experience. They use us because a time to grab before being bought by DIC five years ago. keep on expanding the chain until the
they want to do something else, like cele- In the normal course of events DIC would good times return and DIC decides the
Hobbies: Swims three times a week, scuba brate a family event or have a night on the opportunities have looked to either float or sell on the business is ready for another change of
dives, is learning the piano (currently at town.” firm to another trade buyer by now. ownership. In the meantime, expect
Grade Six), a cinema buff. Parsons adds: “When the day of the open to us”. But the credit crunch has put those Britain’s branded budget hotel market to
Royal wedding was announced we had a plans back by at least a year or two. DIC last become even more competitive.
CITYA.M. 31 JANUARY 2011
Aviation policy key
to London’s growth
CITY COMMENT
STUART FRASER
W
HEN it comes to interna-
tional trade and inward
investment London is
indisputably the principal
gateway for the UK economy.
The fact that the capital made an
estimated net contribution of
£1.4bn in 2009-10 highlights
London’s vital role in driving eco-
nomic recovery forward.
But, as the Mayor pointed out ear-
lier this month, there is a danger
that our competitive position could
be undermined if transport infra-
Mounting Egypt unrest to
send stocks sharply lower
MARTIN ON
THEMARKETS
MARTIN SLANEY
E
UROPEAN stock markets are all
expected to trade lower on the
open this morning, following
the heightened turmoil wit-
nessed in Egypt over the weekend.
GFT is quoting the FTSE 100 index
to open down 49 points from
Friday’s close, at a level of 5,932.
Elsewhere in Europe the German
Dax is called down 32 points at
7,070, and the French CAC is quoted
down 27 points to open at 3,975.
REGIONAL SELL-OFFS
Regional stock markets in the
Middle East were suffering major
sell-offs yesterday, with the Dubai
stock exchange down almost seven
per cent soon after opening.
The concern will be whether the
violence will spread further afield
WALL ST WEEK AHEAD
U
S STOCKS may struggle to
return to firmer footing this
week if anti-government
riots in Egypt destabilise the
Middle East, keeping investors on
edge.
Cautious trading could also
structure is not rapidly upgraded.
In this light, I hope the govern-
ment’s aviation policy review will
be a major step towards resolving
capacity issues that could act as a
bottleneck to future growth.
That is why we are publishing a
new report today highlighting the
need for urgent action in this area.
Access to aviation services is a crit-
ical requirement for firms across
the City and London as a whole. We
must rise to the challenge of
increasing demand, with passenger
numbers across London’s airports
forecast to rise from 140m a year in
2010 to 400m in 2050.
Long-term solutions such as the
proposed hub airport are welcome,
but London and the UK should not
stand still for decades until such a
project becomes operational.
Although technological advances
mean that more business can be
done remotely, air services remain a
major factor for international firms
around the Gulf region, potentially
even leading to the disruption of oil
supplies.
The situation seems almost to be
spiralling out of control, and when
you have instability like that in a
region as tumultuous as the Middle
East, investors get nervous about the
implications and the potential for
derailing the economic recovery.
Brent Crude oil was trading just
shy of $100 a barrel on Friday, and
the rise in energy prices generally
over the last quarter will benefit the
likes of BP, which coincidentally
announces full year results tomor-
row.
ANALYSIS l DAX
7,200
7,000
6,800
6,600
1 Nov 19 Nov
ANALYSIS l FTSE
6,100
5,900
5,700
1 Nov 19 Nov
come if earnings do not outper-
form and erode optimism about
profits. The government’s January
jobs report on Friday will highlight
the week’s economic data.
Monday could see a bounce-back
after Friday’s losses, followed by
News 25
BEST OF THE BROKERS
ANALYSIS l Melrose 319.70 MELROSE
330
p 28 Jan UBS has begun covering the industrial acquisi-
320 tion vehicle with a “buy” rating and a target
310
300
290
280
270
price of 415p. The broker believes that
Melrose can sell its Dyncast business for
£370m to £400m in the next few months,
freeing up resources for a further acquisition.
UBS also likes the firm’s high US exposure and
1 Nov 19 Nov 9 Dec 31 Dec 21 Jan forecasts growth in its energy division.
when they decide where to locate.
Extra capacity is needed, though ANALYSIS l Great Portland Estates GREAT PORTLAND ESTATES
it may require unpopular decisions. 370
p 360.50 Panmure Gordon rates the property group
We understand both the political 28 Jan
and environmental issues that sur- 360 “hold” with an increased target price of 344p.
round aviation policy. Wherever 350
The broker has tweaked its earnings forecasts
new airport capacity is planned for 2011 and 2012 following an upbeat trading
there will be objections from those 340
statement last week, with good increases in
likely to be affected or concerned
about the environmental impact. 330 both property values and rental growth in the
These are important issues but
320
last year. However, Panmure’s preferred large-
have to be balanced against the eco- 1 Nov 19 Nov 9 Dec 31 Dec 21 Jan cap property play remains British Land.
nomic benefits. We need to plan
now and have a Government policy ANALYSIS l BG Group BG GROUP
that deals not just with the longer- 1,400 1,334.00
term future but also with the next p 28 Jan Citigroup has started coverage of the oil
1,350
few years. Frankly, if left too long explorer with a “buy / medium risk” rating and
the business will have migrated else- 1,300 an initial target price of £16. The broker sees
where to continental Europe. 1,250 BG Group as a strong performer in the
To safeguard our future, we need
firms to choose London and the UK 1,200 European oil sector, with an 18 per cent out-
in the first place. A sustainable and 1,150
performance compared to its peers since
competitive aviation policy is essen- January 2010. It also approves of BG’s
1,100
tial to achieving this. 1 Nov 19 Nov 9 Dec 31 Dec 21 Jan improved portfolio and visibility.
Stuart Fraser is policy chairman at the
City of London Corporation To appear in Best of the Brokers email your research to notes@cityam.com
DIVIDENDS REINSTATED
Investors should see a dividend rein-
stated, with the whisper suggesting
seven cents a share – equivalent to a
£3bn distribution, or roughly half
what it was before the oil spill last
year. Rival Shell follows with its fig-
ures on Thursday.
Martin Slaney is director of GFT’s global
dealing operations
7,102.80
28 Jan
9 Dec 30 Dec 20 Jan
5,881.37
28 Jan
9 Dec 31 Dec 21 Jan
more consolidation, said Matt
McCormick, a portfolio manager at
Cincinnati-based Bahl & Gaynor .
Next week, 102 S&P 500 compa-
nies are expected to report, includ-
ing Dow Chemical and United
Parcel Service.
 26 CITYA.M. 31 JANUARY 2011

Wealth Management | Spread Betting

Your guide
to picking
up bargains
Donata Huggins offers five tactics
for trading individual companies
HESE days, it sometimes seems as if It’s a little harder than

T nobody seems to try to pick shares

any more. Instead, they trade
indices, the number of which seem
to grow by the day, or other assets like cur-
rencies. But following individual compa-
it looks
Picture:
ALAMY

nies trials and success remains a

particularly satisfying way to trade. Here
are a few tips to help traders focus.

1. SEEK THE HIGHS

No, we are not suggesting that marijuana
will help your trading because it probably
won’t. Chasing a stock that has broken
through a record high, however, might.
Professional traders often talk excitedly
about “psychological barriers” and “tops”.
They do this because once a stock has hit a
record price it tends to climb. Jumping
aboard that sort of price rally can be an
easy way to make a profit on stocks. It’s a
strange phenomenon, but stocks that have
done well, tend to continue to do well, at
least for a little while. It’s called the
reacts, as traders tend to assume the
worst. When it turns out that things real-
ly aren’t that bad, the share price recov-
instance, are regularly hit by the change
in oil prices. But for this reason, make
sure you diversify the type of stocks you
5. FOLLOW THE LEADER
Loretta Young might have said: “A charm-
momentum effect, and economists are ers. Look out for companies that have trade on – you don’t want to have all your ing woman doesn’t follow the crowd,” but
struggling to explain it, but it does seem suffered catastrophic share price declines capital wiped out by a shock occurrence. traders should. If people are pouring into
to work well, at least for a few traders. and try to work out whether the panic a trade, it probably means something big

2. BECOME A BOTTOM PICKER

was justified – if it wasn’t, it might be an
easy profit. Be careful though: not every-
thing that comes down must go up again.
This may sound unpleasant, but as Manoj
Ladwa of ETX Capital explains: “Some of
our most successful clients are bottom
pickers: people who look for stocks that
3. PICK ON THE VULNERABLE
Picking on companies that are heavily
have been oversold.” Often, when bad exposed to certain sectors can be a good
news hits a company, the market over- way to chase a rally or dive. Airlines, for
4. NO SMOKE WITHOUT FIRE
As the old saying goes: “there’s no smoke
without fire.” And this is especially true of
stocks. If you hear a rumour about a com-
pany, jump on that trade – even if the
rumour doesn’t come to fruition, the
trade is likely to move in your favour. But
be sure to get out before it’s squashed.
is going to happen, and it’s worth joining
in. Plus, the added volume will prevent
irrational jumps in the share price and
prevent you getting knocked out too early
by your stop loss. Being contrarian might
make you colossal returns sometimes, but
there can still be strength in numbers.
Don’t confuse following the crowd with
being a lemming though.

THE WEEK AHEAD in association with

THE TIPSTER earnings next week. The compa-
ny has just announced it has the
all-clear to purchase the remain-
COMPANY NEWS ECONOMICS NEWS
BP MAY FINALLY der of King Pharmaceuticals for
POLITICAL NEWS $14.25 a share. The share price

l Rupert Murdoch’s News

Corp will launch the first
iPad only newspaper on
l The European Central
Bank (ECB) releases it’s pre-
liminary estimate of the
HICP measure of inflation
l The European Monetary
Union (EMU) posts its
unemployment rate esti-
mate for December tomor-
l The Burmese Parliament
HAVE STRUCK OIL has been rising from around $16
since last December so it is in an
is to convene today for the existing uptrend, but it could
first time since the coun- also bounce off the 20-day mov-

Wednesday, The Daily.
l The oil giant Exxon
Mobil reports earnings
today.
l As does budget airline
RyanAir, which releases its
third quarter earnings
results today.
l Tomorrow the iPhone
chip manufacturer ARM
Holdings releases its fourth
quarter results, which
should have benefitted
from demand for iPhones.
l Mining group
Antofagasta releases its
fourth quarter production
results on Wednesday.
for January.
l The USA’s personal
income and spending statis-
tics are out today at
1:30pm.
l As is the Chicago Fed’s
purchasing managers index
(PMI) for January, which is
due out at 2:45pm
l Germany’s unemploy-
ment rate statistic will be
released tomorrow. HSBC
predicts it will be 7.4 per
cent.
l The UK’s manufacturing
PMI figure is out tomorrow,
with the consensus estimat-
ing expansion at 58.
row - expected to be
around 10.1 per cent.
l The American ADP
measure of employment
comes out on Wednesday.
l On Thursday, the British
PMI services index for
January will be released,
expected to show a flat
50.0
l The ECB announces its
policy rate decision on
Thursday. It is widely
expected to keep rates at 1
per cent.
l The American non-farm
payrolls data comes out on
Friday at 1:30pm.
tries landmark elections
three months ago – the first
in 20 years.
l President Obama will
tomorrow visit
Pennsylvania for the annual
Groundhog Day winter fes-
tival.
l The outgoing Irish Prime
Minister, Brian Cowen, is to
dissolve Parliament tomor-
row and announce a date
for a national election, after
which he will stand down.
l President Lee Myung-bak
of South Korea will give a
live broadcast tomorrow to
discuss diplomacy and secu-
rity in the Korean peninsu-
lar.
T
HE EMBATTLED oil giant
BP may have found sup-
port after ingratiating
itself with the Russians
over the controversial Rosneft
deal. But threats continue to
linger over the Gulf oil spill and
brokers who had been viewing
the stock as something of a bar-
gain are now tempering their
outlook. Combine this with wan-
ing oil prices and the fact that
this week's earnings statement
could offer some additional
insight and the 500p per share
level may remain somewhat elu-
sive for a while yet. The current
IG Index price on BP is 482.6p-
483.7p
Pfizer, the global biopharma-
ceutical company is due to
report its fourth quarter 2010
ing average, which is potentially
another buy signal. Capital
Spreads quotes a price of
$18.46-$18.49.
Investors in the UK’s premier
satellite TV provider, BSkyB,
will be rubbing their hands after
a smashing set of first-half
results. While an increase in divi-
dend is always welcome when
sales, revenue and profit have
risen, shareholders will be hold-
ing out for a windfall capital
gain.
News Corp, if given the green
light by the regulators to go
ahead and bid, may now find
investors demand a premium for
their stake. ETX Capital is quot-
ing 772.5p-773p for the rolling
daily contract.
Daniel Knowles
CITYA.M. 31 JANUARY 2011 Wealth Management 27

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 28 Wealth Management | Behavioural finance
Blocking out the sirens’ call: how to
protect your wealth from emotion
Daniel Knowles meets the wealth manager
who wants to understand how you think
J
OHN MAYNARD KEYNES once said
that “there’s nothing so dangerous
as the pursuit of an rational invest-
ment policy in an irrational world”.
Despite that advice, every day, people try to
construct rational, risk balanced portfo-
lios. And often they fail, instead buying
what is fashionable, or panicking when
they should be cool-headed.
According to Dr Greg Davies, the head of
Barclays Wealth’s unique behavioural
finance team, the problem isn’t so much
that pursuing a rational investment policy
is dangerous – it is that it is difficult. “It’s
not like there’s ever been any shortage of
good advice” he says. “The problem is not a
lack of advice, it’s a lack of ability to follow
through on it.”
While the financial industry has been
hiring physicists and other “quants” for
decades to analyse markets, Davies brings
something rather new to finance – psy-
chology. In his view, the average investor is
self evidently not always the rational
“homo-economicus” that classical finance
theory assumes. Rather he is human, with
emotions and habits, and those can derail
any rational investment plan.
Together with his highly academic team
(four have PhDs and continue to con-
tribute research), Davies has spent the last
four years trying to understand how our
human foibles sometimes prevent us from
making classically “rational” decisions.
The team then tries to provide a personally
tailored investment plan designed to
account for clients’ emotions.
“We’re not saying classical finance is
wrong” he says. “It just lacks the human
element. We want to construct portfolios
that are right in the classical sense of hav-
ing the risk-return tradeoffs, but right also
in the sense that the customer is comfort-
able with it, so they’re less likely to make
decisions along the way that are detrimen-
tal to their long term performance.”
Davies argues that most investors have
an inbuilt tendency to “buy high and sell
low”. When investments are doing badly,
and so cheaper, people are wary of putting
money in – they fear regretting it. But at
the top, “when all your friends at the din-
ner party are telling you how well they’ve
done, it flips over – suddenly it’s fear of
not doing something”.
People put their money in, and then the
bubble bursts. Davies points out that not
only did individual investors pour money
into stock markets at the peak of the
boom, and so lost out most in the crash,
they also failed to benefit from the recov-
ery in Spring 2009. Instead the gains
flowed mostly to institutional investors
who were able to put aside their fears.
EMOTIONAL DECISIONS ARE COSTLY
According to a study Barclays commis-
sioned from the Cass Business School,
emotional decision making costs the aver-
age investor 1.2 per cent of performance
per year – hardly insignificant. More
importantly, the distribution is quite wide
– so some investors lose an awful lot more.
Realising that, Davies divides his clients
into two groups – high composure and low
composure – through a simple profiling
test. High composure people can deal quite
well with the ups and downs of investing,
and so they are advised to get traditional,
risk balanced portfolios. Davies’ interest is
in the low composure individuals – people
said to have a “high emotional involve-
ment with the short term,” or more sim-
ply, the anxious.
Low composure people tend to find loss-
es very distressing and to get overexcited
Investing is rather
like sailing in a
by short run gains. Consequently, they are
more likely to make bad decisions, espe-
storm – you need
to avoid getting
cially during intensely emotional periods
like financial crises.
seasick For those people, Davies has a few strate-
gies. He compares his clients to Ulysses
faced with the beautiful but deadly sirens.
Picture: GETTY But whereas Ulysses tied himself to the
mast of his ship to avoid the deathly lure,
Davies is more reluctant to lock investors
in. “The people who are most nervous,
most engaged with the short term, are the
ones who when they find themselves
locked in, are most distressed by it,” he says.
Instead: “We structure your portfolio in
a way that throws oil on the waters,”
smoothing out the ups and downs of the
market. Or alternatively: “We can help to
try and get you to sleep through the
waves” by distancing clients from their
portfolios, and so helping them see the
“bigger picture.”
BUILD UP GOOD HABITS
But portfolio structure isn’t everything –
habits matter too. Davies reckons that one
of the reasons why institutional investors
do better than individuals is because they
have to adhere to a strict set of rules. “Nick
Leeson and Jerome Kerviel are the excep-
tions that prove the rule – when profes-
sional traders get around this, they can
cause more damage than any individual”
CV | DR GREG DAVIES, BARCLAYS WEALTH
From: Born in Cambridge but
grew up in Johannesburg
Age: 35
Education:-
University of Cape Town
l BBusSci in philosophy, econom-
ics and finance
University of Cambridge
CITYA.M. 31 JANUARY 2011
Davies never trades intraday on his own
account – he always waits until the end of
the week. He also only trades in areas he
knows a lot about. “It’s like writing a con-
stitution for yourself – you’re allowed to
change the constitution, but only when
you have a supermajority.” According to
Davies, building up good habits is the key
to avoiding stupid emotional decisions.
And with financial markets and confi-
dence now gradually recovering, Davies is
expanding his ambitions a little further.
He argues that the importance of distin-
guishing between long term and short
term decision making is fundamental to
other areas of life – including government
and corporate management.
“Our natural, emotional, institutional
structures are all geared towards the short
term.” As a result, people from politicians
to corporate managers tend to be judged
on their short term performance, to the
detriment of long term decision making.
That helps cause crises, exacerbate prob-
lems that could have been planned for and
otherwise makes the world a less con-
trolled, reasonable place.
But while Davies’ team might help you
make your investment strategy a little
more rational, they can’t do much about
the irrationality of the entire world.
Unfortunately enough, on that at least,
Keynes might still be proven right.
l MPhil in economics
l PhD in decision theory and
behavioural finance
Academic activities:
l Guest lecturer at the London
School of Economics
l Honorary research fellow at
University College London
 Lifestyle
Montreal gives us the world’s first
floating spa
An old ferry boat with 678 portholes makes for an oddly
restful place to be pampered, finds Olivia Greenway
I
T can’t be that difficult to find a
boat, especially if it’s moored. When
the taxi driver said “You can’t miss
it!” my heart sank as that is precisely
what I knew I would do.
In my defence, my two colleagues and I
were battling a snowstorm in the dark, in
downtown Montreal, knee-deep in newly
arrived snow. A dog walker saved us from
frostbite by pointing to the other side of
the St Lawrence River and a nearby foot-
bridge.
From the outside, Bota Bota appears
quite small; it’s only when you walk up
the gangplank and into the reception
area you realise that the boat is spacious.
It’s also a dedicated spa; in fact, it’s the
world’s first floating spa and has only
recently opened.
Turning an old ferry boat into a
Scandinavian spa was a tall order for the
design team and took two years to com-
plete. “Our team set out to recreate an
MEATY COOL COMES TO 29
COLUMBIA ROAD
| Travel BRAWN, REVIEWED IN
TOMORROW’S CITY A.M.
environment reminiscent of an ocean
liner voyage, even though the ship would The floating spa is
remain at dock, contemplating the moored in the
Montreal skyline and the river,” says Jean industrial docks of
Pelland, project design architect and sen- Montreal.
ior partner at Sid Lee Architecture.
All the nautical features of the boat
remain – the 678 portholes, the
wrought-iron rails and stairs and the
wooden decks, but the minimalist
design, using calming, soft colours of
grey, black and white is welcoming and
restful.
Spas are something girls like, but
owner Natalie Emond told me that men
are making up half of their customers
and there has been a deliberate attempt
to appeal to both sexes.
After checking into reception, we were
given a bath robe and towel and taken
downstairs to our locker to change into
CONTINUED ON PAGE 30
 30 Lifestyle | Travel and Gadgets CITYA.M. 31 JANUARY 2011

CONTINUED FROM PAGE 23
our swimwear. The spa focuses on water
treatments, to energise and aid relax-
ation. With the temperature minus 14
outside, I was not sure I wanted to try
the hot tub out on deck, but for me it
was the high point of our visit.
There were perhaps twenty steps to
take to the tub, across a snowy deck.
Once inside my womb-like sanctuary, I
was able to view the skyline, like a string
of fairy lights and all around me, outside
the tub, the inky black of the river.
If I tilted my head backwards, I could
With the feel the snow flakes entering my mouth
and I even scooped up a handful of snow
temperature from the outside of the tub to make a
snowball. It was surprisingly relaxing,
minus 14 being cosseted by the warm water with
the vibrancy of the city just across the
outside, I river.
My colleagues had tried the sauna and
was not sure steam room and then we cooled down in
the plunge pool, which takes a bit of
I fancied the courage if you are not used to it. An alter-
native is to take a cold shower. Wrapping
hot tub out up in your bathrobe, it’s now time to
relax, perhaps positioning yourself in a
on deck large porthole, padded for the purpose
and reading from a selection of maga-
zines, or you could choose a squishy sofa.
Chic room itself is a delight. Full length
windows flood the room with light and
Downstairs are the 30 treatment
rooms, all with portholes and mood
wonderful views of the city; leaf pat-
terned mats in beige and black, light
lighting. It’s a dedicated quiet zone to
afford the maximum benefit of peace
grey sofas and orange and red cushions
help to make the space feel bright
and relaxation to the clients. On offer
are several facials (from $85), body treat-
and fun.
Bota Bota has a café serving reasonably
ment (from $60) and massages, either
Californian or Swedish (from $90). Both
priced light meals and drinks for spa cus-
tomers, so you could spend several hours
are fairly firm, though the Californian is
slightly more gentle.
here.
If you are lucky enough to find your-
If you are not up for being pummelled
or don’t want a facial, a manicure or
self in Montreal, it’s worth a visit. Just
try to choose a day when it’s not snow-
pedicure could be the answer. The Bota ing. www.botabota.ca

Royal honeymoon: three months to go TRAVEL NOTES |

by Donata Huggins

Travel industry insider Nigel Massey Almuña, Gaucin, Spain

casts his bets on where Will and
Kate will celebrate their nuptials Set on a hillside farm in 500 acres with views
across the Straights deep into North Africa,
Almuña is a stunning jasmine clad seven bedroom Four Seasons returns

G
IVEN the furore surrounding the Royal Wedding, there has family home in the heart of Andalucía near Gaucin Four Seasons returns to Mayfair this
been surprisingly little speculation as to where Prince in Spain. It offers William and Kate the greatest week with the re-opening of the Four
William and his new wife Kate will go for their honeymoon, privacy in what is a madly romantic setting. They Seasons Hotel London, Park Lane. With
even though it’s just three months away. can ride, ramble, swim, mountain bike, golf, kite views over Hyde Park and interiors
Recognizing the tough times we are all facing and keen to show surf and enjoy home-cooked Spanish food far out designed by Pierre-Yves Rochon, the
his understanding I believe that His Royal Highness will opt for a of reach from the prying paparazzi and, if they so hotel is sure to become one of central
destination that is neither ostentatious nor likely to compromise desire, go on exquisitely planned several-days riding London's must-stay destinations. Call
their security, but certainly remote and reflective of their love of all trips. The home of the deeply British Arbuthnot the hotel on 020 7499 0888;
things outdoors and sporty. family who would host their stay, Almuña ticks all www.fourseasons.com/london.
I am going on the assumption that – being as clever at PR as they the right boxes. And should the lure of the bright
are – the couple will shun the glitz and glamour of Bali or Las lights prove overwhelming, Sotogrande is but a
Vegas, not least because of fears of a double-dip recession. Here are short drive away. www.arbuthnottholidays.com
my five picks for the most likely top honeymoon spots and natural-
ly they are all in the very best of taste.

Hell Bay, Scilly Isles Crillon le Brave, Provence Hemingways, Kenya Los Potreros, Argentina

A room in the trees

Owned by The Duchy of Cornwall
(Will’s Dad) Bryher in the Scilly
Isles sends out all the right signals.
It is an understated and discreet
hideaway and can only be reached
by boat at one landing jetty.
Unspoiled island a mile by half a
mile with palms, white sandy
beaches, overlooking the Atlantic,
Hell Bay Hotel is idyllic and very
romantic. Lovely suites, with exten-
sive decks and sea views, honest
English food and a whole host of
outdoor activities – from yoga to
yachting, birding to cycling to div-
ing. “New England meets the
Caribbean meets Cornwall” –
what’s not to love? Certainly it
sends the right patriotic signals.
www.hellbay.co.uk
Atop the tiny village of Crillon le
Brave in Provence, Hotel Crillon le
Brave is 25 miles from Avignon at
the foot of the 6,000ft Mont
Ventoux. The Vineyards of
Chateauneuf du Pape and Cote du
Rhone are 30 minutes away. Here
William and Kate can escape, enjoy-
ing swimming and cycling, tennis and
riding, a spa, visits to the local wine
makers and even a little cultural and
historic sightseeing, knowing that
they will be able to stroll incognito
through the many small and beautiful
local villages of Provence. There are
also big brownie points to be had
from going to a destination reachable
by train rather than car or plane.
(Eurostar goes straight to Avignon).
www.crillonlebrave.com
In Kenya (a country for which
William has a real love),
Hemingways is but a 90 minute
flight from Lewa Down where he
asked Kate for her hand. This hotel
is far from ostentatious, a hand-
some hotel overlooking the Indian
Ocean with three miles of white
sandy beaches. It is seldom written
about, jealously guarding the priva-
cy of its guests. Here their Royal
Highnesses can swim in the sea,
enjoy sailing, tennis, windsurfing
and fishing, picnics on 100-year-old
dhows, explore the stunning local
Marine Park, watch the sunset over
cocktails and dance until dawn to
the sounds of the local band that
are unlikely to make The X Factor.
www.hemingways.co.ke
The UK’s first treehouse hotel is opening
on the edge of Snowdonia National Park
in May. The leafy surrounds offer a
romantic and peaceful getaway for fam-
ilies and couples. But don’t panic, the
eco-friendly house has an ensuite
Swedish compost toilet and a wood-
burning stove to heat a spring water
shower. www.redletterdays.co.uk
To guarantee total privacy William
and Kate couldn’t go wrong with
Estancia Los Potreros, in the
foothills of the Sierra Chicas moun-
tains, near Cordoba. Set over
6,000 acres of rolling hills and val-
leys, the happy couple could hire
the estancia exclusively and enjoy
their honeymoon riding up to the
waterfalls for a midnight dip, relax-
ing on the honeysuckle veranda
with a glass of malbec, or Kate
would learn to play the game her
Zambia beckons
Are you a marketing guru? Do you want
husband adores, polo, on the to win a 15-day safari holiday in Zambia
estancia’s own grounds. Owned by for two? Well here’s your chance: the
an Anglo-argentine family, the Zambian Tourism Board is holding a
charming Beggs, Los Potreros is competition to find a new brand to
perfect escapism with a quintes- attract travellers. See www.zambia-
sentially English twist. tourism.com for details. Closing date is
www.estancialospotreros.com 25 February 2011.

VARSITY HOTEL, CAMBRIDGE REVIEWED BY ZOE STRIMPEL

The Varsity is a beautifully-built hotel –
once you get past the unpreposessing
brick exterior. But what is most remark-
able about it is that it is Cambridge’s first
proper, world-class luxury hotel.
Complete with stunning penthouse
suites, a wonderfully sexy roof terrace
that will be brilliant in summer and a
state-of-the-art spa, it would make any
800 year-old university town proud.
ROOMS: I was lucky enough to stay in a
penthouse suite. All the rooms – with
names like Senior Fellows Suite and the
Fellows King Rooms – are decorated in
smooth woods, chic fabrics and, most
importantly, come with divine views of
the Medieval town. But this one (pic-
tured) was staggering. Wall-to-wall win-
dows make you feel like you’re outside,
sweeping wood floors, plenty of seating,
two TVs (what for?) and a high-class
espresso machine confirm you’ve arrived.
Elsewhere, the hotel is strangely small
and claustrophobic; labyrinthine, close
corridors and a brick wall-facing lounge.
SPA: Part of Glassworks, the super-
swanky gym only the most privelaged of
students can afford, the spa is in a neigh-
bouring building but its affiliation with
the hotel ensures a top line of treatments.
The highlight is the exquisite jacuzzi look-
ing over the river; elsewhere are eight
treatment rooms where you can experi-
ence the full range of Aveda’s therapies.
FOOD: There’s no in-house restaurant, so
guests eat at the River Bar Steakhouse
and Grill, a slightly atmosphere-less
restaurant round the corner. Our dinner
was very nice though: baked camembert
and swordfish with vegetables, and the
Italian waiter was a dear. Breakfast is
best taken in your room, nibbled on while
the gardens of Magdalen College and the
rest unfold before you.
Rooms from £100 to £390.
www.thevarsityhotel.co.uk
CITYA.M. 31 JANUARY 2011
Mount Gay, Barbados: a tour
round rum’s natural home M
T
HE heart of the Barbados rum
trade is perched at the northern-
most tip of this small Caribbean
island. High in the mountains in
the St Lucy district sits the Mount Gay
refinery, surrounded by a nine feet tall
sugar cane plantation and gazing out
over wild Atlantic waves which crash
into the Florida coast 1,600 miles away .
This is where Frank Ward, head of the
refinery, comes to work every day. The
rambling collection of 100-year-old brick
buildings and wooden warehouses is not
much to look at, but it is here where
some of the best rum in the world is
made.
Mount Gay, along with Appleton in
Jamaica, are two of the most famous
names among the 40 or so brands of
rum made across the Caribbean. Among
the rum cognoscenti they are admired
for the subtle flavours they have consis-
tently been able to produce for hundreds
of years. Mention that you are quite par-
tial to a Barcardi and coke every now and
again and you will be politely sent to the
nearest corner.
Those in the know take their rum
neat, over ice, or with a splash of water.
Although, to be fair, cheaper white rums
are designed to be drunk with coke or
punch. And if your girlfriend has left
you, you are permitted to sink a double
shot into your beer. This is called a bicy-
cle in Barbados, though it is not recom-
mended that you try riding one after a
couple of these.
They have been making rum on this
166-square mile island since 1654;
Mount Gay was first distilled here in
1703.
Frank Ward’s family has headed the
refinery (which is confusingly where the
rum is distilled) for just under a hun-
dred years. Even though the family sold
ownership of the brand to US firm the
McKesson Corporation in 1981 (who in
turn sold it to Rémy Cointreau in 1989),
the family still hold the right to make
the drink and supply it exclusively to
Rémy. The French giant owns a bottling
factory in the island capital Bridgetown,
but the booze is made here in the moun-
tains.
Up here, Ward – although he only
employs 26 workers and uses steam pow-
ered machinery – makes 2.2 million
litres, or 450,000 12-bottle cases of the
golden rum a year.
Ward is a small bird-like man (who is a
trained lawyer and has a PhD in toxicolo-
gy from the University of Surrey) and is
softly spoken. He breathes: “Golden rum
is being sold as a premium product in
the US and Europe over the last few years
and is doing quite well in comparison to
the drinks it is sold against – whisky,
bourbon and cognac. In the Caribbean,
over the same sort of time, Absolute
Vodka has become popular.”
Rum is a simple mixture of sugar,
water and yeast. Juice is extracted from
sugar cane and boiled to produce thick
Lifestyle 31
Invasion of the
smart machines
GEEK
SPEAK
@steve_dinneen
Y house isn’t smart enough. To get inside it I have to open the door
myself. With a key. When I walk in, a digital voice doesn’t greet me,
realise I’ve had a bad day and tell me a joke to cheer me up (I’m imagin-
ing a soothing voice like Hal from 2001: A Space Odyssey). I have to clean
my own dishes, wash my own clothes, unblock my own toilet. I am essentially liv-
ing in unspeakable Dickensian squalor; a latter-day street urchin being sent, every
molasses. This is then diluted with water The Mount Gay day, to scrub the filthy chimney of my existence.
and yeast is added for fermentation in Refinery produces But there is hope. Intel’s European boss Tristan Wilkinson tells me the technol-
huge bubbling industrial vats for at least some of the most ogy giant, which churns out more chips than McCain, has a dream of putting a
two days. The sweet, heady smell in this famous rum in the microchip inside anything with a plug. This will presumably lead to a utopia where
part of the factory makes the place smell world. blenders not only dice vegetables, but get out in the garden and plant them; three-
less like a place of business and more bar hearers trundle after your grandmother during the winter, and irons not only
like a private club where the time has de-crease your clothes but detect whether they are hideous and, if they are, set
run way past midnight. After this, the fire to them.
liquid is heated in traditional pot stills The idea of smart homes, kitted out with smart appliances, has been around for
(which can take up to nine days) or mod- years, with the super-rich and the slightly unhinged already making use of them.
ern column stills (which takes hours). At But 2011 will be the first time many of the innovations will be available for main-
this point the alcohol, which boils at 78 stream consumption.
degrees centigrade, is separated off from A firm called Warmup is set to launch a smart thermostat, the 3iE, that allows
the water, and is collected in tanks. users to micro-manage the temperature in every room of their home from one
The rum is then put into second-hand funky, iPhone-inspired touch-screen controller (“the ultimate addition to the mod-
barrels to age for anything up to 25 years ern home environment” reads the rather optimistic press release).
or more. The most common barrels used LG’s Hom Bot, a “smart” vacuum cleaner, uses ultrasonic and infra-red sensors
are from the US whiskey industry, which to plot a course around your home. It can remember where furniture is and will
only use their barrels once. Rum makers “learn” quicker routes the next time it is unleashed. And, thankfully, it can tell the
also use cognac barrels from France, and difference between living things (pets, children) and inanimate
Ward has recently been trying to get his objects, hopefully preventing hamster-related accidents.
hands on sherry barrels. The Korean firm is also launching a smart washing
Ward says: “The rum reacts both with machine that will recommend the most energy efficient-
the air in the barrel and draws out some cycle for your clothes and work out whether it is cheaper in
of the flavours in the wood. But no one
has worked out exactly what happens in
Mention your area to wash the load during “off peak” hours. In a baf-
fling display of organisation, the appliance will even churn
that barrel over all that time.”
Around 95 per cent of Ward’s output
that you are out daily, weekly or monthly reports on its energy consump-
tion, although quite who will spend their time sifting through
is dedicated to Mount Gay but this does
leave him some spare capacity. Over the
partial to a them is unclear.
Other firms are releasing smart water-
last several years he has developed a dis-
tinctive triple distilled pot still rum
Bacardi and heaters, smart alarm systems and smart
refrigerators. Soon everything will be
called Mount Gilboa, the old name of
the region.
Coke once in smart. The machines have already
taken over – they are just far more
Ward plans to up production. At the
end of my a tour of the factory, his
a while and boring than we imagined.
Follow Steve on Twitter:
cousin Andrew Ward explains the busi-
ness will buy more stills and plans to
you will be @steve_dinneen
almost double output to 4.2 million
litres by next year.
politely sent SONY’S NEXT GEN PORTABLE
I did not run through the economics
of the expansion with the Wards. But
to the The Sony PlayStation Portable 2 was unveiled this week. Officially called
the Next Generation Portable (NGP), the new device packs a real punch.
after tasting their fayre high on that
windswept mountainside, my calcula-
nearest It features a gigantic five inch screen, a touch sensitive rear, 3G connec-
tivity, wi-fi and what Sony is calling the most advanced chip on the mar-
tion was the more rum in the world, the
better. Roger Baird
corner ket. Sony, perhaps the biggest proponent of 3D technology, stuck with
2D for the NGP, which means the games will have to be something spe-
cial to win over users from Nintendo’s 3DS. Gamers will have a long time
to make their minds up – it won’t be released until Christmas.
FIVE RUM STARS
ATRIX ARRIVES IN UK
Mount Gilboa – A heavy number of ages including seven, Motorola has announced it will be bringing its Atrix handset
Barbadian smoky rum, from eight and 21 years. to the UK. The Android smartphone looks slick (nothing to
the same distillery that makes blow your mind in a post-iPhone 4 world, but certainly more
Mount Gay. This rum is triple Clement – A Martinique impressive than Motorola’s clunky leviathan the Milestone).
distilled for a longer finish. rum made from fresh The Atrix, the firm says, is designed for speed, opening web
sugar cane juice rather pages up to twice as fast as rivals. But the really interesting
Havana Club – A light dry than molasses. After an part is the link-up with your desktop PC. Slotting into a nifty
Cuban rum. Good for drinking initial sweetness it has a dock, you can run the Atrix’s applications through your PC
with friends in a bar. Sold at a spicy dry finish, which screen or plug in a full keyboard via USB to type messages
number of ages including some say is similar to and emails.
unaged, three years, Armagnac
seven years and 15
years. El Dorado – Made from ANGRY BIRDS CATAPAULT
demerara sugar. It has In a bizarre case of life imitating art (if, indeed, you can call firing birds at
Appleton – A fruity medium to dry smoky pigs art) Character Options is set to launch an official Angry Birds cata-
Jamaican rum with finish, with hints of pult. The plastic toy is designed to shoot fluffy balls with the 7m-selling
hints of banana sherry, vanilla and coffee. game’s trademark avian faces painted on. I was slightly disappointed to
and vanilla. It gets its smoky flavour learn it isn’t big enough to launch the range of plush toys released by the
Medium-bodied from being distilled in firm. Still, prepare for a glut of YouTube videos posted by people with far
with a medium to wooden potstills instead of too much time on their hands recreating in minute detail every level from
long finish. Sold at a more common copper stills. the smartphone game.
 32 Lifestyle | TV& Games CITYA.M. 31 JANUARY 2011

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
6pm BBC News
6.15pm BBC London News
7pm The One Show
7.30pm Inside Out: BBC News
8pm EastEnders
8.30pm The Battle for Bomb
Alley: Panorama
9pm CHOICE Silent Witness
10pm BBC News
10.25pm Regional News
10.35pm A Question of Sport
11.05pm Late Kick Off
11.35pm The Graham Norton Show.
With Kate Hudson, Jerry Hall and
Tinie Tempah. 12.20am The
Apprentice USA 1.25am The
Apprentice USA; Weatherview
2.10am Sign Zone: Ancient Worlds
3.10am Sign Zone: Climbing Great
Buildings 3.25am-6am BBC News
6pm Eggheads: Quiz show.
6.30pm Great British Railway
Journeys
7pm Escape to the Country: A
couple search rural Devon for
their first home.
8pm University Challenge
8.30pm Baking Made Easy:
Fast and easy recipes for
entertaining.
9pm Horizon: The Secret
World of Pain: The latest
research into pain.
10pm Episodes
10.30pm Newsnight: Weather
11.20pm Mad Men
12.05am An Island Parish
12.35am 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 Live from Studio Five
7pm Emmerdale 7pm Channel 4 News 7pm Five News at 7
7.30pm Coronation Street 7.55pm 4thought.tv 7.30pm How Do They Do It?
8pm The Lakes 8pm CHOICE Birth of Britain: Five News Update
8.30pm Coronation Street: Tony Robinson goes in search of 8pm Emergency Bikers: Biker
9pm CHOICE The Biggest the UK’s gold. Last in the series. paramedic Mark Hayes helps a
Loser: The contestants head to 9pm One Born Every Minute: A man who has been hit by a bus;
Twickenham Stadium for their father-to-be cannot be Five News Update
next challenge. contacted as his girlfriend’s 9pm FILM Murder at 1600:
10pm ITV News at Ten labour progresses. Political thriller, starring SILENT WITNESS
10.30pm London News 10pm Alan Carr: Chatty Man Wesley Snipes. 1997. BBC1, 9.00PM
10.35pm Total Emergency Part one of two. Harry and Nikki
11.05pm The Joy of Teen Sex 11.10pm FILM Slow Burn:
11.35pm That Sunday Night 12.10am Premier League Poker Thriller, starring Ray Liotta. investigate a shooting at the Dutch
Show 1.10am Mosley 2.10am The Genius 2005. embassy, where several people are
12.05am Grimefighters of British Art 3.05am Titanic: The 1am SuperCasino 4.05am The FBI killed. Concludes tomorrow.
12.35am The Zone Mission 4am ER 4.45am-6.10am Files 4.55am Rough Guide to
2.35am The Jeremy Kyle Show FILM Little Norse Prince: Japanese Adventures 5.10am Wildlife SOS
3.25am-5.30am ITV Nightscreen animated drama. 1968. 5.35am-6am House Doctor

SKY SPORTS 1 1am WWE Vintage Collection LIVING 11.05pm Skins 12.10am Scrubs 3.50am Chris Barrie’s Massive
SATELLITE & CABLE

6.30pm The Sky Sports Years
7.30pm Live Irish Football 10pm
The Sky Sports Years 11pm
Netbusters 11.30pm Soccer
AM: The Best Bits 12.25am
Netbusters 12.55am-6am Live
International One-Day Cricket
SKY SPORTS 2
7pm Bass Fishing 8pm NFL
10pm Bass Fishing 11pm
Extreme Carp 11.30pm Wild
Spirits 12am Show Jumping
1am Irish Football 2.30am
Sports Unlimited 3.30am
Watersports World 4.30am
Max Power 5.30am-6am
Extreme Carp
SKY SPORTS 3
7pm Show Jumping 8pm Kings
of the Snow 8.30pm Wild Spirits
9pm Extreme Carp 9.30pm
This Week In WWE 10pm
WWE: Late Night – Bottom Line
11pm WWE: Late Night –
Afterburn 12am WWE: NXT
2am Live WWE: Late Night –
Raw 4.15am-5.15am Bass
Fishing
BRITISH EUROSPORT
7.15pm Football 7.50pm
euroCRASH! 8pm Eurogoals
8.15pm Eurogoals: One to One
8.30pm Bobsleigh 9pm
International One-Day Cricket
11pm Strongest Man 12.15am-
12.30am WATTS
ESPN
6.30pm Talk of the Terrace.
Football debate show. 8pm NHL
10pm Between The Lines
10.30pm Pardon the
Interruption UK 11pm ESPN
Kicks: FA Cup 11.30pm ESPN
Game of the Week 12am Talk of
the Terrace 1.30am ESPN Press
Pass 2am Winter X Games 3am
Bundesliga Review Show
4.15am Between The Lines
4.45am ESPN Game of the
Week 5.15am ESPN Press Pass
5.45am-6am ESPN Kicks: Extra
7pm Ghost Whisperer 8pm
Nikita 9pm America’s Next Top
Model 10pm Four Weddings US
11pm Criminal Minds 12am CSI:
Crime Scene Investigation
2.50am Charmed 5am-6am
Four Weddings
BBC THREE
7pm Michel Roux’s Service 8pm
Snog, Marry, Avoid? 8.30pm
Hotter Than My Daughter 9pm
Music, Money and Hip-Hop
Honeys 10pm EastEnders
10.30pm Being Human
11.30pm Family Guy 12.15am
Snog, Marry, Avoid? 12.45am
Hotter Than My Daughter
1.15am Cannabis: What’s the
Harm? 2.15am Music, Money
and Hip-Hop Honeys 3.15am
Michel Roux’s Service 4.15am-
5.15am Being Human
E4
7pm Hollyoaks 7.30pm Friends
9pm Glee 10pm Tool Academy
1.05am RuPaul’s Drag Race Engines 4.40am Rory McGrath’s
2am Skins 2.55am Beauty and Best of British Engineering
the Geek 3.35am Life 5.30am-6am How Does That
Unexpected 4.20am-6am Work?
Switched
DISCOVERY HOME & THE BIGGEST LOSER
HISTORY HEALTH ITV1, 9.00PM
7pm Heir Hunters 8pm
7pm A Baby Story 8pm 10 The remaining contestants are split
America: The Story of the US
9pm Pawn Stars 10pm Years Younger 9pm Real ER: into teams and head to Twickenham
American Pickers 11pm The The Bronx 10pm Untold Stories Stadium, the home of England’s rugby
Prime Minister Is Missing 12am of the ER 11pm Chicago Medical union team, for their next challenge.
Pawn Stars 1am American 12am Real ER: The Bronx 1am
Pickers 2am America’s Toughest Untold Stories of the ER 2am
Jobs 3am Life After People Chicago Medical 3am 10 Years
5am-6am Deep Sea Detectives Younger 4am Bringing Home
Baby 5am-6am A Baby Story
DISCOVERY
8pm How Do They Do It? SKY1
8.30pm How It’s Made 8pm Road Wars 9pm Dream
9pm Aircrash Confidential Lives for Sale 10pm Mental
10pm Concorde’s Last Flight 11pm Inside: Prison Tactical
11.30pm How Do They Do It? 12am Road Wars 1.50am BIRTH OF BRITAIN
Safety in the Skies 12am Border Invasion USA 2.40am CHANNEL4, 8.00PM
Surviving the Cut 1am Deadliest 99 Most Bizarre 3.30am The Tony Robinson goes in search of the
Catch 2am Mystery 4400 4.20am Don’t Forget the UK’s gold, visiting mines in Wales and
Investigator: Olly Steeds 3am Lyrics 5.10am-6am Are You Northern Ireland, and tries his hand at
How the Universe Works Smarter Than Your 10 Year Old? panning for the precious metal.

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

QUICK CROSSWORD
    

SUDOKU KAKURO
18 10 39 10 8 32
7 22
16 13 24 
45
Place the numbers from 1 to 9 in each empty cell so that each  
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 34 10
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 9 10
 
above or to the left of it. 15 29 20 5
You can only use the digits 1-9 9 16 13    
   and you must not use the
6 22 12
45 
same digit twice in a block.
   The same digit may occur 4 14 8  
19 11
    more than once in a row or
column, but it must be in a
3
9 17
4
18 15

15 35
   separate block.
11
45
    23 8
 

   ACROSS DOWN
1 Lads (5) 1 Bestow (6)
   
   WORDWHEEL H F
4 Augmenting (5)
7 Authoritative command (7)
2 Slightly open (4)
3 Unspecified
Using only the letters in the Wordwheel, you have person (7)
   8 Comedy characterised by
ten minutes to find as many words as possible,
A E improbable situations (5) 5 Dish of rice, hard-
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters S 10 Bloodsucking insect
boiled eggs and
flaked fish (8)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
W N parasitic on warm-
blooded animals (5) 6 Aquatic South
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
L S 12 Synthetic fabric (5)
American rodent
resembling a
14 Characteristic of a city (5) small beaver (6)
QUICK CROSSWORD 1 5 5 9 7 7 5

F E U D A L I S M
4 9 3 2 5 6 7 8 1 SUDOKU         
16 River which flows
through Paris (5)
9 Placed very near
together (5-3)
8 5 3 1 2 6 3
H M A O L D         
4 6 2 1 3 1 3 2 17 Plant exudation (5)
A H E A D T H E S E          11 Daybreak (7)
U N D O T E O 5 7 1 1 3 9 7
         19 Italian composer
G O D L Y O P T E D 4 6 8 7 9 13 Niche (6)
        
H
T
O
R A W L I
A
N C U
O
R
1 3
7 9 8
2 9 4 6
4 9 3 8
8
7
WORDWHEEL         
remembered for his
operas (1792-1868) (7)
15 Number written
I G I A N H A          as XC in Roman
2 1 6 4 6 2 9 The nine-letter word was
L O O P S S P A I N
Y R L E I T 4 5 9 3 2 8 1 7 6          20 Mooring (5) numerals (6)
3 4 2 1 4 2 1
DYSLECTIC         
V A L E N T I N E 21 Access (5) 18 Gentle (4)
 Sport
Misery but
no tears as
Murray falls
at last hurdle
▲
TENNIS
BY FRANK DALLERES
BRITISH No1 Andy Murray admits he is
getting used to the heartbreak of los-
ing grand slam finals after a brilliant
Novak Djokovic beat him to the
Australian Open in straight sets.
Third seed Djokovic dismissed
Murray 6-4, 6-2, 6-3 to ensure the 75-
year wait for a major winner from
these shores lingers and remind the
Scot of the crushing defeat he suffered
to Roger Federer 12 months ago.
On that occasion Murray was
reduced to tears. Yesterday, however,
his eyes stayed dry – despite earning
the unwanted distinction of
becoming the first man to
fail to win a singe set in
three grand slam final
appearances.
“It’s better than it
was last year,” said
Murray. “It is obvi-
ously tough and dis-
appointing but I’ve
got to deal with it.”
Last night in
Melbourne was billed
as Murray’s best chance
yet to land his first grand
slam, with a smooth progres-
sion to the final and both of the top
two seeds Rafael Nadal and Federer
already out.
But Serbian Djokovic (inset) swept to
his second Australian Open title in
breathtaking style, and Murray insisted
his former rival on the junior circuit,
who beat Federer in straight sets in the
semi-finals, had been flawless.
“I think he would have beaten every
other player on the tour tonight,” he
SPORT | IN BRIEF
Casey wins on Monty course
GOLF: England’s Paul Casey ended his
20-month wait for a title with a dramat-
ic one-shot victory at the Volvo Golf
Champions in Bahrain. Casey and
Sweden’s Peter Hanson were tied going
into the last hole, but the former made
par to finish on 20 under while Hanson
could only manage a bogey. Casey’s win
came on a course designed by Colin
Montgomerie, who controversially left
him out of his Ryder Cup team last year.
Clijsters plays down slam sweep
TENNIS: Australian Open champion Kim
Clijsters has played down talk of making
a clean sweep of grand slams after her
victory in Melbourne. Clijsters, who won
the US Open last year, now holds two of
the four major titles with the French
Open next on the calendar in June. “I’m
not going to say that wouldn’t be nice
but to be honest I haven’t really thought
about it,” she said.
added. “He served well, he didn’t make
many mistakes from the back of the
court, he moved really well and he hit
the ball cleanly. He played great
although I would have liked to have
played better.”
While Djokovic, 23, flourished,
Murray, the elder by seven days, was
lacklustre, and the writing looked to be
on the wall as soon as his serve was bro-
ken at 5-4 in the first set. The 2008
champion duly served out and then
opened up a 5-0 lead in the second,
from which Murray never recovered.
Even when he did fashion a break early
in the third, Djokovic immediately
reasserted his authority by breaking
back twice.
Murray, who had one
day fewer to recover
from his semi-final
exertions, looked
sluggish in the
evening heat, but
brushed off sugges-
tions he had been
carrying an injury.
“I thought I moved
decent,” he said. “I
could have moved bet-
ter but, no, I wasn’t
injured. Against Novak you
need to be firing on all cylin-
ders and I didn’t move as well as I
would have liked.”
Djokovic pinpointed his snaring of
the first set as the cornerstone of an
impressive triumph. “The turning
point was probably the last game of the
first set when we had some incredible
rallies from the baseline,” he said. “It
was a great match. From the start to
the last point I did what I intended to
do tactically and what I prepared for.”
Vunipola and Wasps were well beaten in Abu Dhabi by Harlequins
CHELSEA READY TO GO TO THE
WIRE IN RACE TO SIGN TORRES
CHAMPIONS MAY INCREASE BID TO
£50M TO SNARE SPANISH ACE: P34
HAVEN’T WE BEEN HERE BEFORE? | MURRAY’S OTHER SLAM FINALS
Murray reached his very first grand slam
final at the US Open in 2008, only to be
emphatically beaten by Roger Federer 6-2,
7-5, 6-2 in less than two hours
Picture: REUTERS
Murray’s defeat
was his third in a
grand slam final
Picture: PA
Federer was again the opponent when
Murray made his next slam final, at last
year’s Australian Open, and again he won in
straight sets 6-3, 6-4, 7-6
Quins saunter to historic
five-try win in Abu Dhabi
WASPS 13
HARLEQUINS 38
▲
RUGBY UNION
BY FRANK DALLERES
HARLEQUINS ran in five tries to thump
Wasps in Abu Dhabi in the first com-
petitive match between English clubs
to be played on foreign soil.
In a specially-constructed 5,000-
seater stadium in the grounds of a lux-
ury hotel, Quins, technically the away
side, romped to a bonus point LV= Cup
33
England fall
to big defeat
as injury list
lengthens
▲
CRICKET
BY JAMES GOLDMAN
ENGLAND captain Andrew Strauss
admitted his side “got what they
deserved” after another emphatic
defeat, this time by 51 runs in Brisbane,
allowed Australia to take an unassail-
able 4-1 lead in the one-day series with
two games to play.
The hosts were restricted to an emi-
nently attainable total of 249, due to
the excellence of Chris Woakes, who
took six for 45 – the best ODI figures
by an England bowler on foreign soil.
But England again fell well short
with the bat, the third wicket went
down with only 22 on the board and
nobody passed 50, and Strauss knows
major improvement is needed in that
department if England are to compete
at the upcoming World Cup.
“We’re very disappointed with the
manner in which we’ve played as a bat-
ting group so far in this one-day series
and we’ve got what we deserved which
is Australia have gone on and won the
series,” he said.
“We still want guys to play positively.
We’ve got the World Cup coming up –
we’re going to need to play positive
cricket.
“We’ve played very badly. I think we
certainly could have won the first two
games – in fact we probably should
have done but what’s concerning is
that we haven’t played smart cricket.
That’s disappointing.”
While the batting failures are largely
in the mind the concern over their
bowlers is physical after injuries to
Ajmal Shahzad and Chris Tremlett.
Shahzad suffered a hamstring injury
while bowling and had to bat with a
runner, while Tremlett was ruled out
before the game due to a slight side
strain.
Both will have scans on Monday and
after front-liners Graeme Swann and
Tim Bresnan flew home early due to
injury last week, Strauss said a replace-
ment may be called upon.
win. Karl Dickson ran in two tries while
George Lowe, Ceri Jones and Sam
Smith also crossed in a contest missing
a host of stars due to RBS Six Nations
preparations.
Tom Varndell and Joe Launchbury
went over for Wasps, but it was
nowhere near enough to deny Quins a
victory that puts them top of Pool Four
with one round remaining.
Head coach Conor O’Shea said his
side had enjoyed playing in warmer
weather than they would have back
home. “On a day like today, when the
conditions are like they are, you can get
a few tries, which we did,” he said.
Elsewhere, London Irish were 37-20
winners at home to Northampton.
34 Sport CITYA.M. 31 JANUARY 2011

Chelsea step
SPORT TENNIS
up chase for
£50m Torres
▲

FOOTBALL ready to roll back the years and dip

BY FRANK DALLERES
CHELSEA are today expected to test
Liverpool’s determination to hold on
to Fernando Torres by increasing
into his billions again to give his team
an edge as they scrap for their top
four status.
Torres is the biggest name on
Chelsea’s shopping list, but manager

MURRAY their British record bid, in what looks

likely to be a frantic final few hours of
transfer activity.
Carlo Ancelotti has also asked for
reinforcement in defence and a £25m
move for Benfica’s David Luiz, which
BEATEN IN The Blues had an initial offer of
£35m turned down on Thursday but
appeared to stall on Friday, could yet
be resurrected.
FINAL YET are likely to return with an improved
bid in an attempt to force through a
Liverpool, meanwhile, have already
shown ambition by signing Uruguay
AGAIN deal for the Spain striker before
tonight’s 11pm deadline.
striker Luis Suarez from Ajax in a deal
that could be worth up to £23m.

PAGE 33 Torres has told the Anfield hierar-

chy he wants to leave and is thought
to have a clause in his contract
Their American owners, the Fenway
Sports Group, must now decide
whether it is worth trying to Torres has asked to

Cricket: Strauss allowing him to move if a

club
Liverpool,
pays £50m.
however,
keep an unhappy Torres or
to sell him to one of
their biggest rivals.
leave Liverpool

Picture:PA
slams England have let it be known
they would accept a
The Reds could use
the money, not only

after defeat p33 bid of nearer £40m

if Chelsea offer for-
ward Nicolas
to balance the
Suarez signing but
also to fund moves
Abramovich can silence doubters
Anelka in part-
exchange.
It means the situa-
for Blackpool mid-
fielder
Adam and Aston
Charlie with return to big-spending ways
Rugby Union: tion is delicately
poised going into dead-
Villa winger Ashley
Young. The sale of FRANK DALLERES
willing to pay what is needed.
Second, how important are

Quins beat Wasps line day, after which much

more is likely to be known of
both clubs’ aspirations.
in Abu Dhabi p33 After a blistering start to the sea-
son, champions Chelsea have slipped
dramatically off the pace, and are in
genuine danger of missing out on a
place in next season’s Champions
League. Owner Roman Abramovich
(inset) has forsaken his big-spending
ways in recent seasons but appears
Young would help Villa
balance the books this month
following their swoops
Sunderland striker Darren Bent and
Lyon midfielder Jean Makoun.
Chelsea midfielder Frank Lampard
has appeared to welcome a move for
Torres, saying: “It remains to be seen
what happens with the club – who
they bring in – but world class players
will always be very welcome from us.”
COMMENT
for
THE OUTCOME of Chelsea’s pursuit
of Fernando Torres will answer a
handful of pertinent questions that
have built up at Stamford Bridge.
First, how determined are they
to finish in the top four? Signing a
player of Torres’ quality could
make all the difference – if they are
looming financial fair play rules?
Splurging £75m on Torres and
David Luiz would be hard to offset,
leading to further losses.
Finally, how interested is Roman
Abramovich nowadays? Is a recent
cut in spending a sign of waning
enthusiasm, or is he still in love
with the club enough to write huge
cheques when it matters? By 11pm
we should know the answers.

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CITYA.M. 31 JANUARY 2011
Redknapp pays the penalty
Murphy eases Fulham
through as Spurs boss
says hopes of signing a
striker look to be over
FULHAM 4
TOTTENHAM 0
▲
FOOTBALL
BY JAMES GOLDMAN, CRAVEN COTTAGE
TOTTENHAM manager Harry
Redknapp admits he’s run out of time
to bolster his side’s forward line with
the addition of Newcastle’s Andy
Carroll or Atletico Madrid’s Sergio
Aguero.
Redknapp watched Jermain
Defoe and Peter Crouch fire
blanks again in a humili-
ating FA Cup defeat at
Craven Cottage as
two penalties from
Danny Murphy, a
Brede Hangeland
tap-in and a fine
solo strike from
Moussa Dembele,
all before half-time,
did the damage.
Defensively, as the
scoreline suggests, the vis-
itors were a shambles, but
they were no better up front where
Defoe and Crouch, who were given 45
minutes each, failed to test David
Stockdale.
With Defoe yet to break his Premier
League duck this season and Crouch
having only a solitary strike against
Blackburn to his credit in the bread and
butter stuff, Redknapp was expected to
invest in another forward this January.
Carroll, who has struck 11 times in
his first full season in the top flight,
has emerged as Redknapp’s top target
and was reported to be the subject of a
failed £23m bid last week.
FOOTBALL ROUND-UP
City force replay but
Johnson out until May
MANCHESTER CITY striker Edin
Dzeko scored a late equaliser, his first
for the club, as Roberto Mancini’s side
earned a replay with Notts County fol-
lowing a 1-1 draw at Meadow Lane.
City will now be firm favourites to
qualify, but England international
Adam Johnson may miss the rest of
the season with an ankle injury he
picked up in training last Thursday.
Wolves win the race
to sign O’Hara on loan
TOTTENHAM midfielder Jamie
O’Hara has joined Wolves on loan for
the rest of the season.
The 24-year-old was in the stands to
watch Wolves’ 1-0 defeat by Stoke in
yesterday’s FA Cup tie after undergo-
ing a medical.
O’Hara was on loan to Portsmouth
last term, but he has not featured at
first-team level at White Hart Lane
this season because of a back injury.
Murphy struck twice from the penalty spot against his former club
But the Tottenham
manager, who has
allowed Robbie Keane
to join West Ham on
loan until the end of the
season, denied
knowledge of his club’s
any
pursuit of Carroll.
“I never made a bid for Andy
Carroll. Maybe the chairman did but I
never did. Nobody has told me we’ve
made a bid,” said Redknapp, whose
club had a £38.5m bid for Atletico’s
Aguero turned down last night, accord-
ing to the Spanish club. “We won’t get
a striker in.”
Spurs are also facing up to a defen-
sive crisis with Redknapp revealing
that Younes Kaboul faces and opera-
tion, William Gallas is playing with an
injury, while Michale Dawson (inset) is
suspended following the professional
foul which ended yesterday’s match as
a contest in the 13th minute.
Nasri a doubt for Barca clash
ARSENAL 2 lose bodies is very difficult for us,” said
HUDDERSFIELD 1 can recover. The good thing is when
▲
FOOTBALL
BY FRANK DALLERES, EMIRATES STADIUM
ARSENAL manager Arsene Wenger
fears mounting injuries and suspen-
sions could sabotage his team’s ability
to challenge on all four fronts after los-
ing three men in an unconvincing late
FA Cup fourth round victory.
The 10-man Gunners needed anoth-
er late cameo from captain Cesc
Fabregas, who climbed off the bench
to help win and then convert an 86th-
minute penalty, to finally see off their
League One opponents.
But relief for Wenger was short-
lived, as he contemplated a one-match
ban for the red carded Sebastien
Sqiuallaci and injuries to midfielders
Samir Nasri and Denilson which will
rule them out of a hectic schedule
that continues tomorrow with the
visit of Everton.
“We’re at the stage of the season
“We are down to two central defend-
ers,” Redknapp added. “Kaboul is hav-
ing an operation on his knee and
could be out for six weeks. William
Gallas has a hip injury.”
Dawson’s poor backpass had already
contributed to the concession of the
first penalty – converted by Murphy in
the 11th minute after Clint Dempsey
had been felled by Alan Hutton – and
he gave away the second, hauling back
Dembele, leaving referee Phil Dowd
with little option but to dismiss him.
Hangeland nudged in the third
after 23 minutes and Dembele round-
ed off the scoring with a memorable
strike from just outside the penalty
area in first-half stoppage time.
Delighted Fulham boss Mark
Hughes said: “We wanted to make it
hostile coming out of the blocks for
them and we managed to force a few
errors from their defenders and we
capitalised on those situations.”
where we play so many games so to
Wenger. “We looked a little but tired
today but hopefully before Tuesday we
you win you recover quicker. I have
a few players who did not play
today and will be fresh, but of
course we have just 48 hours.”
Nasri’s hamstring injury makes
him a major doubt for the
Champions League last 16
clash with Barcelona on 16
February, and Wenger
conceded the in-form
playmaker’s knock
was “a big blow”.
Yet despite the
fresh fitness con-
cerns, and the
continued
absence of centre-
back Thomas Vermaelen,
Wenger insists he does not
expect to make any signings
before tonight’s transfer dead-
line.
“No, I leave these headlines to
all the other clubs,” he said,
before adding: “I can’t tell you
definitely, because if a good play-
Picture: ACTION IMAGES
Non-league Crawley
handed Man United
CRAWLEY TOWN, the first non-
league side to reach the FA Cup’s
fifth round since 1994, have been
handed a plum draw away to top
flight leaders Manchester United.
West Ham v Burnley
Notts Co/Man City v Aston Villa
Stoke City v Brighton
Birmingham v Sheff Wed
Leyton Orient v Arsenal
Everton/Chelsea v Reading
Man Utd v Crawley Town
Fulham v Bolton/Wigan
er knocks on my door tomorrow and
says I want to play for you then I will
sign him.”
Wenger now intends to rotate his
team, which he did yesterday to
mixed effect. Nicklas Bendtner rev-
elled in another start on the right
wing, driving the opening goal
via a deflection from Peter Clarke
on 22 minutes.
But the sending off of last
man Squillaci for a body-
check on the marauding
Jack Hunt handed
Huddersfield
momentum, and they
the
duly levelled on 66
minutes when Alan
Lee climbed above
Abou Diaby to power
a header past the
recalled Manuel Almunia.
Substitute Fabregas
restored some vim to
Arsenal’s attack and made
the winner when he won the
ball 25 yards out and slipped
a pass to Bendtner, who was
felled, allowing the Spaniard to
net from the spot for his ninth of
the season.
Sport 35
Obinna hit a hat-trick Pic: ACTION IMAGES
Obinna treble
fells Forest as
Keane signs up
WEST HAM 3
NOTTM FOREST 2
▲
FOOTBALL
WEST HAM boss Avram Grant had
two good reasons to be cheerful after
following up an FA Cup victory with
the loan signing of Tottenham striker
Robbie Keane.
The arrival of Keane until the end
of the season was confirmed after
Victor Obinna’s hat-trick earned the
Hammers a comeback win.
Nigerian Obinna put the home side
ahead and then brought them level
again, after goals from Nottingham
Forest pair Dele Adebola and David
McGoldrick.
And he completed his treble with a
penalty early in the second half to set
up a fifth round tie against Burnley at
Upton Park.
Keane was in east London to watch
the game and West Ham co-owner
David Gold said: “We’re delighted to
sign a world-class striker.”
Grant added: “He (Keane) is not just
a good player, he is a good character
that we need in the next 14 games.”
Results
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email sport@cityam.com
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