Cityam 2012-06-13

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FTSE 100 5,473.74 +41.37 DOW 12,573.80 +162.57 NASDAQ 2,843.07 +33.34 /$ 1.55 unc / 1.24 unc /$ 1.25 unc
BUSINESS WITH PERSONALITY
LONDON2012
days to go
See The Forum, Page 20
See The Capitalist, Page 14
44
www.cityam.com FREE ISSUE 1,651 WEDNESDAY 13 JUNE 2012
Certified Distribution
02/04/2012 till 29/04/2012 is 100,668
CHANCELLOR George Osborne has
suggested that Greece may have to
crash out of the euro for German vot-
ers to be convinced of the need to save
the single currency.
At a gathering of business leaders in
London yesterday, an unusually blunt
Osborne risked provoking anger in
Berlin by hinting that a so-called
Grexit could persuade German taxpay-
ers to prop up debts from troubled
Eurozone states.
I just dont know whether the
German government requires a Greek
exit to explain to their public why they
need to do certain things like a bank-
ing union, eurobonds and things in
common with that, Osborne said.
I ultimately dont know whether
Greece needs to leave the euro in order
for the Eurozone to do the things nec-
essary to make their currency survive.
His comments could irritate German
Chancellor Angela Merkel, who has
held out against eurobonds.
Despite not being central to the deci-
sion of whether to let Greece go or
keep them in, the UK government
continues to provide advice to its
Eurozone neighbours, Osborne told
the Times CEO summit, calling for
bold, pre-emptive decisions.
Everyone said to the Eurozone that
if you do not directly recapitalise these
[Spanish] banks, if you do it via the
Spanish sovereign, then you are not
going to convince the market that the
Spanish sovereign is entirely credible
BY JULIAN HARRIS
and yet they went ahead down this
route, he complained, predicting a
long period of uncertainty and fragili-
ty if problems are only addressed
after they have flared up.
Osborne was speaking after yields on
Spanish 10-year government bonds
shot up to over 6.8 per cent a euro-era
high before ending the day up 20
basis points, or three per cent, at just
over 6.7 per cent.
And rating agency Fitch
downgraded 18 Spanish banks, having
slashed its sovereign rating last week.
CaixaBank, Bankia and Banco
Popular Espanol saw their ratings
downgraded, after BBVA and
Santander had been cut on Monday.
Meanwhile European Commission
vice president Joaquin Almunia yester-
day warned Spanish banks that they
should have to pay a rate of at least 8.5
per cent on any cash they get from EU
aid channelled via the Spanish state.
Spains prospects are weighed down
by banking and housing crises that
appear to be moving from bad to
worse. Data released yesterday by a
Spanish surveyor showed a fall of
11.1 per cent in house prices
last month, compared to a
year earlier. Prices have
plummeted by nearly a
third from their peak.
Elsewhere in the
Mediterranean, Italys bond
yields mirrored Spains by
edging towards the dreaded
seven per cent mark. Yields on
10-year bonds hit 6.17 per cent.
Although there is nothing
sacrosanct about the seven per
cent mark, it resonates as a
critical juncture, said
George Magnus of UBS.
Italys levels are very resist-
ant to falling are they
spiking at seven per cent, or
are they finding a new home
[at these higher rates]?
As the threat of falling out of
the euro grows in Greece, reports
yesterday suggested that up to half a
billion euros are being pulled out of
the banks on some days.
With new elections scheduled for
the end of this week, a failure to elect a
government capable of resolving the
crisis could see Greeks hurrying to
withdraw even greater amounts of
their cash.
Osborne said that the UKs recovery has been knocked by the euro crisis
6.7%
SPANISH YIELDS AT
COMPANIES need to fight back
against the anti-business
sentiment that dominates
current political discourse in
the UK, chancellor George
Osborne said yesterday.
Osborne urged business
leaders to get their voices heard
and counter the politics of
envy that he feels has worsened
since the coalition came to
power in May 2010.
If you are not out there,
engaged in those arguments,
then you are going to leave the
field open to those people who
want to fill that space, and who
argue that companies... have got
to pay more tax, Osborne said.
The chancellor called upon
the audience at the Times CEO
summit to retaliate against the
politics that says its perfectly
acceptable for the state to take
half of all national income.
Cutting the top rate of tax
from 50p to 45p in the pound
was unpopular but economically
sensible, Osborne said, arguing
that he has made difficult
decisions to help business.
G
E
T
T
Y
MORE EUROZONE: Pages 2, 4, 6, 7, 21

THE FORUM: Page 20

OSBORNE: GREXIT MAY BE
NEEDED TO RESCUE EURO
Chancellor: stick
up for business
6.17%
ITALIAN YIELDS HIT
WE NEED MORE CAPITALISM
FORMER TESCO BOSS TERRY LEAHY ON HOW TO RESTART THE ECONOMY
CITYS OSCARS HONOUR THIS YEARS BEST FINANCIAL FIRMS
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
IN BRIEF
Top Syriza candidate defects
nA leading Greek leftist politician
defected from the Syriza party
yesterday, just days before an election
in which it is likely to become the
largest group in parliament. Corinth
candidate Nikos Hanias hit out at the
party in a letter, saying it is gambling
with our future, betting on the
possibility that our creditors are
bluffing. The anti-bailout party has
sworn to reject the countrys bailout
package, though that risks Greece
being forced out of the euro
something the party says it does not
want. Hanias departure came as
Syriza leader Alexis Tsipras ruled out
forming a coalition with pro-bailout
parties after Sundays elections. He
said he would lead a government of
the left against the austerity measures
demanded by the EU and IMF.
Russia in frame for Cyprus rescue
nCyprus is keeping its options open
on whether to apply for a European
Union bailout to help recapitalise its
second-largest bank but has yet to
make any application, its government
said yesterday. Russia was yesterday
put in the frame as the source of a
possible bilateral bailout for the
country. Sigma, a private TV station,
reported that Cypriot President
Demetris Christofias had paid an
unannounced visit to the Russian
embassy. Late last year, Cyprus
secured a 2.5bn bilateral loan from
Russia to help it refinance debt and
plug deficits in 2012. Cyprus must
recapitalise its second-largest lender,
Cyprus Popular Bank, by a 30 June
regulatory deadline.
G
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T
T
Y
Tucker: Liquidity rules are
damaging the recovery
REGULATORS should lower banks
liquidity requirements to help
them fight the current crisis, top
Bank of England official Paul
Tucker said last night, arguing that
tight constraints are damaging the
sector and the wider economy.
The very public intervention
shows that Tucker would be a more
flexible regulator than outgoing
Bank governor Sir Mervyn King.
Tucker is in the running to
replace King, and yesterday demon-
strated he would try to promote
growth, not just price stability.
Tougher capital and liquidity
requirements are being put in
place by regulators in an effort to
ensure banks are better prepared
for any future financial crisis than
they were in 2008.
Regulators are pushing banks to
build up buffers now, well in
advance of the 2019 Basel III dead-
line in the hope of making them
safe in good time.
However, that means central
banks are pumping liquidity into
the system to boost the economy,
but banks are using that to bolster
their regulatory buffers, preventing
the authorities from achieving
their current aims.
There is less of a case for regula-
tors to require banks to rebuild
Hildebrand takes Blackrock role
Philipp Hildebrand, the former chairman
of the Swiss National Bank, is joining
BlackRock as vice-chairman and will
oversee the firms largest institutional
client relationships outside of the US.
Treasury rejects pay levy on City
The Treasury has rejected a plan to get the
City to pay the salaries of some of its civil
servants, despite warnings that low pay
and high staff turnover are leaving the
department dangerously exposed.
F1 suspends IPO over market turmoil
Turmoil in financial markets has pushed
the owners of Formula One to delay a
$3bn share offering in Singapore due later
this month, according to people close to
the situation. A formal decision by F1s
owners, led by CVC, the private equity
firm, is expected early next week.
Phaidon hires Greenhill for sale
Phaidon Press, the privately owned art
and cookery book publisher behind titles
including Ernst Gombrichs The Story of
Art and The Silver Spoon, has hired
investment bank Greenhill to find a buyer.
Margate fears over Portas project
Margate, one of the towns chosen by the
government as a Portas Pilot high
street rejuvenation project has attacked a
deal to turn its scheme into a Mary Portas
television series.
HMRC targets Liechtenstein dogers
Days are numbered for tax dodgers who
have squirreled their money away in the
tiny Alpine principality of Liechtenstein,
with HM Revenue & Customs expecting to
raise 3bn from them.
Cable calls for manufacturing vision
Vince Cable, the business secretary, has
said the government must develop a
strategic vision to grow British industry
and should use the automotive sector as
model for success.
SSE attacks nuclear subsidy talks
Government negotiations with French
energy giant EDF over subsidies for new
nuclear power are being conducted in a
smoke-filled room, the chief executive of
rival company SSE claimed yesterday.
Facebook takes on critics
Facebook launched a public-relations
blitz to hit back at criticisms. It had been
prohibited from making public comments
under securities rules. That period has
now ended, allowing executives to speak
out to justify the firms business model.
Dell to start paying a dividend
Dell said it plans to pay a stock dividend
beginning in its fiscal third quarter, as the
computer maker looks to increase
shareholder value.
WHAT THE OTHER PAPERS SAY THIS MORNING
ITALIAN Prime Minister Mario
Monti hit out at Austrias finance
minister yesterday, declaring her
comments about his governments
finances inappropriate.
Austrian Maria Fekter had said
Italy may need a Eurozone bailout
because of its high borrowing costs.
Italy has to work its way out of
its economic dilemma of very high
deficits and debt, but of course it
may be that, given the high rates
Italy pays to refinance on markets,
they too will need support, Fekter
said in a television interview.
But Monti said her remarks were
completely inappropriate for an
EU finance minister.
The Italian governments
borrowing costs rose to their
highest level since January on
worries that the state has too much
debt and too little economic
growth to pay for
them. Fekter tried
to tone down the
claim by saying
there were no
signs of Italy
planning to apply
for aid, but
Eurozone officials
said the comments
were unhelpful.
Monti row with
Austria over
bailout claims
Paul Tucker is in the running to become the next Bank of England governor
2
ECONOMIC CRISIS
BY TIM WALLACE
BY TIM WALLACE
To contact the newsdesk email news@cityam.com
G
UESS which developed country
could enjoy the fastest growth
this year? Come on? Alright,
then its Iceland. Its economy
expanded by 2.4 per cent quarter on
quarter in the first three months of
the year, its fastest pace since its
meltdown, boosted by exports,
tourism and consumption. Annual
economic growth was 4.5 per cent,
the highest since the first quarter of
2008. Unemployment has tumbled to
5.6 per cent in May from 6.5 per cent
in April, figures out yesterday
revealed. That is to be compared to
24.3 per cent in Spain and 21.9 per
cent in Greece, where a shocking 52.8
per cent of under-24s are on the dole.
Iceland is now able to borrow on the
global markets, paying around 5.8
per cent, substantially less than what
euro members such as Spain or Italy
are faced with.
EDITORS
LETTER
ALLISTER HEATH
Icelands stunning comeback gives Eurozone food for thought
WEDNESDAY 13 JUNE 2012
The contrast with the news from
other troubled European economies
is astonishing. We learnt yesterday
that Spanish house prices fell 11.1 per
cent year on year in May, taking them
down by over 30 per cent since their
2007 peak. Not only is that disastrous
for homeowners including UK
investors but it means that more
people will be plunged into negative
equity, and therefore the total bad
debt in the Spanish financial system
could be even greater than previously
thought. Iceland famously did every-
thing the IMF or the global economic
establishment thinks you should
never do: it allowed banks to go bust,
it defaulted on its debt, it reneged on
international deals and so on, putting
taxpayers first. It fell out severely with
the UK government, among others.
Yet its economy has bounced back, its
people have found work again and
the country is on the mend. Many
people in nations such as Ireland that
have bankrupted themselves bailing
out banks look on in envy.
Am I saying that Iceland is a perfect
role model? Of course not. Some of
the shock therapy worked; some was
counter-productive. But sometimes
total collapse followed by a swift
rebound works better than a long-
drawn out death. There were lots of
downsides to Icelands policies, and
Im not even referring to the obvious
Spanish 10-year yields hit a new
Eurozone-era record of 6.83 per cent
yesterday. The spread (or interest rate
differential) over German bonds is
now a massive 5.39 percentage points.
As Ashraf Laidi of City Index points
out, it took 10 days of five per cent-
plus spreads between Spanish and
German 10-year yields before Spain
obtained a bailout. It took 16 days of
such spreads for Athens to obtain its
first bailout; 24 days for Dublin to get
bailed out; and 34 days before Lisbon
was rescued. Given that Italys yield
gap is moving ever closer to the night-
marish five per cent, business as
usual is no longer an option. Unless
radical new solutions are found, vot-
ers will increasingly be tempted by an
Icelandic solution, warts and all.
ones. Its massive devaluation trans-
formed its competitiveness but
helped push up Icelands prices by a
quarter. Its capital controls were ugly
and have chased away investment. Its
mass mortgage write-offs helped
those who had borrowed in foreign
currencies but were hardly fair at a
time when savers lost money.
But a sanitised variant of what
Iceland did default, debt-write offs,
shutting bust banks and devaluation
combined with dramatic supply-
side reforms would undoubtedly
make more sense for an economy
such as Greece. That, of course, would
require leaving the euro. Yes, there
would be intense pain (though there
is already lots of that right now) but
within a couple of years Greece,
rather than Iceland, could easily be
the fastest growing Western economy.
Meanwhile, the madness continues.
their stock of liquid assets in current
conditions, said the Monetary Policy
Committee (MPC) member.
At the least, banks need to be free
to draw on their liquidity buffers in
order to absorb current pressures.
And, so far as possible, we should see
whether we can liberate this part of
their balance sheet in these stressed
times.
These contradictory aims and
results show a lack of joined up
analysis by the authorities, he said.
Tucker also said central banks need
to learn the lessons of the lending
boom, fuelled by lax credit condi-
tions, which he believes illustrated
the lack of macroeconomic tools
available to fight bubble.
In particular he said that the one-
size-fits-all monetary policy of the
Eurozone helped build Spains hous-
ing bubble, which was as large as
Britains before the crash.
In addition, he called for greater
competition in the banking sector,
arguing that the impact of a bank
going bust in a concentrated market
is far greater than in a more compet-
itive one.
The new jobs website for London professionals
CITYAMCAREERS.com
Italian PM
Mario Monti
ZYNGAS shares plummeted more
than 10 per cent yesterday, hitting a
new low since its stock market listing
last year, after analysts expressed
doubt at the social gaming companys
ability to grow in the face of rising
mobile use.
San Francisco-based analyst firm
Cowen & Co argued that Zyngas
shares are likely overvalued at cur-
rent levels, citing the companys
declining usage as players continue to
switch to mobile devices to browse
social networks such as Facebook.
The analysts quoted data showing
that Zyngas daily active users
dropped 8.2 per cent to 54.2m last
month and claimed the firms cul-
ture could be a stumbling block to
further growth.
Within half an hour of markets
opening in New York, Nasdaq
imposed a two-day ban on short-sell-
ing the companys stock. The rule,
designed to prevent short-sellers
thrashing down already knocked
shares, comes into effect when a stock
loses over 10 per cent on the previous
days closing price.
Cowen & Co said: We believe that
BY LAUREN DAVIDSON
THE HEAD of the remuneration
committee at advertising giant WPP
faces a protest vote today following
the controversial 60 per cent pay
rise awarded to chief executive Sir
Martin Sorrell.
Jeffrey Rosen, whose
independence has been questioned
by shareholder advisory group Pirc,
is set to face opposition over his re-
election to the board.
WPP is also braced for its pay
report to be defeated, driven by
BY PETER EDWARDS
AND JAMES WATERSON
anger over Sorrells 12.9m package.
A series of investor groups have lined
up against Sorrells deal, with Pirc
opposed to its excessiveness while
the Association of British Insurers
has issued a red top warning, its
highest level of disapproval.
Yesterday Liz Murrall, director of
corporate governance at the
Investment Management
Association, brushed off Sorrells
suggestion that Britains hostility to
executive pay deals is out of step
with rest of the world: He is in a
public UK-listed company that has
grown through using UK
shareholder funds. It is not an
owner-managed business and his pay
needs to come in line with UK
standards.
Sorrell has argued he deserves his
pay package for turning WPP into
the worlds leading advertising
group with more than 160,000
employees across 108 nations.
WPP has said Sorrells pay is
performance related and reflects the
firms fast growth in emerging
markets and through digital
marketing while the mature
Western markets struggle.
RESOLUTION EXEC MOVES TO BUPA
Zynga Inc
8Jun 31 May 1 Jun 6Jun 7Jun
5.00
5.25
5.50
5.75
6.00
6.25
$
4.98
8Jun
THE PENSION deficits at Britains
final salary schemes ballooned to a
record 312bn last month as funds
were hit by market swings and the
effects of the Bank of Englands
money printing scheme.
The cumulative deficit of the
6,432 defined benefit schemes
jumped 95bn in May and increased
by nearly 13 times from the 24.5bn
level of a year earlier, said the
Pension Protection Fund report.
This is a big leap further into the
red for private sector final salary
pension funds and it reflects the
immense pressure they are under,
said National Association of Pension
Pension fund deficit soars to
record 312bn at British firms
BY PETER EDWARDS Funds chief executive Joanne Segars.
In total the schemes have only 77
per cent of the assets currently
needed to pay their pensioners.
The report showed 5,503 of the
schemes are in deficit.
The Banks 325bn quantitative
easing programme could cost
Britains pension industry 270bn by
driving down yields on gilts a
staple investment also used to
calculate liabilities making it more
expensive to pay for future
obligations, the NAPF estimates.
Over the last month 15-year gilt
yields have fallen by 0.55 percentage
points, which resulted in an increase
in liabilities of 7.6 per cent, the PPF
estimates.
SHAREHOLDER SPRING: Page 12

3
NEWS
cityam.com
Insurance acquisition
vehicle Resolution
yesterday announced
that Evelyn Bourke,
one of its most senior
executives, is leaving
the firm to become
chief financial officer
at healthcare insurer
Bupa. Shore Capital
analyst Eamonn
Flanagan said
Bourkes departure
could set back
Resolution's plan to
boost cash
generation at its
closed life unit. A
great win for Bupa, a
big and bad loss for
Resolution, the
analyst wrote in a
note.
WPP pay boss under fire after
backlash over Sorrells new deal
interest in Facebook-based gaming
may have reached a negative inflec-
tion point as more casual gamers
migrate to mobile platforms.
Zynga, which owns games including
Farmville and Words With Friends,
said in its first quarter results last
month that it generates substantially
all of its revenue and players through
the Facebook platform and expects to
continue to do so for the foreseeable
future.
The news followed a research paper
from Facebook and data analysis firm
ComScore defending the benefits of
advertising on the social network. The
report claimed one in seven online
minutes are spent on social media and
said advertising on Facebook drives
lifts in purchase behaviour.
Zynga plunges
to lowest price
since its listing
G
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T
Y
MANUFACTURING output fell in
April, official data showed yesterday,
indicating another disappointing
quarter for the UK economy.
The sectors output dropped 0.7 per
cent on the month, according to the
Office for National Statistics (ONS),
taking output down 0.3 per cent on
the year.
The wider production index, which
includes industries like energy and
mining as well as manufacturing,
was flat from March to April and
down one per cent on the year the
14th consecutive monthly of year-on-
year fall.
These figures highlight the tough
conditions facing industry operating
within the UK output remains well
below pre-financial crisis levels and
shows little sign of improvement,
said Colin Edwards from the Centre
for Economics and Business Research.
With the Eurozone in perpetual
turmoil the UKs largest export mar-
ket looks unlikely to provide an out-
Falling factory
output hits UK
recovery hopes
BY TIM WALLACE let for UK firms any time soon. This is
likely to weigh on the potential for
output growth for some time.
The oil and gas industry led the fall
with an 18.2 per cent drop in output
on the year, closely followed by a 15
per cent decline in mining and quar-
rying production.
However, there were some bright
spots energy output jumped 13.6
per cent on the month, thanks to
Aprils bad weather, with electricity
production up 9.3 per cent and gas
supply rising 32.1 per cent.
ECB calls for deposit guarantee
scheme to build banking union
A BANKING union across the
Eurozone is vital to ending the
crisis and creating a stable base for
future growth, the European
Central Bank (ECB) said yesterday,
although the German Bundesbank
appeared cynical towards plans to
integrate financial sector risk.
A union could only work if
properly anchored in a fiscal
union with powers to stop
countries breaking budgetary
rules, Bundesbank vice president
BY TIM WALLACE
Sabine Lautenschlaeger said.
Nonetheless the ECB proposed
several steps to establish a banking
union, that it claims must be taken
to stabilise the regions economies.
An international deposit
guarantee scheme would be a key
step, the ECB said, to help reassure
depositors who have removed cash
from banks in countries such as
Greece. The report also called for
the link to be broken between
banks and sovereigns which
significantly exacerbates the
impact of financial disturbance.
Supervision of the financial
sector across Europe should be
centralised to reinforce financial
integration, mitigate
macroeconomic imbalances and,
therefore, improve the smooth
conduct of the single monetary
policy, while the risk to taxpayers
should be minimised through
adequate contributions by the
financial industry, the ECB said.
However, the report recognised
these reforms will certainly take
time to implement and may
require substantive legal changes. European Central Bank boss Mario Draghi is pushing for further banking union
Manufacturing output fell again in May
Jan12 Jan11 Jan10 Jan09 Jan08
105
100
95
90
85
Manufacturingoutput
Total output
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ECONOMIC CRISIS
cityam.com
A SECOND major shipping
insurer has stopped selling cover
to Greek shipping firms, it
emerged yesterday.
French giant Coface has
followed the worlds largest trade
credit insurer Euler Hermes in
suspending cover to the countrys
exporters because of the risk of
doing business in the debt-laden
nation.
Greek development minister
Yiannos Stournaras has taken the
unusual step of writing to the
French finance minister, Pierre
Moscovici, to beg Paris to provide
cover for goods being sent to
Greece, as he fears other insurers
will also take action.
Greeks cut off
by ship insurer
BY TIM WALLACE
FRANCE said yesterday that it would
support taking steps towards
budgetary integration in Europe, but
the first priority must be to agree
measures to solve the debt crisis.
After talks in Paris with his
German counterpart Michael Link,
Frances European affairs minister
Bernard Cazeneuve said issues could
be worked on in parallel but a fiscal
union could not be built until the
crisis was brought under control.
We very much wish to continue
the political discussion on the
process of greater economic and
monetary integration and we
believe, like our German friends, in
the building of a political Europe,
Cazeneuve said.
France backs
fiscal tie-up
BY CITY A.M. REPORTER
S
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INTERNATIONAL banking regulators
are split over how much extra capital
big local lenders must hold to shield
taxpayers from bailing out failed
banks, an official at Germanys cen-
tral bank said yesterday.
Banking watchdogs have already
agreed that about 30 global systemi-
cally important banks, known as G-
SIBs, must hold extra capital buffers
from 2016 because they pose such a
threat to the financial system should
they fail.
These banks must have an extra one
to 2.5 percentage points in their core
capital solvency ratios on top of the
globally agreed minimum of seven
per cent that is being phased in from
next January for all lenders across the
world.
Regulators have also agreed to apply
a similar approach to big national
players that could threaten financial
stability on a smaller scale.
But they have run into difficulties
in hammering out rules for the next
group down, the domestic systemical-
ly important banks, or D-SIBs, that
would be consistent with the rules
for their larger G-SIB peers, said Erich
Loeper, who is responsible for bank-
ing supervision at the Bundesbank.
The framework for the treatment of
nationally important banks is expect-
ed to be ready by November at the lat-
est, following the publication of the
criteria for identifying those banks.
Capital rules
for local banks
still uncertain
GERMAN Chancellor Angela Merkel
called for a centralised Eurozone
banking regulator yesterday, blasting
national regulators for failing to
organise proper stress tests.
The demand came as her govern-
ment demonstrated Germanys eco-
nomic strength by slashing its budget
deficit target.
She said central authori-
ties should be given
more power to
impose discipline on
member states and to
measure banks per-
formance.
The existing
setup has led to
the European
B a n k i n g
Aut hor i t y s
(EBA) remit
being under-
mined by
national over-
sight bodies
acting out of
Merkel seeks EU
regulator after
stress test flop
BY TIM WALLACE
misguided national pride, she said,
blaming them for last years inaccu-
rate stress tests which gave many
struggling Eurozone banks a clean bill
of health.
No sooner had we finished the
recapitalisation phase of banks from
the EBA stress tests when it emerged
that the Spanish stress tests were not
correct, she told business supporters.
She also praised Spain for seeking a
bank bailout, but stressed that there
will be strings attached as the banking
system must be restructured.
It came as Germanys parliament
demonstrated the strength of its own
economy, voting to lower its budget
deficit target to 31.2bn (25bn) from
34.8bn.
The move was possible
because the govern-
ment benefits from very
low borrowing costs, as
investors have fled from
countries including
Spain and Italy, and see
Germany as a safe haven in
which to put their cash.
Merkel praised Spains bailout
THE HEAD of the International
Monetary Fund (IMF) yesterday
called for decisive steps by
European policymakers to deal
with the regions financial crisis
and suggested that carbon taxes
could be used by cash-strapped
governments to raise more
revenue.
We need a strategy that is
good for stability and good for
growth where stability is
conducive to growth and growth
facilitates stability, said
Christine Lagarde.
Policymakers should aim for a
Lagarde: Deficit plans urgently
needed to prevent worse crisis
BY HARRY BANKS combination of very
accommodating monetary policy,
use of common resources to
provide direct support to banks
and growth-friendly policies
where fiscally possible.
Lagarde said fiscal stability
meant governments in advanced
economies should outline
credible medium-term plans to
lower public debt. Without such a
plan, countries might be forced to
make bigger adjustments sooner,
she cautioned.
Developing economies were
holding up relatively well, she
said, but could face a cold chill
if global conditions worsened.
6
ECONOMIC CRISIS
cityam.com
Christine Lagarde suggested states look to new taxes such as carbon levies to cut deficits
7
ECONOMIC CRISIS
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DONATIONS
Spain
-2.5%
Portugal
-11.4%
Italy
-9.2%
Greece
-11.3%
Heathrow
Total Passenger
Trafc is 5.8m
down 0.6%
Cargo Trafc
down 3.8%
* all gures are like-for-like,
compared to May last year
TRAFFIC TO AT-RISK EUROZONE COUNTRIES IS DOWN
BAA traffic figures fall as visitors
shun troubled Eurozone spots
AIRPORTS operator BAA said
yesterday the Eurozone crisis had
dented traffic numbers from UK
airports to Greece, Spain and
other European countries
suffering worsening economic
conditions.
The owner of Heathrow
Europes busiest airport
yesterday said passenger numbers
between Heathrow and Greece
dropped 11.3 per cent in May
compared with the same month a
year ago, with numbers to and
from Italy falling 9.2 per cent,
Portugal 11.4 per cent and Spain
2.5 per cent.
The impact of the Eurozone
crisis is still being felt with sharp
falls in passenger numbers to the
worst affected countries and
reduced cargo traffic, said BAAs
chief executive Colin Matthews.
BAA, owned by Spanish
infrastructure group Ferrovial,
said cargo traffic a key indicator
of economic health fell 2.4 per
cent across its airports last
month. Cargo traffic at Heathrow
was down 3.8 per cent.
Both [cargo] figures are likely to
be a reflection of the continued
economic problems, particularly in
the Eurozone, added Matthews.
Traffic at airports operated by
BAA fell 0.1 per cent in May,
compared with the same month in
2011, reflecting last years late
Easter and royal wedding which
boosted traffic in May 2011. The
late May bank holiday into June
this year also reduced last month
traffic figures, it said.
BAA said 5.8m passengers passed
through Heathrow last month, 0.6
per cent down on last May.
I
OWN a satnav. It used to be my
pride and joy, but now sits in the
boot of my car, while my wife calls
out directions to me from her
iPhone. Soon, according to Apples
announcement on Monday, I could
simply replace my wife with an iPad
and have Siri call out every turn
instead. Thats an upgrade too far for
me, but in a world where technology
moves so fast, satnav manufacturers
are clearly in a tight spot. Garmin,
one of the market leaders, saw its
share price fall to the lowest level of
the year to date on the news.
Yet is all lost in the fiercely
competitive personal navigation
device (PND) sector? Yesterday,
Garmins rival TomTom rose 16 per
cent on the announcement that
Apple will be licensing maps and
related information from the GPS
navigation firm.
When your sector is being turned
upside down, it makes sense to hitch
a ride with the innovators. With 48.9
per cent of the UK population
owning a smartphone by 25 January
this year, according to Kantar
Worldpanel, it is the platform to be
on. TomTom has been aware of this
for years, teaming up with HTC in
2010, and announcing that
Samsungs Wave3 Bada smartphone
would use its maps earlier this year.
Nor is it alone: Garmin-Asus
announced its partnership to make
smartphones with built-in satnav as
far back as 2009. And Apples
willingness to bite proves just how
much value it sees the satnav firm
bringing to this deal, enough to
tempt a tech behemoth out of taking
such services completely in-house.
Thats possible because satellite
navigation isnt just about gadgetry:
it also relies on supplying very large,
very accurate datasets that are
challenging to compile and
maintain. TomTom added to this
natural advantage when it spent
2.9bn buying Tele Atlas in 2008,
which used to supply UK maps to
Google until late 2011. Apple has
given the push-off to Google,
unsurprisingly keen to get out of its
competitors bed, but TomToms
astute acquisition has allowed Apple
to buy access to the next best thing.
Yet Apple has other sources of
maps than TomTom and this deal
cant solve all of its problems. This
April, the Dutch company posted
first quarter results with revenues
down 12 per cent year-on-year. It also
highlighted the shrinking market for
dedicated satnavs: the European
market was 2m units compared to
2.4m units in the same quarter of
2011, while the US market size fell
from 2.1m to 1.4m quarter-to-quarter.
That matters, because TomTom
still relies on the declining
consumer market for more than half
its revenue. The deal with Apple will
boost licensing revenue, but it is also
likely to cannibalise sales of the
companys own iPhone app.
Satnavs are a brilliant invention,
and those licensing the software and
map data at the technologys heart
will remain in demand. But not
dedicated devices. My car has a built-
in cassette player and a personal
navigation device in the boot but
its the iPhone in my wifes hand
that plays music as we drive and
points out what exit to take next.
Marc Sidwell is City A.M.s managing
editor
BOTTOM
LINE
MARC SIDWELL
cityam.com
8
NEWS
A smart acquisition pays off as satnav market shrinks
TomTom plots path
to profit with Apple
TOMTOMS shares climbed by 16 per
cent to 3.80 yesterday after Apple
unveiled a deal with the satellite
navigation systems firm.
The shares, down almost 40 per
cent over the past year, jumped to
their highest level since February.
On Monday, Apple announced it
was replacing old maps partner
Google with its own software.
The Dutch company confirmed it
BY LAUREN DAVIDSON will supply the tech giant with
maps and related information.
The deal between TomTom and
Apple is a big boost for TomTom
given its ambitions, SNS Securities
said in a research note.
But the analyst said it was hard to
put a value on the deal for TomTom
as the fee will largely depend on
advertising revenue and perhaps a
nominal fee per map. Apple has
acquired a string of mapping
software companies in recent years.
Anthony Boltons $750m China
fund has lost a fifth of its value
ANTHONY Boltons Fidelity China
Special Situations fund has lost a
fifth of its value since its launch in
Asia in 2010, lagging the wider
Chinese stock market, it was
revealed in an annual report
yesterday.
Bolton, one of the UKs best
known and most successful fund
managers, said in the report that he
continued to believe his strategy
was capable of beating the Chinese
benchmark index, despite
struggling so far.
The fund has suffered from heavy
exposure to poorly performing
small and mid-cap stocks, according
to the report. Since its launch in
April 2010, the $750m China funds
net asset value has fallen by 20 per
cent to 11 June, lower than a 17 per
cent drop in the MSCI China Index.
Earlier this year Bolton decided to
run the fund for at least two more
years, giving himself more time to
turn around its poor performance.
To date the road has been hard
but my enthusiasm for this
amazing country remains
unabated...I strongly believe that
China is not the house of cards
some have suggested and it is not
about to collapse, Bolton said.
Specifically on Chinese stocks,
valuations are still near their ten-
year lows and sentiment has again
become very negative.
BY HARRY BANKS
MOBILE banking embarks on a new
trajectory today with the launch of
GetCash, the first service that allows
money to be withdrawn from a cash
machine without the use of a debit
card.
From today, RBS or NatWest cus-
tomers who use their banks mobile
app will be able to take cash out of an
ATM using a unique six digit pin
number generated on their phone.
This has never been done anywhere
in the UK, yet it is a simple and secure
way to help our customers get cash
whenever and wherever they need it,
said Ben Green, head of mobile at
NatWest and RBS.
He continued: Weve heard count-
less stories from customers whove
left their wallet behind, or parents
who need a quick way to send money
across to their children immediately
GetCash means these problems have
been solved in a totally secure and
painless way.
GetCash is the latest feature to be
updated on the banks mobile app,
which allows the user to transfer
No card wont
mean no cash
with new app
BY LAUREN DAVIDSON
money, check balances and set text
alerts among other services.
Already downloaded by more than
2.6m people, the app has facilitated
over 776m worth of payments and
transferred in excess of 4bn.
The increasing availability of cash via
mobile services has led to criticisms
that banks are neglecting customer
security in favour of industry competi-
tive technology.
But an RBS spokesperson said most
customers have higher security on
their mobile phones which often
need a password to access the phone
itself before any of the apps can be
opened than debit cards, which are
protected by just a four-digit pin num-
ber.
Up to 100 can be withdrawn per
unique code, which remains valid for
three hours, but there is no limit on
the number of codes a customer can
generate each day.
RBS and NatWest said GetCash is just
the latest in a range of mobile develop-
ments this year which will propel the
banks towards providing the first
genuine alternative to a customers
wallet through their mobile phone.
RETAIL giant Sainsburys yesterday
took its first step into the ebook
market, taking on the likes of
Amazon and WH Smith with the
purchase of a majority stake in
digital books platform Anobii.
The supermarket paid a nominal
1 for struggling music vendor
HMVs stake in the online books
retailer and expects to hold a 64
per cent stake in Anobii, joining
current shareholders Penguin,
HarperCollins and Random House.
Anobii is an online ebooks
platform which enables readers to
research and purchase titles on a
Sainsburys sizes up to Amazon
with ebook platform purchase
BY LAUREN DAVIDSON range of devices including e-
readers, smartphones and tablets.
The service, which currently has
over 600,000 global users, doubles
as a social network.
Sainsburys announcement
comes just one month after
Microsoft unveiled a partnership
with US bookstore Barnes & Noble
and its Nook ereader.
The tech behemoth paid $300m
for 17.6 per cent of the new firm.
The news coincided with a
trading update from Kobo, the WH
Smith-backed ereader, which said
ebook downloads grew by 400 per
cent and device sales were up by
160 per cent over the last year.
9
NEWS
cityam.com
Anobiis other shareholders include Penguin, HarperCollins and Random House
BRITISH fashion chain Ted Baker
appeared to be unswayed by the wet
weather and the tough consumer
backdrop as it posted a 16.2 per cent
revenue rise for the last 19 weeks.
The chain increased its trading
space by 12 per cent, following the
opening of a new store on Londons
Brompton Road last weekend,
themed to the 1851 Great Exhibition.
Ted Baker did not disclose a like-for-
like sales figure, but its space growth
implies sales of around 4.2 per cent,
analysts at Seymour Pierce estimated.
Expansion lifts
Ted Baker sales
BY KASMIRA JEFFORD
THE PRIVATE equity arm of Lloyds
Banking Group is in talks to buy a
chunk of ailing retailer HMV.
Lloyds Development Capital is
interested in several artist
management firms and
entertainment venues that are part
of HMV Live.
HMV, which earlier this month
offloaded the Hammersmith Apollo,
is considering a break up of its live
entertainment business as it
struggles to drum up interest from
bidders for its festivals arm. HMV
and LDC declined to comment.
Lloyds chases
HMV live arm
BY PETER EDWARDS
COALITION tensions will rise further
today as Liberal Democrats abstain
in a parliamentary vote on whether
culture secretary Jeremy Hunt
should be referred to the ministerial
watchdog.
Lib Dem MPs agreed to stay out of
the vote, which has been called by
Labour in an attempt to force an
investigation by Sir Alex Allan, the
Prime Ministers adviser on
ministerial interests, into Hunts
comments in the Commons over
BSkyB.
It comes after Labour leader Ed
Miliband and former Prime
Minister Sir John Major both lashed
out at Rupert Murdochs media
empire at the Leveson inquiry.
Major claimed Murdoch asked
him to change the governments
Europe policy or his papers would
not back him in the 1997 election a
seeming contradiction of Murdochs
statement under oath that he has
never asked a Prime Minister for
anything.
Major said Murdochs claim was
literally true in the context of
personal or commercial benefits. He
also called the sheer scale of
[Murdochs] influence an
unattractive facet of British
national life.
Miliband accused News
International of exhibiting a sense
of power without responsibility.
Lib Dems will
not back Hunt
in key vote
BY PETER EDWARDS
AND LAUREN DAVIDSON
SHAREHOLDERS at systemically
important banks should do more to
clamp down on risky behaviour by
executives, an influential backbench
MP claimed yesterday.
Top banks benefit from an implicit
guarantee from the government, as
investors believe they will be bailed
out should they get into financial
trouble a guarantee the Bank of
England believes was worth up to
220bn in 2009 and 2010 alone,
though this figure is disputed.
Treasury Select
Committee (TSC) chair-
man Andrew Tyrie
told City A.M. that
the way in which
executive pay is
determined does
not properly
reflect this state
support.
Corporate gov-
ernance is crucial
for the long-
r u n
health
Tyrie: Top bank
pay promotes
excessive risks
BY TIM WALLACE
of the industry and the economy, and
clearly we dont have it right at the
moment.
Shareholders who invest in firms
which carry an implicit guarantee
arguably carry some responsibility to
make sure effective corporate gover-
nance is exercised over the remunera-
tion structure to make sure it does not
incentivise excessive risk-taking.
For example, basing bonuses on the
return on equity at a bank may look
like a results-driven process, but it
encourages execs to take on debts that
could backfire in the long run.
His comments come as business sec-
retary Vince Cable re-examines his
plans to reform executive pay rules.
The TSC also heard from Lloyds
remuneration committees
Anthony Watson that not all share-
holders look out for firms long-
term interests including pension
fund managers who behave like
traders, looking to make gains on
stocks.
JP MORGANS recent trading losses
are an isolated incident and the
bank is expected to be solidly
profitable in the second quarter,
chief executive Jamie Dimon will
tell the US Senate Banking
Committee today.
Dimon will tell the committee
the bank feels terrible about the
trading debacle, while emphasising
the losses will only hurt
shareholders, not taxpayers, and
the bank maintains a fortress
balance sheet, according to his
prepared testimony.
While we can never say we
Dimon set to say sorry for JP
Morgans $2bn trading losses
BY HARRY BANKS won't make mistakes in fact, we
know we will we do believe this to
be an isolated event, Dimon will
say according to his testimony
released by the bank last night.
Last month, JP Morgan
announced that a hedging strategy
had gone awry and produced at
least $2bn in unexpected trading
losses.
Dimon in his prepared testimony
did not provide an updated
estimate for the losses.
Dimon is contrite in his
testimony and says the bank did
not have proper risk protections in
place in the chief investment office
where the losses occurred.
10
NEWS
cityam.com
JP Morgan chief Jamie Dimon will tell the Senate his bank regrets the trading losses
Andrew Tyrie fears state support is
not reflected in pay packets
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ends Sunday
INSTITUTIONAL investors are taking
an increasingly active role in the
firms in which they invest, accord-
ing to new research that shows the
changes in attitude that paved the
way for the shareholder spring.
Investors are more likely than ever
to demand firms provide clarity on
long-term strategy and redraft exec-
utive pay deals to incentivise good
performance, according to a report
published today by the Investment
Management Association (IMA).
Liz Murrall, director of corporate
governance at the IMA, told City
A.M.: Numerous studies show that
good governance delivers good
returns over the long term. Few peo-
ple want to invest long-term in a
badly governed company.
Clients are expecting more of
their fund managers. But managers
already were quite active. Were
establishing a benchmark.
The IMAs report includes respons-
es from 58 asset managers who
manage 774bn of UK equities rep-
resenting almost half of the UK mar-
Shareholder
activism is set
to grow further
BY JAMES WATERSON
ket. Their responses were judged
against the Financial Reporting
Councils (FRC) stewardship code for
investors.
It reveals that the resources com-
mitted to corporate governance
increased by four per cent in 2011,
with an average of 19 staff employed
to deal with financial stewardship at
each institutional investor.
In addition, it shows that the num-
ber of institutional investors who
exercised their voting rights on all
UK shares increased from 81 per cent
in 2010 to 86 per cent last year.
There has also been a substantial
jump in the number of institutional
investors who make their voting
record public.
But the IMA found that investors
voting record on overseas shares
remains poor.
The report is based on responses
from 83 institutions covering the
period up to 30 September last year.
Since then five firms remuneration
reports have been defeated in the
shareholder spring while Andrew
Moss, the chief executive of Aviva,
stepped down after shareholders
voted against the pay report.
BRITISH insurers face big claims
for flooding after the heavy
rainfalls across the country this
month, making it harder for them
to hit profit targets and
potentially forcing them to raise
premium rates for consumers,
analysts said yesterday.
Hundreds of people were
evacuated in west Wales at the
weekend after floods swamped
caravan parks and homes, and
scores more were hit by smaller
inundations in parts of England,
according to media reports.
More flooding is expected amid
Insurers face hit from floods as
severe weather sweeps the UK
BY CITY A.M. REPORTER forecasts for continued rain, with
39 flood alerts in force across
England and Wales as of last night,
the Environment Agency said.
Some insurers could miss their
underwriting profit targets for
the year because of a surge in
flood-related claims, said Oriel
Securities analyst Marcus Barnard.
The recent rain and associated
flooding are likely to lead to
significant claims for UK insurers,"
Barnard wrote, estimating that the
industrys overall combined ratio
of costs and claims to revenue
could deteriorate by three to six
percentage points.
viva and RSA, Britain's biggest
GLOBAL Radio is thought to have
tabled the largest bid at around
50m for Guardian Media Groups
radio business.
It is understood that three
offers have been submitted for
GMGs radio arm, which was
reported in the companys
financial results last year as being
worth almost 119m.
Global Radio is the largest
commercial radio operator in the
UK and owns the Capital, Heart
and Classic FM brands.
50m offer for
Guardian radio
BY LAUREN DAVIDSON
THE GOVERNMENT of the Falklands
said yesterday it will hold a
referendum next year to eliminate
any possible doubt about the
islanders wishes to remain British in
the face of Argentinas sovereignty
claims.
Britain will respect and defend
their choice, said Prime Minister
David Cameron in a statement.
Britain and Argentina in 1982
went to war over the South Atlantic
islands, and 30 years later tensions
have escalated between the two
nations.
Referendum
for Falklands
12
NEWS
cityam.com
NOBEL LAUREATE OSTROM DIES AGED 78
Elinor Ostrom, a
professor at Indiana
University who was
the first woman to
win the Nobel Prize
for economics, died
yesterday from
cancer, the
university said. She
was 78. Ostrom
received the 2009
Nobel Prize in
Economic Sciences
for research on the
ways that people
organise
themselves to
manage resources.
IN BRIEF
Remy Cointreau pays special divi
n Remy Cointreau, the French spirit
group, said yesterday that it would hand
investors a special dividend for the second
year running after booming demand for its
premium cognac in Asia lifted full-year
profits. The group, famous for making
Remy Martin cognac and Cointreau liqueur,
said it was confident it could generate
steady and profitable growth.
ENRC pledges more transparency
n ENRC investors approved all resolutions
at the mining groups shareholder meeting
yesterday, as the firm promised a simpler
and more transparent structure. New
chairman Mehmet Dalman said this would
include streamlining an African structure
that has ENRC controlling its operations
through several holding companies with
shareholders who are not fully disclosed.
13
NEWS
cityam.com
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Olympic Games has spent the
whole year with scores above 30, ris-
ing slowly to 50 now.
It is, somewhat unsurprisingly,
the most noticed event this year by
a long way and has almost consis-
tently been the leading event.
However, it has occasionally been
overtaken by other events in the
sporting calendar that have their
brief moment.
OTHER SPORTS CANT COMPETE
At the end of April, for example, it
was overtaken for a few days first the
Grand National (peaking at 57) and
then the London Marathon (peaking
at 50) before dropping back to their
more general level of 10-20 once the
events has passed.
Now is the turn of Euro 2012. With
the gain beginning mid-May it has
had a longer build up than either of
the other two events, but has yet to
get as high as they did or overtake
the Olympics.
EURO 2012 WILL GATHER PACE
Its trajectory is positive though and
sponsors will hope it gathers pace
before the tournament ends, more
likely if England can progress to the
later stages. Olympic sponsors will
be encouraged by its high base level.
HOW HIGH CAN THE OLYMPICS GO
It will be interesting to see how high
attention on the Olympics can go
over the next few weeks as the build
up to the event grows and it even-
BRAND
INDEX
STEPHAN SHAKESPEARE
Sporting success as Olympic interest heads for gold ahead of Games
I
T is not just the competitors who
look for success at sporting
events. Both Euro 2012 and the
London Olympics have
numerous high profile sponsors
who will be desperate to gain
traction from their association.
But before they can do that, they
need consumers to be engaging with
those events.
YouGovs SportsIndex works in a
similar way to BrandIndex, tracking
public perception of major sporting
events and competitions over time.
Today Ive focussed on attention
whether people have heard anything
(good or bad) about the event recent-
ly.
OLYMPIC INTEREST IS HIGH
The first chart shows how the 2012
tually takes place.
It will also be interesting to gauge
what the impact is on the percep-
tion of those brands that have been
associated with it.
Stephan Shakespeare is chief executive of
YouGov
EURO 2012
Jan Feb Mar Apr May Jun
20
10
30
40
50
60
2012SummerOlympicGames
UEFAEuro2012
Marathon and Grand National
Jan Feb Mar Apr May Jun
20
0
10
30
40
50
70
60
2012SummerOlympicGames
GrandNational
LondonMarathon
The new
jobs website
for London
professionals
The new
jobs website
for London
professionals
C
I
T
Y
A
M
C
A
R
E
E
R
S
.
c
o
m
The BBCs Emily Maitlis was the compere for the Extel awards
Andrew Wood wins analyst of the year
UBS triumphs
in latest Extel
awards survey
Got A Story? Email
thecapitalist@cityam.com
14
cityam.com
cityam.com/the-capitalist
THECAPITALIST
Slideshow Gallery Map Trip details
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See
notes
T
HEY call them the Oscars of the
City and yesterday the BBCs
presenter Emily Maitlis
compered the 39th annual
Thomson Reuters Extel survey,
celebrating the Citys top performing
professionals.
Most notably, perhaps, Swiss bank
UBS won the award for the leading
pan-European brokerage firm for
equity and equity-linked research for
the twelfth year in a row. The win
means that UBS has now exceeded a
record of 11 wins by James Capel,
which is now part of HSBC.
Andrew Wood of Sanford C
Bernstein, who is a former City A.M.
awards winner, was given the title of
top equity analyst of the year for the
seventh time in eight years, despite
being based first in New York and
since last year in Singapore.
Sanofi won the award for the best
company for investor relations,
becoming the first ever French-based
winner, and breaking the run of five
different German companies winning
this category in the last five years.
Bank of America Merrill Lynch won
sector team of the year for its chemi-
cals coverage.
More than 450 people packed into
the Citys Guildhall for the event at
which presenters included Greg
Barker, the minister for energy and
climate change and Helena Morrissey,
the chief executive of Newton
Investment Management.
STANDARD Chartered, the
emerging markets bank that has
been advised on its financial public
relations for the past 10 years by
Roland Rudds RLM Finsbury, is
looking for a change.
RLM Finsbury has been put on
notice, a Standard Chartered
spokesman says, and the bank is
interviewing a host of public
relations groups to see if they can
better serve its needs.
RLM Finsbury is still in the mix
but the firm, which probably
wont be overly bothered since it
has 25 of the FTSE 100 as its
clients, is unlikely to get the
mandate, sources close to the
process say. A source close to
Standard, whose chief executive is
Peter Sands
(pictured),
says it
decided it is
good practice
to put the
mandate up
for review
after a such a
long period
with one
adviser.
StanChart to
start review of
public relations
NEARLY a third of shareholders
rebelled over pay at electronic parts
distributor Premier Farnell yesterday
amid concerns about directors
performance targets.
The firm said 32.1 per cent of its
shareholders voted against the
remuneration report at its annual
general meeting.
Investors expressed frustration
over the use of two six-monthly
performance targets for the 2012-13
financial year. The criteria were
designed to reflect the lack of
visibility over future sales, with more
than 99 per cent of orders having to
be satisfied within 24 hours.
The vote comes amid falling
profits at Premier Farnell, whose
chief executive Harriet Green is to
move to Thomas Cook in July.
Premier said no bonuses were paid
to directors in the year and said it
would contact investors who voted
against the pay report.
Shares in the FTSE 250-listed firm
closed down 1.8 per cent at 156.4p,
down from a 220p peak at the start
of May.
Premier Farnell
investors hit
out at exec pay
BY PETER EDWARDS
G
E
T
T
Y
BRITISH pharmaceutical giant
GlaxoSmithKline (GSK) yesterday
announced that it has bought the
rights to a new anti-eczema drug
from Swiss firm Basilea for an initial
146m.
Basilea will also receive additional
payments of up to 50m if the drug
is approved for use in the United
States, as well as a substantial cut of
future US sales. The news pushed
Basileas share price up by four per
cent.
The medicine, named Toctino, is
the only prescription drug specifical-
ly approved for adults with chronic
hand eczema whose ailment does
not respond to steroids applied to the
skin.
Its 2011 worldwide sales were 22m
but analysts suggest its peak global
GSK buys new
eczema drug
in 146m deal
BY JAMES WATERSON
sales could reach as much as $200m
(128m).
This acquisition gives us an imme-
diate opportunity to develop and
expand the availability of this new
and innovative product, said Simon
Jose, president of GSK subsidiary
Stiefel.
Shares in GSK closed yesterday up
0.8 per cent at 14.51.
UK LEISURE INDUSTRY
Nasdaq executive to join LSE
LONDON Stock Exchange (LSE) said
yesterday that David Warren will
jump ship from Nasdaq to become
its new finance chief, as it unveiled
a management shake-up designed
to diversify the company beyond its
share trading business into data,
technology and clearing.
Warren, who holds the
equivalent role at US exchange
Nasdaq, will replace Doug Webb at
the start of July.
Xavier Rolet, chief executive of
the LSE, said: With our sights
firmly set on becoming the worlds
leading diversified exchange
group, I am delighted that David
Warren will be joining the
BY JAMES WATERSON
company. Davids international
expertise will be a real asset to
the group.
The LSE also announced the
creation of a new position of
chief executive for the groups
London Stock Exchange PLC
subsidiary.
Former JP Morgan
banker Alexander
Justham, who has
also served as
director of markets
at the Financial
Services Authority,
has been
appointed to
the new
position.
He will be
responsible for group-wide
regulatory strategy and public
affairs.
Elsewhere chief information
officer Antoine Shagoury has
been made the groups chief
operating officer and group
director of information services.
David Lester has gained an
additional role as group director
of strategic development.
Rolet is pursing a strategy of
diversification and earlier this
year gained shareholder
permission to buy a majority
share in clearing house
LCH.Clearnet.
David Warren is the LSEs
new finance chief
BUSINESS in Sport & Leisure,
whose 70 members span the
gaming to tourism industries, has
urged the government to help
unlock 440,000 potential jobs in
the sector by cutting VAT and
introducing initiatives to kick-start
growth.
In a report published yesterday
outlining the impact of leisure on
the economy, BISL revealed that
the industry provides 2.6m jobs,
representing nine per cent of the
workforce.
The sector also employs more
than one in five 16-25 year olds
more than the manufacturing,
construction and financial services
sectors combined while low-
skilled and part time workers also
benefit heavily.
But the industry says the
15
NEWS
cityam.com
GLOBAL BUSINESSES
RECRUITING LONDONS
BEST PROFESSIONALS
YOUR FUTURE IS OUR BUSINESS
CITYAMCAREERS.com
WWW.CITYAMCAREERS.COM
OVER
OR SCAN HERE
4000
SALARIES UP TO
JOBS
300K
Leisure industry bosses urge
plans to cut tax and lift jobs
BY KASMIRA JEFFORD government has slapped it with
extra taxes and regulations
costing 3.2bn since 2010 a
figure estimated to rise to
3.9bn by 2014. The BISL calls
on the government to take its
foot off the brakes and cut the
20 per cent VAT rate on hotels
and attractions to five per cent.
With the right government
support we believe the industry
could create a further 440,000
jobs by 2020, Simon Johnson,
chief executive of BISL said.
GlaxoSmithKline PLC
11 Jun 12Jun 6Jun 7Jun 8Jun
1,415
1,460
1,455
1,450
1,445
1,440
1,435
1,430
1,425
1,420
p
1,451.50
12Jun
200bn
revenue generated
each year
2.6m
jobs = 9pc of
UK workforce
44%
management
roles held by
women
employs more than one in
five of all 16-25 year olds
potential to create
440,000 jobs by 2020
GERMAN carmaker BMW delivered
yet another boost the UK auto
industry yesterday, saying that the
engines for its new hybrid sport
model will be built at a factory
near Birmingham.
The i8 petrol-electric car will go
on sale at the end of next year,
with a three-cylinder petrol engine
to extend its capacity beyond what
is possible with a plug-in hybrid
battery. The engines will be
manufactured at BMWs Hams
BMW will build engines for new
hybrid sports car at UK factory
BY ELIZABETH FOURNIER Hall factory in North
Warwickshire, with the body
assembled at the companys
facilities in Leipzig.
BMW announced its plans at the
Society of Motor Manufacturers
and Traders (SMMT) annual
conference at Canary Wharf
yesterday.
In a speech at the conference,
business secretary Vince Cable
cheered the UK automotive
industry, saying it had attracted
said 5.5bn of investment in the
last 18 months.
The BMW i8 plug-in hybrid sports car will go on sale next year
CHINA yesterday threatened to
impound European planes if its own
aircraft are seized, in the latest tit-
for-tat over the EUs unpopular car-
bon emission tax.
Chinese airlines, at the behest of
Beijing, have refused to hand over
data on their carbon emissions by
Europes 31 March deadline.
And now authorities have warned
they could hold up European flights
if the EU tries to punish them for the
breach.
EU climate commissioner Connie
Hedegaard has said the carriers have
until the end of this week to submit
their data or face enforcement
action such as fines or impounding
aircraft.
Chinese airlines are unanimous
on this. We wont provide the data,
said Wei Zhenzhong, secretary gen-
eral of the China Air Transport
Association, on the sidelines of an
International Air Transport
Association (IATA) meeting in
Beijing.
Wei said China would try to avoid
China threatens
to seize planes
in EU tax row
BY MARION DAKERS
any trade war, but is prepared to
retaliate if its state carriers Air
China, China Southern Airlines and
China Eastern Airlines are
penalised.
The country has already delayed an
estimated $14bn of plane orders in
protest at the carbon scheme,
prompting airlines of all stripes to
ask Europe to delay the introduction
of the cap-and-trade programme.
China has been the most vociferous
critic of the plans to tax polluting
carriers, but the US, India and Russia
have also hit out at Europes plans.
The EU set out in 2009 a scheme to
force the aviation sector to monitor
and pay tax on carbon emissions by
2012. Firms would be able to trade
surplus emissions allowances from
2013 under the current schedule.
But at a time when airlines around
the world are battling with soaring
fuel costs and dwindling traffic
growth, China has asked Europe to
push back the start date by a year.
The EU has said it is prepared to
withdraw the plan if other countries
can come up a suitable global alter-
native.
16
NEWS
cityam.com
DEVELOPER UK & European has secured John Laing as a tenant at its One Kingsway
estate in Londons Midtown. The PFI specialist has taken two office floors at around
25,000 square feet on a 15-year lease. It joins Tate & Lyle, which agreed to take the top
two floors of the building at Aldwych, and the Wolseleys sister restaurant the Delaunay.
JOHN LAING MOVES INTO KINGSWAY ESTATE
THE BOARD of troubled exchange
operator Plus Markets yesterday
urged shareholders to reject an
attempt to oust the firms chief
executive and chairman.
Irate investors tabled the AGM
motions after becoming
exasperated with the directors
handling of the proposal to sell the
firms stock exchange unit to broker
ICAP for a nominal fee.
But shareholders in Plus Markets
have now received a letter from the
board asking them to vote in favour
of keeping the chief executive Cyril
Thret and chairman Malcolm
Basing in their positions.
Sadly, we have not been able to
realise fully a successful
turnaround, Thret wrote.
It is the boards view that
continuity in the leadership and
executive management of the
company is imperative. I am
therefore seeking to continue to
fulfil my fiduciary duties.
The letter was sent out ahead of
the companys annual meeting,
which takes place on 29 June.
But the controversial ICAP
takeover will be settled at an EGM
on 18 June.
Activist investor Simon Chapman,
who put forward the motions, has
previously told City A.M. that Plus
rejected his attempt to hold the
votes at the earlier EGM.
Plus Markets
asks investors
to back board
BY LISA MORAVEC
IN BRIEF
Small firms fear US slowdown
nJob creation remains weak in the
US, undermining hopes that the
economy is recovering strongly
according to a survey published
yesterday by small business
organisation NFIB. Only seven per
cent of small businesses think that
now is a good time to expand their
facilities, and increasing numbers are
reducing inventory holdings rather
than increasing them because of the
negative outlook for sales growth. The
surveys overall small business
optimism index slipped 0.1 percentage
points to 94.4, with fewer firms
expecting sales to outpace inflation.
Consultation on tax abuse rule
nThe government yesterday
launched a consultation on plans for a
general anti-avoidance rule (GAAR)
intended to clamp down on what it
sees as artificial and abusive
avoidance schemes. The GAAR is
expected to apply to main direct
taxes, like income tax, corporation tax
and national insurance, as well as
stamp duty land tax and potentially
inheritance tax. The aim is also to
minimise the impact on the vast
majority of taxpayers who pay a fair
share, said minister David Gauke.
Insurers bolster property loans
nThe volume of new property loans
in Britain is set to balloon to 50bn a
year by 2016, as more insurers enter
the real estate lending market,
according to research by property
consultancy Savills. The new loan
market will rise from the 27.5bn seen
last year, in large part thanks to the
likes of AXA, Met Life and the Bank of
China accumulating cash piles large
enough to offer big loans. Savills also
predicted that interest in the regions
will start to return, after years of
cautious real estate investors sticking
to the safe haven of prime London
property.
G
E
T
T
Y
THE ECONOMY is flat-lining and will
not return to pre-recession levels of
output until 2014, according to a
forecast out yesterday from the
National Institute for Economic and
Social Research (NIESR).
It estimated that the economy
grew 0.1 per cent in the three
months to May, reversing the 0.1 per
cent decline in the three months to
April.
That suggests the recession is over,
and the economy is expanding very
slowly, but shows growth hovering
around the zero mark the zig
zag of a weak and volatile economy
predicted by the Bank of England in
February.
However, NIESR only recorded
growth in the services sector its
output index rose from 99.1 to 99.2
in the three months, using 2008 as
the base year 100.
Meanwhile the industrial sector
Britain is set to
face two more
years in slump
BY TIM WALLACE
dropped from 90.2 to 90 per cent of
its 2008 level, agricultural produc-
tion slipped from 78.8 to 78.7 per
cent, and construction from 92.5 to
91.2 per cent of its pre-recession level.
The UK economy has ceased to
contract, but economic activity
remains very weak, said the think
tank.
We expect the UK economy to
remain broadly flat over the next
six months. While significant down-
side risks persist, we expect econom-
ic recovery to begin to take hold in
2013.
However, output remains more
than four per cent below its pre-
recession peak in 2008, meaning the
economy is still in a depression.
The institute does not expect eco-
nomic output to rise above that 2008
peak for another two years, even
though the current prolonged
depression has already lasted longer
than any other major slump of the
last century.
NIESR says the UK faces another two years of depression
0 6 12 18 24 30 36 42 48 54
6
4
2
0
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-4
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-8
%
G
D
P
: c
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e
f
r
o
m
p
e
a
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months from start of recession
1990-1993
1973-1976
1930-1934
1979-1983
2008
DEVELOPING countries should
brace for a long period of
financial market volatility and
weaker growth as tensions rise
over a worsening Eurozone debt
crisis, the World Bank warned
yesterday.
The report said developing
nations should prepare for
tougher times by reducing short-
term debt, cutting budget deficits
and moving to a more neutral
monetary stance so that policies
can be loosened quickly if needed.
Global capital market and
investor sentiment are likely to
Eurozone crisis hits developing
economies, warns World Bank
BY HARRY BANKS
remain volatile over the medium
term making economic policy
setting difficult, said Hans
Timmer, director of development
prospects at the World Bank.
He said policymakers in
developing countries should
move away from fire fighting to
strengthen underlying growth
potential by focusing on reforms
and infrastructure investment
instead of reacting to day-to-day
events in the world economy.
The Global Economic Prospects
report forecast that growth in
developing countries is likely to
slow to 5.3 per cent in 2012 from
6.1 per cent last year.
17
NEWS
cityam.com
World Bank official Hans Timmer says emerging economies should spend on infrastructure
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UK becomes nation of renters
as young adults fail to save
YOUNG people in the UK are
increasingly relying on their
parents to help them onto the
property ladder, an industry
survey revealed yesterday, as the
financial crisis and their own
failure to save holds them back.
Half of 20 to 45 year olds think
Britain will become a nation of
renters within a generation, and
24 per cent of parents have had
their children move back home
as adults due to the current
market, according to research
from Halifax.
Although 75 per cent of non-
owners do want to buy a house,
just 14 per cent are actively
saving towards a deposit and 80
per cent admit to spending
money which they could be
putting towards a house.
Parental support does not stop
when children fly the nest 26
per cent of parents contributed
to a deposit and 19 per cent
expect to in the future, while six
per cent contribute to monthly
mortgage payments.
Such increasing reliance on
the bank of mum and dad has
left a third of parents concerned
for their own financial future.
Parents think that their kids
could make cutbacks on holidays
and going out in order to save for
a deposit, said Halifax.
BY WILLIAM ORR
VOICE OF THE CITY
PoliticsHome.com PoliticsHome.com In association with
Apply to join today at WWW.CITYAM.COM/PANEL
T
HIS week were asking our Voice of the City
panel, run in association with
PoliticsHome.com, to give us their opinion on
last weekends Spanish bailout.
We want to know whether members of our panel
made up of business and finance professionals
across the City think Europe was right to provide
Spain with a 100bn loan to prop up its ailing bank-
ing sector, and whether the money will be enough
to make a difference.
To have your say in this and future polls, apply to
join the panel at cityam.com/panel.
IN BRIEF
BNP Paribas mulls Egypt exit
n BNP Paribas, France's biggest
listed bank, is planning a sale of its
retail banking operations in Egypt as
the lender seeks to shore up its capital
base and exit non-core operations,
two banking sources said yesterday.
BNP, which has around 70 branches in
the North African country, may raise
as much as 260m if the sale goes
through.
Workspace cheers London boom
nWorkspace Group, the London-
based firm that provides office space
to start ups, reported better-than-
expected results as its focus on the
capital paid off. Net asset value per
share, a key industry measure, rose
eight per cent to 3.08. Workspaces
trading profit rose 13 per cent to 16m.
Heathrow Express staff get bonus
nHeathrow Express staff have won a
bonus of up to 700 each for working
during the Olympics. Heathrow
Express said workers would receive a
bonus if there were additional
passenger volumes ad revenues occur
on specific peak days. The Unite
union said the news piled pressure on
bus firms to offer a Games bonus.
Qantas defends against bids
nQantas has tapped Macquarie
Group to defend against a possible bid
after it lost a third of its value last
week following a profit warning, a
source said yesterday. Shares in the
firm rallied more than seven per cent
following the news.
SHARES in Spirit Pub Company lost
almost six per cent yesterday despite
the firm reporting like-for-like sales
growth in its third quarter.
The pub group said it was up
against tough prior year compara-
tives when drink sales were boosted
by the warm weather and royal wed-
ding weekend.
But Spirit said it continues to sig-
nificantly outperform the market
and posted a 3.7 per cent like-for-like
sales growth for the 12 weeks to 26
May.
Drink sales were up 1.1 per cent,
while like-for-like food sales jumped
by 6.8 per cent in the period, which
reflects the ongoing evolution of
our offer across our managed
brands, the company said.
Spirits food brands include Chef &
Brewer, Taylor Walker, Fayre &
Square and Flaming Grill.
The London-listed group invested
in 21 pubs in the period, bringing its
total investment for the three quar-
ters of the financial year so far to 177
Spirits shares
drop on lack of
royal wedding
BY LAUREN DAVIDSON
sites. Spirit said it would employ a dif-
ferent strategy in this years final
quarter, concentrating on boosting
the profitability of its pubs.
Chief executive Mike Tye said: Our
focus now is on maximising sales in
our managed pubs during what
promises to be a busy summer and
stabilising performance in our leased
estate.
Income from Spirits leased pubs
sector dropped eight per cent in the
quarter. The company said it has
already disposed of 27 out of a desig-
nated 100 underperforming pubs
that it intends to sell off.
ING agrees to pay $619m fine
for violating US state sanctions
ING Bank has agreed to pay $619m
(398m) to settle US government
allegations that it violated US
sanctions against Cuba, Iran and
other countries. It was the biggest
ever fine against a bank for
sanctions violations, officials said.
US authorities said ING moved
$1.6bn illegally through banks in
the US from the early 1990s through
2007 by concealing the nature of the
transactions.
ING eliminated payment data
that would have revealed the
involvement of sanctioned countries
BY CITY A.M. REPORTER and entities, authorities have said.
The bank also told clients how to
evade computer filters designed to
prevent sanctioned entities from
gaining access to the US banking
system. And it provided US finance
services to sanctioned entities
through shell companies and misuse
of an internal ING account.
Amsterdam-based ING said in a
statement its banking unit took a
provision in the first quarter to cover
the penalty, and that it had taken
steps to improve its compliance. It
closed its representative office in
Cuba in 2007 and terminated
relationships with sanctioned banks.
ING is the fourth major bank to
settle with New York and US
authorities over stripping wire
transfer information to hide the
illegal movement of money through
banks in New York on behalf of
clients subject to US sanctions.
Credit Suisse agreed to pay $536m
in 2009 to settle charges of illegal
transactions involving Iran, Cuba
and Libya, and elsewhere. Lloyds TSB
agreed to forfeit $350m that year to
settle charges it altered records for
clients from Iran, Sudan and other
sanctioned countries.
Barclays settled similar charges in
2010 for $298m.
Chief executive Mike Tye said Spirit is focusing on its managed pubs over the summer
Spirit Pub Co PLC
11 Jun 12Jun 6Jun 7Jun 8Jun
47
48
45
46
49
50
51
52 p
45.50
12Jun
On balance, this update should be viewed as supportive rather than sig-
nicant progress. We believe the strategy to focus on maximising value
as entirely logical and still see further potential with this estate.
ANALYST VIEWS
DOES SPIRITS TRADING

UPDATE BODE WELL FOR
ITS FULL YEAR RESULTS? Interviews by Lauren Davidson
JAMES DAWSON CHARLES STANLEY
LAFARGE, the worlds biggest
cement maker, yesterday unveiled
plans to cut costs by 1.3bn
(1.04bn) over the next four years
and bring its net debt pile below
10bn as early as possible next year.
The group, whose debt totalled
12.4bn at the end of March, is
targeting savings of at least 400m
this year and at least 350m in
2013, and it plans to shun major
acquisitions until 2015.
While we anticipate a
demanding economic environment,
we are confident that the actions
we are taking will help drive sales,
cash flows and returns, said boss
Bruno Lafont.
Lafarge to cut
costs and debt
18
NEWS
cityam.com
Spirit has performed well in a tough quarter. But we are trimming our
forecast as we are marginally above consensus and the slower progress on the
leased estate probably limits the overperformance potential for the year.
PAUL HICKMAN PEEL HUNT

Trading is still on track and ahead of our consensus-in-line full year fore-
cast. With the fourth quarter offering good like-for-like trading prospects, there is
now reasonable visibility for the full year at least meeting expectations.
DOUGLAS JACK NUMIS

Bombardier stock soars on big
order from Warren Buffett firm
SHARES in Bombardier jumped
yesterday on news that the
Canadian planemaker had won
what analysts said was the biggest
business jet order in its history.
NetJets, a private jet-sharing
company owned by Warren Buffetts
Berkshire Hathaway, said it would
buy up to 425 new business jets
from Bombardier and from US
plane-maker Cessna Aircraft in a
$9.6bn (6.16bn) deal to renew its
North American and European
fleets.
Bombardiers portion of the order
is worth up to $7.3bn and includes
up to 275 of the companys
Challenger business aircraft. The
transaction comprises 100 firm
orders on two different types of
Challenger jets, and options for 175
more.
The market has been aware that
Bombardier was a contender for the
NetJets mid-size jet order, but the
magnitude of the order is likely
much larger than market
expectations, said National Bank
Financial analyst Cameron Doerksen
in a research note to clients.
Montreal-based Bombardier has
also signed a long-term service
agreement with NetJets that could
be worth an extra $2.3bn if all of
NetJets options on Bombardier
aircraft are exercised. All in, the deal
could be worth $9.6bn for
Bombardier, more than a full-years
revenue for the aerospace division.
Bombardiers shares rose as high
as C$4.02 in busy early morning
dealings on the Toronto Stock
Exchange, a gain of 10 per cent.
The surge is a welcome boost for
the stock, which was down 46 per
cent in the past year on concerns
about orders for commercial planes
and its new C-Series commercial jet.
OIL major BP has started
pumping oil from a new project
off the Gulf of Mexico coast, its
first new development to come
onstream since the Macondo
disaster in 2010 caused the largest
offshore spill in US history.
BP said yesterday the Galapagos
development started initial
production earlier in June, with
oil flowing to a nearby platform
140 miles south east of New
Orleans in water depths of 6,500
feet.
Last October, US regulators
granted BP its first permit to drill
a new well since the April 2010
disaster.
BP returns to
Gulf of Mexico
MORE British local authorities

are likely to outsource work as
government austerity forces
them to cut costs, infrastructure
and maintenance firm May
Gurney said yesterday, creating
opportunities for the private
sector.
May Gurney, which helps
maintain Britains roads, rail and
utilities services, said a need for
local authorities to address
funding gaps but protect
frontline services would create
work in areas like highways,
transport and environmental
services.
Austerity aids
May Gurney
US private equity house
Symphony has made a last-minute
99.6m offer for British logistics
firm Kewill, which provides
software to freight forwarders,
distribution firms and express
parcel groups.
Directors of Kewill, as well as
shareholders Aviva Investors,
Herald Investment Management
and Henderson Global Investors,
have backed the 106p a share cash
offer and withdrawn support for
the bid from Francisco Partners,
whose 96p a share bid was
expected to be approved in court
today.
Symphony in
bid for Kewill
BY PETER EDWARDS
19
LONDONREPORT
Bargate Murray
Alfred Merckx has been
appointed as a partner and head
of the City law firms newly
formed aviation department. He
joins from Dubai-based JetEx
Flight Support, where he was
general counsel. Merckx has
extensive experience in business
aviation and has served as a
partner at Sinclair Roche and
Thomas Cooper.
Ixaris
The electronic payments firm has named Kenneth Bonnici
as group chief financial officer, reporting to chief
executive Alex Mifsud. Bonnici has over 18 years of
experience in finance and management, and was
previously operations director at Ixaris and director for its
Malta office.
Lloyds Banking Group
Matthew Cooke has joined the banks wholesale banking
division as managing director and head of financial
institutions origination for its asset backed solutions team.
He joins from Bank of America Merrill Lynch, where he led
its European securitised products origination for five years.
Thomas Miller Investments
Andrew Herberts has been appointed deputy head of
private investment management at the asset management
firm. He was most recently investment director for Adam &
Company, and has served in investment roles at Edinburgh
Fund Managers and Scottish Widows. He also spent five
years as a commissioned officer in the British Army.
Grant Thornton
The business advisory firm has made two hires to its leasing
and consumer finance team. Peter Landers joins as a
director from HBOS, where he was head of retail sales. Phil
Gerrard also joins as a director. He has previously held
management positions at NatWest, Lombard Vehicle
Management and RBS.
CF Partners
The commodities risk trading, management and investment
firm has announced two hires. Alvaro Ventosa joins from
Cygnus Asset Management. He has also worked at Morgan
Stanley as a senior trader. Carlo Sbraccia joins from Noble
Group. He has also worked at Goldman Sachs as an energy
strategist.
Barclays
Pavel Schachkov has been appointed as a director and
private banker in the banks wealth and investment
management division. Based in London, he will focus on
the Russian market. Schachkov was previously a senior
banker in Morgan Stanleys private wealth management
division. He has also worked for UBS Securities.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
Bailout buzz is
back in the US
as stocks rise
U
S stocks took their cues
from Europes troubled debt
markets yesterday, staging a
comeback rally to end up
more than one per cent as Spanish
bond yields came off euro-era
record highs.
Trading has been choppy this
week as investors struggle for clari-
ty on whether the 100bn bailout
for Spanish banks agreed over the
weekend will be effective.
Economically sensitive sectors
that had sold off recently were the
strongest performers, suggesting
investors saw value in beaten down
shares, while traders looked for an
oversold bounce as the S&P 500
slipped back toward 1,300.
We are just being held hostage
by all the news flow, said Frank
Lesh, a futures analyst and broker
at FuturePath Trading LLC in
Chicago. I dont think anyone has
a handle on this.
Materials, financial and industri-
al shares were the biggest gainers,
up over 1.5 per cent.
Boeing led the Dow, climbing 3.4
per cent, helped by an upgrade by
Sanford C Bernstein, which said it
saw a better outlook for the compa-
ny's new Dreamliner plane.
For the week so far, the S&P is
close to flat, reflecting the uncer-
tainty in the market.
For the day the Dow Jones indus-
trial average gained 162.57 points,
or 1.31 per cent, to 12,573.80. The
Standard & Poors 500 Index rose
15.25 points, or 1.17 per cent, to
1,324.18. The Nasdaq Composite
Index added 33.34 points, or 1.19
per cent, to 2,843.07.
Trading was volatile yesterday.
Wall Street dipped earlier as yields
on Spains 10-year bond hit 6.86
percent, the highest level since the
1999 launch of the euro, pointing
to stress in the nations debt mar-
kets shortly after the bailout deal.
Investors are also staring down
the barrel of upcoming elections in
Greece. The weekend ballot is
viewed as a major risk that could
result in the country leaving the
Eurozone, but it could also spark a
rally if the outcome favors Greeces
bailout agreement with interna-
tional lenders.
Its certainly possible that we
recover all the May losses, I think
that is on the table, said Peter
Jankovskis, co-chief investment
officer at OakBrook Investments
LLC.
In corporate news, Nasdaq halted
short-sales of Zynga as shares of the
social gaming company plummeted
10.3 per cent on increased concerns
that the craze for games on
Facebook has already peaked.
Also in company news yester-
day, shares of Michael Kors
Holdings jumped 7.6 per cent to
$41.10 after the designer clothing
company reported a stronger-than-
expected fourth-quarter profit and
gave a full-year outlook that
exceeded Wall Streets forecast.
B
RITAINS top share index ended
higher yesterday after another
volatile session, recovering from
a fall in the afternoon as
Spanish bond yields hit their highest
levels of the euro era on worries about
the impact of its banking bailout.
Initial relief over an aid deal agreed
on Saturday for the countrys banks
has quickly turned to concern over how
easily Spain will be able to access debt
markets in the longer term.
Volatility was also engendered by wor-
ries over a possible Greek exit from the
Eurozone accompanied by spillover
fears for the rest of Europe if this
Sundays general election in the coun-
try returns an anti-bailout govern-
ment.
The FTSE 100 index closed up 41.37
points, or 0.8 per cent, at 5,473.74, near
the top of a 60 point trading range for
the day, in relatively thin volume of 75
per cent of the 90-day daily average.
The FTSE 100 volatility index was up
1.8 per cent yesterday, having gained
nearly four per cent in the previous ses-
sion.
Market heavyweight Vodafone
accounted for a chunk of the FTSE
100s gains, with its 2.1 per cent
advance equating to around seven
points on the index, with the mobile
telecoms firm helped by some positive
broker comment.
BofA Merrill Lynch repeated its buy
rating and 215p price target on
Vodafone saying it sees positive cata-
lysts remaining for the group in
Europe and the United States.
Precious metal miners Randgold
Resources and Fresnillo were also
among the strongest performers, up
three and 2.4 per cent respectively, as
the gold price rose above $1,600 an
ounce, with volatile markets favouring
the traditional safe-haven metal.
US blue chips were equally volatile
yesterday, opening higher after big
falls in the previous session, before dip-
ping back, and then recovering to print
a rise of around 0.9 per cent by
Londons close.
Inter-dealer broker ICAP was a top
British blue chip gainer, up 2.7 per cent
with Faraday Research seeing the firm
doing well in volatile and fluctuating
markets.
More volatility and uncertainty
would lead to more trades, which in
turn leads to more commission for the
company. Right now looks to be the
calm before the oncoming storm, said
David Lowery, equity analyst at Faraday
Research. With a potential spike in
volatility just around the corner, we
feel ICAP is perfectly placed to see earn-
ings and profits increase over and
above current forecasts.
In marked contrast to the blue chips,
and again illustrating the markets
volatility, British mid cap stocks were
sharply lower, with the FTSE 250 index
down 0.9 per cent.
Weakness in British housebuilders
was a drag on mid cap sentiment, with
Redrow, Bovis Homes, and
Persimmon worst off, all down around
two to three per cent after some disap-
pointing domestic economic data.
The latest RICS survey showed British
house prices falling at a slower pace in
May, although the outlook worsened as
the Eurozone crisis intensified and
sales took a temporary hit from the
expiry of a tax holiday.
And British manufacturing output
posted a surprise fall in April, official
data showed yesterday, raising the risk
of a longer recession and piling pres-
sure on policymakers to take action to
boost growth.
Jittery FTSE 100 swings to a gain as
traders fret over Spains prospects
BESTof theBROKERS
Flybe Group PLC
6Jun 7Jun 8Jun 11Jun 12Jun
67
66
65
64
63
p
66.00
12 Jun
FLYBE
Espirito Santo rates the airline neutral with a fair value of 65p per share,
up from 55p. While the broker admits Flybes results were weak in
absolute terms, the losses were not quite as bad as feared. Espirito
Santo thinks the firm is well positioned to profit from the UKs eventual
economic recovery though it accepts that a swift return to material
profitability is unlikely.
FTSE
5,550
5,500
5,450
5,400
5,350
5,300
5,473.74
12 Jun
DASHBOARD CITY
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
NEW YORK
REPORT
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
in association with
Aquarius Platinum Ltd
76
74
72
70
68
66
64
62
p
64.10
12 Jun
AQUARIUS PLATINUM
Citi rates the miner neutral and has slashed its target price from 140p to
80p following the temporary closure of its Marikana mine on Monday. The
broker is assuming that the South African mine will be closed for two
years, meaning the firm has to rely on its Zimbabwean operations which
are working under the threat of government seizure. To reflect this risk,
Citi has cut its target price from 0.9 to 0.8 times net present value.
Genel Energy PLC
660
650
640
630
620
610
600
p
617.00
12 Jun
GENEL
UBS has started covering the energy firm with a buy rating and a 12-
month price target of 850p. The broker is optimistic about the political
situation in the Kurdish region of Iraq, where Genel operates, and is
impressed by the firms assets in the region. UBS also expects the group to
make some high-impact acquisitions with its $1.8bn cash pile, putting
Turkey and West and East Africa in the frame.
W
OULD you be surprised to
hear that British
charities receive more
money from the
government and the
National Lottery than they do from
individual donors? More than
12bn a year was transferred from
the taxpayer to the third sector at
the last count. Much of this was
essentially outsourcing. Millions of
pounds of foreign aid is channelled
through groups like Christian Aid
and Oxfam, and many healthcare
services, including hospice care and
family planning clinics, are
provided by grant-maintained
charities.
This is all well and good.
Government has worked with
M
Y 33 years at Tesco, 14 of
them as its chief executive,
left me in no doubt that
people hold one of two views
of the world: there are those
who believe in trusting people,
markets and competition, and those
who put their faith in government, in
all its various guises. Life being what
it is, there are innumerable variations
and blends. But, deep down, each of us
will tend to believe either in trusting
people, or government. Crises bring
this divide into sharp relief the
current crisis being a case in point.
My position is simple: I believe that
you should trust people to make their
own decisions as far as possible. People
know what is best for them and, given
freedom to choose and incentives to
work hard, save and invest, they will
make decisions that benefit not just
themselves but society as a whole.
Underpinning that freedom are mar-
kets and competition not laissez-
faire, but regulated competition that
spurs companies to innovate, to invest
and, above all, to follow the customer.
Profit and wealth creation are not
cityam.com/forum
As a believer in free
markets, and someone
who trusts people
taxes are still too high
In association with
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.
20
TERRY LEAHY
Business leaders must speak up in
promoting a culture of capitalism
dirty words to me, but the essential
lubricant of markets. Without them,
the basic laws of supply and demand
will not function. More than that, the
ability to prosper, to realise ones
dreams and give ones children a bet-
ter start in life than you had are the
things that make people work hard,
day in, day out, to turn small business-
es into large firms.
The problem someone like me faces
is that many people now believe the
current crisis was caused by competi-
tion, markets and globalisation. Few of
our global leaders have rebutted this
misconception, and argued that the
current crisis does not mean the prin-
ciples which underpin competition
are fatally flawed. Yes, the banks made
hideous mistakes. But so too did gov-
ernments, many of which embarked
on reckless borrowing sprees, while
doing nothing to deter individuals
from getting deep into debt. Prudence
was thrown to the wolves.
So, yes, we need to regulate the
banks. And of course governments
must pay down their debts: no nation,
just like no household, can borrow its
way out of debt. But bank regulation
and deficit reduction will not, in
themselves, be sufficient to resuscitate
our ailing economies. For that to hap-
pen, governments need to harness the
power of the market, not timorously,
but wholeheartedly. As Tesco is the
largest private employer, and one of
the largest owners of real estate in the
UK, of course I loudly applaud any
measure to cut red tape in employ-
ment and planning laws. Yet the bene-
fit of such measures, critical as they
are to competitiveness, will take time
to be felt.
As a believer in the free market, and
someone who trusts people, in my eyes
taxes are still too high. Insufficient
incentives exist in the UK to encourage
investment, hard work and job cre-
ation. The ambition to steadily cut cor-
poration tax is laudable. This, though,
should be part of a much wider pro-
gramme of tax reduction, which does
not imperil plans to cut the deficit or
spook the markets, but gives employ-
ees, employers and investors more
money to do with as they wish. That is
the way to get the growth needed to
pay down our debts. Just look at
Sweden, where the government has
cut taxes every year and abolished
wealth taxes. The result? Growth of 4
per cent on average for the last two
years, and a budget surplus. Yes, the
highest rate of income tax is still high.
But experience has begun to change
the culture.
And thats what is needed in the UK:
a rebirth of the culture of capitalism.
Business cannot sit idly by and expect
politicians to do this alone. If we have
the courage of our convictions, busi-
ness people need to get stuck into the
debate, taking this message not just to
the media but elsewhere, including
schools. Every student should be
taught about wealth creation and
entrepreneurship.
Finally, in case you are wondering, I
was brought up in a socialist house-
hold. I write all this not because I
learnt it in a textbook, but thanks to
being part of a team that embraced
competition, followed the customer,
lived within its means, gave employees
incentives to work hard, and delivered
for its shareholders. Yes, you may say
that youve heard this before but
sadly, not often enough from the lips
of those who lead us.
Sir Terry Leahys Management in 10
Words (Random House Business Books, 20)
is out now. Sir Terry is speaking tomorrow at
6.30pm at the Institute of Directors as part
of the World Leader Interview series. To
reserve a free ticket visit www.iod.com
charities to provide public services
since the welfare state was created
and there is no compelling reason
for it to stop now. However, in the
last 15 years, the relationship has
become murkier. Governments,
from the European Commission
down to local authorities, have
been funding overtly political
organisations on a large scale. Did
you know, for example, that dozens
of environmental pressure groups,
including Friends of the Earth, are
largely funded by the EU? Is it
transparently clear that many of
the charities who lobby for various
taxes and prohibitions are being
paid by government departments
for advocacy and policy
development?
To give a recent example, various
arms of the Department of Health
have, over the past year, spent
public funds campaigning for
minimum pricing of alcohol and
plain packaging for cigarettes. If
Action on Smoking and Health and
Alcohol Concern were being
commissioned to set up stop-
smoking clinics and rehab centres,
it could be described as providing a
public service, but these groups
dont focus on this. Their purpose is
almost exclusively to campaign for
legislation. So why is the
government paying to lobby itself?
These are not isolated examples.
27,000 charities rely on taxpayers
money for three-quarters of their
income and the misleadingly
named voluntary sector (which
employs 600,000 staff) has never
been more politically active. The
websites of charities such as Living
Streets or Sustain (both heavily
subsidised by the taxpayer) are
crammed with online petitions,
ongoing campaigns and calls to
action. Some of their policy
prescriptions may be laudable, but
is it asking too much for them to
promote them with their own
money?
With charities reputedly facing
up to 3bn of government cuts, it is
difficult to believe that the sector
could not survive with a few less
policy managers and media
advisers. But aside from the issue of
efficiency, an important principle is
at stake. Taxpayers should not be
compelled to pay for campaigns
with which they may profoundly
disagree. Lobbying and activism are
healthy parts of any democracy, but
civil society is supposed to put
pressure on the government to take
action, not the other way round.
Chris Snowdon is a fellow of the
Institute of Economic Affairs.
AGAINST
THE GRAIN
CHRIS SNOWDON
Government should not be doling out money to charities for lobbying
21
Confidence shaken
[Re: Euro establishment isnt learning any
lessons from the crisis, yesterday]
Euro debt is out of favour, but Europe
certainly isnt. Who wouldnt want a piece
of Europe? If debt were converted to
become asset backed governments would
have to surrender their assets in a default
situation then I see no sovereign debt
issue. This mechanism would force the
public to understand the importance of
government spending restraint.
Demir Sevim
France may have escaped unscathed thus far,
but how Francois Hollande can expect to
maintain confidence while raising top rate
taxes to 75 per cent is beyond me.
RichardCooper
Facebook in the UK
[Re: Therell be no UK Zuckerberg while we
fear all failure, yesterday]
I can completely understand and agree with
David Richards saying that the UK has no
entrepreneurial attitude. But its all our own
fault. We have lavished state welfare on
many, and completely failed to engineer our
education system towards the needs of the
future.
LeoJames
Why should the UK want its own Mark
Zuckerberg? It seems strange to decide,
subjectively, that unprofitable internet
social networking is the industry of the
future and then worry retrospectively that
we have none of our own.
HarryCritchlow
A
N INCREASINGLY
acrimonious battle on
accounting standards is
playing out that few people
can follow with ease.
Accounting standards, as a
consequence of their highly
technical nature, are easy to put
aside as only of interest to those who
have spent decades deciphering
company finances. However,
accounts are fundamental to the
functioning of the modern market
economy. If the accounts are wrong,
how can we know whether a
company especially a bank is a
going concern or not?
Unease centres on the blind faith
that both the UK government and
European regulators place in
International Financial Reporting
Standards (IFRS). Much ink has been
spilt on the issue of IFRS allowing
banks to inflate their balance sheets
and profits. The standards may have
exacerbated the boom before the
banking collapse brought down the
markets. Even today, we see huge
bonuses being paid out on the basis
of accounts that do not reflect reali-
ty, but are deemed acceptable
because they conform to the stan-
dards. In February 2012, HSBC admit-
ted that directors were paid 5.019m,
rather than the 3.076m disclosed in
the 2010 accounts which had been
prepared under IFRS. In Ireland, a
heated debate continues on why
auditors signed off the accounts of
banks such as AIB which then col-
lapsed within a year. The auditors
defence is that the accounts were
signed off as true and fair in accor-
dance with IFRS.
IFRS has encouraged a move away
from the principle of prudence,
whereby accounts must not overstate
assets or understate liabilities. Profits
should only be booked once they are
realised, and sufficient funds are put
TOP TWEETS
Its scary that the Spanish government will
end up owning institutions which themselves
own Spanish government debt.
@42Jason
John Major at Leveson reminds me why he
was a great leader honest and polished.
@snapeysnapey
I have been firmly reminded that big business
likes regulation, or at least regulation to its
advantage.
@SteveBakerMP
The UK is committed to the Annan Plan for
Syria. If it doesnt succeed, all options are on
the table.
@WilliamJHague
As the Eurozone crisis heightens, is now the
right time for Britain to consider an EU exit?
YES
The first duty of any British government is to act, entirely, in
Britains interest. Its what it was voted in to do, what it is paid to
do. Thus it must allow this country to disentangle itself from the
wreckage of the European Union. If it does not, then Britain may
well go down with it. The financial and economic turbulence
created by the euros almost inevitable collapse will hit us. Of
course it will. But unless we start to move now, the damage to
this country will be all the greater. A year ago 100bn (80.2bn)
would have settled the markets for months on end; this week,
the panacea lasted a mere four or five hours. Spanish, Italian and
other bond spreads merely hiccupped on their way towards new
highs. Getting out will not be painless, but staying in could
certainly be fatal.
Nigel Farage is leader of the United Kingdom Independence
Party and MEP for South East England.
Nigel Farage
NO
Stephen Tindale
The UK should not leave the EU the single market has greatly
strengthened the British economy. To continue trading so much
with the rest of Europe, the UK would still have to follow the
rules set to regulate the single market. But from outside the EU,
we would have no influence over what rules are set. Much better
to be in the club and able to shape their design. The EU also plays
an important role over energy and climate policy, both linked to
future economic growth. Europe needs a modernised and
extended electricity grid, including a North Sea grid. Building
this would enable the UK to harness enormous quantities of
offshore wind power, thus increasing UK energy security as the
oil and gas runs out. It would be possible if the UK leaves the EU,
but easier and more efficient if we remain a member.
Stephen Tindale is an associate fellow at the Centre for European
Reform.
RAPIDresponses
Accounting rules
place box ticking
above prudence
aside to cover any potential losses.
This has been replaced by an
American-inspired principle of audi-
tor neutrality, which means
accounts are always deemed true
and fair if they have ticked all the
boxes required by IFRS. This encour-
ages auditors to move away from
exercising professional scepticism
when assessing a companys
accounts to simply ticking boxes.
This box ticking failed to spot finan-
cial institutions recording expected
income from complex financial
instruments in advance. We all saw
the result of that when financial
institutions failed, or had to be
bailed out, since they simply did not
put aside enough funds to cover
their exposure to credit default
swaps and collateralised debt obliga-
tions. AIG Financial Products was
able to build a portfolio of $2.7 tril-
lion (1.7 trillion) in derivatives,
resulting in liabilities many times its
capacity to pay out.
As we consider the ongoing negoti-
ations on a new EU accounting direc-
tive, we should be looking for
accountants and auditors to be guid-
ed above all by the principle of pru-
dence. Without this, some financial
institutions and corporates will be
able to continue to hide behind the
mask of international accounting
standards and claim they are solvent
when they may be anything but.
Syed Kamall is Conservative MEP for
London and a member of the European
Parliaments Economic and Monetary
Affairs Committee.
SYED KAMALL
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Bridging the gap: How GE is trying
to create a legacy for the Olympics
Finding long-term
use for equipment is
key, says Tom Welsh
T
OWER Bridge and Homerton
University Hospital in Hackney
have little obvious in common.
The first was opened in 1894 by
the future Edward VII and is one of
Londons most photographed
landmarks. The second caters for one
of Londons poorest, most ethnically
diverse boroughs. Both sit at the heart
of GEs London 2012 legacy vision.
GE has been an Olympic Worldwide
Partner since 2005, and has used its
expertise in power generation, water
treatment, infrastructure, security
and medical equipment to supply
Games since Turin 2006. Its Evolution
locomotive engines improved trans-
port at Vancouver 2010, reducing
emissions by 40 per cent. At Beijing
2008, it helped generate power for ven-
ues via the Shanghai Wind Farm.
But GE sees London as different. The
international conglomerate is a
London 2012 Sustainability Partner,
and it intends its involvement to leave
a lasting legacy beyond the sports and
the stadia.
INFRASTRUCTURE UPGRADE
Mark Elborne, president and chief
executive of GE UK and Ireland, says
that, for a group with a portfolio as
wide as GE, the Olympics is about
more than just the venues, its the
whole infrastructure upgrade that
comes with it. GEs involvement is
certainly broad it has provided
14,000 lamps for the Olympic
Stadium, uninterruptible power sup-
plies at the Velodrome, digital imag-
ing equipment at the polyclinic and
water monitoring systems at the
Olympic Village.
But GE wants the benefits of its com-
mitment to continue beyond the dis-
mantlement of the venues. Were
trying to showcase what a sustainable
Olympic venue can look like, says
Elborne. One concern is that equip-
ment has transferrable benefits. GEs
Jenbacher gas engine technology will
provide power and heating for
Olympic venues, but its also been
introduced at Guys and St Thomass
NHS Foundation Trust. Jenbacher is
credited with helping the Trust
44 DAYS TO GO
COUNTDOWN
TO THE LONDON
2012
OLYMPIC
GAMES
OLYMPICREPORT
23
cityam.com
reduce CO2 emissions by 11,300
tonnes per year and saving it 1.5m
enough to power Newcastle for a week.
ATHLETES OF THE FUTURE
Its unsurprising that healthcare is an
important legacy issue for GE. Its
medical equipment division is
headquartered in Little Chalfont in
Buckinghamshire, the first GE
business to be stationed outside the
US. But the firm has chosen to focus
its Olympic philanthropy on a less
leafy part of the UK, at Homerton
University Hospital in Hackney the
designated hospital for 2012 athletes.
According to the 2011 Hackney
Health and Wellbeing Profile, the bor-
ough has more teenage pregnancies
than anywhere else in London and
above average infant mortality (5.7
deaths per 1,000 live births against 4.6
for the rest of London). While GEs dig-
ital imaging equipment will map and
track the strains of athletes during the
Games, a donation of 4.8m worth of
neo-natal equipment to a new ward at
Homerton will help to reduce the dis-
proportionate blight of infant mortal-
ity in the borough.
All this is part of a broader initiative
by the company. It wants to put its
equipment and infrastructure at the
service of cost reduction, quality and
efficiency. Its Homerton donation
may be small by the standards of a typ-
ical hospital budget, but GE hopes to
showcase how the expertise it is put-
ting behind the Olympics will survive
as a lasting legacy for one of Londons
poorest areas.
A LEGACY OF LIGHT
The threads of GEs legacy vision come
together at Tower Bridge. The attrac-
tion has had the same lighting system
for 25 years a flat affair, which
served neither to attractively display
its neo-Gothic battlements nor to
effectively conserve power.
In partnership with EDF Energy, GE
has sponsored the installation of 1,800
LED fixtures and 2km of linear light-
ing, a low-carbon innovation that will
see 40 per cent shaved off energy con-
sumption.
The bridge will be used as a stage for
light shows during the Games, com-
plementing a huge, suspended set of
Olympic rings. And for the next 25
years, GEs technology will provide
cheap and sympathetic lighting.
Some will worry that, once the lights
are turned off the Olympic roadshow,
all well be left with is some impres-
sive buildings and memories of a sum-
mer of sport. GE hopes that its
Olympic commitment will prove these
worriers wrong. Jeff Immelt, chairman of GE, examines new neo-natal equipment at Homerton Hospital with Nancy Hallett and Professor Kate Costeloe
GE lights up Tower Bridge
Tetra contour cable GEs
durable alternative to neon
lighting follows the metal
curves on either side of the
towers and across the walkway
LED projectors enhance the
architecture of the bridge by
flooding the two towers with a
rush of light from below. The
system has three colour options,
allowing the bridge to take on
different looks for special events
In total, the new lighting system
will save 40 per cent of energy
consumption when compared to
the previous artistic lighting
Tower Bridges Cornish granite
and Portland stone cladding
protects and embellishes an
underlying framework of steel
with a Victorian Gothic flourish
F
OR some time now, the
accountancy profession has
been actively engaged in the
debates on sustainable
development and climate change, at
least in respect of those areas that
impact on accounting and business.
Despite best efforts, two commonly
asked questions about environmen-
tal and sustainability issues continue
to be asked. The first, asked by
accountants, is: whats this got to do
with me? And the second, asked by
non-accountants, is: What have
accountants got to do with environ-
mental and sustainability issues?
We are rapidly approaching a time
when neither question should have
to be asked again, because account-
ants are increasingly occupying and
being seen to occupy a central role
in both the climate change and the
sustainable development debates.
This developing role is likely to be
recognised in this months United
Nations Conference on Sustainable
Development, widely referred to as
Rio+20.
The COP 17 conference in Durban in
late 2011 which brought together
governments of the UN Framework
Convention on Climate Change
took its negotiations to a new place.
Paul Toyne, head of sustainability at
design consultancy WSP Group, out-
lined in the media the implications
of the agreement struck by the con-
ference for the business community:
What is significant about Durban is
that all UN countries will need to [set
reduction targets] by 2020, including
the new big emitters such as China
and India. This sets the whole world
on a course for a low-carbon economy
for the first time.
The implications are profound for
business, as companies that can sell
services and goods that help realise
this roadmap process will prosper.
This should also stimulate invest-
ment in low-carbon technology and
encourage the carbon offset markets,
as negotiators at Durban acquiesced
to new market mechanisms to put a
price on carbon.
At the business level, accountants
particularly finance directors, chief
financial officers (CFO) and auditors
will need to be fully conversant with
the implications of the Durban deci-
sions. Between 2012 and 2020:
nTighter limits on greenhouse gas
emissions will be set globally, and by
2020 may be legally enforceable.
nCarbon emission trading schemes
will expand and mature, as will their
importance on balance sheets the
International Accounting Standards
Board (IASB) has been developing a
standard for some years.
nSophisticated carbon offset
Riosummit is a game changer for
accountants role in businesses
schemes and carbon-related financial
instruments, including derivatives,
will become common.
n Investors will demand more and
more disclosure detail on emissions
and related risks, and governance sys-
tems will have to be
augmented/expanded to deal with
these new requirements.
n Corporate risk management pro-
grammes and processes will need to
respond, and corporate strategies will
have to embrace the challenges of the
low-carbon economy.
n Emissions disclosure regimes will
begin to bite at the annual reporting
level, and carbon-intensive organisa-
tions will have to develop more
focused investor relationship pro-
grammes, as well as convincing adap-
tation strategies.
n Upstream and downstream
reporting of greenhouse gas emis-
sions (Scope 3 disclosures under the
Greenhouse Gas Protocol) may be
included within the new reporting
regimes.
n Third-party assurance for green-
house gas emissions will become
mandatory. The International
Auditing and Assurance Standards
Board (IAASB) is finalising guidance
on the assurance of emissions trad-
ing schemes for issue later this year.
n Internal management processes,
such as capital investment appraisal
decisions, will have to formally
embrace emissions issues as well as
other significant sustainability-relat-
ed impacts.
At Rio+20, one agenda issue that has
already been widely reported is a pro-
posal that sustainability issues should
be integrated into the annual report-
ing cycle. Clause 41 of the so-called
zero draft for Rio+20 reads: We call
for a global policy framework requir-
ing all listed and large private compa-
nies to consider sustainability issues
and to integrate sustainability infor-
mation within the reporting cycle.
This recommendation appears to
speak to the recent establishment of
the International Integrated
Reporting Council (IIRC) and the
increasing demand for a reporting
regime which embraces traditional
financial reporting as governed by
the International Accounting
Standards Board and sustainability
reporting, largely determined by the
Global Reporting Initiative (GRI).
According to the IIRCs discussion
paper Towards Integrated Reporting:
Communicating Value in the 21st
Century, integrated reporting sets out
to demonstrate the linkages between
an organisations strategy, governance
and financial performance and the
social, environmental and economic
context within which it operates. By
reinforcing these connections, inte-
grated reporting can help business to
take more sustainable decisions and
enable investors and other stakehold-
ers to understand how an organisa-
tion is really performing.
Were clause 41 ever to become legal-
ly enforceable or incorporated into a
standard, the corporate reporting
environment would change signifi-
cantly.
With Rio+20 and then COP 18 in
Qatar later in the year, public policy
developments in 2012 seem likely to
make the future direction of travel
more certain. Already 95 per cent of
Global 250 companies report on sus-
tainability issues, up from 45 per cent
in 2002.
With a well-advertised political will,
stemming from the antipathy
towards short-termism engendered by
the global financial crisis, to elongate
the investment time horizon, the
future for accountants, their employ-
ers and the profession in general
seems likely to have sustainability
issues at its heart.
CFOs and financial directors will
have to assess the financial impacts
and risks associated with the required
changes. They must communicate
their findings to their companies
audit committees. They must reflect
them and the action the organisa-
tion is taking to mitigate them in
their public disclosures to investors.
And above all they must play a part
in the creation of value by being core
members of the teams that design
long-term low-carbon business strate-
gies and business models.
After all, the financing of all that is
the crux of the CFOs and financial
directors role.
John Davies is head of technical at ACCA.
JOHN DAVIES
World leaders will gather in Rio to try and create a blueprint for a green economy
Corporate strategies
will have to embrace
green requirements
24
ACCOUNTINGBUSINESS
cityam.com
Already 95 per
cent of Global 250
companies report on
sustainability issues
25
cityam.com
U
SUALLY when a motoring
hack is invited up to Scotland
to drive a new car it is to test
a sportscar or an SUV. The
Scottish Highlands are the perfect
combination of twisting roads and
dramatic backdrops for sporting
road cars, and provide off-road high
jinks for rugged off-roaders on
some private estate or other.
But the launch of Mazdas new CX-
5 was a little different. Here is a car
that is officially a SUV but which
was launched north of the border to
show just how good it is on the
road. This new compact crossover is
a really big deal for Mazda because
it is the first of a forthcoming range
of cars that has been entirely devel-
oped using new technologies called
SkyActiv. The Japanese company
believes its SkyActiv range of new
engines, transmissions and light-
weight chassis and body technolo-
gies will set its products apart by
being up to 30 per cent more light-
weight, efficient and economical.
While other manufacturers bolt on
hybrid components to achieve bet-
ter economy and emissions, Mazda
believes it can produce similar per-
formance by further improving con-
ventional systems.
For the UK market the CX-5 is
available with a choice of two
engines a 2.0-litre petrol and a 2.2-
litre diesel. The diesel engine comes
with two power output choices of
150PS or 175PS. Lower-powered
diesel is offered with the option of
2WD, as is the petrol version.
Having tested the 2WD petrol, 2WD
diesel and the higher-powered
diesel 4WD model, I found I liked
the cheaper 2WD diesel CX-5 the
most.
The CX-5 proved impressive on the
beautiful roads around Torredon
and the Isle of Skye because it is one
of the most car-like SUVs Ive ever
driven. This is a very good thing if
you prefer your SUVs on-road. The
elevated seating position results in
great visibility and the car felt
speedy enough and the engine com-
pliant. The acceleration time of 0-
62mph in 9.2 seconds is not
particularly fast but the manner in
which the new SkyActiv-D engine
delivers its power is impressive. It
pulls from low down and the engine
is surprisingly smooth, which means
progress feels effortless. For a com-
pact SUV, the CX-5 also feels pretty
nimble. It was keen through the
bends and body roll was reasonable
as we sped along the winding roads
around Loch Ness and onto Skye.
Both the automatic and manual
gearboxes are very good, though I
just preferred the manual. Engine
refinement is so good I can think of
no real reason to plumb for the
petrol version.
So the CX-5 drives well...now take a
look at its fuel economy and emis-
sions figures. The 2WD model offers
the best economy (61.4mpg) and best
emissions of the CX-5 range. These
are extremely good figures for a car
in this segment but it beats even
some small city cars. Mazdas new
approach seems to be working then.
From the outside, the CX-5 is a
pretty stylish, if understated, design.
It doesnt have the slightly swollen
looks of some of its SUV competitors
and manages to pull off a feline face,
thanks to its nose-like grille and eye-
like headlamps. A lot of work has
gone into improving the interior
refinement. Theres a pleasing
amount of leather around, including
the steering wheel, and the cabin is
spacious and comfortable. A con-
troller in the centre console manipu-
lates the infotainment system and
enhances the premium feel. The boot
is also sizeable at 503 litres.
I found CX-5 immensely likeable
because when youre driving it, its
very easy to forget youre behind the
wheel of an SUV. It seems Mazdas
plan to produce a lighter car
has worked and these changes
extend to pedestrian safety too. Each
CX-5 is fitted with low-speed safety
tech which means the car can brake
itself automatically at slower speeds
to avoid or minimise an impact.
This is yet another example of
the kind of thinking for which
Mazda should be applauded.
At only 22,995, Mazdas new SUV represents very good value.
Mazdas immensely likeable SUV
LIFE&STYLE MOTORING
CAR TALK
BY RYAN BORROFF
Meet Rolls Phantom Series II
Last week Rolls-Royce Motor Cars introduced 100 of its customers to the
latest Phantom Series II by turning its Goodwood assembly line into a
dining room. For the dine on the line event, guests arrived in
chauffeured Rolls-Royce Phantoms or by helicopter, then tucked into a
banquet in the red carpet-lined production area as they were wowed by
Rolls-Royce craftsmen and women demonstrating their skills.
WORDS BY
RYAN BORROFF
THE VERDICT:
DESIGN $
PERFORMANCE $
PRACTICALITY $
VALUE FOR MONEY $
THE FACTS:
MAZDA CX-5 SUV
PRICE: 22,995
0-62MPH: 9.2 secs
TOP SPEED: 126 mph
CO2 G/KM: 119g/km
MPG COMBINED: 61.4mpg
Mercs even sportier SLS
Mercedes-Benz has introduced an even sportier SLS for track day use.
The 591bhp SLS AMG GT has a 0-62 mph time of 3.7 seconds and a
limited top speed of 198mph. Available as a Coup and Roadster, the
suspension is stiffer and has no comfort mode. Shifting up and down via
the seven-speed semi-automatic transmission paddles shifters is quicker
too.
Renaults test drive tour
The Renault Z.E. Test Drive Tour 2012 is underway. The general public
can try Renaults range of electric vehicles. Fluence Z.E., Twizy, and
Kangoo van models are available to drive and there is a special agility
course for the Twizy, the two-seater electric compact vehicle we
reviewed last week. The London event will be held at Westfield White
City from 31 August to 2 September.
The CX-5 is economical, efficient and satisfying to drive and should appeal to more responsible drivers
26
TV & GAMES
cityam.com
T
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BBC1
SKY SPORTS 1
5.30pmLive T20 Cricket 9pm1962
US Open Jacks First Major 10pm
Footballs Greatest 10.30pmEuro
2012 Report 11pmTotal Rugby
11.30pmFIFA Futbol Mundial 12am
T20 Cricket 2amEdinburgh
Marathon Festival 3amT20 Cricket
5am-6am1962 US Open Jacks
First Major
SKY SPORTS 2
7pmEuro 2012 Report 7.30pm
FIFA Futbol Mundial 8pmState of
Origin Rugby League 10pmBoots n
All 11pm1962 US Open Jacks
First Major 12amChampions Tour
Golf 1amState of Origin Rugby
League 3am-4amBoots n All
SKY SPORTS 3
7pmTruth in 24 Every Second
Counts 8pmInternational Rugby
Union 9pmEdinburgh Marathon
Festival 10pmCage Fighter
10.30pmProfessional 8 Ball
Pool Masters 11.30pmPool
12.30amInternational Rugby Union
1.30amCage Fighter 2amPGA
EuroPro Tour Golf 4am-5amTrans
World Sport
BRITISH EUROSPORT
7pmUEFA Euro 2012 Show7.30pm
Wednesday Selection 7.35pmRiders
Club 7.40pmPGA Tour Golf 8.40pm
European Tour Golf 9.10pmLadies
European Tour Golf 9.20pmGolf
Club 9.25pmYacht Club 9.30pm
Alexias Selection 9.40pmLe Mans
24 Minutes 10.05pmEuro 2012
12.05am-2amCycling
ESPN
5.30pmNBA 8pmWorld Series by
Renault 9.30pm30 for 30 11pm
ESPN Kicks: Extra 11.15pmESPN
Kicks: Brasileirao 11.30pmPress
Pass 2012 12amPremier League
World 12.30amFriday Night Fights
2.30am30 for 30 4amNBA
Tonight 4.30am-6amWorld Series
by Renault
SKY LIVING
7pmCriminal Minds 8pmBattle of
the Brides 9pmBones 10pm
Bedlam11pmBones 12amCriminal
Minds 1amMaury 1.50am
Americas Next Top Model 2.40am
Medium3.30amBones 4.20am
Nothing to Declare 5.10am-6am
Jerry Springer
BBC THREE
7pmDont Tell the Bride USA
7.50pmDont Tell the Bride:
Greatest Moments 8pmGlamour
Model Mum, Baby & Me 9pmFILM
The Accidental Husband 2008.
10.25pmFamily Guy 11.10pm
American Dad! 11.50pm Live at the
Electric 12.20amSnog, Marry,
Avoid? 12.50am Euros Most
Shocking Moments 1.50amHow to
Be England Manager 2.45am
Kicked Out Kids 3.45amLive at the
Electric 4.15am-5.10amGlamour
Model Mum, Baby & Me
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8pmFILMGuess Who
2005. 10.05pmFILMThe Texas
Chainsaw Massacre: The Beginning
2006. 11.55pmThe Big Bang
Theory 12.55amScrubs 1.25am
How I Met Your Mother 1.55am
Rules of Engagement 2.20am
Franklin & Bash 3amDesperate
Housewives 3.45am90210 4.25am
Greek 5.10am-6amSwitched
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8pmStorage Wars 9pm
Swamp People 10pmAx Men 11pm
Storage Wars 11.30pmPawn Stars
12amAmerican Pickers 1am
Swamp People 2amAx Men 3am
Ice Road Truckers 4amLock n
Load 5amPawn Stars 5.30am-6am
American Restoration
DISCOVERY
7pmBear Grylls: Born Survivor: The
former soldier parachutes into
Turkey. 8pmMoonshiners: Tim
clears out all his moonshine. 9pm
River Monsters 10pmSons of Guns
11pmGold Rush 12amRiver
Monsters 1amSons of Guns 2am
Auction Kings 3amAmerican
Chopper: Senior Versus Junior
3.50amIce Pilots 4.40amBear
Grylls: Born Survivor 5.30am-6am
Destroyed in Seconds
DISCOVERY HOME &
HEALTH
7pmA Wedding Story 8pmI Didnt
Know I Was Pregnant 9pmHospital
Sydney 10pmEmbarrassing
Illnesses 11pmSex Change Uncut
12amHospital Sydney 1am
Embarrassing Illnesses 2amSex
Change Uncut 3amA Wedding
Story 4amA Baby Story 5am-6am
Birth Stories
SKY1
7pmThe Simpsons 8pmFuturama
8.30pmThe Simpsons 9pmAn
Idiot Abroad 10pmCop Squad
11pmBrit Cops: War on Crime
12amRoad Wars 1amRoss Kemp:
Extreme World 1.55amBrit Cops:
Rapid Response 2.55amGadget
Geeks 3.45amMedical Emergency
4.35amReal Filth Fighters
5.05am-6amDont Forget the
Lyrics
BBC2 ITV1 CHANNEL4 CHANNEL5
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6pmBBC News
6.30pmBBC London News
7pmMatch of the Day Live:
Euro 2012
10pmBBC News
10.25pmRegional News
10.35pmThe National Lottery
Wednesday Night Draws
10.45pmFILMFace/Off;
National Lottery Update
12.55amWeatherview
1amSign Zone: See Hear 1.30am
Sign Zone: Great Ormond Street
2.30amSign Zone: The Town
Taking on China 3.30amSign Zone:
Fake Britain 4.15amSign Zone:
Great British Menu 4.45am-6am
BBC News
6pmEggheads
6.30pmGreat British Railway
Journeys
7pmAntiques Road Trip
8pmSpringwatch 2012
9pmCHOICE The Secret
History of Our Streets:
Camberwell Grove in south-
east London.
10pmSounds of the 70s 2
Rock n Roll Revisited Get It
On
10.30pmNewsnight: Weather
11.20pmThe Fish Market:
Inside Billingsgate
12.20amBBC News
4am-6amBBC Learning Zone
4.30pmEuro 2012 Live:
Presented by Adrian Chiles.
7pmLondon Tonight
7.15pmITV News
7.30pmCoronation Street
8pmCHOICE Midsomer
Murders
10pmITV News at Ten
10.30pmLondon News
10.35pmEuro 2012 Highlights
11.35pmPerspectives: Robson
Green and the Pitmen Painters
12.35amJackpot247; ITV
News Headlines
2.35amBritish Touring Car
Championship Highlights
3.45am-5.30amITV Nightscreen
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmSecret Eaters
9pm24 Hours in A&E
10pmCHOICE A Short History
of Everything Else
10.30pmThe Killing 11.30pm
Random Acts 11.35pm2 Broke Girls
12amDesperate Housewives
12.55amMusic on 4: Subculture
1.10amRoots Presents: Twin Atlantic
1.25amSpotlight 1.40amMercury
Prize Sessions 1.55amLaunched at
Red Bull Studios 2.05amThe Crush
3amSouthland 3.45amSt Elsewhere
4.30amDeal or No Deal
5.25am-6.10amCountdown
6pmHome and Away
6.30pm5 News at 6.30
7pmPolice Interceptors: 5
News Update
8pmNew Emergency Bikers: 5
News at 9
9pmNCIS: Gibbs interrogates
a man accused of killing his
father.
10pmBig Brother
11pmBig Brothers Bit on the
Side
12amPoker: The Big Game
1amSuperCasino 3.55amHouse
Doctor 4.20amHouseBusters
4.45amGreat Scientists 5.10am
Michaelas Wild Challenge
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6 7
8 9
10 11 12 13
14 15
16 17 18 19
20
21
22 23
5 6 15
34 20
9 11
45
10 12 24
16
7 16 11
45
29 11
16 20
20 4 17
13
11
33
15
25
10
21
38
8
7
35
3
3
23
39
23
32
18
17
14
15
ACROSS
1 Open ___, magic
words used by
Ali Baba (6)
4 Poses for a portrait (4)
6 Fight back (9)
8 Astern (3)
10 Brown with a
reddish tinge (6)
13 Stopper (4)
14 Got up (5)
16 Pool (4)
17 Aim at (6)
20 Floral garland (3)
21 South American
country (9)
22 As a result (4)
23 Not if (6)
DOWN
1 Cut the wool
from (5)
2 Types, varieties (5)
3 Substance (6)
4 Indoor shoe (7)
5 Prosecute (3)
7 Hairpiece (6)
9 Sudden
outburst (6)
11 Sorrow (7)
12 Add up (3)
15 Cotton fabric with
a shiny nish (6)
18 Coating for
ceramics,
metal, etc (5)
19 Multiplication (5)
21 Large container (3)
A
M
U
C
A L
B
N
E

4

T U B E S C R U B
E C H I C E E
R U S H I J A
S P O M P A D O U R
E K E A T I D
C A R R I O N
B T M C D U B
E V A P O R A T E O
A C S O R A L
T L E X A M U
S P E N T B I D S
2 4 1 5 3 1 8 2
4 7 2 8 1 5 3 9 6
7 9 7 9 8 2
1 5 2 9 5 8 9
2 1 6 9 9 7
1 6 3 7 2 5 9 4 8
3 1 4 1 8 6
6 8 9 2 7 3 9
8 7 9 4 1 8
4 1 6 2 8 3 9 5 7
1 2 4 4 1 3 2 6
4
4
4
4
4
4
4
4
4
The nine-letter word was
SECLUSION
T
E
R
R
E
S
T
R
I
A
L
S
A
T
E
L
L
I
T
E
&
C
A
B
L
E
BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
THE SECRET HISTORY OF OUR
STREETS BBC2, 9PM
The series charting the fortunes of
London streets focuses on Camberwell
Grove, which boasts some of the
capitals finest Georgian architecture.
MIDSOMER MURDERS
ITV1, 8PM
A DJ judging a classic-car show is
crushed to death, giving John Barnaby
his first murder case since taking over
from cousin Tom. With Neil Dudgeon.
A SHORT HISTORY OF
EVERYTHING ELSE CHANNEL4, 10PM
Panel game that uses archive clips to
test contestants knowledge of history.
Marcus Brigstocke and Charlie Baker
are the team captains.
TVPICK
G
E
T
T
Y
TWO goals inside the first six min-
utes kept the Czech Republics
European Championship hopes alive
and pushed Greece to the brink of
elimination from Group A last night
in Wroclaw.
Early strikes from Petr Jiracek and
Vaclav Pilar minimised Czech fears
they could suffer the ignominy of
being the first team knocked out of
the tournament.
And even though Chelsea goal-
keeper Petr Cechs handling howler
handed Greece a route back into the
match, which Theofanis Gekas grate-
fully accepted, they remain in con-
tention to reach the quarter-finals.
Heading into their final fixture
against Poland, the Czech Republic
lie second in the group with three
Greeceon brink
after decisive
Czech bounce
points, while Greece are in bottom
place with just one.
Striker Jiracek gave the men in red
the perfect start in the third minute
when he ran onto a defence-splitting
through-ball from Tomas
Hubschman and beat Greek goal-
keeper Kostas Chalkias.
The Municipal Stadiums Czech
contingent were pogoing again just
moments later when Arsenals Tomas
Rosicky fed full-back Theodor Gebre
Selassie and his pull-back was bun-
dled in by Pilar for his second of the
tournament.
Greece suffered two more blows
before half-time: first losing veteran
stopper Chalkias to injury and then
seeing a Giorgios Fotakis header
ruled out for offside, despite the mid-
fielder appearing to be level.
They were given a lifeline eight
minutes after the restart when Cech,
seemingly distracted by the presence
of encroaching colleague Tomas
Sivok, fumbled a tame cross. Gekas
duly scored, but there was to be no
repeat of their opening match come-
back against Poland.
E
NGLAND chiefs have made it
clear they hope Ian Bell will
replace Kevin Pietersen in the
one-day team, starting on
Saturday against West Indies
although Bell should have been
there all along.
He is playing very well, looks
really confident and extremely
focused and I expect him to get
some big scores this summer.
One factor against him has been
his failure to convert 50s into
centuries, which you need your top-
order batsmen to do at one-day
level. But while he used to get
nicked off early, feeling for the ball
outside off-stump, his footwork has
greatly improved lately, and he is
playing straighter and therefore
doing better.
Pietersens retirement from one-
day and Twenty20 internationals,
meanwhile, could yet present
selectors with a devilish dilemma
later this year. It seems he did not
want to quit T20s, just ODIs, but
England coach Andy Flower and
others did not feel that fitted in
with their plans.
So he has retired from everything
but Tests. But what if he announces
in a month or two that he wants to
play in the T20 World Cup?
Perhaps selectors would stick to
their guns, but he is arguably the
best T20 batsman in the world and
it would leave them with a very
tricky call to make.
Andy Lloyd is a former England Test
cricketer who captained, and then later
acted as chairman of, Warwickshire.
CRICKET
COMMENT
ANDY LLOYD
MANCHESTER United have signed
18-year-old Crewe forward Nick
Powell for an undisclosed fee
believed to be an initial 3m.
Powell last season scored 16 goals
in 45 matches to attract Premier
League interest and has, to the
obvious pleasure of manager Sir
Alex Ferguson, signed a four-year
contract with United, though he
will not return to Crewe on loan.
He is an exceptional talent and
has been schooled well at Crewe,
said Ferguson. Im delighted he
has chosen to come to United. He
Powell seals dream transfer as
United continue to strengthen
Bells long overdue chance to shine in one-day
side and dont rule out a Pietersen comeback
has a lot to offer and we are all
looking forward to working
with him.
Powell, whose transfer fee could
rise to 6m depending upon his
success and the number of
appearances he makes, shared
Fergusons excitement. He said: It
really is a dream come true to be
signing for Manchester United. The
thought of making the step up to
the Premier League next year is an
exciting prospect. I cant wait.
Powells arrival follows that of
12m Japan international
midfielder Shinji Kagawa, who
signed from Borussia Dortmund.
PREMIERSHIP champions
Harlequins face a rematch with
Irish side Connacht, who knocked
them out of last years competition,
in next seasons Heineken Cup.
Quins will also meet Challenge
Cup winners Biarritz and newly-
formed Italian side Zebre in a
reasonably kind Pool Three draw.
Fellow Londoners Saracens face a
tougher route to the knockout
stages, having drawn last years
semi-finalists Edinburgh, two-time
winners Munster and French club
Racing Metro in Pool One.
Exeter Chiefs, playing in their
first Heineken Cup campaign, have
also been handed a difficult pool,
with matches against defending
champions Leinster and two former
semi-finalists in Clermont Auvergne
and Llanelli Scarlets.
BY DECLAN WARRINGTON
BY WILL SEROCOLD
SPORT
27
cityam.com
IN BRIEF
Zhang to set golf record
n GOLF: Fourteen-year-old
Andy Zhang will tomorrow
become the youngest post-
war player in the US Open
when he tees off in the first
round tomorrow. China-
born, America-based Zhang
replaces injured Englishman
Paul Casey, who is
recuperating from a
dislocated shoulder.
Wales defeat Brumbies
n RUGBY UNION: Wales
second-string ran out 25-15
victors over Brumbies in
yesterdays tour game with
15 points from James Hook
and tries from Alun Wyn
Jones and Justin Tipuric.
Gavin set for title fight
n BOXING: Undefeated
British boxer Frankie Gavin
will be among the chief
support of David Hayes 14
July fight with Dereck
Chisora. Gavin will fight for
the vacant WBO European
light-middleweight title,
though his opponent is yet
to be confirmed.
GREECE .......................................1
CZECH REPUBLIC........................2
BY FRANK DALLERES
EURO 2012
MUNSTER
BEST: Winners
LAST: Quarter-nal
STAR MAN:
Peter OMahony.
EDINBURGH
BEST: Semi-nal
LAST: Semi-nal
STAR MAN:
Tim Visser
SARACENS
BEST: Semi-nal
LAST: Quarter-nal
STAR MAN:
Owen Farrell
RACING METRO 92
BEST: 3rd in group
LAST: 4th in group
STAR MAN:
Francois Steyn
TOULOUSE
BEST: Winners
LAST: Quarter-nal
STAR MAN:
Vincent Clerc
LEICSTER TIGERS
BEST: Winners
LAST: 3rd in group
STAR MAN:
Billy Twelvetrees
OSPREYS
BEST: Quarter-nal
LAST: 3rd in group
STAR MAN:
Dan Biggar
BENETTON TREVISO
BEST: 2nd in group
LAST: 4th in group
STAR MAN:
Kris Burton
BIARRITZ
BEST: Runners up
LAST: 2nd in group
STAR MAN:
Dimitri Yachvili
HARLEQUINS
BEST: Quarter-nal
LAST: 2nd in group
STAR MAN:
Nick Evans
CONNACHT
BEST: 4th in group
LAST: 4th in group
STAR MAN:
Miah Nikora
ZEBRE
BEST: N/A
LAST: N/A
STAR MAN:
TBC
NORTHAMPTON
BEST: Winners
LAST: 3rd in group
STAR MAN:
Lee Dickson
ULSTER
BEST: Winners
LAST: Runners up
STAR MAN:
Ruan Pienaar
GLASGOWWARRIORS
BEST: Last 16
LAST: 2nd in group
STAR MAN:
Ruaridh Jackson
CASTRES OLYMPIQUE
BEST: Semi-nal
LAST: 4th in group
STAR MAN:
Pierre Bernard
LEINSTER
BEST: Winners
LAST: Winners
STAR MAN:
Jonny Sexton
CLERMONT AUVERGNE
BEST: Semi-nal
LAST: Semi-nal
STAR MAN:
Aurelien Rougerie
LLANELLI SCARLETS
BEST: Semi-nal
LAST: 2nd in group
STAR MAN:
Rhys Priestland
EXETER CHIEFS
BEST: N/A
LAST: N/A
STAR MAN:
Ignacio Mieres
CARDIFF BLUES
BEST: Runners up
LAST: Quarter-nal
STAR MAN:
Leigh Halfpenny
MONTPELLIER
BEST: 4th in group
LAST: 4th in group
STAR MAN:
Francois Trinh-Duc
SALE SHARKS
BEST: Quarter-nal
LAST: N/A
STAR MAN:
Danny Cipriani
RC TOULON
BEST: Quarter-nal
LAST: N/A
STAR MAN:
Jonny Wilkinson
Quins handed shot at Connacht Heineken Cup revenge
Czech Republic striker Peter Jiracek scored a third-minute goal as
his side won their first match of the 2012 European Championship
POOL 1 POOL 2 POOL 3 POOL 4 POOL 5 POOL 6
Results
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POLAND captain Jakub
Blaszczykowski expressed his delight
at scoring to rescue a valuable point
against Russia and preserve Polish
ambitions of advancing to the
European Championships last eight.
Blaszczykowski scored the co-hosts
goal during a sensational second-
half after Alan Dzagoev scored in the
37th-minute to raise Russian hopes
of topping Group A and improving
upon their Euro 2008 performance.
Russia remain top with four
points but Poland, with two, could
yet overtake them with victory over
Czech Republic if Russia fail to
overcome Greece.
When you score an equaliser like
that, it gives really good energy to
the team, said Blaszczykowski.
Smuda got his tactics spot on, and
we followed them through.
Were still in contention, and if
we win our final game were
through. Well fight until the end.
If we have the attitude and get
energy from the fans we can show
them that we deserve their support.
Dzagoev headed Russia in front
from Andrey Arshavins in-swinging
free-kick but as play became
stretched, Blaszczykowski scored
past goalkeeper Vyacheslav Malafeev
with a left-footed effort so powerful
it made a weightlifter look weak.
Yet though the atmosphere inside
the stadium was fierce as this
tournament has known, the mood
outside was considerably darker.
Support of Russias Independence
Day sparked anger among Polish
extremists, provoking violent clashes
between riot police and both sets
of fans.
Poland skipper
praises point
andlooks ahead
Boxing chiefs: Threat remains for
rebels involved in Haye-Chisora
BRITISH boxing chiefs have hit back
at promoter Frank Warren and
reiterated that anyone involved in
the controversial fight between
David Haye and Dereck Chisora risks
having their licence withdrawn.
Warren alleges that the British
Boxing Board of Control has
backtracked on threats to ban all
fighters, trainers, managers and
promoters associated with next
months bout and called the change
an embarrassing climbdown.
BBBofC general secretary Robert
Smith, however, last night told City
A.M. that their stance on the 14 July
show at Upton Park in east London
had not softened.
No, thats not the case, said
Smith. Weve said that any licence
holder officials, boxers, trainers
we dont feel the event is in the best
interests of boxing in Britain, and
therefore we will not give
permission for them to take part.
Now if they do take part, then
obviously we have procedures where
we will have hearings and deal with
each person individually. We sent
out a statement right at the
beginning, telling of the process that
were using, and weve confirmed it.
We cant stop anybody taking
part in it, and if they want to take
part in it then theyre entitled to.
But theyve got to understand the
consequences of being a licence
holder with the BBBofC, and it is our
duty to inform them.
Chisoras licence was withdrawn
by the BBBofC after his brawl with
Haye at a Munich press conference in
February, but in an unprecedented
step the fight has been sanctioned by
the Luxembourg Boxing Federation.
Jakub Blaszczykowski, Polands captain, scored with a powerful effort to rescue a draw
CRISIS-HIT Scottish giants Rangers
could be made to start next season
in the fourth tier after a creditors
deal was sunk by Her Majestys
Revenue and Customs.
Their future in the top flight
now rests in the hands of other
Scottish Premier League clubs, who
will vote on the matter, possibly as
early as Monday.
HMRC rejected prospective
owner Charles Greens offer of nine
pence in the pound, foiling his bid
to exit administration with a
company voluntary arrangement.
It means Rangers are doomed to
liquidation, with Green set to buy
Rangers at risk of relegation
with vote set for top flight clubs
the clubs assets from
administrators Duff and Phelps for
5.5m and set up a new entity.
A so-called newco Rangers would
be banned from European
competition for three years and at
risk of relegation to the bottom tier
of the Scottish league system.
Some fans have urged their clubs
to vote against readmitting a newco
Rangers to the SPL, with a desire
growing for them to be punished
for debts of 21m. But chairmen
may be reluctant to banish a team
who retain huge pulling power to
supporters and broadcasters.
HMRC said it hoped its decision
would allow it to pursue people
through the courts.
ENGLAND captain Steven Gerrard
insists his side should beat Sweden
on Friday, believing they need three
points if they are to advance to
the European Championships
knockout stages.
England produced a disciplined
performance to hold France to a 1-1
draw in their opening game but
must still overcome potentially prob-
lematic fixtures against Sweden and
joint hosts Ukraine to proceed.
Though Gerrard remained adamant
that England respect their next
opponents, the influential midfield-
er maintained nonetheless that he
expects to overcome them.
We need to get three points
against them and then the point
against France becomes very impor-
tant, said Gerrard. I dont want to
disrespect the other two teams. Of
course, on paper France are
favourites in the group.
The Swedes are difficult and I
dont think weve beaten them for a
long time in a competitive game.
We will respect them but, with all
respect, its a game we should win.
Gerrard assisted Joleon
Lescotts goal against France
with a masterful right-
wing cross but the defend-
ers Manchester City
team-mate Samir Nasri equalised dur-
ing a game in which England were
content with a point. Though no dif-
ferent in value to the 1-1 draw against
USA with which England began the
2010 World Cup, Gerrard believes
their recent result has the opposite
effect on their morale.
The difference now to two years
ago is we came off that game against
the USA deflated with no belief and
confidence, added Gerrard, also
Liverpools captain. I think after get-
ting a point against France, in the
dressing room there was a lot of
belief, confidence and togetherness
and that is what you need.
Gerrards views have been echoed
by Tottenham manager Harry
Redknapp who, though overlooked
for the role when a rival to Roy
Hodgson before the latters May
appointment as England manager,
gave an insight into how he may have
approached the job.
We all know about
[Sweden and AC Milan strik-
er] Zlatan Ibrahimovic but
theres not that much
quality around him,
said Redknapp.
Theres not
enough talent in
the Swedish line-
up and I think
England have to
go for the win
from the sec-
ond game in
Group D.
BY FRANK DALLERES
Steven Gerrard believes
England are full of
confidence and belief
cityam.com
SPORT
cityam.com/sport
Harlequins captain Chris
Robshaw can target revenge
after being drawn with
Connacht in the Heineken Cup
Rugby Union: Page 27
28
England should
beat Sweden,
says confident
captain Gerrard
POLAND......................................1
RUSSIA........................................1
EURO 2012
@cityam_sport
EXCLUSIVE

Cityam 2012-06-13

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