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Gold ISSU

E 30

SEPTEMB

ER 14

- OCTOBER

13, 2

013

LOUCAS MARANGOSCEO, TFI Markets Ltd.

(Silver Sponsor)

POLIS ECONOMIDES

Chief Financial Director, Jumbo

Trading Ltd.

VARNAVAS THEODOSIOU

President and Managing Director,

ExxonMobil Cyprus Ltd.

YIANNIS TINIS Managing Director,

Amdocs Development Ltd.

ELENA LEONTIOU

Head of Media, IMH(Co-organiser)

DIETER ROHDENBURG

CEO, Intership Navigation Co. Ltd.

VIKTOR KISLYIPresident & CEO, Wargaming Public

Company Ltd.

PHILIP VAN DALSEN

CEO, MTN Cyprus

SERGEY POPRAVKO

Managing Director, Unicom Management

Services (Cyprus)

MEHRAN EFTEKHARGroup Head of Corporate

Services & Finance Director, Nest Investments Holdings

(Cyprus) Ltd.

CHRISTODOULOS ANGASTINIOTIS

Chairman, CIPA(Co-organiser)

HANS WOLFFDirector and Country

Manager, Barclays (Gold Sponsor)

NICOS ANASTASIADES

President of the Republic of Cyprus

2 ndCIPA INTERNATIONAL INVESTMENT AWARDS

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PHILIP VAN DALSENCEO, MTN Cyprus

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AWARDS AT THE CEREMONY HELD AT THE PRESIDENTIAL PALACE ON 10 SEPTEMBER 2013.

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KPMG Academy Upcoming Seminars:

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6 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

FEATURE

NO SUCCESS LIKE FAILUREBy Savvas Savouri 42

15,000 WORDS LATERBy Peter Economides 82

+ OPINION

44 | CAPITAL VALUE

A Limassol-based credit rating agency is going

from strength to strength.

48 | RENEWING EGYPT’S DEMOCRATIC ASPIRATIONSThe country’s Ambassador to Cyprus remains optimistic about her country’s future.

52 | TIME FOR ΝEW DOUBLE TAX AGREEMENTSCyprus should expand its network of bilateral agreements for the avoidance of double taxation to cover more countries, especially those in Africa.

56 | RESTORING INVESTOR CONFIDENCEInvestment firms have been hit by the

agreement with the Troika but Cyprus’ reputation has been hit harder, says Dr. Stelios Platis.

60 | ALL THE RIGHT MOVESInterview with management guru Costas Markides.

64 | EASTERN MEDITERRANEAN NATURAL GAS FORUMThe Eastern Mediterranean: A New Energy Frontier is the title of a major conference being organised by IMH in London.

5660

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8 1016

Issue 30September 14 - October 13,

2013EDITORIALUP FRONTFIVE MINUTES WITH…

THE CEREMONY FOR THE 2ND CIPA INTERNATIONAL INVESTMENT AWARDS, HOSTED BY GOLD, TOOK PLACE AT THE PRESIDENTIAL PALACE IN NICOSIA ON 10 SEPTEMBER. WITH PHOTOS FROM THE GALA DINNER, THE SPEECHES AND PRESENTATIONS, WE BRING YOU

ALL THE DETAILS OF THE AWARDS CEREMONY, TOGETHER WITH PROFILES OF THE 10 AWARD WINNERS, COMMENTS FROM THE EVENT’S SPONSORS AND MORE.

MAGAZINE

17

68 money

70 business

74 economy

76 tax & legal

78 lifestyle

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TΙΜΗ €4.95 | Σε ειδικη τιμη €3.40 για τhn kYρiakh 1/09/13 μαζι με την εφημεριδα Σημερινη

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κοινωνικα ευαισθητεσεταιρειεσ

EDITORIAL

John Vickers,Chief Editor

[email protected]

Time to Say ‘Thank You’

T he ceremony for the 2nd CIPA International Investment Awards, which took place on Tuesday 10 September in the gardens of the Presidential Palace, was not only an enjoyable evening for the 450 invited guests but an impressive gathering of company executives and senior officials, politicians and professionals involved in the services sec-

tor. The venue of the event and the presence of President Anastasiades underlined not only its status and prestige but also the importance that the new government places on the contribution of foreign investment to the economy. And while intense efforts are being made to attract new investors, funds and firms to the island, the CIPA International Investment Awards are one way in which the coun-try can say ‘thank you’ to those companies that have already shown and maintained their trust in Cyprus.

The keynote speaker of the evening, easyJet founder Sir Stelios Haji-Ioannou, urged the Govern-ment to pay particular attention to start-ups, a theme that was echoed by former President George Vassiliou. But the most impressive words of the evening turned out to be the unscripted comments by the representatives of the award-winning firms. Without exception, their message (enthusiastical-ly applauded by the President) was “We are here and we are staying here”. Reference was, of course, made to the new circumstances in which we have all been living since March and to the decisions of the Eurogroup which have impacted the economy, the banking sector and our daily lives. But the overwhelming implication was that, despite the drawbacks, the negative publicity and, in particular, the inconvenience of banking restrictions, the foreign companies that have chosen Cyprus as their base of operations are not about to desert the island for another jurisdiction. Viktor Kislyi, President & CEO of Wargaming Public Company Ltd., made the point in a more personal manner, telling the audience that he had just enrolled his son at school in Nicosia, while Dieter Rohdenburg, CEO of Intership Navigation Co. Ltd, noted that the company had recently completed work on its brand new offices in Limassol.

The aim of the CIPA International Investment Awards, which Gold inaugurated in 2012, is to express gratitude and to honour foreign investors – companies and individuals – that have contrib-uted to the growth of the island as an International Business Centre. These organisations have estab-lished local operations and created jobs; they pay taxes and have added overall value to the economy; they have actively shown trust in the island and in our local professionals. As George Michail, Man-aging Director of IMH and publisher of Gold, told the gathering at the Presidential Palace, Cyprus’ present economic predicament makes awards such as these more important than ever.

In this month’s issue, you will see and read all about the event and the firms that were honoured at this year’s ceremony, including views and opinions from the award-winning companies’ and event sponsors’ representatives, but there is much more in the pages of this issue: We have interviews with management guru Costas Markides (page 58), the Egyptian Ambassador to Cyprus, Dr. Heba Elmarassi (page 46), the Managing Director of the Capital Intelligence rating agency, Zafer Diab (page 42) and the Chairman of the Association of Cyprus International Investment Firms (ACIIF), Dr Stelios Platis (page 54), as well as articles on topics as varied as Double Tax Agreements, Hedge Funds, Business Valuation and Investing in Photographs.

Finally, in an issue dominated by the awards that say ‘thank you’ to investors in Cyprus, I would like to express my thanks to the only person who has featured in all 30 issues of Gold, our columnist and brand strategist extraordinaire, Peter Economides. Magazines, like economies, need change and renewal every so often and, from our next issue, Peter’s “Last Word” will disappear. We wish him all the best in his many other successful activities.

Some things don’t change, however, and I’ll see you next month!


MANAGING DIRECTOR George Michail

GENERAL MANAGER Daphne Roditou Tang

MEDIA MANAGERElena Leontiou

EDITOR-IN-CHIEF John Vickers

SENIOR EDITOR Kyproula Papachristodoulou

CONTRIBUTORS TO THIS ISSUE Rakis Christoforou, Peter Economides,

Chloe Panayides, Savvas Savouri

ART DIRECTION Anna Theodosiou

SENIOR DESIGNERAlexia Petrou

PHOTOGRAPHY Jo Michaelides

MARKETING EXECUTIVE Kevi Chishios

SALES & BUSINESS DEVELOPMENT EXECUTIVE

Phivos KarayiannisADVERTISING EXECUTIVES

Irene Georgiou, Christopher ConstantinouOPERATIONS MANAGER

Voulla NicolaouSUBSCRIPTIONSMyria Neophytou

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CONTACT5 Aigaleo St., Strovolos 2057, Nicosia, Cyprus

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up front


M edochemie Ltd is to represent Cyprus in the prestigious 2013-14 European Business Awards in the Imports/Ex-

ports Award category, after beating off stiff competition to become National Cham-pion. The firm will now compete against National Champions from 31 European countries for Ruban d’Honneur status in the next round. Final category Award win-ners will be unveiled in April 2014.

Yiannakis Mouzouris, Area Manager for Europe and the CIS said, “Medochemie has won several prestigious awards in its 37-year history. Today, we are excited to have been selected to represent Cyprus in the Euro-pean Business Awards competition, which is widely recognised as a showcase for Europe’s most dynamic companies. It’s on honour to be recognised again as one of the leading organisations in our country and worldwide. We’re looking forward to the next round of the competition.”

Adrian Tripp, CEO of the European Business Awards noted that, “Very few organisations get the chance to fly the flag for their country and compete across Europe to be recognised as one of Europe’s finest. It really is on exceptional accolade to be picked as a National Champion and together with our sponsors and supporters we’re looking forward to seeing Medoche-mie Ltd in the next round.”

To advance in the competition, all National Champions have to submit a video entry for viewing and assessment by a judging panel. In addition, the public will also be able to vote online for their favourite National Champion from each country, these companies be-come ‘National Public Champions’ and one will go on to be ‘Euro-pean Public Cham-pion’. Voting begins in November 2013.

MEDOCHEMIE TO REPRESENT CYPRUS AT THE EUROPEAN BUSINESS AWARDS

ForexTime Ltd has launched a new Mandarin Chinese language website to support traders with content in the world’s most spoken language. With more than one billion speakers, Mandarin Chinese is second only to English as the leading

language for business. Olga Rybalkina, CEO of ForexTime, says,

“We are seeing huge interest in our Forex services from the Asian region, with people looking for new and interesting ways to invest their money and trade the market. It’s no secret that we all prefer to speak in our native language and even more so when we are doing business.” Rybalkina adds, “With more than one billion people speaking Mandarin Chinese, 40 million of whom live abroad, the language is used widely across the world and we expect our new Chinese language website to resonate extremely well with traders looking for a more personal trading experience.”

The launch of the Chinese-language website (www.forextime.com/zh) is just the latest step in ForexTime’s expansion plans which include introducing new products tailored to the individual needs of each trader.

FOREXTIME launches Chinese website National Champions have

National Champion

ForexTime Ltd has launched

language for business.

“We are seeing huge interest in our Forex services from the Asian region, with people looking for new and interesting ways to invest their money and trade the market. It’s no secret that we all prefer to speak in our native language and even more so when we are doing business.” Rybalkina adds, “With more than one billion people speaking Mandarin Chinese, 40 million of whom live abroad, the language

V odafone has sold its 45% stake in Verizon Wireless to US tel-ecoms group

Verizon Communica-tions in one of the big-gest deals in corporate history. Vodafone will

receive €99 billion, of which €63 billion will be returned to its shareholders. The com-pany will also invest money in its business, with funds earmarked for high speed mobile

phone networks. The company is launch-ing a £6bn investment plan called Project Spring, which will accelerate the introduc-tion of 4G networks and increase invest-ment in laying fibre optic cables, among other things. By 2017 its main five Euro-pean markets will have almost complete 4G coverage thanks to this investment.

This is the third biggest corporate transaction, behind Vodafone’s 1999 deal to buy Germany’s Mannesmann and AOL’s purchase of Time Warner in 2000.

Vodafone in €99 billioncorporate

deal

Focus on tomorrow,starting today

www.pwc.com.cy

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up front


PREMIER LEAGUE CLUBS SPEND £630M IN THE SUMMER TRANSFER WINDOW

Deloitte’s Sports Business Group reported at the begin-ning of this month that clubs in England’s Barclays Premier League spent a record £630

million on players during the so-called sum-mer transfer window which closed on 2 September. The previous record of £500m was set in 2008.

Among the big signings on the last day was Mesut Ozil who left Real Madrid for Arsenal for £42.4m and Marouane Fellaini who was signed for £27.5m by new Man-chester United boss David Moyes from his old club Everton.

“The story of this summer transfer window is of new records: a new record for Premier League spending as well as a new world transfer record fee,” said Dan Jones of Deloitte. The record transfer fee was for Gareth Bale, who was sold to Real Madrid by Tottenham Hotspur for £85m.

Premier League clubs are flush with cash from their latest domestic three-year TV deal. BT has spent £738 million over three years for the rights to 38 live match-es a season, while Sky paid £2.3 billion for 116 matches a season.

“Testament to the impact this is having is in the scale of Premier League gross spending, as well as the gulf in net spend-ing between the Premier League and other European leagues,” said Alex Thorpe oft Deloitte.

“Whereas many clubs around Europe have been reliant on selling players in order to spend, the financial advantages Premier League clubs enjoy has enabled net spend-ing of £400m across the league.”

Spending in other major European leagues has also been up. La Liga and Serie A each had gross spending of £335m, followed by Ligue 1 in France with £315m and Germany’s Bundesliga with £230m.

Microsoft to buy Nokia’s mobile phone business for

€5.4 billion

I n a major deal, Microsoft has agreed to buy Nokia’s mobile phone business for

€5.4 billion. The purchase is set to be completed in early 2014. While Nokia has struggled against competition from Samsung and Apple, Microsoft has been criticised for being slow in getting into the mobile market. It launched its Surface tablet PCs last year, but sales of the devices have been relatively slow. Nokia was once a leader in mobile phones, but the firm’s sales of 53.7 million mobile phones during the quarter were down 27% on last year. Nokia intends concentrate on three key businesses: network equip-

ment manufacturing, mapping and location services, and the development and licensing of technology. Earlier this year, it agreed to buy Siemens’ 50% stake in their joint venture, Nokia Siemens Networks (NSN), which makes telecoms network equipment, for €1.7 billion.

the mobile market. It launched

up front

CCCIBusiness Forums in Ukraine, India & Kuwait

T he Cyprus Chamber of Commerce & Industry (CCCI) is holding three Business Forums in September-October, all in conjunction with the Ministry of Energy, Commerce, Industry

& Tourism, in Ukraine, India and Kuwait. The third one coincides with an official visit to the country by President Anastasiades.

Two meetings will take place in Ukraine: on 24 September in Donetsk and on 25 September in Lugansk. Organised in collaboration with the Cyprus-Ukraine Business Association, they aim to promote Cyprus as a business and investment service centre and to promote closer economic ties and cooperation between the two countries.

A similar objective is behind the two business forums in New Delhi and Mumbai on 1 & 3 October respectively, organised with the Cyprus-India Business Association.

Finally, President Anastasiades will make an official visit to Kuwait from 7-9 October and on the last day (9 October) he will address a Business Forum organised by the CCCCI, the Ministry of Energy, Commerce, Industry & Tourism and the Cyprus-Gulf Cooperation Countries Business Association.

FXPRO PREPARES TO ENTER WORLD OF SOCIAL TRADING

The Financial Times reported last month that currency bro-ker FxPro is planning to enter the world of “social trading” in the next couple of months, with the launch of a “Super Trader” platform featuring

about 200 Forex traders, whose positions can be copied by other FxPro traders.

“The whole concept is to give clients access to different [trading] strategies in order to diver-

sify their risk,” said Charalambos Psimolophitis, Chief Executive of the Cyprus-based platform.

He said traders would be picked and vetted by FxPro, based on factors such as their trading techniques, how profitable they have been, and how risky their trades were.

Fellow traders will be able to sort through the so-called strategy providers, according to their risk levels and how many followers they accrue.

“The client will be able to see the risk param-eters of the strategy,” said Psimolophitis.

up front

CYPRUS46 Makedonitissas Ave., P.O. Box 24005, 1700 NicosiaTel: +357- 22841500 Fax: +357- [email protected]

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GREECE265 Mesogeion Ave., Neo Psichiko, 15451 AthensTel: 30210 - 6722868 Fax: 30210 - [email protected]

ROMANIA31A Economu Cezarescu Str.,Sector 6, 060754 Bucharest Tel: 4031- 4253663 Fax: 4031- [email protected]

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up front


RUSSIA’S RICHEST BILLIONAIRES Following the collapse of the Soviet Union in 1991, Russia was ripe for entrepre-neurs snapping up formerly state-owned assets in metals, mining and the financial sector. The ten billionaires on this list, compiled for CNBC by research firm Wealth-X, started their rise to wealth during the 1990s. Now, many are famiiar names in the world of international business, owning diverse interests from global mining companies and banks to basketball and football clubs. At least one of them has the headquarters of his business in Cyprus. Which one? Read on… 12

AlisherUsmAnov (60)Co-Owner of USM HoldingsNet WOrtH: $19.9 billiON After the collapse of the soviet Union, Usmanov identified a niche for plastic bags when such items were scarce. in-vesting in machinery to produce them, he quickly cornered the market. later he moved into the commodities sector, buying stakes in metals, mining and gas companies. he is now co-owner of metalloinvest, the world’s fifth larg-est commercial iron ore producer. he recently bought a $100 million stake in Apple and is the second-biggest share-holder in Arsenal football club.

mikhAil FridmAn (49)Co-founder of Alfa GroupNet WOrtH: $16 billiON Fridman, co-owner of the Alfa Group Consortium, was one of four oligarchs who jointly owned a 50% stake in oil exploration firm Tnk-BP, the failed joint venture between BP and Alfa Access renova. BP and Fridman and his partners sold their stakes in Tnk-BP to oil giant rosneft in 2013. in June it was reported that the Alfa Group would invest more than $20 billion in global oil and gas projects.

leonid mikhelson (58)Chairman of SiburNet WOrtH: $15.2 billiON The chairman of petrochemicals company sibur and Ceo of russia’s largest gas producer, novatek, began his career as foreman of a construction com-pany. in 1987, mikhelson inherited the management of novatek, which built pipelines, roads and indus-trial facilities at the time. Between 2010 and 2011, he bought a 57.5% stake in sibur, which operates in 60 countries and employs 30,000 people. Bloomb-erg estimates the firm is worth over $12 billion.

314

6

Andrey melniChenko (41)Chairman of euroChemNet WOrtH: $13.6 billiON melnichenko made his fortune in coal and fertilizer, although in 1993 he co-founded mdm bank which went on to become one of russia’s largest banks.he later sold his stake in mdm and acquired a holding in eurochem, the largest producer of mineral fertilizers in russia. he also runs sUek, one of russia’s biggest coal producers, with business partner sergei Popov.melnichenko owns the world’s 16th largest superyacht, which is thought to have cost around $300 million. =5 =5vlAdimir lisin (57)Co-Owner: Fletcher Group HoldingsNet WOrtH: $12.4 billiON steel baron vladimir lisin, who started his career as a mechanic in a soviet coal mine, was seen as russia’s richest man in 2010 but a decline in steel prices has chipped away at his fortunes. he is the majority shareholder in novoli-petsk, one of russia’s largest steel produc-ers but his company, Fletcher Group hold-ings, also invests in energy, oil and gas exploration, banking and real estate. The Group’s administra-tive office is in nicosia.

vlAdimir PoTAnin (52)Chairman of interrosNet WOrtH: $12.4 billiON Following the break-up of the soviet Union, Potanin served as first deputy prime minister be-tween 1996 and 1997. he later founded interros, an investment company worth approximately $15 billion with assets in metals and mining, real estate, tourism and the media. he is also Ceo of norilsk nickel, the world’s largest producer of nickel and palladium. The vladimir Potanin Foundation supports higher education and arts and cultural projects in russia.

mikhAil Prokhorov (48)Owner: brooklyn Nets basketball teamNet WOrtH: $12.3 billiON Prokhorov has had a varied career as a banker, athlete, metals mogul, playboy, investor, media player and politician, according to Forbes. he owns the new rork-based Brooklyn nets Basketball team. he resigned as chairman of Polyus Gold, russia’s largest gold producer, to enter politics, founding the Civic Platform party in 2012 and winning 8% of the national vote when he ran against vladimir Putin in the presidential race.

GermAn khAn (51)Co-founder of Alfa Group

Net WOrtH: $11.1 billiON khan is co-owner of the Alfa Group Consortium, founded with mikhail Fridman (no.2) and Alexei kuzmichev. The three started Alfa-eco in 1989, before launching russia’s largest private bank Alfa Bank. The Alfa Group has interests in commercial and invest-

ment banking, asset management, insurance, telecommunications and water utilities. it bought Tyumen oil in the 1990s and merged it

with BP’s russian assets, later selling it share for $28 billion.

Alexey mordAshov (48)Chief executive of SeverstalNet WOrtH: $10.1 billiON nicknamed “the tank”, mordashov started his career at the

Cherepovets steel mill in north-western russia in 1988. he made his fortune after the privatization of Cherepovets, in which he was

a major shareholder, following the fall of the soviet Union. Cherepovets was renamed severstal and is now one of the

largest steelmakers in russia. mordashov, who owns 82% of the company, is also Chairman of the World steel Association.

98

vAGiT AlekPerov (63)President of lukoil

Net WOrtH: $12.1 billiON The former soviet deputy minister of oil and Gas, Alekperov heads lukoil, russia’s largest independent energy

company. According to Forbes, Alekper-ov willed his near-21% stake in lukoil

to his only son yusuf in 2013, with the caveat that his son can-not sell it. When exxonmobil sold its investment in lukoil in 2010, Alekperov bought some shares, which he sold for a 3% in 2011, earning him $350 million.

7

C M Y CM MY CY CMY K

interview

W ith fiscal adjustment programmes, rising unemployment and social outrage aimed

politicians and the EU institutions, is Europe going in the wrong direction?For sure, these are the most difficult times facing Europe in economic terms since the aftermath of World War II. The failure of EU institutions and national politicians to find satisfactory answers as fast as the public wants is dividing some countries from others and is strain-ing faith in the ideal of European unity. To that extent, Europe is going in the wrong direction. However, it is mistaken to think there is a “right” direction on which everyone can agree. The crisis of low long-term economic growth, high public and private sector debt, fragile banking systems and weak job creation is one that predates the financial turmoil that erupted in 2008. There was no agreement on common solutions before 2008 and I see no reason to believe there will be such agreement in the future – though that does not preclude more short-term fixes and medium-term good intentions of the kind we have become familiar with.

Five months after the events of March 2013, which ended with the pain-ful bail-in of the two major banks in Cyprus, how would you rate the EU’s decision-making procedures?For many years the EU has made a habit of taking its most important decisions

five minutes with...

at meetings that drag on throughout the evening and night, making the partici-pants tired, irritable and better at haggling than arriving at optimal solutions. The first March summit on Cyprus was a clas-sic of this kind. But, in their defence, the reason why EU policymakers go about their business in this way is that they regard the Union as a family or club in which decisions should be reached by compromise and consensus wherever possible. This explains why the initial decision on Cyprus incorporated the wish of President Nicos Anastasiades to make ordinary bank deposit holders share some of the cost of the financial rescue. But one has to ask if eurozone finance ministers would have made this unfathomably inept choice if they had been discussing Cyprus with clear heads at a normal time of day.

How much is the result of the German elections likely to alter the economic debate in Europe?I doubt that the German election result will produce a significant change in Ber-lin’s policies on the euro crisis. There is a broad consensus among Chancellor Angela Merkel’s Christian Democrats, the opposition Social Democrats and the smaller parties with which each is allied, that the way forward lies in permanent fis-cal discipline on the part of governments, economic reforms to promote long-term growth and careful measures aimed at strengthening the eurozone’s defences against future upheavals. These include progress on European banking union, but

not so fast as to include a comprehensive and common deposit guarantee scheme. A US-style fiscal union is absolutely ruled out. The next German government might conceivably feel able to press ahead with European integration more swiftly, if it were convinced that France had truly committed itself to a course of ambitious domestic economic reform. But that re-mains open to question and Franco-Ger-man relations are consequently marked by coolness and mistrust at present.

How would you describe European reporters’ views on Cyprus’ ability to overcome its current economic and fi-nancial predicament?I know few – if any – European report-ers who think the road ahead for Cyprus will be anything but arduous in the com-ing years. However, it is not so common these days to hear, as one did in the early months of this year, dire predictions that Cyprus will drop out of the eurozone and even detach itself from its EU moor-ings, thereby making itself vulnerable to pressure from Turkey and drawing other powers into an East Mediterranean power struggle. There is a reluctance to line up with Cyprus because it is seen to a great extent as the author of its own woes. In Germany and other creditor countries, there is a tendency to regard Cyprus as too small a problem to have much systemic impact on the eurozone as a whole – though this is a lesson drawn from experi-ences since March, rather than in the run-up to the dramatic events of that month.

Tony Barber Europe Editor, Financial TimesPanelist at the 4th Limassol Economic Forum


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opinion

There seems to be no reputational cost to morally hazardous behaviour

No Success Like FailureEconomic forecasters seem to feel no pain when they get it wrong

info: Dr. Savvas Savouri is a Partner and Chief Economist of Toscafund.

W atching the way he beats himself up when losing a point, you know Andy Murray is in the true sense of the word a winner. The same

weekend he came through with his historic win at Wimbledon, I watched the Australians in defeat. As the Lions quite rightly celebrated their rugby victory, I could see these words being seared in the minds of each of the Wallabies: I don’t like losing, it hurts.

Without entering into motivational psycho-babble, you have to recognise that errors and defeat mean failure. In two fields, however, there seems to be a total lack of hurt when losing. On the one hand we have England’s international footballers and on the other financial and eco-nomic forecasters.

HSBC research analysts have been unable to contain themselves about how impressive the future is for the UK’s residential market and how attractive its listed homebuilders are. Why do I make particular reference to HSBC? Because this is the firm which, until quite recently, was telling us that UK homebuilders were long-term rubbish.

I do not want to simply pick on investment bank research where analysts are never “wrong” but “surprised”. Such euphemisms are every-where, in research consultancies, accountancy firms and essentially all self-selected soothsayers. Consider the all-too-familiar, “I am adjusting my forecasts” where in reality the wording should read “I am correcting my forecasts”.

For their part, the IMF, OECD and CBI have recently raised their GDP forecast for the UK. What makes these revisions (read “corrections”) particularly interesting is that they come from organisations which, only recently, were lam-basting the Chancellor for driving the UK into the ground. Let me return to the UK residential sector, and consider another self-congratulatory team of forecasters. Capital Economics has built a lucrative predictive franchise as indeed has the Centre for Economic & Business Research. Rath-er than take out costly adverts to raise the profile

of their business, however, Capital Economics regularly produces shock-forecasts: “London’s house prices to halve”; “Base rates to hit 8%”; “Unemployment to reach 4 million”; “China to hard land”; “Greece to leave the euro”… you get the idea. Such predictions cannot fail to find themselves emblazoned on the front pages or aired with top billing on business broadcasting channels. And yet London’s property market has continued to flourish, base rates still wallow, unemployment is falling, China is growing and Greece is holding on in there. Remarkably, there seems to be no reputational cost to morally haz-ardous behaviour.

Of course people in glass houses…I will not deny presenting forecasts that fail.

Believe me, it hurts when matters do not unfold as I expected. However, I do not merely brush aside each failure, but strive to understand what contributed to the error. I will sometimes insist the error is in timing. Yes, I know, timing matters and an error of timing costs. But if first principals and fundamentals continue to point to a particu-lar outcome I will continue to make the case it will happen.

It amused many when, back in 2011, I forecast that the Australian dollar would reach US$1.7 by the end of 2014. What a blunder this now seems with the currency lurching ever lower below parity. Well, I stand by my positive view on the Australian economy and its currency; I trust fun-damentals, having as much disdain for technicals as I have for a drunk disrupting a play; at some point he will be thrown out and order restored. If by December 31, 2014 the Australian dollar hasn’t recovered all and more of the ground it has lost, then that will go in my hurt locker.

I would, however, make the point that the gap between my enthusiasm towards Australia today, and the less than favourable consensual mood towards it, is much the same size as that which existed barely twelve months ago between what I expected for Britain and what the consensus was suggesting. I have every confidence the same revi-sions to consensus thinking towards Australia will occur as has already been seen for the UK.

By Savvas Savouri


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A LIMASSOL-BASED CREDIT RATING AGENCY IS GOING FROM STRENGTH TO STRENGTH.

CapitalValue44 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

By John Vickers

credit rating

W

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS Gold 45

e’ve all heard of Moody’s, Standard & Poor’s and Fitch Ratings but the so-called “Big Three” rating agencies are by no means the only ones. Capital Intelligence (CI) has been providing credit analysis and ratings since 1985, and now rates over 400 Banks, Corporates and Financial Instruments (Bonds & Sukuk) in 37 countries. A specialist in emerging markets, CI’s geographical coverage includes the Middle East, the wider Mediterranean region, Central and Eastern Europe, South Asia, South-East Asia, the Far East, and North and South Africa. What few people know is that CI is based in Limassol. The company’s Managing Director, Zafer Diab, spoke to Gold about how CI has expand-ed over the past three decades and described the company’s plans for future growth, as well as recalling that it issued its own warnings about Cyprus over two years ago.

Gold: Many people will be surprised to know that there is a credit rating agency in Cyprus. Have you purposely kept a low profile?Zafer Diab: Certainly not! The media spot-light tends to focus on the big two or three global rating agencies, particularly when they get things wrong. Capital Intelligence has a solid reputation among financial professionals, especially in the banking industry, but it would be fair to say that our rating actions are not always monitored closely by the mainstream media. There is another dimension to this with regard to Cyprus. The island has historically served as a regional location for the ratings industry. However, the Cypriot economy is quite small in comparative terms and only a few institutions have been rated by Capital Intelligence or another international rating agency. So the ratings industry does not receive a great deal of attention locally.

Gold: How did Capital Intelligence come to start operations in Limassol almost 30 years ago?Z.D.: We launched our credit rating service in the mid-1980s in response to market demand for analysis of the counterparty risk of banks in the Middle East and North Africa region. This was a region largely eschewed by other rating agencies at the time and I believe we still rate more banks in the region than any other rating agency. Cyprus was chosen for a variety of reasons, including the quality of life, relative stability and proximity to our core markets.

Gold: How has the company’s business ex-panded over the years?Z.D.: The first thing we did was to extend our geographical coverage beyond the Mid-dle East and North Africa by rating banks in more countries. So today we rate banks in Asia, including China and India, as well as South Africa and Central and Eastern Europe. We have expanded our sectoral coverage to non-bank financial institutions, corporates and governments. We also rate specific financial instruments, such as bonds and Islamic finan-cial instruments.

Gold: Why do financial institutions or gov-ernments need rating agencies?Z.D.: A credit rating may improve access to capital markets and counterparty credit lines, as well as help broaden an institution’s

investor base. Ratings can also be useful for benchmarking creditworthiness against peers and for promotional or marketing purposes, including strengthening investor relations. For investors and other users of credit ratings, ratings and the accompanying analysis can be used to supplement internal assessments of credit risk and for setting exposure limits to rated entities.

Gold: Given the global recognition of the “Big Three” rating agencies, how difficult is it for a relatively small player to gain a foothold in the market?Z.D.: It would certainly be challenging for a new entrant but Capital Intelligence has been in the business for some time and we have built up a strong reputation in our core mar-kets as a provider of insightful and independ-ent credit rating opinions. The concentration risk posed by the “Big Three” is clearly a concern for policymakers and it is good to see that the European Union is trying to do more to open up the market to other agencies within Europe.

Gold: Rating agencies are frequently criticized – usually when they are issuing downgrades of course – for ratings that may become self-fulfilling prophecies. In other words, when a downgrade is announced, the economy or the financial state of an institution will automatically decline. How do you respond to such views?Z.D.: Certainly rating downgrades some-

MANY GOVERNMENTS ARE NOW ACTIVELY

SEEKING TO DISCOURAGE

THIS MECHANISTIC RELIANCE ON RATINGS


times have a much bigger impact than they ought. Part of the problem is that ratings have been “hardwired” into the financial regulations of many countries and into the investment mandates of major institutional investors. As a result, we have seen instabil-ity in markets where a ratings downgrade by one of the ‘Big Three’ – whether justified or not – triggers a massive sell-off of the downgraded stock, worsening an already bad situation for the rated institution. But we have also seen complacency, where long-term investors hold a financial instrument because a couple of agencies have given it an ‘AAA’ rating, without undertaking any credit analysis of their own.

Rating agencies are not really to blame for the hardwiring and many governments are now actively seeking to discourage this mechanistic reliance on ratings.

Gold: The “Big Three” were roundly criticized for their flawed assessments prior to the US sub-prime crash which led to the global financial crisis. Since then, do you think they have changed anything about the way they work?Z.D.: I suspect quite a lot has changed, due in no small part to the growth in regulation and increased scrutiny of rating agencies in many countries. For example, in the EU, rating agencies were not regulated prior to September 2009. Now any rating agency that wants to operate in the EU must be registered with the European Securities and Markets Authority (ESMA) in Paris. The requirements for registration are quite strin-gent and agencies are subject to ongoing monitoring of their activities. We have all had to strengthen our internal controls and compliance functions, in addition to being more transparent about how we assign rat-ings. Regulation has been generally good for the industry and for Capital Intelligence specifically, as we believe it will increase market confidence in the ratings we issue. Gold: How complex are the issues that you have to take into account before issuing or changing a rating?Z.D.: In general we look at a number of quantitative and qualitative factors that may affect the ability and willingness of a rated entity to meet its financial obligations in full and on time. In the case of a bank, for example, we examine asset quality, capital

adequacy, liquidity and profitability. But we also look at factors that may be important for longer-term creditworthiness, such as the bank’s market position, business strategy and management capabilities. We would also analyze the bank’s operating environment, including the degree of economic and politi-cal risk in the bank’s principal markets and the quality of the regulatory and supervisory regime in which it operates.

Gold: How much of the banking sector collapse in Cyprus did you “predict”?Z.D.: I seem to recall that by the middle of 2011 we were warning about weakening asset quality and worsening operating conditions in both Greece and Cyprus for the major Cyp-riot banks and also that the Greek sovereign debt crisis presented significant downside risks to their financial strength. A year later, we warned that the government was in urgent need of official financial assistance from exter-nal creditors to service its debts and meet the capital needs of banks. We did not expect the government to take as long as it did to negoti-ate a bailout and it is fair to say that, although we foresaw going concern risks at Cyprus Popular Bank and very significant risks to banking system liquidity, we did not foresee the deposit for equity exchange that was ap-plied to Bank of Cyprus.

Gold: Based on your knowledge and ex-perience, and the hundreds of ratings you issue each year, what can you say about the Cyprus banking sector in the light of what happened in March?Z.D.: Clearly, the standalone financial strength of the local banks is generally low and it will take some time to resolve the sec-tor’s problems. Bank of Cyprus has recently been recapitalized and there are plans to restructure and recapitalize other banks, particularly the cooperatives. Nevertheless, with the economy mired in recession, there

CAPITAL CONTROLS AND RESTRICTIONS ON DEPOSIT WITHDRAWALS IN CYPRUS

ARE UNLIKELY TO BE PHASED OUT QUICKLY

is a risk that asset quality will continue to deteriorate for some time and the capital needs of some institutions may be higher than currently envisaged. There are also significant near-term threats to funding and liquidity, as confidence in the sector has been damaged to such an extent that maintaining the current deposit base, let alone growing it, will be very difficult. As a consequence, capital controls and restrictions on deposit withdrawals are unlikely to be phased out quickly. Moreover, in the absence of deposit growth, the banks will not be able to provide the necessary fund-ing for economic growth to take place. The crisis has also exposed significant weaknesses in banks’ risk management and internal governance arrangements, and also in the supervisory and enforcement capacity of the Central Bank. These issues will also have to be effectively remedied in order to restore confidence and return the sector to a more sustainable footing.

Gold: What are your ambitions for Capital Intelligence after its 30th anniversary?Z.D.: The barriers to entry in the rating in-dustry are quite high and the fact that Capital Intelligence is still going from strength to strength after almost 30 years is testament to the integrity and credibility of the company’s ratings and associated research. Our main ambition is to build on our sound reputa-tion and become one of the leading rating agencies of choice in the markets we cover. We also aim to extend our ratings coverage to developing markets that are not currently covered to any great extent by the major rat-ing agencies, but where demand for ratings and related services is likely to increase as their financial sectors grow. Further investment in analytical capabilities and product develop-ment will be vital to ensuring that our ratings service remains relevant to investors, robust to growing competition and compliant with rising regulatory standards.

credit rating

RENEWING EGYPT’S DEMOCRATIC ASPIRATIONS

THE COUNTRY’S AMBASSADOR TO CYPRUS REMAINS OPTIMISTIC ABOUT HER COUNTRY’S FUTURE.

Almost one year to the day after the world hailed another ‘Arab Spring’ as Egypt held its first-ever democratic elections, the elected president Moham-med Morsi was removed by

the military after giving himself wide-ranging powers that were beyond any kind of review. The situation in the country remains tense but Egypt’s Ambassador to Cyprus, Dr. Heba Elmarassi tells Gold that she is confident that the situation will soon have returned to normal. Not only that, she unhesitatingly gives readers the all-clear to visit the country’s Red Sea resorts at anytime.

Gold: I think we have to start by asking you about the current situation in your country. After the removal of President Morsi and the subsequent chaos and blood-shed, how confident are you that things can soon return to peace and normality in Egypt? Heba Elmarassi: I am quite confident that order and calm will soon be restored in Egypt. Egypt has demonstrated its commitment to implementing democratic principles and the restoration of democratic governance in the earliest time possible, by announcing a clear road map stipulated in the constitutional dec-laration of July 3, 2013. On August 21, 2013, H.E. the Prime Minister of Egypt announced some important developments in the Govern-ment’s Programme for a Sustainable Path to Democracy. I can assure you that Egyptians are resolved to create an environment that embod-ies a modern, civil and democratic society, one that respects the rule of law, and one that certainly does not discriminate on the basis of gender, race or belief.

Gold: Do you believe that Egypt is capable of ever becoming a Western-style democ-racy or is that something that the country does not actually aspire to?H.E.: I believe that Egypt will and should become a democracy, with all the consequenc-es that this term entails. Having said that, I can be more specific and say that Egypt will be aspiring to restore law and order all over the country, to maintain the security of its citizens, irrespective of religious denomination or political affiliation, places of worship and other governmental, private and public properties, as well as the protection of the rights and liber-ties of its citizens according to international standards. We shall also be endeavouring to implement an all-inclusive, transparent road-map based on equal opportunities and aimed at restoring democratically elected institutions,


an elected parliament and electing a new president. The constitution will be amended in such a way as to reflect the identity, desires and hopes of the Egyptian people and we shall hold a referendum to approve the amended con-stitution. This is recognized as an important milestone in the transformation process.

Gold: How will you go about achieving some kind of reconciliation?H.E.: We shall launch a dialogue with all peaceful political forces, parties and civil society in order to complete the legal and admin-istrative framework relative to the demo-cratic process. We intend to build democratic institutions including the National Council of Human Rights, the National Council of Women and the National Council for Justice and Equality. And we are going to implement

interview

I AM QUITE CONFIDENT THAT ORDER AND CALM WILL SOON BE RESTORED IN EGYPT

THESE TWO GREAT NATIONS WILL MANAGE TO COME OUT OF THESE CHALLENGING SITUATIONS STRONGER AND WISER

By John Vickers. Photograph by Jo Michaelides

Dr. Heba Elmarassi

a national programme through independent national committees with the aim of achieving long-lasting national reconciliation, as well as establishing an independent blue ribbon com-mission to look into the events following June 30, 2013.

Gold: Cyprus and Egypt have had good relations for many years. What kind of mutual trade goes on between the two coun-tries? Is there room for improvement? H.E.: Egypt and Cyprus have enjoyed excel-lent bilateral relations in all fields for many decades. Needless to say, outstanding political relations between the two countries should be reflected in the level of their economic and trade cooperation. Unfortunately, this is not the case with Egypt and Cyprus, and that’s why both sides should exert tireless efforts to increase their mutual trade which, in 2012, stood at some €50 million only. With this in mind, the prospects for cooperation and areas in which it is possible should be explored and widened, through the holding of joint seminars, workshops, exchange visits and greater engagement on the part of the business communities in both Egypt and Cyprus.

Gold: Cyprus and Egypt now have perhaps more in common than before, following the discovery of natural gas deposits in Cyprus’ Exclusive Economic Zone. There have been various reports suggesting that Egypt wishes to cancel the agreement on the maritime borders of the countries. Can you shed some official light on this matter?H.E.: Egypt remains committed to the agree-ment on the maritime borders with Cyprus. The discovery of the hydrocarbon reserves in Cyprus’ Exclusive Economic Zone makes it even more important to consolidate coopera-tion between the two countries in the field of energy, and especially regarding the exploration and exploitation of natural gas. We are cur-rently discussing some agreements pertaining


to this matter with Cyprus at a technical level. I strongly believe that the discovery of natural gas in the Eastern Mediterranean should be used positively towards reaching peace and prosper-ity in the region rather than towards causing conflict.

Gold: Another common factor between the two countries is tourism, which brings con-siderable income to them. How badly has the recent situation affected tourism to the country? Obviously Cairo is out of bounds for now but Sharm el Sheikh, for instance, appears unaffected. Is this the case?H.E.: Undoubtedly the recent situation has affected the Egyptian tourism industry with arrivals and occupancy rates slowing down. Nevertheless, Egypt is working diligently in all spheres to restore order all over the country, with a view to stabilizing the situation and help-ing attract and increase the number of foreign tourists visiting Egypt. I can assure you that the tourist resorts on the Red Sea have not been affected at all by what is going on in Egypt, and I invite all Cypriots to continue visiting such areas to discover the beauty of Egypt’s beaches.

Gold: Assuming that peace returns to Egypt and Cyprus manages to overcome its economic problems, what would be your wishes for the two countries, separately and together?H.E.: I am not only confident that peace and economic prosperity will return to Egypt and Cyprus but also that these two great nations will manage to come out of these challenging situations stronger and wiser. I am looking forward to maintaining excellent relations between the governments and the peoples of Egypt and Cyprus, taking into account that our relations date back to ancient times through the great Mediterranean. I sincerely hope that our people-to-people exchanges and our intercultural communication will increase to the benefit of the two countries.

THE DISCOVERY OF NATURAL GAS IN THE EASTERN MEDITERRANEAN SHOULD BE USED POSITIVELY TOWARDS REACHING PEACE AND PROSPERITY IN THE REGION

interview

30 MONTHS OF TURMOIL & UPHEAVAL IN EGYPT2011February11: President Hosni Mubarak steps down in response to massive demonstrations and the military takes over. It dissolves parliament and suspends the constitution, meeting two key demands of protesters. November 28: Egypt starts multi-stage, weeks-long parliamentary elections. The Muslim Brotherhood wins nearly half the seats in the lower house.

2012May 23-24: The first round of voting in presidential elections has a field of 13 candidates. The Muslim Brotherhood’s Mohammed Morsi and Ahmed Shafiq, the last prime minister under Mubarak, emerge as the top two and will face each other in a runoff. June 16-17: Morsi wins with 51.7% of the vote. June 30: Morsi takes the oath of office. November 22: Morsi unilaterally decrees greater powers for himself, giving his decisions immunity from judicial review and barring the courts from dissolving the constituent assembly and the upper house of parliament. The move sparks days of protests. November 30: Morsi sets a December 15 date for a referendum. December 4: More than 100,000 protesters march on the presidential palace, demand-ing the cancellation of the referendum and the writing of a new constitution. December 15 & 22: In the two-round referendum, Egyptians approve the constitu-tion, with 63.8%percent voting in favour but turnout is only 32.86%.

2013January 25: Hundreds of thousands hold protests against Morsi on the 2nd anniversa-ry of the start of the revolt against Mubarak. June 30: Millions of Egyptians demonstrate on Morsi’s first anniversary in office, calling on him to step down. July 1: Egypt’s military gives the president and the opposition 48 hours to resolve their disputes, or it will impose its own solution. July 2: Morsi pledges to defend his legiti-macy and vows not to step down. July 3: Egypt’s military chief announces that Morsi has been deposed, to be replaced by the Chief Justice of the Supreme Constitu-tional Court until new presidential elections. No time frame is given. July 26: Prosecutors announce that Morsi is under investigation for a host of allegations including murder and conspiracy. July 30: The EU’s top diplomat Catherine Ashton holds a two-hour meeting with Morsi at an undisclosed location. August 7: Egypt’s presidency says that diplomatic efforts to resolve the standoff between the country’s military-backed interim leadership and the Muslim Brother-hood have failed.

Contact Powersoft www.powersoft.com.cy Ι [email protected] Ι Tel: 22.410.000

taxation

Cyprus’ list of Double Taxation Agreements (DTAs) constitutes one of the country’s main competitive advantages as it pursues success as an

international financial and business centre. At present the country maintains 45 DTAs while 10 more are under negotiation. The list may appear impressively long but other competitive jurisdictions have many more and, in some cases, are ahead of Cyprus in concluding new treaties. It has been the professionals’ view for some time that Cyprus should strengthen and expand its network of bilateral agreements for the avoidance of double taxation to cover more countries, especially those with emerging economies. Also, specific double tax treaties need to be renegotiated so as to apply to new financial instruments and the trends in inter-national trade.

“We should be rigorous in expanding and continuously improving the DTA network,” says Angelos Gregoriades, Chairman and Head of Tax of KPMG Cyprus and a member of the Board of the Cyprus Investment Promotion Agency (CIPA). “DTAs are an important tool in the carrying out of cross-border invest-ment since double taxation in international investment is neither efficient nor desirable,” he adds. “The longer the list, the better the tax efficiency of Cyprus as an attractive and respectable financial centre.”

Recently the international media has reported on the intense worldwide interest in concluding not only DTAs but also investor promotion and protection agreements (IPPAs) with Sub-Saharan countries. This was trig-gered by a surge in foreign investment in Afri-ca. According to the 2013 report from the United Nations Conference on Trade and Development (UNCTAD), Foreign Direct Investment

(FDI) flows to African countries increased by 5% to US$50 billion in 2012 even as global FDI fell by 18%. In East Africa, energy resources such as recently-discovered gas reserves in Tanzania and oilfields in Uganda have drawn increased FDI to the region with inflows increasing from $4.5 billion in 2011 to $6.3 billion in 2012.

Kenya was among the five top destinations for FDI projects in Africa with 50 recorded for last year. Britain’s Financial Times reports that the surge in foreign investment in Africa “has triggered a race among offshore financial centres to sign deals to reduce the tax bills of overseas companies and protect their investment on the continent, with Mauritius, Singapore and Luxembourg rushing to secure agreements. Offshore centres that typically channel FDI flows are seeking negotiations with host African nations to sign investor pro-tection and promotion agreements, which can minimise the risk of nationalisation by forcing fair compensation and arbitration, as well as double taxation avoidance agreements, which reduce the tax bill that companies face.”

FDI levels in Sub-Saharan Africa are now more than double the levels of ten years ago. While it is apparent that natural resources are still the mainstay of FDI flows to Africa, the UNCTAD report notes that FDI in consumer-oriented manufacturing and services are beginning to climb, reflecting the growing purchasing power of the continent’s emerging middle class. But the FT says that the rush “could prove controversial as poverty reduction campaigners and others

blame these kinds of deals for a loss of revenues for governments.”

It adds that Mauritius, which boasts one of Africa’s largest offshore financial centres, is leading the way having already signed 19 tax deals with African countries and it is negotiat-ing another three. But some countries, notably

the Netherlands, are reviewing their DTAs with Uganda, Zambia and Ghana in the light of criticism that such agreements allow companies to pay taxes in the country of legal residence – usually a low-tax jurisdiction such as Luxembourg – rather than in the country where the physical operations are based. But the FT notes that international offshore centres

WE SHOULD BE

RIGOROUS IN EXPANDING AND CONTINUOUSLY

IMPROVING THE DTA

NETWORK

TIM

E FOR NEW DOUBLE

TAX A

GREEMENTS

AGAGA RCYPRUS SHOULD EXPAND ITS NETWORK OF BILATERAL AGREEMENTS FOR THE AVOIDANCE OF DOUBLE TAXATION TO COVER MORE COUNTRIES, ESPECIALLY THOSE IN AFRICABy Kyproula Papachristodoulou

CYPRUS TAX TREATY PARTNERS

NOTES* 7 Denmark - The existing Convention ceased to have effect as from 1.1.2012** The treaty between Cyprus and the Socialist Federal Republic of Yugoslavia is still in force.*** The treaty between Cyprus and the Czechoslovak Socialist Republic is still in force**** The treaty between Cyprus and the Union of Soviet Socialist Republics

“are not alone seeking preferential deals” with African countries to channel FDI, with South Africa and Botswana trying to play a similar role locally.

Angelos Gregoriades told Gold that, given the interest expressed lately in the countries of Sub-Saharan Africa, perhaps a targeted effort to conclude Double Taxation Agree-ments with those countries may prove to be of benefit to Cyprus. “Especially considering the exploitation of our own natural resources and seeing that energy resources are something we have in common, an IPPA may encourage the development of business relations in that sector. Similar considerations should be made for countries in the Latin America region such as Brazil,” he said.

In the case of Cyprus, there are specific existing tax treaties that need to be renegoti-ated such as those with the USA and China. It should also be noted that cooperation with the US authorities will also be enhanced through the implementation of FATCA (Foreign Account Tax Compliance Act) regulations. For this purpose, the Cyprus government is involved in negotiations with the US Tax Authorities for the signing of a bilateral agree-ment.

Gregoriades points out that with regard to IPPAs, “These need to be concluded so as to enhance the investment environment. How-ever, prior consultation is now required by the European Union in this respect.”

But what is the stance of Cyprus as an attractive jurisdiction in relation to DTAs, compared with other financial centres like Luxembourg, the Netherlands, Mauritius and Singapore? Gregoriades told Gold that a brief look at other competing jurisdictions shows that the Netherlands has over 90 Double Tax Treaties in force, Ireland and Luxembourg have more than 60, and Switzerland has more than 100. Mauritius has concluded 47 DTAs whilst, Singapore has 69. Cyprus has concluded 45 DTAs and efforts are ongoing, with negotiations currently underway with ten countries.

In terms of the target countries, South America and Sub-Saharan Africa may defi-nitely be promising regions, Gregoriades says. “It is interesting that other financial centres are not yet so active or operative in these areas. For example, the Double Tax Treaty Network of Sub-Saharan African countries in general

STATEDATE

OF ENTRY INTO FORCE

1 AJIKISTAN**** 19832 ARMENIA 20113 AUSTRIA (NEW ΑGREEMENT) 1990 (2013)4 AZERBAĲAN**** 19835 BULGARIA 20016 BELARUS 19997 BELGIUM 19998 CANADA 19859 CHINA 1991

10 CZECH REPUBLIC (NEW AGREEMENT)

1980 (2009)

11 DENMARK* TREATY NOTES NEW AGREEMENT

1981 1982 2011

12 ESTONIA 201413 EGYPT 199514 FINLAND 201415 FRANCE 198316 GERMANY

(ΝEW AGREEMENT)1977 2011

17 GREECE 196918 HUNGARY 198219 INDIA 199420 IRELAND 1970

21 ITALY TREATY PROTOCOL (ADDITIONAL PROTOCOL)

1983

22 KUWAIT (NEW AGREEMENT) 198623 KYRGYZSTAN**** 198324 LEBANON 2005

25 MALTA 199426 MAURITIUS 200027 MOLDOVA 200828 MONTENEGRO** 198629 NORWAY 195530 POLAND

(NEW AGREEMENT)1993 2013

31 PORTUGAL 201432 QUATAR 200933 ROMANIA 198234 RUSSIA

(AMENDMENT PROTOCOL)1999

(2012)35 SAN MARINO 200736 SERBIA** 198637 SEYCHELLES 200638 SINGAPORE 200139 SLOVAKIA*** 198040 SLOVENIA****

(NEW AGREEMENT)1986

(2011)41 SOUTH AFRICA 199842 SPAIN 201443 SWEDEN 198944 SYRIA 199545 THAILAND 200046 UKRAINE****

(ΝEW AGREEMENT)1983

(2014)47 UNITED ARAB EMIRATES

48 UNITED KINGDOM TREATY PROTOCOL

1974

49 USA 198550 UZBEKISTAN**** 1983

is with high tax jurisdictions such as France which has concluded over 25 DTAs with African countries though this may, of course, be due to historical reasons.”

It is noteworthy that Cyprus has only concluded Double Taxation Agreements with Egypt and South Africa from the whole of the African continent and none is with a Sub-Saharan African country. In contrast, both the Netherlands and Switzerland have concluded DTAs with Ghana, Malawi and Zambia, whilst Switzerland also maintains an active Double Tax Treaty with Ivory Coast and The

Gambia among others. Singapore has six such deals, while Seychelles, Luxembourg and the Netherlands have started negotiations with governments in Africa. The Cyprus govern-ment, Gregoriades says, should consider taking immediate action on this matter.

But what needs to be done for Cyprus to upgrade and update its DTAs? In Angelos Gregoriades’ view, “We should intensify our negotiation processes with other countries and become more proactive in expressing an inter-est in concluding DTAs. It would also be very useful to put down policy guidelines outlining our goals and our targets and set a clear path of our intentions for formulating DTAs. It is very important to have a Business Plan.”

It is worth noting, however, that the first step in such cases tends to be political, which is why the Ministry of Foreign Affairs, in con-sultation with the Ministry of Finance, should perhaps be engaged more actively in diplomatic talks initiating the process of concluding such tax agreements.

It should also be noted that a well-established, dedicated team, consisting of professionals from the Ministry of Finance and the private sector, has already been established and is currently handling the negotiations and technical issues relating to Double Tax Agreements.

STATEDATE

OF ENTRY INTO FORCE

DOUBLE TAXATION

I nternational juridical double taxation, generally defined as the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical periods, has

a harmful effect on the international exchange of goods and services and cross-border movements of capital, technology and people. In recogni-tion of the need to remove this obstacle to the development of economic relations between countries, as well as of the importance of clarifying and standardising the fiscal situation of taxpayers who are engaged in activities in other countries, the OECD has developed a Model Convention on Income and on Capital which provides a means to settle on a uniform basis the most common prob-lems that arise in the field of international juridical double taxation.

TIM

E FOR NEW DOUBLE

TAX A

GREEMENTS


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KPMG Academy Upcoming Seminars: May - June 2013

Tax updates 2012 - 2013*Date: 20/05/2013

International Tax PrinciplesDate: 03/06/2013

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SHIPPINGSPECIALSERVICESSUPPLEMENT

INTERVIEWSLUIS CAMPOS E CUNHATHEO PARPERISPETR ZEMCIK

+ CHRISTODOULOS ANGASTINIOTIS, NIKOLAOS GEORGIKOPOULOS, PERSELLA IOANNIDES

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SOCCERNOMICS How to Deal with German Champions


KUWAITLearning fromthe Kuwaitiexperience

INTERVIEWSJohn M. Koenig John MauldinSteve Roberts

+ THANOS DOKOS, GEORGE IOULIANOS, PETER JOHN

THE

Worldwide consumption of natural gas

3,222.9 bcm in 2011

The Russian Federation has the largest share of the world’s natural gas

reserves

All 6 leased blocks in Cyprus EEZ may

potentially hold

1,400 bcm of natural gas

Europe is dependent on Russian

gas for

35-40% of its energy production

USGS estimates that Cyprus may

have up to

60 tcf of natural gas

All 6 leased blocks All 6 leased blocks Europe is Europe is

Levant Basin holds

close to 3450 bcm of natural

gas25%

of the natural gas arriving

in the EU is in liquid form

Cyprus’ block 12 first gas to Cyprus:

Q3/2018

$1.6 trillion per year on average – will be

necessary to meet energy demand until 2035

Worldwide consumption consumption

Natural gas emits up to 60% less CO2 than

coal when used for electricity generation

Natural gas is affordable,

reliable, efficient and

available

Cyprus’ block 12 first LNG export:

Q3/2019

Natural gas is primarily used for electricity

generation, industrial, residential, and

commercial sectors

ISSUE 28 JULY 14 - AUGUST 13, 2013PRICE €4.95

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Gold ISSU

E 26

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E 13, 2

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*Available between the hours of 0830 and 1700 Monday to Friday. Calls may be recorded for security reasons and so that we may monitor the quality of our service. Call costs may vary. Please check with your telecoms provider. Barclays offers banking, wealth and investment management products and services to its clients through Barclays Bank PLC and its subsidiaries. Barclays Bank PLC is registered in England and authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered No. 1026167. Registered Office: 1 Churchill Place, London E14 5HP. Barclays Bank PLC is regulated by the Central Bank of Cyprus in the conduct of its banking and investment business in Cyprus.



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To find out more about how Barclays can help, go to barclays.com/wealth or call us on +357 22 654477* for our Nicosia office or +357 25 208000* for our Limassol office.

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With a Diamond Exchangethe island could rivalDubai, say experts

DIAMONDS ARE FOR… CYPRUS ?

OUTSIDE LOOKING IN How Foreigners

view Cyprus today


BANKINGFive Lessons

for Europe

INTERVIEWSJose Barrionuevo

Morten FonGuillermo Nielsen

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investment


Investment firms have been hit by the agreement with the Troika but Cyprus’ reputation has been hit harderBy John Vickers. Photograph by Jo Michaelides

RESTORING INVESTOR CONFIDENCE

Dr. StelioS PlatiSDr. Stelios Platis is an economist, with a PhD in Finance and Macroeconomics from the Faculty of Economics and Politics of the University of Cambridge. In 2003 he founded the internationally-awarded company MAP S.Platis (www.mapsplatis.com), providing risk management, internal audit and compliance support services to the EU financial services sector. Since 2009 he has been the Chairman of the Association of Cyprus International Investment Firms (ACIIF).

T he Association of Cyprus International Invest-ment Firms (ACIIF) was set up in 2009 to represent the interests of investment firms in Cyprus. It is now by far the biggest Association in the sector as well as its strongest voice. The ACIIF has worked – and continues to work – closely with the regulator (the Cyprus Securities

and Exchange Commission) with the aim of growing and supporting Cyprus’ investment firms which are a mainstay of the financial services sector today.

Asked how his members have been affected by the events of March 2013, ACIIF Chairman Dr Stelios Platis says that, fortunately, only a small number suffered a haircut of their deposits. However, he considers that the most significant damage has been to the reputation of Cyprus as a financial services centre and to the image that regulated Cyprus Investment Firms have in the eyes of their clients and investors.

“It was a terrible agreement for the financial services sector,” he says. “There is no doubt about that. It targeted the Cypriot banks and, through them, our entire financial services model. The financial services sector is extremely sensitive to issues relating to investor confidence and investor confidence was significantly hurt by the whole process. However, what’s done is done and we can’t turn back the clock. We now need to see how to put this behind us and bring the sector back on track towards growth.”

The members of the ACIIF are EU Investment Firms which operate either in or from Cyprus and always maintain a significant physical presence here, including offices and personnel. However, their clientele is primarily located overseas. Platis acknowledges that a number of member firms are seriously thinking about relocating to other jurisdic-tions but he considers that, under the circumstances, this was to be expected. Fortunately, the majority are staying.

“The decision by international investment firms to base themselves in Cyprus always depends on much more than one or two factors,” he explains, “whilst the relocation of such regulated institutions is not always an easy task. One should not underestimate the fact that Cyprus maintains a well-established and tested regulatory framework in the sector, with one of a handful of regulators in the world who understand the business of Forex and binary options. In my view, the Forex and binary options industry in Cyprus has a very solid foundation and I am confident that it will overcome any reputational and practical issues still pending.”

Stelios Platis has good reason to be particularly satisfied by the fact that nearly a quarter of the world’s 50 largest global Forex brokers have chosen Cyprus as the jurisdiction of choice for their particular sector. A considerable role in this development has been played by his own firm, MAP S.Platis. Cyprus was one of the first jurisdictions to issue a number of “pure” retail Forex Investment Firm licences under MiFID in early 2008 – all of them represented by MAP S.Platis. Before that, he recalls, “The Cyprus Securities and Exchange Commission did not want to hear about Forex, let alone be responsible for its over-sight. They kept throwing reasons back at us why they considered it a ‘grey’ area regulation-wise and not their responsibility, directing us to the Central Bank of Cyprus (CBC). Then the CBC would send the issue back to CySEC and then it went to the CBC and so on. It was make-or-break for the sector and we realised this so we kept trying. In the end, through logical argument, perseverance and lobbying, we convinced CySEC to take the sector under its prudential supervision.”

Cyprus now tops the list of retail Forex jurisdictions and MAP S.Platis has been responsible for around 70% of all Forex licences issued to date.

If the Forex/Binary Options sectors are thriving, sadly this cannot be said of other key sectors of the economy. Stelios Platis considers that the downsizing of the banking sector, in particular, has harmed the island’s reputation “quite seriously, especially given the overall clumsy way that the issue was handled by the Troika and the EU.” He believes that it gave the (wrong) impression that the Cypriot authorities and the Cypriots were not aware of how the financial services sector works and what investors need. Both regulatory authorities – the Central Bank of Cyprus and the Cyprus Securities and Exchange Commission – as well as the Government now need to prove otherwise, he says.

Platis disagrees strongly with the Troika’s contention that Cyprus’ business model was flawed and the country needs to find a new one. While recognizing the existence of “a number of inefficiencies and rigidities as well as serious flaws, especially in terms of corporate govern-ance in the banking sector and its prudential supervision,” he believes that as far as the financial services sector is concerned, and investment services in particular, “It has been a very successful model with a great history and an even greater future. Cyprus’s business has been and will be in services and financial services play a very important role in this respect – both as a target as well as a means.”

Asked what can be done to restore confidence, the ACIIF Chairman says that “Cyprus needs to work really hard on ending the uncertainty in the banking sector.” Thereafter, it needs to move towards training and modernising the main supervisory bodies towards efficiency and risk-based supervision, and communicating this effectively to the sec-tor. A good solution, he suggests, would be to have a single regulator with the resources, capacity and strategy to make Cyprus a real hub for financial services.

And while some of his members still need convincing, Dr Stelios Pla-tis remains optimistic that Cyprus will eventually return to economic growth and convinced that Cyprus can fulfil its commitments under the Memorandum of Understanding with the Troika.

“Cyprus is a small, dynamic and quite manageable economy with excess fiscal weight that can still be shed,” he says. “At the same time, the Government needs to make sure that as it fulfils its commitments, a strategic plan based on Cyprus’ competitive advantages is put in place and followed consistently. There are always great opportunities that surface following such a large-scale restructuring of an economy with so many competitive advantages.”

Regarding the short- and long-term future of Cyprus as a regional centre for professional and financial services, Platis notes that, whatever may have happened in the past six months, the advantages of Cyprus are still there. “Let’s not forget why such global brokers choose Cyprus as their base in the first place: low barriers to entry, its geographical location, superb support and ancillary services by professionals, a solid infrastructure, low and efficient taxation, contemporary legislation and reasonable regulators, a dynamic workforce and these are just a few of the reasons for Cyprus’ success in this field. Having said that, of course, the longer this uncertainty in Cyprus’ banking sector carries on, the greater the chances are of reputable and large investment firms relocat-ing and Cyprus missing out on the momentum of recovery. I strongly believe that it is up to the State and the Cypriots themselves to push things in this direction. Nobody can do this for Cyprus and on Cyprus’ behalf.”

RESTORING INVESTOR CONFIDENCETHE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS Gold 57


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Entrepreneurship and innovation can get Cyprus back on courseEntrepreneurship and innovation

ALL THERIGHTMOVES


xxxxxxx

Gold: As a Cypriot, I am sure that you have always kept a watchful eye on what is happening here, so were you surprised by the fact that Cyprus was forced to request a financial assistance package in 2012?Costas Markides: The need to request financial assistance from our European partners was not a surprise. What was sur-prising was the magnitude of the assistance needed and the manner in which it was given to us. In particular, what caught most people by surprise (or at least me) was the size of the financial bailout that our banks needed.

Gold: How did you view the resolu-tion of the Cyprus Popular Bank and the ‘bail-in’ method used to recapitalize Bank of Cyprus?C.M.: The bail-in was definitely a surprise

for me. The EU had provided much bigger financial packages to countries such as Greece, Ireland and Spain without resort-

ing to the bail-in method, so applying it to Cyprus for the first time was unexpected and surprising. With hindsight, you can see where the Europeans (and the IMF) are coming from. We may look at the bail-in as unfair and harsh but, from an EU perspec-tive, they could make the argument that simply loaning the money to us would have made our debt unsustainable.

Gold: Do you believe that alternative solutions could have been found?C.M.: It’s hard to see what the alternative would have been. One possibility would have been to find another investor (e.g. another foreign bank) to buy Cyprus Popu-lar Bank or Bank of Cyprus and provide the necessary capital. Another alternative would have been for the Government to provide the necessary injection. I believe both options were pursued and were found


management

THE MOST INSPIRING

THING FOR PEOPLE

IN THE MIDDLE

OF A CRISIS IS HOPE

By John Vickers. Photograph by Jo Michaelides

DrCOSTAS MARKIDES, PROFESSOR OF STRATEGY AND ENTREPRENEURSHIP AT THE LONDON BUSINESS SCHOOL, IS THE KEYNOTE SPEAKER AT THIS YEAR’S 12TH HR MANAGEMENT & HUMAN CAPITAL CONFERENCE ORGANISED BY IMH AND PWC CYPRUS AT THE HILTON PARK HOTEL, NICOSIA, ON 13 NOVEMBER 2013. MARKIDES, A BESTSELLING AUTHOR, WAS INCLUDED IN THE 2011 LIST OF THE 50 MOST INFLUENTIAL MANAGEMENT GURUS PUBLISHED EVERY TWO YEARS BY THINKERS50. ON A RECENT VISIT TO CYPRUS HE SPOKE TO GOLD ABOUT WHAT THE ISLAND NEEDS TO DO IF IT IS TO RECOVER FROM ITS CURRENT PREDICAMENT AND HOW EMPLOYERS SHOULD BEHAVE IF THEY ARE TO KEEP THEIR PERSONNEL POSITIVE IN DIFFICULT TIMES LIKE THE PRESENT.

management


to be unrealistic. The only other alternative was for the EU to lend us the money (as they did in Greece) but that would have driven our debt to unsustainable levels, something that the IMF was averse to. Gold: You are a Professor of Strategy and Entrepreneurship, two concepts which, in this post-bailout era situation, Cyprus would appear to need more than ever. So what should the government’s basic strategy be if the economy is to recover?C.M.: First, can I just say that it always takes two to tango. By this I mean that as Cypriots, whenever we get into a mess, we always think that it’s the Government’s responsibility to do things that get us out of the mess. Even if we accept that the Government can do some things to help the situation, we should not forget that we (as individuals or companies) have an equal responsibility to help out. My advice is to always ask: “Suppose the Government does nothing. What should I be doing to help my company or my family succeed or get out of the crisis?”Now, in terms of what the Government needs to do, I believe we need to separate the short-term from the long-term. In the short term, the Government is already tak-ing lots of actions to kick-start the econo-my and there’s little I can add to this list of actions. But more importantly for Cyprus, we need to be setting the platform for the long-term. This implies (a) correcting the existing institutions of our society that have been proven defective in the current crisis (such as our corporate governance system and the checks-and-balances system that needs to exist between the executive arm of government, the press and our judicial system); (b) putting in place new institutions that the crisis has revealed as missing (such as new labour laws and new economic institutions); and (c) develop-ing an industrial strategy for our economy that identifies which industries should be promoted over the next 25 years and what supporting institutions must be put in place to help these industries prosper.

Gold: And what should the role of entre-preneurship be in this strategy?C.M.: The role of Government is to devel-op the legal and institutional environment that allows individuals and organisations to function in a secure manner, where prop-erty rights are respected and the laws of the state are upheld. We know from 50 years

Entrepreneurship and innovation should be the foundations of this wealth crea-tion. History shows that societies prosper when they innovate. You can innovate in a myriad of ways (through new tech-nologies or new products or new business models) and Cyprus will be better in some of these things and not so good in others. For example, our small size suggests to me that we will not be pioneers in technologi-cal innovation but nothing should stop us from engaging in business model innova-tion. All you need to do this is creativity and courage.Entrepreneurship and Innovation should be the foundation of our future growth as a society. There are certain things the Government can do to promote entrepre-neurship in Cyprus – and we can certainly benchmark what they did in Israel or other countries to learn from them. But there are also many things that companies them-selves can do to promote innovation, even if the Government does nothing.

Gold: The current crisis in Cyprus is not the world’s first so are there lessons to be learnt from past crises in other countries?C.M.: There are many lessons to be learnt but let me single out two of them: First,

HISTORY SHOWS

THAT SOCIETIES PROSPER

WHEN THEY INNOVATE

of academic research that without having properly-functioning institutions at the society level, everything else collapses.Once the proper environment is in place, it is then the responsibility of individu-als to create wealth within this system.

Costas Markides is a Professor of Strategy and Entrepreneurship and holds the Robert P. Bauman Chair of Strategic Leadership at the London Business School. A native of Cyprus, he received his BA (Distinction) and MA (1984) in Economics from Boston University, and his MBA (1985) and DBA (1990) from the Harvard Business School. He serves on the Editorial Boards of several academic journals and on the Board of Directors of the Strategic

Management Society. He participated in the World Economic Forum in Davos from 1999-2003 and again in 2012 and in 2013.His book: All the Right Moves: A Guide to Crafting Breakthrough Strategy (Harvard Business School Press, 2000) was shortlisted for the Igor Ansoff Strategic Management Award while his book (with Paul Geroski), entitled Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate

New Markets (2005) was shortlisted for the Financial Times-Goldman Sachs Management Book of the Year in 2005. Game-Changing Strategies: How to Create new Market Space in Established Industries by Breaking the Rules was published in 2008 and he is currently working on a new book (with Anita McGahan) provisionally entitled: Architects of Change: How ordinary people bring about social change.

COSTAS MARKIDES


I AM VERY OPTIMISTIC ABOUT THE FUTURE OF

CYPRUS

what most people seem to forget is that there are negatives associated with a crisis but there are also positives. People always focus on the negatives and forget about the positives. The societies (or companies) that have done well in a crisis are those that were able to put the negatives of the crisis in perspective (i.e. don’t ignore them but do not be overwhelmed by them) but then found ways to exploit the positives of the crisis in a strategic way. For example, we know that resistance to change during a crisis is low so this is the time to imple-ment lots of radical changes. Second, the most inspiring thing for people in the middle of a crisis is hope. They need to see something positive to aim for. Societies (or companies) that were clever enough to develop a positive target for their people to shoot for in the middle of a crisis were the ones that prospered after the crisis.

Gold: You will be talking in Cyprus about keeping employees motivated and engaged when times are tough. How difficult is this when they are facing job insecurity, salary cuts and more?C.M.: Needless to say, it is very difficult to keep people motivated in difficult times but it is not impossible. In the middle of the crisis, the employees’ primary concern will be job security and salary. If you can offer these two things to them, they will be happy. But even if you cannot offer them these two specific things, you should still try to use other tactics to motivate people.What you need to remember is that people get motivated by different things – it could be money, recognition, independence at work, job satisfaction, power, a nice work-ing environment, the feeling that their company is “special”, autonomy and so on. So it’s not just money. Be creative and keep trying. Make them appreciate that without their energy, your organisation cannot succeed.

Gold: You are also discussing entre-preneurial thinking and corporate innovation in difficult times. You stress

The 12th HR Management & Human Capital Conference takes place on 13 November 2013 at the Hilton Park Hotel, Nicosia. It is organised by IMH and PwC Cyprus and sponsored by Cablenet. Aca-demic Supporter: Globaltraining. IMH: Tel: 22505555./ e-mail [email protected] / Website: www.imhbusiness.com

the importance of the Organisational Environment for success. Could you elaborate on this?C.M.: In the last 50 years, social psycholo-gists have been asking the question: “What influences how people behave?” After fifty years, we think we know the answer: on average, 30% of the variance in our behaviours is determined by our personal-ity, education and values but almost 70% is determined by the “situation” or the “environment” we find ourselves in. This implies that, much more than we like to believe, the environment determines how we behave. As a result, if we want people in an organisation to behave in ways that promote innovation, we should not just tell them to “be innovative”. Instead, we should put in place an Organisational

Environment that encourages people to behave in ways that promote innovation. The Organisational Environment is made up of 4 things: (1) the organisation’s culture and values; (2) its measurement and incentive systems; (3) its structures and processes; and (4) its people. These are the four things that every company needs to be thinking about if it wants to create an environment for Innovation. Without a supporting environment, you will never get innovation.

Gold: How has the world of business in Europe and the US changed since you obtained your first degree and began

your professional career?C.M.: I think new technologies (such as the Internet and social media) have changed the business landscape completely. Business is now faster, more transparent and more competitive. At the same time, norms and attitudes have changed so employees and customers are now fundamentally different from thirty years ago. Overall, I’d say that we now live in a hyper-competitive world with a free and rapid flow of information, increased labour mobility and technological and cultural convergence. In this kind of business landscape, innovation is the key to success.

Gold: Did the key concepts on which you have lectured and written over the past two decades even exist?C.M.: Some things have changed and some have stayed the same. For example, the concept of strategy (what it is, how do you develop it and how do you implement it) has not really changed in the last 30 years. On the other hand, concepts such as “dis-ruptive technologies” or “business model innovation” are new things we teach today.

Gold: How do you see the future of entrepreneurship in broad terms?C.M.: Human beings are entrepreneurs by nature. Nothing has changed that will stop us from engaging in entrepreneurship in the future. But increasingly, developed societies will be putting more emphasis on how to “scale up” entrepreneurial firms while less-developed economies will be putting their emphasis on starting new entrepreneurial firms. In addition, we will see more emphasis on innovating through new business models rather than through new products or services.

Gold: And finally, how do you see the future of Cyprus?C.M.: I am very optimistic about the future of Cyprus! Throughout our history, we have faced serious challenges and we have always risen to the occasion. I see no reason why we cannot do the same now.

T he Eastern Mediter-ranean: A New Energy Frontier is the title of a major conference being organised by IMH in London on 6 November. Among the issues to be dis-

cussed are LNG, oil and gas developments in Cyprus, Israel, Greece, Lebanon; External energy developments and their impact on Eastern Mediterranean geopolitics; Connect-ing Eastern Mediterranean LNG with the rest of the world; and Investment considera-tions and opportunities in theEastern MediterraneanLefteris Karydis, Scientific Content Manager of the Eastern Mediterranean Natural Gas Forum, explained the conference title: “The quest for fresh natural gas reserves to meet rising demand is at a high and conventional ‘easy’ reserves elsewhere are declining. Con-sequently, as competition for its resources becoming fiercer, the Eastern Mediterranean is emerging as the ‘new frontier’.”It is estimated that the EU’s natural gas requirements for the next 50-60 years could be satisfied by the gas reserves in the Eastern Mediterranean. However, it is one of the most troublesome areas in the world, char-acterized by political and financial instability and maritime border issues. Furthermore, geological and technological challenges, regulatory complications and uncertain market pricing pose even more obstacles for local and international oil and gas companies to explore and exploit the Eastern Mediter-ranean resources. The “treasure” buried beneath the Mediterranean Sea can either become the reason for all nations in the area to cooperate and benefit or it can lead to more turbulence and instability.Describing the London conference as “an exclusive senior-level Forum that will stimu-late high-level debate around the exploration and exploitation of hydrocarbons in Cyprus, Greece, Israel and Lebanon to determine the development of further collaboration and progress in the oil and gas industry,” Karydis added that the Forum will also provide the most up-to-date information and develop-ments regarding the state of affairs in each country in the area. “It will bring together key players, top government officials, gas experts, company leaders and senior executives from the gas industry to share their knowledge and experience and discuss projects and investments resulting from the hydrocarbon discoveries in the region,” he said. The list of speakers is impressive, with sev-eral present and former government min-

EASTERN MEDITERRANEAN NATURAL GAS FORUMIMH holds London conference


isters of taking part: George Lakkotrypis, Minister of Energy, Commerce, Industry & Tourism (Cyprus), Silvan Shalom, Minister of Energy and Water Resources (Israel), Yiannis Maniatis, Minister of Environment, Energy and Climate Change (Greece), Joseph I. Paritzky, Former Minister of Energy & National Infrastructure (Israel).

CONFERENCE CHAIRMAN: ANTHONY LIVANIOS, CEO, ENERGY STREAM CMG GMBH, GERMANY.With over 20 years of experience in busi-ness to government relations, energy issues, international affairs and research in over 50 countries, he was instrumental in negotiat-ing and concluding the agreement for the construction of the Greek-Bulgarian Natu-ral Gas Pipeline (IGB). In 2000 he founded Alpha Metrics, a research and business development company and served as Chief Executive Officer, specializing in business to government relations, public consultations and economic research.

OTHERKEY SPEAKERS: NAJI ABI-AAD , PH.D., SENIOR ADVISOR, PETROLEB, LEBANON.In September 2012, Naji Abi-Aad was appointed COO of the Beirut-based oil company Petroleb, which is active in off-shore petroleum exploration in the Eastern Mediterranean. He also manages the newly-established Institute for Energy Economics at the American University of Beirut (AUB) and is an advisor to the Qatar Foundation on oil and gas research. He has authored over 80 reports and studies on Middle East energy issues, as well as a book on the secu-rity of petroleum supply from the region.

VICTOR ALESSANDRINI, BUSI-NESS DEVELOPMENT MANAGER, OFFSHORE BUSINESS UNIT, TECHNIP, FRANCE.He has worked in locations as diverse as Korea, Scotland, West Africaand Azerbaijan. Since 2007 he has been responsible for business development & sales within Technip’s Offshore Business

Unit supporting Special Projects & FLNG activities worldwide.

GINA COHEN, CONSULTANT TO THE NATURAL GAS INDUSTRY, ISRAEL.Since 1998 she has been involved in projects spanning the full natural gas chain, from exploration & development to involve-ment in legislation, conducting gas sales and purchase negotiations, assisting the Ministry of Energy in its regulatory work and carrying out feasibility projects relating to the estab-lishment of natural gas operated IPPs. She is the author of the Hebrew-English energy lexicon used by all professionals in the Israeli oil and gas sector.

CHRISTINA HIOUREAS, SENIOR ASSOCIATE, CHADBOURNE & PARKE LLP, USA.She represents States, private entities, and individuals on international dispute resolu-tion and public international law matters. She has particular experience in international law issues involving the Mediterranean and is the American Society of International Law (ASIL) Delegate to the United Nations Con-sultative Process on the Law of the Sea.

CÉCILE MAISONNEUVE, DIRECTOR, CENTRE FOR ENERGY, INSTITUT FRANÇAIS DES RELATIONS INTERNATIONALES (IFRI), FRANCE.She was appointed Director of the Centre for

Energy at the IFRI six months ago having served as an executive at the international energy group AREVA from 2007 to 2012.

DR. AMIR MOR, ENERGY AND ENVIRONMENT ECONOMIST AND FINANCIAL ANALYST , CEO AND OWNER, ECO ENERGY LTD, STATE OF ISRAEL.For a quarter of a century, he has special-ized in energy and environmental finance and economics, serving as a consultant to governments, financial organisations, public and private companies in the fields of natural gas, petroleum, electricity and renewable energy. In the 1990s he worked as a consultant at the World Bank in Wash-ington D.C., specialiing in the finance of natural gas and energy projects, as well as in reform planning of energy and environ-mental policies of developing countries. Dr. Mor also led the team that prepared the Energy Master Plan for the State of Israel and participated in the World Bank team that prepared the Energy Sector Review for the Palestinian Authority.

PETER STEWART , CHIEF ENERGY ANALYST, INTERFAX GLOBAL ENERGY SERVICES, UK.An author and frequent speaker at oil and energy industry conferences on all aspects of the oil and gas value chain, as well as emerging markets such as bio-fuels, he is Chief Energy Analyst at Interfax Global Energy Services and Managing Editor of the monthly Global Gas Analytics, a publica-tion that provides expert insight into Gas markets fundamentals and short- and medium-term price forecasts. He is also involved in econometric research at the University of Surrey on oil and gas pricing benchmarks.

AS COMPETITION FOR ITS RESOURCES BECOMING FIERCER, THE EASTERN MEDITERRANEAN IS EMERGING AS THE ‘NEW FRONTIER’

conference


The East-ern Medi-terranean Natural Gas

Forum The Eastern Mediterranean: A New Energy Frontier, will be held on 6 November at the Jumeirah Carl-ton Tower, London. For more information, contact Lefteris Kary-dis on 22505538 or by e-mail at [email protected]. Website: www.east-medgasforum.com

(Left to right)Dr. Amir Mor Gina Cohen

Christina Hioureas Peter Stewart

Anthony Livanios Joseph I. Paritzky

73

September 14 – October 13, 2013

70 What’s it Worth?How exactly does a business valuation work?

73 Innovation a top priority for businessChief executives around the world are ramping up their efforts to innovate and find new ways to do business

ISSUE

30

68 money

74 Government deficit decreases in EUCyprus economy contracts by 1.4% in Q2

78 Picture Perfect?Investing in photographs

70 business

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES OF CYPRUS Gold 67

78 lifestyle

BUSINESS: The New Rules of Marketing & PR: How to Use Social Media, Online Video, Mobile Applications, Blogs, News Releases, and Viral Marketing to Reach Buyers Directly By David Meerman Scott 73

TAX & LEGAL: The World’s Best Tax Havens: How to Cut Your Taxes to Zero & Safeguard Your Financial Freedom By Lee Hadnum 77

LIFESTYLE: The Divine Comedy By Dante Alighieri (New translation by Clive James 81

+ BOOK REVIEWS

76 tax&legal76 Hedge fund rules absent in 16 EU statesCyprus has transposed the AIFMD into national law

68 Second Year StartsFX Careers Training School celebratesfirst anniversary

69 ForexTime Named Best Newcomerby World FinanceThe Limassol-based company winsa major award

74 economy

I n 2012, Donna Stephen-son and John Lewis, di-

rectors of FX Careers, decided to set up a

school in Cyprus where experts would provide

students with both practical and theoretical knowledge about the Forex and Binary Options industries. In this way, talent would be developed which would subsequently fulfil the staffing needs of the increasing number of Forex and Binary Options brokers in Cyprus. Katy Parks, Manager of FX Careers, spoke to Gold about how the school has evolved over its first year and how she views its future.

Gold: This month, FX Careers celebrates a year since it ran its first FX course. What are the highlights and challenges you have faced so far?Katy Parks: In terms of highlights, every-one has their own story and we are proud of what the school has achieved in a short period of time. One of our students was an unemployed Cypriot who had recently re-located to Cyprus. He came to FX Careers and, after completing the course, he not only joined a Forex company but within a few months won an award for his customer service skills. Another student was em-ployed by a Binary Options firm and, after a few months, was promoted to Sales Man-ager. Our main challenge is to ensure that the content of the course remains attractive to both the student and the Forex/Binary Options employer. By including modules appropriate to other departments such as Compliance and Back Office, we maintain

Year Startsits diverse appeal and cover a broad range of skills.

Gold: Why do people take the course? K.P.: Many of our applicants approach us because they can see that employment op-portunities in the FX sector are on the rise and they want to learn more before they take the next step in their career. One in three jobs filled in 2012 by our sister com-pany GRS Recruitment was in the Forex and Binary sectors which have seen 190% growth in the number of people being hired compared to 2011. Most applicants say they just want to learn more about the sector. Many are curious about whether they can start a career, expand their skillset and/or apply this new knowledge to their current employment.

Gold: What does the course material cover and what are your teaching meth-ods?K.P.: The course covers the foundations of Forex and Binary Options including theoretical and practical training on the

most popular trading platforms such as MT4. In addition, modules are provided for Compliance, Market-ing and Back Office processes. Due to the rise in sales and customer service vacan-cies amongst Forex and Binary Options companies, the course also has a practical

FX CAREERS TRAINING SCHOOL CELEBRATES FIRST ANNIVERSARY

WE ARE SEARCHING FOR MOTIVATED INDIVIDUALS WHO SHARE A DRIVE FOR

SUCCESS AND A THIRST FOR KNOWLEDGE

Second

Katy Parks

forex

money

Sales module. We use role play as part of the learning process, especially in the Sales training. There is also a written exam. All of our lecturers are industry professionals with established careers in the sector. They provide students with valuable insights into the industry as well as offering first-hand knowledge and experience.

Gold: Do all students go on to work in Forex/Binary Options?K.P.: No. Not everyone seeks employ-ment in the sector upon completion of the course. If an applicant is not an EU citizen, a work permit needs to be obtained by the employer and this is not always possible. Regarding those who decide to apply for a job in the industry, employers are searching for candidates with the best communica-tion skills, especially for Sales/Customer Service roles. Employers are also looking for multilingual applicants. The main languag-es desired at present are Arabic, Spanish, French, Italian, German, Russian, Chinese and Hindi (Indian). The demand for these languages tends to vary, depending on each company and the regions it is targeting.

Gold: What does a potential student need to take the FX course?K.P.: We are open to candidates from all employment, educational and ethnic back-grounds. Our main requirement is that the applicant be fluent in English. The course is very intense and a strong command of the English language is essential. FX Ca-reers is currently accepting applications for its autumn courses and we welcome

applications from anyone who meets this criterion. We are searching for motivated

individuals who share a drive for success and a thirst for knowledge. We can teach them the rest.


Year Starts Following the launch of Forex-Time Ltd earlier this year, the Limassol-based Forex broker has just been named ‘Best Newcomer 2013’ at the annual World Finance Awards. Forex Time, which was es-tablished by Andrey Dashin,

co-founder and shareholder of Alpari, launched in February 2013 with the aim of providing inves-tors with a fresh and dynamic approach to Forex trading. Offering world-class service and product developments which constantly put the trader and the trading experience first, this accolade from the World Finance Awards is the culmination of a highly successful global launch for the brand.

The World Finance Awards were inaugurated in 2007 to recognise industry leaders, individu-als, teams and organisations that represent the benchmark of achievement and best practice in the business world.

As part of the World Finance Awards presenta-tion ceremony, George Stylianou, Chief Market-ing Officer at Forex Time, gave an interview to World Finance TV in which he explained how Forex Time had achieved success in such a short period of time since its launch six months earlier.

“Forex Time is built on the bench-mark of time as a highly valuable com-

modity, and everything we do is focused on how we can save time for our clients,” he said.

“The senior management team at Forex Time has over 50 years of experience in the Forex indus-try and this experience and expertise is what has helped us achieve maturity more quickly and chal-lenge more established brands.”

The Forex market is one of the fastest growing financial markets in the world and holds great future potential, with increasing interest from in-vestors in emerging economies. Forex trading vol-umes have increased by 166% from 2007 to 2013, with $4 trillion dollars traded globally each day.

With the growth of emerging economies comes a rise in disposable income in these regions and greater interest from investors wishing to diversify their portfolios and assets using Forex.

Stylianou said: “Forex is an exciting and ever-evolving market. As we are a newly-formed and flexible brand, we have the ability to adapt to different situations and deliver to our clients what they want when they want it.”

FOREXTIME NAMED BEST NEWCOMER BY WORLD FINANCE

FOREX IS AN EXCITING AND EVER-EVOLVING MARKET

forex

money

George Stylianou

business

Although busi-ness evaluation is not quite as simple as assessing the value of an asset such as shares, where you can come up with a

figure simply by multiplying the number of shares you own by their closing price, a skilled business appraiser can supply you with a sound estimate.

Many people try to create their own busi-ness valuation by factoring in the company’s historical financial statements but, to cor-rectly perform a business valuation, many other factors need to be considered. Finan-

cial statements are created using generally accepted accounting principles. This means that amortization, depreciation and other expenses are recorded based on account-ing rules and not on economic realities. A financial statement is also unable to apply to the statement any intangible assets that a company might have, and will thus not ac-curately reflect the true value of the business.

I believe that credible and defensible business valuations can only be provided by Accredited Business Appraisers who cor-rectly follow all the necessary steps in the process, as described below.

• Full information (operational, financial, non-financial, economic and industry analysis etc) underpins sound valuations. • Curiosity is as important as calculating

ability and the appraiser must ask lots of questions. • The value lies in the future earnings of the business, so both internal and external risks and opportunities must be considered. Financial accounts for most SMEs will require “normalisation” i.e. identification of discretionary expenses and reasonable owner’s remuneration. • All approaches should be considered and appropriate methods applied. • A Sanity Test should be applied to all valuation conclusions and a range is gener-ally more accurate than a precise figure.

That said, there are three fundamental ways of measuring what a business is worth: The Asset Approach, The Market Approach and The Income Approach.

valuation


By Rakis Christoforou

IF YOU OWN A BUSINESS, IT IS AN IMPORTANT ASSET, AND IT IS VITAL THAT YOU KNOW ITS VALUE. BUT HOW EXACTLY DOES A BUSINESS VALUATION WORK?

WHAT’S IT WORTH?


review should include, but is not necessarily limited to, a review of the following: • The target company’s income tax returns for at least five years• Balance sheet, income and expense state-ments, profit and loss statements for at least 5 years• Current operating budgets and any fore-casts of future company operations• The most recent Schedule (ageing analy-sis) of accounts receivable and payable to-gether with comparable data from previous years• A schedule of all contingent liabilities such as guaranties and product or service warranties.

BY IDENTIFYING THE SELLER’S MOTIVES, THE BUYER OBTAINS VALUABLE INFORMATION NECESSARY FOR ASSESSING THE RISKS INVOLVED IN THE TRANSACTION

The Asset ApproachThe Asset Approach views the business as a set of assets and liabilities that are used as building blocks to construct the picture of business value. The asset approach is based on the so-called “principle of substitution” which addresses the question: What will it cost to create another business like this one, which will produce the same economic benefits for its owners? Since every operat-ing business has assets and liabilities, a natural way of addressing this question is to determine the value of these assets and liabilities. The difference between them is the business value. This may sound simple enough but the challenge is in the details: figuring out what assets and liabilities to include in the valuation, choosing a stan-dard of measurement and then actually determining what each asset and liability is worth. For example, many business bal-ance sheets may not include their most im-portant assets such as internally developed products and proprietary ways of doing business. If the business owner hasn’t paid for them, they won’t have been recorded on the “cost-basis” balance sheet!

The Market ApproachThe Market Approach, as the name im-plies, relies on signs from the real market place to determine what a business is worth. Here, the so-called “principle of competition” applies and the question is: What are other businesses worth that are similar to my business? No business oper-ates in a vacuum. If what you do is really great, the chances are that are others doing the same or similar things. If you are look-ing to buy a business, you should decide what type of business you are interested in and then look around to see what the “go-ing rate” is for businesses of this type. If you are planning to sell your business, you will check the market to see what similar businesses are selling for. It is intuitive to think that “the market” will settle on some idea of business price equilibrium – some-thing that a buyer will be willing to pay and a seller willing to accept. That’s what is known as the fair market value. Both par-ties are assumed to act in full knowledge

of all the relevant facts, with neither being forced to conclude the sale.

The Income ApproachThe Income Approach takes a look at the core reason for running a business – mak-ing money. Here the so-called “principle of expectation” applies and I need to ask myself: If I invest time, money and effort in business ownership, what economic benefits will it bring me and when? Notice the future expectation of economic benefit. Since the money is not in the bank yet, there is some measure of risk – of not re-ceiving all or part of it when you expect it. So, in addition to figuring out what kind of money the business is likely to bring, the income valuation approach also factors in the risk. Since the business value must be established in the present, the expected in-come and risk must be translated to today.

Due DiligenceDue diligence involves delving into the background of a business, identifying any issues that could affect it in the future, and other related matters. It is more like performing a Forensic Business Valuation. There are certain tasks which should be included on any due diligence list, before applying any business valuation approach and method, as follows:

1. DETERMINE THE SELLER’S MOTIVES. The business owner’s decision to sell may be motivated by any number of factors in-cluding – but not limited to – retirement, illness or death, internal disputes, inad-equate capital and poor market prospects. By identifying the seller’s motives, the buyer obtains valuable information neces-sary for assessing the risks involved in the transaction, as well as for determining an appropriate valuation for the company.

2. REVIEW ALL FINANCIAL RE-CORDS. A review of the target com-pany’s financial records is always a key component of any due diligence investiga-tion because it provides the principle basis for the business valuation. The financial


valuation

The financial records of many small companies are often extremely limited. In such a situation, the due diligence inves-tigation should be expanded in an effort to obtain the financial information neces-sary for a reasonable valuation. Limited financial data may also impact the terms of the purchase. For example, in a business that has a large number of accounts receiv-able, without reliable financial statements, the buyer may want to place a substantial discount on the value of these accounts or even require the seller to guarantee that all or some of the receivables will be col-lected. At a minimum, the buyer will want to conduct a more thorough investigation regarding the nature of the receivables and the customers owing the debt.

3. REVIEW ALL THIRD PARTY CONTRACTS. The contractual obliga-tions and rights of the target entity must be identified for a proper valuation. Therefore, the due diligence effort should include –at a minimum – a review of the following:• Franchise and licensing agreements• Sales contracts or other contacts to which the company is a party• Insurance policies• Agency, distributor and advertising contracts• Supply contracts

credit and instalment purchases

7. REVIEW ALL LITIGATION FILES.

Information regarding pending or threatened

lawsuits involving the target company must be carefully exam-

ined. The buyer should also review any administrative proceedings, governmental investigations or inquiries.

8. REVIEW ALL REQUIRED GOV-ERNMENT FILINGS. Various gov-ernment permits and licences are often required before a company may lawfully conduct business, such as a sales or tax permit. The buyer should ensure that all required permits and licences have been appropriately maintained.

9. REVIEW ALL DOCUMENTS ES-TABLISHING THE LEGAL ENTITY FOR THE BUSINESS. The buyer should review any assumed name certifi-cate, partnership agreement, shareholder agreement, bylaws, articles of incorporation and any other document establishing the legal structure for the target entity.

10. EVALUATE ALL INTELLEC-TUAL PROPERTY. Lastly, the buyer should never forget to evaluate all intel-lectual property, including any patents, copyrights, trademarks, trade secrets and goodwill.

As can be seen from the above, the Busi-ness Valuation due diligence process can be extremely complex and often requires the involvement of several legal, financial and business professionals. That’s why I prefer the term “Forensic Business Valua-tion” for such a process. Those interested in purchasing or selling an existing business should take the prudent step of engaging appropriate professionals. There are many risks associated with the purchase/sale of an existing business, both large and small. However, with proper due diligence and financial forensic examination, these risks can be effectively minimized.

Rakis Christoforou

• Government contracts• All other material agreements to which the target company is a party

4. REVIEW EMPLOYMENT CON-TRACTS. In many companies, the real value lies not in the assets, the product or the customer list but in its employees. Therefore, the terms of all employment contracts for key employees, company retirement and benefit plans, as well as employee manuals and union contracts are crucial to the success of any business ven-ture and should be reviewed as part of the due diligence effort.

5. INSPECT ALL INVENTORY. An inspection of the company inventory is obviously central to any business valuation. Such an inspection should also cover all fixed assets, motor vehicles and other assets needing a recorded conveyance or change of registration.

6. REVIEW ALL LEASES, DEEDS, MORTGAGES AND LOAN AGREEMENTS. The buyer should re-view the following:• Documents and agreements evidencing borrowings by the target company, includ-ing loan and credit agreements and other

evidences of indebtedness• Documents evidencing mortgages, security interests

or loans on assets of the business• Guarantees, agree-ments to maintain

net worth and similar agreements

• Agreements confirming lines of credit• Leases of real or personal property to which the com-pany is a party, either as les-sor or lessee• Documents and agree-ments evidencing other material financing arrange-ments, including letters of

IN MANY COMPANIES, THE REAL VALUE LIES NOT IN THE ASSETS, THE PRODUCT OR THE CUSTOMER LIST BUT IN ITS EMPLOYEES

info: Rakis Christoforou is the first Cypriot to hold CFF (Certified in Financial Forensics) and ABV (Accredited in Business Valuation) certifications. He is a member of many professional accounting associations including ICPAC (Institute of Certified Public Accountants of Cyprus) of which he is Vice Chairman of the Economic Crime and Forensic Accounting (ECFA) Committee.

survey


business

THE NEW RULES OF MARKETING & PR: HOW TO USE SOCIAL MEDIA, ONLINE VIDEO, MOBILE APPLICATIONS, BLOGS, NEWS RELEASES, AND VIRAL MARKETING TO REACH BUYERS DIRECTLY BY DAVID MEERMAN SCOTT (JOHN WILEY & SONS, 2013)

RRP: £15.45 (£9.79 FROM AMAZON.CO.UK)

T his 4th edition of what has become the benchmark guide to marketing and PR is updated with the latest social

media and marketing trends, tools, and real–world examples of success. An international bestseller with more than 300,000 copies sold in over 25 languages, it offers a step-by-step action plan for harnessing the power of modern marketing and PR to communicate with buyers directly, raise visibility, and increase sales. It shows how large and small companies, nonprofits, and other organisations can leverage web-based content to get the right information to the right people at the right time for a fraction of the cost of big-budget campaigns. Including a wealth of compelling case studies and real-world examples of content marketing and inbound marketing success, this is a practical guide to the new reality of reaching buyers when they’re eager to hear from you. It includes an examination of newly popular tools such as Infographics, photo-sharing using Pinterest and Instagram, as well as expanded information on YouTube, Twitter, Facebook, and LinkedIn.

BOOK REVIEW

A PwC Pulse Survey in North and South America, Europe, Asia Pacific, and the Mid-dle East reveals that 97% of CEOs see innovation as a top priority for their business. The

Pulse Survey was conducted as a follow-up to the recent PwC Survey of 1,330 CEOs around the globe which showed innovation to be a major and lingering CEO concern.

Not every region sees the need for in-novation in the same light. The appetite for innovation was strongest in Asia-Pacific and North America, where CEOs unanimously agreed that innovation is a key focus area within their organisation. In contrast, 18% of CEOs in Central and Eastern Europe and 10% of their peers in the Middle East disagreed, reporting that innovation is not a priority in the markets in which they operate.

Perhaps the most interesting news is there has been an important shift in the relative focus on operations and innovation. Globally, almost two in three CEOs see innovation and operational effectiveness as equally important to the success of their company. Business leaders in Latin America agree with this the most (71%), in contrast to their peers in the Middle East who are more divided (50%).

The research also shows that there has been a shift in how CEOs view their role in driv-ing innovation. Today’s CEOs recognise that they need to be directly involved in driving innovation within their business, with 37% reporting their role as ‘leader’ in this area, and 34% as ‘visionary’. This contrasts sharply with the situation three years ago when a

similar survey showed only 12% of CEOs were leading the charge on the innovation strategy.

And their innovation plans are broad. Over the next three years, CEOs are planning to innovate across the board, from customer experience, products and services, through to

business models, systems and approaches.

With such widespread innovation planned by so many companies, the question will be around how companies will be able to differ-entiate themselves for competitive advantage.

David Percival, Global Innovation Product Lead at PwC says:

“Put simply, CEOs have overwhelmingly recognised that today, companies that don’t innovate will fail. It’s no longer a choice. The CEOs we surveyed are ready for the challenge and are taking the helm. The key will be for them to deliver value in new forms, in new ways, to existing and new customers. What remains to be seen is whether their organisa-tions are ready to deliver on their aspirations.”

The PwC Pulse Survey results are based on interviews with 246 CEOs in 60 countries in North and South America, Europe, Asia Pacific, and the Middle East.

The full report can be found at http:// www.pwc.com/innovationsurvey

INNOVATIONA TOP PRIORITY FOR BUSINESS

CEOS HAVE OVERWHELMINGLY

RECOGNISED THAT TODAY, COMPANIES THAT DON’T

INNOVATE WILL FAIL

CHIEF EXECUTIVES AROUND THE WORLD ARE RAMPING UP THEIR EFFORTS TO INNOVATE AND FIND NEW WAYS TO DO BUSINESS, IN A MOVE TO STIMULATE GROWTH IN A CHALLENGING GLOBAL BUSINESS ENVIRONMENT.

While the eurozone is gradually emerging from the longest recession in its his-tory, fiscal deficits both in the euro

area and the EU are declining. According to the latest Eurostat update of the not seasonally adjusted general government deficit, in the first quarter of 2013 the total figure as a percent-age of GDP was -4.89% in the euro area and -4.26% in the European Union. In the previ-ous quarter it was -4.78% in the eurozone and -4.51% in the EU. At the same time, general government total revenue amounted to 46.5 % and 45.3 % of GDP in the currency bloc and the union respectively, while total expenditure amounted to 50.0 % and 49.1 % of GDP.

The latest news on growth issued last month shows that the 17-member area grew by 0.3% during the second quarter on a seasonally-

adjusted basis. The figure beat the analysts’ forecasts of 0.2%, and was seen as a herald of a long-awaited return to growth for the first time since the latter part of 2011. Olli Rehn, the EU’s economic affairs commis-sioner, said that the figures showed that a sus-tained recovery was within reach but, like the economists, he also warned that the recovery remained delicate.

The economies of Germany and France grew faster than expected in the second quarter. Germany grew by 0.7%, its largest expansion in more than a year, thanks largely to domestic private and public consumption. France’s economy expanded by 0.5%, pulling out of a shallow recession to post its strongest quarterly growth since early 2011. Improve-ment was noticeable elsewhere in the bloc.

Bailed-out Portugal’s GDP leapt by 1.1% in the quarter, its strongest in almost three years, due to higher exports and the easing of a previ-ous investment slump. Austria and Finland also saw improved growth. But recession con-tinued in the Netherlands – an otherwise core euro zone economy – as well in the debt-laden periphery.

Cyprus’s economy contracted by 1.4% in the second quarter, on a quarterly basis. Pre-liminary data showed Cyprus‘s Q2 quarterly downturn was better than the first, when output contracted by 1.7%. On a yearly basis, the economy declined by 5.4% from 4.8% in the first quarter.

The improvement of growth prospects in Europe is accompanied by a gradual but steady decrease in deficits. In the first quarter of the current year, Latvia reported a gov-ernment surplus of 3.4% of GDP and the Netherlands 3.1%. Positive figures were also reported by Bulgaria (1.3%) and Cyprus (0.6%) but among the rest of the euro area and EU countries, there was no other country with a surplus.

The highest deficit in the first quarter of 2013 was reported by Greece

(-17.6%) and Ireland (-13.6%). The first quarter deficit in Portugal, which is imple-menting an economic adjustment programme

like Greece and Ireland, was -10.6%. According to CyStat, during January-

March 2013, total government revenue in Cyprus amounted to €1,606.2 million (a

7.6% decrease compared to the correspond-ing period of 2012), while total expenditure reached €1,562.0 million, (a 17.2% decrease) resulting in a surplus of €44.2 million as com-pared to €148.0 million deficit in the corre-sponding period of the previous year.

According to the provisions of the Memo-randum of Understanding with the Troika, Cyprus must achieve a general government primary deficit of no more than €395 million in 2013. The 2013 deficit target can be revised to incorporate compensation for provident and retirement funds in Cyprus popular Bank. Over 2013, the Cypriot authorities are

CYPRUS MUST ACHIEVE A GENERAL GOVERNMENT

PRIMARY DEFICIT OF NO MORE THAN €395

MILLION IN 2013


economyGOVERNMENT DEFICIT DECREASESIN EU

expected to rigorously implement the 2013 Budget Law, includ-ing the additional permanent measures already adopted prior to the granting of the first disburse-ment of finan-cial assistance.

statistics

QUARTERLY ACCOUNTS FOR GENERAL GOVERNMENT NET LENDING (+)/ NET BORROWING (-)

2011Q1 2012Q1 2013Q1EU – 27 -4.91 -4.51 -4.26EU – 17 -5.60 -4.78 -4.89Belgium -8.90 -7.91 -8.92Bulgaria -0.81 -0.65 1.29Czech Republic -4.57 -3.92 -4.11Denmark -2.88 -2.52 -1.59Germany -1.73 -0.46 -Estonia -1.88 -4.19 -3.47Ireland -12.46 -12.50 -13.61Greece -9.13 -8.50 -17.57Spain -6.07 -5.73 -4.88France -9.05 -7.93 -Italy -6.98 -6.63 -7.34CYPRUS -7.26 -3.45 0.56Latvia -2.92 2.58 3.37Lithuania -7.95 -6.09 -6.56Luxembourg -3.71 -4.06 -8.21Hungary 38.52 -3.40 -4.23Malta -2.73 -4.96 -6.21Netherlands -1.66 -1.59 3.11Austria -7.05 -5.96 -2.35Poland -2.69 -1.20 -1.60Portugal -7.49 -7.89 -10.60Romania -3.50 -2.22 -1.41Slovenia -9.48 -5.32 -10.42Slovakia -5.66 -5.27 -3.21Finland -0.80 -0.51 -2.18Sweden 0.83 -0.18 -0.88United Kingdom -5.59 -5.28 -3.06Iceland -3.29 -1.61 -1.91

Source: Eurostat

NOT SEASONALLY ADJUSTED DATA % OF GDP

CYPRUS ECONOMY CONTRACTS BY 1.4% IN Q2 By Kyproula Papachristodoulou

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16 EU states

tax&legal


In economies where action has been taken to reduce complexity in tax administration there has tended to be higher economic growth

STATES THAT HAVE FAILED TO ADD THE AIFMD TO

THEIR OWN LAWS COULD FACE SANCTIONS BY THE

EUROPEAN COURT OF JUSTICE

CYPRUS HAS TRANSPOSED THE AIFMD INTO NATIONAL LAW

The report, which suggests that some states still face a long road to full imple-mentation of the EU’s landmark directive, comes after a survey of 220 hedge fund managers by research group Preqin in July, which revealed that just 22% of manag-ers had reached compliance, with many still waiting for guidance from their local authorities. Unlike the EU member states, the managers have a grace period ending in July 2014 to achieve authorisation.

The AIFMD was first drafted in 2009 and aims to bring numerous multibillion-dollar industries under a single regulatory framework. Many hedge funds, private equity, venture capital, real estate and infrastructure vehicles and investment trusts fall into its sights.

The main risk posed by failure to implement is actually

damage to the states’ own alternative fund industries, he says.One of the main facets of the AIFMD

is a system of fund “passporting”, under which vehicles that comply with the direc-tive can easily be exported to professional investors across the continent.

But alternative fund managers in coun-tries that have not added AIFMD to their rule books will be unable to register them-selves under the regime and so could be limited in terms of the states they passport funds into.

T he deadline for European Union (EU) member states to transpose the Alternative Invest-ment Fund Managers Directive (AIFMD)

into national law passed on 22 July 2013. So far, the directive has been transposed by only 12 out of 28 member states, Cyprus being one of them. The others are Austria, Croatia, Denmark, Germany, Ireland, Latvia, Luxembourg, Malta, the Nether-lands, Sweden, and the United Kingdom. States that have transposed the law, either through an active legislative procedure or through negative assurance procedures, have published information on the transi-tional arrangements and the majority will have transitional relief for domestic AIFMs, other EU AIFMs and non-EU AIFMs. Only the Netherlands and Latvia limit the transitional relief to (domestic) existing managers. Non-EU AIFMs who market to Malta and Ireland will be granted a 2-year relief period.

The failure of 16 of the 28 EU states to meet the July 22 deadline for the alterna-tive investment directive raises the spectre of fund companies in non-compliant states being forced to halt alternative fund sales to certain countries or risk falling foul of their regulators. States that have failed to add the AIFMD to their own laws are now breaking European law and could face sanction by the European Court of Justice as early as the fourth quarter of this year, according to Georges Bock, a partner in KPMG Luxembourg which carried out the latest research and published it in the report AIFMD: Trans-position status.

Georges Bock, KPMG Luxembourg

THE WORLD’S BEST TAX HAVENS: HOW TO CUT YOUR TAXES TO ZERO & SAFEGUARD YOUR FINANCIAL FREEDOM BY LEE HADNUM (WPR TAX PUBLISHING, 2013)

RRP: £19.95 (£18.01 FROM AMAZON.CO.UK)

W e can argue as long as we like that Cyprus is not a Tax Haven but no-one seems to have told

Lee Hadnum about it and the island is included once again in the latest (10th) edition of this popular book for those who are looking to reduce their tax bills. Apart from including Cyprus in a category that we really don’t want to be in, Hadnum’s description of the country’s tax advantages is accurate and non-judgmental. The first half of the book takes 25 of the “world’s best tax havens” and examines the personal and corporate tax planning opportunities available in each. It also contains valuable information on the residency requirements and what it’s actually like to live there. It covers “all of the key tax havens from the exotic Cayman Islands, British Virgin Islands and Monaco, to less well-known but highly attractive tax havens like Cyprus, Malta and the Isle of Man.” In fact Hadnum puts Cyprus into the “low tax haven” category along with the UK, so his definition is clearly a broad one.

THE WORLD’S BEST TAX T TAX T

BOOK REVIEW

The AIFMD is one of the most rigorously debated pieces of financial regulation ever to emerge from the EU

“It all depends on the transposition rules in the countries that they are going to market to,” says Georges Bock.

For example, Germany’s interpretation has been strict, he says, with the country having stated that it will in future accept only alternative funds that are AIFMD-compliant.

The KPMG report highlights Belgium, Finland, Spain and France as key states that missed the deadline for AIFMD readiness.

In France, the courts in June passed legislation that handed authority for imple-mentation back to financial watchdog the Autorité des Marchés Financiers, which is now working on a major overhaul of the nation’s fund regime.

In Belgium, Finland and Spain only draft legislation has been published so far, the report shows. Belgium is planning to add laws by January 2014 and Spain by the first quarter of 2014. In Finland, even the draft law “still leaves some important ques-tions” unanswered, the report warns.

Georges Bock also believes that Belgium, Finland and Spain are eyeing Germany’s radical approach to AIFMD implementa-tion, which includes throwing out the old

system of “private placements” through which cross-border sales have previously taken place.

He says they may be considering a simi-lar overhaul for their own rules, or in some cases their failure to comply simply reflects a focus on other “national priorities”.

Until transposition actually takes place in a particular EU member state, non-EU AIFMs should be able to market their non-EU alternative investment funds to investors in that member state by use of the existing private placement regime. It is important to note, however, that some member states are contemplating the elimi-nation of the private placement regimes at such time as the AIFMD is transposed into law. Therefore, it will be incumbent upon non-EU AIFMs to conduct their proper due diligence with respect to their marketing initiatives.After the date of transposition, a non-EU AIFM will need to comply with a number of conditions (including new reporting and disclosure requirements) in order to continue to take advantage of the private placement regime in a given EU member state.

On the bright side both for EU and non-EU fund providers, European watch-dog the European Securities and Markets Authority has advised that AIFMD-com-pliant funds can be marketed in any state regardless of the compliance status of the state itself.

Amy Bensted, Preqin’s head of hedge fund products, says KPMG’s findings are

further evidence of AIFMD chaos.“There’s definitely a lot of confu-

sion around the AIFMD. There’s this sense that there’s a need for some coherent advice to come through,” she says.

The notoriously laborious European legislative process and aggressive lobbying from the various industries affected by the directive have contributed

to the EU’s bureau-cratic nightmare.

The European Private Equity and Venture

Capital Association

describes the AIFMD as “one of the most rig-orously debated pieces of financial regulation ever to emerge from the EU”, with a staggering 2,000 amend-ments tabled since the first draft.

lifestyle

TRUTHFUL AND ENIGMATIC, PROFOUND AND WHIMSICAL, PHOTOGRAPHY IS A WELL-LOVED, YOUTHFUL FORM OF ARTISTIC EXPRESSION. YET, LIKE A TRUE DARK HORSE, IT IS GAINING SUCH PROMINENCE IN THE WORLD OF ART THAT SOME ARE BEGINNING TO ASK: IS THIS THE PERFECT INVESTMENT PICTURE?

Tall pile of books by Kevin Millar

Picture Perfect?By Chloe Panayides

investing in photographs


1853: The Photographic Society of London (now named

the Royal Photographic Society) is estab-lished and, at a meeting of its syndicates, one member despondently bemoans the fact that photography is too literal, unable to elevate the imagination, and therefore cannot compete with works of fine art.

2011: An Andreas Gursky photograph of an anaemic

river Rhine and colourless sky juxtaposed with sallow green grass is sold at a Chris-tie’s auction in New York for a world record price of $4.3 million.

A discrepancy in perception between fine art works and fine art photography has caged the latter’s evolution over the last century. Art is famously elite, difficult, requiring acute skill and, as a consequence, incredibly valuable. Photography, on the other hand, has been deemed – many experts protest, wrongly – as an easy venture, devoid of skill, amateur even. Perhaps this explains why, as late as the 1960s and ‘70s, art photography was still being relegated (as photographer Jeff Walls described it) to so-called photo ghettos: niche galleries, aficionados and publica-tions; the fringe of culture.

Now, the tides are changing and photog-raphy is ready for its close-up.

The revelation that the production of a photograph may be just as laborious as the creation of a canvas (think of Ead-weard Muybridge, a 19th century pioneer in the photographic study of motion, carrying weighty cameras, boxes of glass negatives, as well as tents and chemicals for a makeshift darkroom through forests and mountains to capture images of the

Yosemite wilderness), and the desire for a fidelity of features that is unique to photog-raphy, have intensified the appreciation of, and fascination with, this art form.

So much so, in fact, that a number of London’s most prominent art galleries and museums – namely, the Tate, the Victo-ria & Albert Museum, and the National Media Museum – have invested some £2.1 million in expanding their photography collections over the past three years, paying it due respect as an artistic medium of historical and cultural significance.

Private collectors, meanwhile, are spy-ing an opportunity to enter an otherwise deeply dear art market for a fraction of the price. In a largely uncontested market space, with a new wave of demand, it seems like a sound strategy.

In April 2013, the art market analysis firm ArtTactic produced a survey suggest-ing that confidence in the modern and contemporary (pre-1960 and post-1960 respectively) photography markets has risen by 10.6% in the twelve months preceding its publication. Moreover, some 92% of experts questioned anticipate that prices for modern photography are likely to rise by the end of the year.

The positive sentiment continued in ArtTactic’s auction analysis report released in June 2013, documenting recent season sales at Sotheby’s, Christie’s and Phillips in

PHOTOGRAPHY IS A LANGUAGE THAT EVERYONE

CAN UNDERSTAND


1853:1853: The Photographic Society PHOTOGRAPHY IS A

Animal Locomotion Studys by Eadweard Muybridge



$400. By 1979, when he was making select editions, Adams’ work was commanding between $4,000 and $16,000. In October 2006, a 1948 print of his Moonrise, Her-nandex, New Mexico sold at Sotheby’s New York for $609,600.

Success of this magnitude for an investor is dependent upon adhering to numerous

criteria. The primary consideration is which artist to invest in. Secondarily,

is the image an extant print?

A spotlight look at key photographers who, through the sale of their works, have helped to elevate the artistic medium

of photography and propel it into prosperous times.

1. JOSEPH-PHILIBERT GIRAULT DE PRANGEY (1804-1892):

Having originally studied painting in Paris, Girault de Prangey quickly developed a fascination with the Daguerreotype Process, the first practical photographic process. The resulting Daguerreotypes from his

experiments and travels in the Middle East are the earliest surviv-ing photographs of Greece, Egypt, Syria and Turkey. His 113 Athenes, Temple de Jupiter from 1842, measuring a mere 18.9 x 24cm, came up for auction at Christie’s London on May 20th 2003. It sold for $922,488. Inspired, Christie’s New York staged an auction entitled ‘A historic photographic grand tour: important daguerreo-types by Joseph Philibert Girault de Prangey’, in October 2010. The sale total, including buyer’s premium, reached $2,873,375.

2. ALFRED STIEGLITZ (1864-1946): A true pioneer in the field of photography, Stieglitz was one of the founding members of

Photo-Secession in 1902, which advocated an emphasis on the craftsmanship inherent in pho-tography. Noted particularly for his compositional choices, his cele-

brated portraits of fellow artist and wife, Georgia O’Keefe, embody his modernist ideas of fragmented self, refusing to encapsulate her identity within a single image: over three hundred images were taken. Two belonging to this collection came up for auction at Sotheby’s New York in February 2006. Geor-gia O’Keeffe – Nude sold for $1.36 million, whilst Georgia O’Keeffe - Hands surpassed its contempo-rary, reaping in $1.47 million.

3. RICHARD AVEDON (1923-2004):In an obituary published to mark the passing of Avedon, a promi-nent newspaper described his fashion and portrait photography as having helped define America’s image of style, beauty and culture

for the last half century. Indeed many famous stars served as inspiration for his works, which are still exhibited at museums worldwide.

His image of American supermodel, Dovima, posing poetically with two elephants whilst wearing a wistful black dress, originally featured in Harper’s Bazaar magazine. The negative has since been lost and only one gelatine, silver print – measuring 216.8 x 166.7cm and signed in pencil – was ever made. It came up for auc-tion at Christie’s Paris in November 2010. The winning bid? €841,000, far surpassing its €400,000-€600,000 estimate.

4. CINDY SHERMAN (B. 1954): Revered for her conceptualist portraits, Cindy Sherman is credited by experts as having sustained a provocative exploration of the construction of contemporary identity. Consequently, her series of self-portraits – temptingly enigmatic – have performed commendably at auctions over the years. Known to substantially limit her prints as well as avoiding titling her images to allow for free interpretation on the part of the

viewer, Sherman’s Untitled #153 (one of six prints) sold in November 2010 in New York for $2.7 million, whilst Untitled #96 (print seven of ten) sold at Christie’s New York in May 2011 for just shy of $3.9 million.

5. ANDREAS GURSKY (B.1955):German visual artist Andreas Gursky’s name is a mainstay of the auction market, with the monumental sale of his Rhine II photograph in November 2011 succeeding to this day as the most valuable photograph ever sold. Recently, in June 2013, his Chicago Board Trade III picture – one of a collection of five images depicting a bird’s eye view of the ordered chaos that reigns throughout international stock exchanges – beat its £800,000 high estimate by 169%, bringing in a total of £2.2 million. Sotheby’s London’s Oliver Baker commented: “Not only are (these photographs) fresh to the market, but they represent the apotheosis of Gursky’s technique and trademark subject.”

FIVE OF THE BEST

London and Paris. The first half of 2013 boasted an overall total of $29.96 million,

an impressive 66% increase from the second half of 2012.

Ben Burdett, owner of Atlas Gallery, a London-based fine art photography gallery that has helped propel photogra-phy collections of the likes of Elton John into the spotlight, explains: “Prices are definitely

creeping up, but it’s not a steep curve, more of a gradual slope.”

Furthermore, Burdett believes that the boundaries that once restricted demand to the US and Europe are dissipating, opening up the market on a global scale. The public is being put in touch with new

photographers, giving rise to new material to be explored and coveted. He concludes: “We’ve seen a huge increase in people that want to become serious collectors of photography and get into this market quite deep. Photography is a language that every-one can understand.”

Whilst the market initially experienced some instability, the practice of creating limited editions focused collecting efforts. Indeed, the most potent resistance that the market has encountered has been the concern of buyers that works of photogra-phy are easily reproducible, are not unique (or, rather, singular), and therefore not a viable investment option. In 1975, prior to limiting his output, photographs by Ansel Adams were selling in the region of

WE’VE SEEN A HUGE INCREASE IN PEOPLE

THAT WANT TO BECOME SERIOUS COLLECTORS OF

PHOTOGRAPHY

lifestyle.indd 80 16/09/2013 12:04


THE DIVINE COMEDY BY DANTE ALIGHIERI.

NEW TRANSLATION BY CLIVE JAMES (PICADOR, 2013)

RRP: £25 (£16 FROM AMAZON.CO.UK)

N o, we’re not joking with this month’s recommendation. Renowned critic and poet Clive James presents what

he considers the crowning achievement of his career: a monumental translation of Dante’s The Divine Comedy. Light reading it isn’t but the general consensus is that James’s new English-language version is the only one that contains Dante’s variety, depth, subtlety, vigour, wit, clarity, mystery, and awe in rhymed English stanzas that convey the music of Dante’s triple rhymes. Dan Brown fans in particular who will come to this for the first time after reading his Dante-filled Inferno (James prefers ‘Hell’) will find it much more accessible than many previous translations. TS Eliot considered The Divine Comedy to be the only book in the western tradition to surpass Shakespeare. As the Guardian reviewer noted, “It is typical of James’s chutzpah that he has not only tackled this Everest of translation, but has scrambled to the summit in triumph.” This translation is an outstanding achievement and will deservedly give Clive James a whole new image to many people.

BOOK REVIEW

What size and medium is it? Is there a signature or other form of identifica-tion? What condition is it in? Thirdly, what position has this artist and their works occupied within the market thus far?

Whilst key names from the world of fine arts may roll off collectors’ lips – Picasso, Monet, Dali – endlessly, knowing which photographers to target in the fine art pho-tography world is a little more difficult.

A quick search will, of course, unearth photographers whose works consistently perform well at auction: Gursky, Adams, Cindy Sherman and Edward Weston, to name a few. How certain names ascend the value-ladder largely depends upon their contribution to the history of photogra-phy: how innovative and pioneering they have been in both subject matter and advancements in technique and technol-ogy. A prime example is Gustave Le Gray’s The Great Wave, Sete (1857). An image measuring a mere 33.7 x 41.4cm, Le Gray’s piece is deemed an embodiment of how photography began exploring its painterly possibilities whilst exemplifying its own unique qualities. Moreover, at a time when photographers found it impossible to achieve proper exposure of both landscape and sky in a single picture (due to emul-sions not being equally sensitive to all colours of the spectrum), Le Gray solved this problem by printing two negatives on a single sheet: one for the sea, the other for the sky. The Great Wave, Sete came up for auction at Sotheby’s London in October 1999, and inspired one bidder to part with over $838,000 to bring it into his posses-sion.

When approaching prints, so-called ‘vin-tage’ (or ‘original’) reflects pieces produced by the photographer within a short time

frame of having taken the picture. Value is placed on these prints due to the idea that the image faithfully

embodies the pho-tographer’s vision at the time. Photographic circles tend to perceive film negatives as being raw files, with a so-called ‘original’ photograph being a wet print made by the photogra-pher themselves; that is, one generation from the raw file. In contrast to editions made later from other sources, original prints are unique in that random variations during processing in, for example, timing, introduce subtle changes.

If not an original, prints pursued should at least be numbered limited editions, com-plete with signature and date, or another form proving authenticity and rarity.

With industry developments, a hierarchy has also emerged regarding the medium of prints. The Platinum process is considered consistently stable, producing images with a rich tonal scale, as opposed to earlier print-ing methods, such as Calotype and Silver, products of which may have a tendency to fade or curl. The importance of condi-tion is not to be underestimated. Industry experts advise that whilst particularly early examples of photography (for example, dating back to the 19th century), may be forgiven for being a little marred, the gener-al rule is to uncompromisingly buy pristine: the finest example of an image that one can find and afford.

Having isolated an interest – a photogra-pher and series of images that are attractive to each collector’s personal tastes – aspiring to trace the market activity of the said pho-tographer and works thus far will ensure, experts advise, empowerment: the purchas-ing of both a piece of fine art and a sound investment.

CAPTURING CYPRUS

T he Cyprus Photographic Society (CPS) has been

actively operating since 1960 (being invited to join the Federation Internationale de l’Art Photographique in 1964), hoping to capture cCyprus’ attention, educating the

public as to the possibilities inherent in this art form.Working tirelessly to make this art form accessible to all in Cyprus, branches representing CPS exist in Nicosia, Limassol, Larnaca, and Paphos, welcoming membership from all factions of society.Yearly, a number of national and international photographic events – spanning exhibitions and

conferences to seminars, lectures, photographic excursions and discussions – are organised. Most recently, CPS staged an International Digital Photo Competition, the closing date of which was September 10, 2013. Opportunities are plentiful for members to present their photographic work, whilst learning from their peers and exchanging ideas.

THE IMPORTANCE OF CONDITION IS NOT TO BE

UNDERESTIMATED

Frequenting galleries, talking to deal-ers, and visiting auction houses will enable collectors to put themselves in touch with past market activity, exposing, furthermore, future opportunities.

Photography expert, Penelope Dixon, advises that, above all, becoming an informed collector is dependent upon train-ing oneself to be sensitive to the medium at hand. The nurturing of instincts and opinions to be able to discern what you, uniquely, like and dislike, and refrain-ing from being swayed by labels declaring certain examples, ‘masterpieces’ or ‘forget-table’, is paramount. Only then will you really find the perfect picture.


“Please keep it to 500 words.” That was my editor, giving me instructions for the first column I ever wrote for this magazine. Now I’ve reached fifteen thousand words. Thirty columns. Five hundred words per column. Fifteen thousand words. Fifteen thousand!

If you read this column aloud, it would take you five minutes. Because we speak at 100 words per minute. This is a useless piece of information to most people. But not to me. I have spent a lifetime reading and criti-cizing and improving (or trying to improve) and presenting and listening to television and radio spots.

“Are you sure this is a thirty second spot? I’ve counted 85 words...”

“Peter, where is your article?” That was my editor again. Giving me hell for stretching deadlines to the limit. Like this one. Which is why I am sitting on a plane counting words. John! Can we run a picture of my dog? Prob-ably not a good idea to ask. OK, forget it.

Dear reader, you are reading the last column I’ll be writing for this magazine. At least for now. I am not sure how many of my columns you have read. For all I know, this may be the first. The one and only. I started thirty columns ago. That’s two and a half years ago. I have shared many of my thoughts with you through this column. I have spoken about branding. And Cyprus. And Greece. And Steve Jobs. And Limassol. And ship-ping. And food. And restaurants. And my grandmother. And New York. And Easter. And lions. And I even told you about the

day I found my dog in a storm water drain in Athens.

Everything has changed. As I write I am sitting in seat 20C. The

lady in 19D (that’s on the other side of the aisle) just turned around. “What you are doing on Rebranding Greece is great, Mr

Economides. Keep it up.” “Thanks,” I said. “I am not Mr Economides. That was my father’s name. I am Peter. And I am not do-ing anything. It just happened.” Smile :)

She would never have turned around fifteen thousand words ago. No-one knew who I was. And no-one really cared. I had impacted millions of lives through my work in advertising. They knew what I did. But they did not know who did it.

On November 11, 2011 – that’s 11/11/11 – I was asked to deliver a speech on Rebrand-ing Greece at a conference in Thessaloniki. George Papandreou was supposed to be there. So was Antonis Samaras. Neither was there. Because that was the week that the Papandreou Government collapsed to be replaced by the caretaker government of Papadimos. Remember? It was also the week that Samaras and Papandreou were bicker-ing like schoolgirls in full sight of the world’s media. And this became one of the central themes of my angry presentation. That there was nothing wrong with Greece. That the Greeks were in crisis. That the Greeks needed to rebrand themselves. To themselves, more than to the world.

That speech went viral. And that’s why the lady in 19D turned around to speak to me.

Everything has changed. But nothing has changed.

Except the names of those who need to lead the change in Greece.

Until the next time, goodbye… Literally, the last word!

15,000 Words Later

info: Peter Economides is a Brand Strategist and founder of Felix BNI. He is a former Executive Vice President and Worldwide Director of Client Services at global adver-tising agencies McCann-Erickson Worldwide and TBWA\Worldwide. He has worked on some of the world’s most iconic brands including Coca-Cola, Apple, Absolut, illy, Audi and Nike. In Cyprus, he has been involved in branding projects for Bank of Cyprus, Sigma Television and easy-forex. Peter is based in Athens. Follow Peter on facebook at http://www.facebook.com/economidespeter or on Twitter @petereconomides

Nothing has changed except the names of those who need to lead the change

THE LASTWORD

How things have changed in Gold’s first 2½ yearsBy Peter Economides

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When you have access to global expertise, navigating complexity becomes much simpler. At Barclays, the focal point is your dedicated Relationship Manager, who will channel the knowledge and skills of the entire Barclays Group on your behalf. They will diagnose needs and identify relevant solutions for your international business.

To find out more about how Barclays can help your international business, call us on +357 22 654477* for our Nicosia office or +357 25 208000* for our Limassol office or visit barclays.com/wealth

*Available between the hours of 0830 and 1700 Monday to Friday. Calls may be recorded for security reasons and so that we may monitor the quality of our service. Call costs may vary. Please check with your telecoms provider. Barclays offers banking, wealth and investment management products and services to its clients through Barclays Bank PLC and its subsidiaries. Barclays Bank PLC is registered in England and authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered No. 1026167. Registered Office: 1 Churchill Place, London E14 5HP. Barclays Bank PLC is regulated by the Central Bank of Cyprus in the conduct of its banking and investment business in Cyprus. Barclays Bank Plc Cyprus branch is now recognised as a Foreign Bank under the Enforcement of Temporary Restrictive Measures on Foreign Banks in case of Emergency Third Decree of 2013 (the Foreign Banks Decree). In accordance with the Foreign Banks Decree, Barclays Bank Plc Cyprus Branch can only service International Clients as defined by the Foreign Banks Decree.

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