BROUGHT TO YOU BY
BROUGHT TO YOU BY
DIETER ROHDENBURG CEO, Intership Navigation Co. Ltd.
SERGEY POPRAVKO Managing Director, Unicom Management Services (Cyprus)
ELENA LEONTIOU Head of Media, IMH (Co-organiser)
PHILIP VAN DALSEN CEO, MTN Cyprus
VIKTOR KISLYI President & CEO, Wargaming Public Company Ltd.
BROUGHT TO YOU BY
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MANY THANKS TO EVERYONE WHO PARTICIPATED IN THE ORGANISATION OF THE 2nd CIPA INTERNATIONAL INVESTMENT AWARDS. ORGANISERS
presents
CIPA International Investment
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MAGAZINE
THIS PRESTIGIOUS EVENT WOULD NOT HAVE BEEN POSSIBLE WITHOUT THE VALUABLE CONTRIBUTION OF OUR SPONSORS.
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GOLD SPONSOR
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MANY THANKS TO EVERYONE WHO PARTICIPATED IN THE ORGANISATION OF THE 2nd CIPA INTERNATIONAL INVESTMENT AWARDS. ORGANISERS
presents
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THIS PRESTIGIOUS EVENT WOULD NOT HAVE BEEN POSSIBLE WITHOUT THE VALUABLE CONTRIBUTION OF OUR SPONSORS.
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IMH & CIPA WOULD LIKE TO CONGRATULATE THE WINNERS OF THE 2 nd CIPA INTERNATIONAL INVESTMENT AWARDS AT THE CEREMONY HELD AT THE PRESIDENTIAL PALACE ON 10 SEPTEMBER 2013.
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Internal Capital Adequacy Assessment Process (ICAAP) Date: 10/10/13 Current Economic Environment –IFRS Application Issues* Date: 14/10/13 Επιχειρηματικές Στρατηγικές Επιβίωσης Ημερομηνία: 17-18/10/13 New Developments in the Banking Sector* Date: 05/11/13 Δηλώσεις ΦΠΑ, Πίνακες VIES & Δηλώσεις INTRASTAT: Τεχνικά Ζητήματα κατά τη Συμπλήρωσή τους* Ημερομηνία: 12/11/13 CRR/CRD IV: Changes in the Basel II, Pillar 1 Framework Date: 18/11/13 Πρακτικά Παραδείγματα για την Εξασφάλιση και Αποπληρωμή Χρεών: Διορισμός Παραλήπτη/ Διαχειριστή* Ημερομηνία: 22/11/13 Tax and VAT Regulatory Amendments and Implications for Cyprus Investment Firms Date: 25/11/13 Valuations* Date: 02-03/12/13 Πρόσφατες Τροποποιήσεις στην περί Φ.Π.Α. Νομοθεσία* Ημερομηνία: 09/12/13 Anti – Money Laundering and Counter Terrorism Financing Requirements Date: 12/12/13 Safeguarding Clients’ Assets Date: Not yet set * The programmes have been approved by the HRDA. Enterprises participating with their employees who satisfy HRDA’s criteria, are entitled to subsidy.
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Issue 30 September 14 - October 13, 2013
8 EDITORIAL 10 UP FRONT 16 FIVE MINUTES WITH…
17
+ OPINION NO SUCCESS LIKE FAILURE By Savvas Savouri
42
15,000 WORDS LATER By Peter Economides
82
MAGAZINE
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.
44 68 70 74 76 78
78 FEATURE
60 48
56
44 | CAPITAL VALUE
52 | TIME FOR ΝEW DOUBLE TAX AGREEMENTS
A Limassol-based credit rating agency is going from strength to strength.
Cyprus should expand its network of bilateral agreements for the avoidance of double taxation to cover more countries, especially those in Africa.
48 | RENEWING EGYPT’S DEMOCRATIC ASPIRATIONS The country’s Ambassador to Cyprus remains optimistic about her country’s future.
56 | RESTORING INVESTOR CONFIDENCE Investment firms have been hit by the
6 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS
{money} {business} {economy} {tax & legal} {lifestyle}
agreement with the Troika but Cyprus’ reputation has been hit harder, says Dr. Stelios Platis.
60 | ALL THE RIGHT MOVES Interview with management guru Costas Markides.
64 | EASTERN MEDITERRANEAN NATURAL GAS FORUM The Eastern Mediterranean: A New Energy Frontier is the title of a major conference being organised by IMH in London.
EDITORIAL
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 sector. 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 country 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 Government 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 (enthusiastically 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 contributed to the growth of the island as an International Business Centre. These organisations have established 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, Managing 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!
John Vickers, Chief Editor
PUBLISHED BY IMH ISSN 1986 - 3543
MANAGING DIRECTOR
George Michail GENERAL MANAGER
Daphne Roditou Tang MEDIA MANAGER
Elena 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 DESIGNER
Alexia Petrou PHOTOGRAPHY
Jo Michaelides MARKETING EXECUTIVE
Kevi Chishios SALES & BUSINESS DEVELOPMENT EXECUTIVE
Phivos Karayiannis ADVERTISING EXECUTIVES
Irene Georgiou, Christopher Constantinou OPERATIONS MANAGER
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up front
Vodafone in €99 billion
MEDOCHEMIE TO REPRESENT CYPRUS AT THE EUROPEAN BUSINESS AWARDS
corporate
M
deal
V
odafone has sold its 45% stake in Verizon Wireless to US telecoms group Verizon Communications in one of the biggest deals in corporate history. Vodafone will receive €99 billion, of which €63 billion will be returned to its shareholders. The company will also invest money in its business, with funds earmarked for high speed mobile
phone networks. The company is launching a £6bn investment plan called Project Spring, which will accelerate the introduction of 4G networks and increase investment in laying fibre optic cables, among other things. By 2017 its main five European 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.
FOREXTIME
launches
Chinese website
F
orexTime 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.
10 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS
edochemie Ltd is to represent Cyprus in the prestigious 2013-14 European Business Awards in the Imports/Exports Award category, after beating off stiff competition to become National Champion. The firm will now compete against National Champions from 31 European countries for Ruban d’Honneur status in the next round. Final category Award winners 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 European 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 Medochemie 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 become ‘National Public Champions’ and one will go on to be ‘European Public Champion’. Voting begins in November 2013.
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up front
CCCI Business
Forums
in Ukraine, India & Kuwait
T
he Cyprus Chamber of Commerce & Industry (CCCI) is holding three Business Forums in SeptemberOctober, 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.
Microsoft to buy Nokia’s mobile phone business for
I
€5.4 billion
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.
12 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS
PREMIER LEAGUE CLUBS SPEND £630M IN THE SUMMER TRANSFER WINDOW
D
eloitte’s Sports Business Group reported at the beginning of this month that clubs in England’s Barclays Premier League spent a record £630 million on players during the so-called summer 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 Manchester 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 matches 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 spending 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 spending 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.
FXPRO PREPARES TO ENTER WORLD OF SOCIAL TRADING
T
he Financial Times reported last month that currency broker 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 parameters of the strategy,” said Psimolophitis.
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Alisher UsmAnov (60)
up front
RUSSIA’S RICHEST
Co-Owner of USM Holdings Net WOrtH: $19.9 billiON
BILLIONAIRES
After the collapse of the soviet Union, Usmanov identified a niche for plastic bags when such items were scarce. investing 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 largest commercial iron ore producer. he recently bought a $100 million stake in Apple and is the second-biggest shareholder in Arsenal football club.
1 4
Following the collapse of the Soviet Union in 1991, Russia was ripe for entrepreneurs 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…
2
mikhAil FridmAn (49)
3
Co-founder of Alfa Group Net 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.
=5
leonid mikhelson (58)
Andrey meln
Chairman of euroCh iChenko (41) Net WOrtH: $13.6 em billiON
Chairman of Sibur Net 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 company. in 1987, mikhelson inherited the management of novatek, which built pipelines, roads and industrial 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. Bloomberg estimates the firm is worth over $12 billion.
=5
melnichenko made his fortune in coal an d fertilizer, although in 1993 he co-founded mdm ba nk which went on to become one of russia’s largest ba nks. he later sold his sta ke in mdm and acqu ired a holding in eurochem, the large st producer of mine ral russia. he also run s sUek, one of russi fertilizers in a’s producers, with bu siness partner serge biggest coal i Popov. melnichenko owns the world’s 16th lar gest which is thought to have cost around $3 superyacht, 00 million.
6
mikhAil Prokhorov (48) Owner: brooklyn Nets basketball team Net WOrtH: $12.3 billiON
vlAdimir lisin (57)
Co-Owner: Fletcher Group Holdings Net 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 novolipetsk, one of russia’s largest steel producers but his company, Fletcher Group holdings, also invests in energy, oil and gas exploration, banking and real estate. The Group’s administrative office is in nicosia.
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.
vlAdimir PoTAnin (52) Chairman of interros Net WOrtH: $12.4 billiON
Following the break-up of the soviet Union, Potanin served as first deputy prime minister between 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.
vAGiT AlekPerov (63)
GermAn khAn (51)
8
President of lukoil Net WOrtH: $12.1 billiON
7
The former soviet deputy minister of oil and Gas, Alekperov heads lukoil, russia’s largest independent energy company. According to Forbes, Alekperov willed his near-21% stake in lukoil to his only son yusuf in 2013, with the caveat that his son cannot 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.
14 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS
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 investment 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 Severstal Net WOrtH: $10.1 billiON
9
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.