Global Business Magazine - November 2011 by Corporate ABM

gbm November 2011

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STEVE JOBS The MAN, THE VISION, THE LEGACY

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November 2011 • GBM • 1

INSIDE This Month:

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Business Talk With the recent loss of one of the world’s greatest entrepreneurs, it seemed only fitting to devote our cover story to Steve Jobs and the incredible life he led. We also dedicate a section to the microfinance investment vehicles market, given its steady growth over recent years. Among others we bring you a 2011 microfinance investment vehicles report and Luxembourg’s publicprivate fund structure. And with Luxembourg a preferred platform for the structuring of Islamic finance products, we examine the history of Shariah-compliant investment funds and the role Luxembourg has to play. Our energy, mining & natural resources section begins with a 2011 energy, mining and natural resources sector report. And as the mining industry has again become a target for government tax increase, we examine the concept of ‘resource nationalism’. Among others we also look at the significant challenges facing the extractive industries and Ecuador’s recent hydrocarbons law reform. In amongst the changes brought about by globalisation lies the world of translation and localisation services. From services in southeast Europe to finding a reliable Latin American service, we give you need-to-know information. While other financial markets are on a downslide, Turkey’s is active and filled with opportunities. Our first country profile looks at Turkey in detail, from its legal framework to recent evolutions, M&A and private equity to recent changes in legislation. Our second country profile covers the Ukraine, a transition market economy state with the highest rate of GDP growth in Europe. We provide a country overview, and among others show you why the Ukraine is an undisputed leader in the CEE outsourcing market and recent trends in competition law and enforcement. As always we bring you the latest deals from around the globe, address the healthy side to your work life and highlight a success story to keep you inspired. And as we finally have to acknowledge that winter is indeed upon us, we hope to raise your spirits by showing you the best luxury ski resorts 2011 has to offer.

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The opinions expressed in GBM do not necessarily reﬂect those of the editors, publishers or their agents. The information provided in GBM is general and may not be applied to a speciﬁc situation. GBM does not purport to provide legal or other professional advice and takes no responsibility for actions taken on the basis of information provided herein. Legal advice should always be sought before taking any such action. Laws and government policies are constantly changing and accordingly GBM takes no responsibility for the accuracy or currency of the information provided herein. If you require particular information you are advised to consult with the article’s author or seek legal advice.

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STeVe JoBS - The MAN, The VISIoN, The LeGACy

Steve Jobs: The Man, the Vision, the Legacy The 24th February, 1955 a young: woman gives birth to a baby. The boy would grow up to be hailed a genius, and a maverick. This little baby boy would, one day, head the world’s most iconic company. He would change the world. The exhausted mother in that San Francisco labour ward would know little of this for years to come. For now, at least, her job was done and her child taken from her to be adopted by a family, who, she hoped, would give him a better life than she could. The reluctant school boy Paul and Clara Jobs adopted the boy they named Steven Paul Jobs. His biological mother, Joanne Carole Scheible, a graduate student at the time of his birth, insisted her child be adopted by a well-educated couple. This did not come to pass. Paul Jobs never even graduated from high school. The adoption went ahead, however, on the proviso that the couple promise to send the boy to college. In 1960, Steve, his parents and Patti, a daughter they adopted in 1958, moved to Santa Clara, known today as Silicon Valley. Joanne Scheible's fears that her son may not prize education could have been realised were it not for the woman Jobs has described as, “one of the

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saints of my life,” - his fourth grade teacher, Imogen “Teddy” Hill. Such was her influence; the formerly reticent student progressed so quickly that he skipped the fifth grade, going straight to Crittenden Middle School. Being younger than all the other pupils, Jobs was bullied mercilessly. In the end the family moved once more, this time to Los Altos so the eleven year old could attend Cupertino Junior High. It was about this time Paul Jobs’ introduced his son to Heathkits – electronic kits which included “hobbyist” computers. Jobs junior was hooked! At Homestead High School, a mutual friend introduced the teenage Jobs to a likeminded electronics buff who would play a pivotal role in his future, Stephen Wozniak - Woz.

Steve was among the greatest of American innovators - brave enough to think differently, bold enough to believe he could change the world, and talented enough to do it. Barack Obama

The college drop out Despite his obvious aptitude for electronics, Jobs chose to attend liberal arts college, Reed in Oregon. Before the Christmas of his first year, he had dropped out. “Looking back,” Jobs insists in his Stanford commencement speech of June, 2005, “it was one of the best decisions I ever made.” He abandoned his official education for what he saw as real education: “The minute I dropped out I could stop taking the required classes...and begin dropping in on the ones that looked interesting,” he continued in his 2005 speech. With no dorm room, Jobs was forced to sleep on friends' floors and made ends almost meet by returning glass soda bottles for the 5c deposit. “I would walk 7 miles across town every Sunday night to get one good meal a week at the Hare Krishna temple.” The obstacles brought out a hitherto unexposed tenacity in the young man, “I loved it,” he proclaimed.

When the Apple II computer was ready to be launched onto the market, Jobs already knew that the pair desperately needed investment. He approached a number of venture capitalists. One who turned them down, Don Valentine, pointed them in the direction of another who he thought may not, Mike Markkula, formerly of Intel. When Jobs met the multi-millionaire in 1976, Markkula, then aged 34 had already retired. The business man invested a quarter of a million dollars – enough to build a thousand machines – but insisted that Wozniak leave HP and the duo use some of the investment on advertising and marketing. The Apple symbol – with the bite taken out so that it would not be mistaken for a tomato – was born.

At Reed, Jobs was exposed to all kinds of esoteric philosophies. In those days he believed that if he ate only fruit he would not need to shower in order to cleanse his superficial exterior, as the detoxing would cleanse his inner being and aid his body to purify him naturally.

Atari Atari's founder Nolan Bushnell was another of Jobs’ early heroes: both for his innovation and entrepreneurial gusto. In 1974 Jobs talked his way into the company and then, somehow, managed to persuade his new employers to fund a trip to India. He was joined on the trip by Reed friend, Dan Kottke, who shared Jobs' interest in eastern philosophies. While Jobs was flitting around India or ensconced on an Oregon farm commune with his then girlfriend Chris-Ann Brennan his old friend Woz had landed himself, what he believed to be his ideal and potentially career long job at Hewlett Packard. Simultaneously, he was in the process of building his own computer that, instead of arrays of flashing lights utilised a screen and keyboard. He presented his designs to HP but they were rejected out of hand. However, this machine was the talk of the Homebrew Computing Club whose membership was largely, though not exclusively, engineers. It was Steve Jobs' feeling that if such highly qualified people were so taken with Woz's design then they (not he!) had a viable product. He persuaded his friend to sell what was to become Apple I to club members.

Apple seeds and Apple Blossom Jobs' skills acquired assembling Heathkits came in very handy indeed. Steve and Woz would put the units together but they needed raw materials. Woz sold his HP 65 calculator and Jobs his van in order to raise funds. Ron Wayne, a colleague of Jobs' at Atari, drew up the necessary paper work for the company and received 10% in shares for his efforts which they bought back in 1976 for $800. Apple Computers was born: the name the result of Jobs' insistence that the company be called Apple if neither he nor Woz could think of anything better.

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STeVe JoBS - The MAN, The VISIoN, The LeGACy

With its integrated keyboard, expansion slots and (by the days' standards) streamlined design, the Apple II out sold rivals like the Commadore PET. VisiCalc, a piece of spread sheet software that would only run on the Apple II opened up a whole new market for the machine. It was now in demand from business.

When first offered the opportunity to invest in Industrial Light and Magic (ILM), Jobs' refused to stump up the $30million being sought. He might, he suggested, consider investing at a lower rate. His caution paid off. In 1986 parent company LucasFilms, came back to Jobs offering him Pixar for just $10 million.

In 1980, the company was ready to go public and on the 12th December it did just that. Overnight, Jobs' worth increased by some $210 million to an estimated $217 million. This was the largest floatation the USA had seen since 1956 when the Ford Motor Company floated.

To begin with, Pixar, like NeXT, seemed to be yet another drain on Jobs' finances. He made the decision to close the hardware arm of the business to concentrate on developing the Renderman 3D software. The animation arm, headed by John Lasseter, was proving itself potentially lucrative by the advertising commissions it was winning. In 1991, Disney approached the company with plans to make a computer animated feature film. Though that venture was later cancelled, John Lasseter's tenacity proved Pixar's greatest asset. He reworked the Toy Story script and the deal was back on. Seven days after the film's release Pixar was publicly floated netting Jobs, the 80% stakeholder, $1.5billion. In 2007, Disney would acquire the company for $4.7 billion.

Dark times

For the next few years, despite what seemed like promising avenues for expansion, the ageing Apple II was the company's only significant money making product. Jobs was at the helm at the Macintosh team, a project initiated by computer scientist Jef Raskin in 1978 who envisioned making a personal computer, “as easy to use as a toaster.” Raskin was fired from the company on what is known in Apple folklore as “Black Wednesday.” That day, Apple's CEO Mike Scott fired over half the employees in a move that ultimately cost him his own job. The new Apple III had proved a commercial failure and with IBM having launched its own PC, Apple's position as market leader was looking precarious. In 1983, Jobs persuaded PepsiCo's John Sculley to take the job of CEO left vacant by Scott. “Do you want to sell sugared water for the rest of your life or do you want to come with me and change the world?” was the question Jobs posed to the executive. The Jobs-Sculley partnership seemed a match made in heaven. Sculley agreed that the Macintosh machine could save Apple and herald the start of a personal computing revolution. The duo appeared together on the covers of countless magazines and gave gushing interviews. These halcyon days were, however, short-lived. Although initially a success, problems with the Macintosh soon surfaced and criticism abounded. IBM's PC had been available for some time before the Mac and had myriad programs which it could run. This new Mac platform had pitifully few which, combined with a price tag $1,000 in excess of IBM’s machine, was regarded as poor value for money. Resentment for Jobs was building within Apple while he, himself, blamed the Mac's marketing team for not being able to sustain the machines impressive initial sales figures. Whereas once Sculley and Jobs had boasted that each could finish the other's sentences friendly or even polite conversation was no longer the order of the day. Such was the tension Apple's co-founder, Wozniak, left in 1985. Reorganisation was necessary. Jobs was ousted as head of the Macintosh team and replaced by Jean-Louis Gassée. When he returned from holiday he was still a member of the board but without any affective role. He was, in his own words, “...very publicly out.”

Light and Magic

Still a member of the Apple board, when Jobs came up with ideas for a new, 3M computer, he took them to Apple. Initially they were excited – they, too, had notions of building such a product which they had code named “Big Mac”. Enthusiasm became concern when Jobs announced that he would need the best brains from the Macintosh team devoted to the project. The board's rejection of Jobs' plan was the final straw. On 17th September 1985, just four days after presenting to the board, Jobs resigned. He sold much of his stock, worth around $100 million and took his dream team with him to start a new venture, NeXT Inc. After putting the launch date back many times, NeXT brought to market its first major product in October 1988. The NeXT Cube was designed to be powerful, easy to use and stylish. This state of the art technology came at a price. At $6,500 the NeXT cube, designed for universities, was more than twice the price the institutions had agreed to pay. Jobs' was faced with another failure.

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Meanwhile, back at Apple headquarters... Apple and the Macintosh were stagnant. Each quarter they were losing market share. By 1996, the company’s CEO, Gil Amelio paid $400 million to acquire NeXT, ostensibly to secure the NeXTSTEP operating system for use in their own machines. It was the company's lifeline and Amelio's downfall. With profits tumbling Jobs, now back in the fold, organised what could only be described as a coup. In April 1997, Jobs became the CEO of the company he had co-founded but that had edged him out. Confidence in the Apple brand returned with Jobs at its helm. Within six months it was once again turning a profit. No longer would there be gaps of years between product launches. First came the PowerMac G3 followed by the Powerbook. In May 1998 Apple introduced the world to the iMac: a desktop computer that was simply beautiful. It was an instant hit not only with computer nerds but design lovers. This was no beige PC. Laptop siblings soon followed each with their own striking design that made Macs immediately identifiable. Perhaps the greatest innovation to come from Apple was the idea of the digital hub. The iApps were the company's attempt to displace Microsoft applications with its own by creating a range of must have, iconic products for which there was no Windows equivalent. The iPod was viewed by Apple as just one of a number of such products. To the surprise of all, including its developers and designers, this little gadget would be so much more. It spawned the iPhone which began the iPad and countless imitators.

“iPod Therefore I Am” - Steve Jobs (Newsweek)

Steve Jobs was diagnosed with pancreatic cancer in October 2003. Always a man to take the path less trodden he sought cures from nature including an extremely restricted diet. Speculation over his fitness and health abounded, with his death being mistakenly reported in 2008. With customary humour Jobs, quoting Mark Twain confirmed, “Reports of my death are greatly exaggerated,” but refused answer further questions relating to his health. When, on the 24th August 2011, Steve Jobs stood down as Apple's CEO to be replaced by Tim Cook, the company's share price fell 3%. In his resignation letter he stated he could. “No longer meet [his] duties and expectations as Apple's CEO.” Still, he left with Apple as the market leader, ahead of long-time rivals Microsoft and IBM and with a three year strategy in place to ensure the longevity of iApps product lines. Jobs' legacy extends far beyond Apple. His interest in design and detail that priced the NeXT cube out of the market made Macs of the 21st century status symbols and forced other manufacturers to rethink their designs. Before his recent death from pancreatic cancer, Jobs passed the baton to Tim Cook. If Cook is to truly capitalize on Jobs' legacy he must step out of the icon's shadow very soon.

Steve Jobs in His Own Words On the early days of Apple and His Vision • “We've never worried about numbers. In the market place, Apple is trying to focus the spotlight on products, because products really make a difference.”(1985) • “The most compelling reason for most people to buy a computer for the home will be to link it into a nationwide communications network. We're just in the beginning stages of what will be a truly remarkable breakthrough for most people-as remarkable as the telephone.” (1985)

On Inspiration and ideas

Innovation distinguishes between a leader and a follower Steve Jobs

• “Innovation distinguishes between a leader and a follower.” • “Picasso had a saying: 'Good artists copy, great artists steal.' We have always been shameless about stealing great ideas.” • “Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn't really do it, they just saw something.” • “I want to put a ding in the universe.” • “I think if you do something and it turns out pretty good, then you should go do something else wonderful, not dwell on it for too long. Just figure out what's next.” • “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it's worth it in the end because once you get there, you can move mountains.” • “So when a good idea comes, you know, part of my job is to move it around, just see what different people think, get people talking about it, argue with people about it, get ideas moving among that group of 100 people, get different people together to explore different aspects of it quietly, and, you know – just explore things.” • “Stay hungry. Stay foolish.” • “In most people’s vocabularies, design means veneer. It’s interior decorating. It’s the fabric of the curtains of the sofa. But to me, nothing could be further from the meaning of design. Design is the fundamental soul of a human-made creation that ends up expressing itself in successive outer layers of the product or service.” • “It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them.” • “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.”

On business and business relations • “I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.” • “I'm the only person I know that's lost a quarter of a billion dollars in one year.... It's very character-building. “ • “You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.” • “When I hire somebody really senior, competence is the ante. They have to be really smart. But the real issue for me is, are they going to fall in love with Apple? Because if they fall in love with Apple, everything else will take care of itself. They’ll want to do what’s best for Apple, not what’s best for them, what’s best for Steve, or anybody else.” • “I mean, some people say, ‘Oh, God, if [Jobs] got run over by a bus, Apple would be in trouble.’ And, you know, I think it wouldn’t be a party, but there are really capable people at Apple. My job is to make the whole executive team good enough to be successors, so that’s what I try to do.” • “Being the richest man in the cemetery doesn't matter to me. Going to bed at night saying we've done something wonderful, that's what matters to me.” • “A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.”

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STeVe JoBS - The MAN, The VISIoN, The LeGACy

• “My model for business is The Beatles. They were four guys who kept each other's kind of negative tendencies in check. They balanced each other and the total was greater than the sum of the parts. That's how I see business: great things in business are never done by one person, they're done by a team of people.” • “My job is not to be easy on people. My jobs are to take these great people we have and to push them and make them even better.” • “The people who are doing the work are the moving force behind the Macintosh. My job is to create a space for them, to clear out the rest of the organization and keep it at bay.” • “It’s not about pop culture, and it’s not about fooling people, and it’s not about convincing people that they want something they don’t. We figure out what we want.”

On life and death

Damn. People like Steve Jobs are supposed to live forever. Venture capitalist, Michael Arrington

• “Why join the navy if you can be a pirate?” • “Sometimes life hits you in the head with a brick. Don't lose faith.” • “My favourite things in life don't cost any money. It's really clear that the most precious resource we all have is time.” • “Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything - all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.” (Stanford commencement address, 2005) • “No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new.” (Stanford commencement address, 2005) • “We don’t get a chance to do that many things, and everyone should be really excellent. Because this is our life. Life is brief, and then you die, you know? And we’ve all chosen to do this with our lives. So it better be damn good. It better be worth it.” • “Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

Steve Jobs through the words of others • “Steve was among the greatest of American innovators - brave enough to think differently, bold enough to believe he could change the world, and talented enough to do it.” Barack Obama • “Steve Jobs, the pioneer of the computer as a jail made cool, designed to sever fools from their freedom, has died.” Richard Stallman, free software pioneer. • “Thanks for showing that what you build can change the world. I will miss you.” Facebook CEO, Mark Zuckerberg • “Steve, your passion for excellence is felt by anyone who has ever touched an Apple product (including the Macbook I am writing this on right now).” Sergey Brin, co-founder, Google • “For those of us lucky enough to get to work with Steve, it's been an insanely great honour. I will miss Steve immensely.” Bill Gates, co-founder, Microsoft • “I met Steve back nearly 30 years. We were colleagues, competitors and friends for more than half of our lives. World has rarely seen anyone with such a profound impact that Steve had, the effects will be felt by future generations. “Bill Gates, co-founder, Microsoft • “Damn. People like Steve Jobs are supposed to live forever.” Venture capitalist, Michael Arrington

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THE SUCCESSOR - TIM COOK

The Successor Profile of

Tim Cook Chief Executive Officer of Apple By John Schaefer

Tim Cook was thrust into the national spotlight on Aug. 24 when Apple Inc. promoted him to Chief Executive Officer following the resignation of company co-founder and industry legend Steve Jobs. But while Cook might have been obscured in the public’s eye by Jobs’ huge shadow, he was already well-known and highly regarded in the business community for his valuable contributions to Apple’s explosive growth in the past decade. Timothy D. Cook was born on Nov. 1, 1960 in Robertsdale, Alabama. His home was blue collar and traditional – his father worked at a shipyard while his mother was a homemaker. Cook attended Auburn University, where he received a Bachelor’s degree in industrial engineering in 1982.

with loads of inventory sitting in boxes, the company became much more nimble while keeping costs down.

Cook went on to earn his MBA in 1988 from Duke University while simultaneously embarking on his career in the computer and hightech fields. Cook joined IBM in 1982 and during his dozen years at “Big Blue” honed his logistics skills while working as the director of North American Fulfillment for the company’s personal computer business. He left in 1994 for computer reseller Intelligent Electronics and rose to the position of Chief Operating Officer.

Cook also has proven to be a whiz at forecasting the future. For example, before Apple rolled out the iPod Nano in 2005 Cook had predicted that the music player would be a hit and he prepaid $1.25 billion to suppliers of flash memory (which the Nano uses a lot of) to lock up the market for five years. Given the success of the Nano, Apple would have had to pay much more for the memory if not for Cook’s shrewd move.

During this period Cook had a brush with death that deeply affected him. In 1996 he was told he had multiple sclerosis, only to later learn that that was a misdiagnosis. “You see the world in a different way” after such a frightening experience, Cook once said in an interview. The incident helped make him more health-conscious and he became an avid cyclist. That hobby would play a key role in Cook’s biggest career move.

Cook began branching out into other areas of Apple in 2000 when he assumed control of the sales force and customer support. He later took over the Macintosh division and iPhone sales and operations. Jobs promoted Cook to Chief Operating Officer in 2005. The year before, Jobs first signaled that Cook was his heir apparent when he tabbed him to serve as interim CEO during a two-month medical leave. Cook again filled in for Jobs in 2009, this time for six months, during which time he kept the iPhone 4 and iPad on development while boosting Macintosh sales.

But first there was a stint at Compaq beginning in 1997 as the Vice President of Corporate Materials, a position he would hold for only six months thanks to a job interview that would change his life. Jobs had returned to Apple in 1996 and one of his tasks was to find a new head of manufacturing operations. When an executive recruiter presented Cook to Jobs the two hit it off well. Jobs was taken by Cook’s calm, self-assured disposition, and when he discovered that Cook was a cycling nut like himself the two formed an instant bond. Joining Apple was risky for Cook. The company was something of a laughingstock while Compaq was a major player in the computer business. But Jobs convinced Cook that Apple would rise up from the heap. That, of course, is exactly what happened. While Jobs soon began dazzling consumers with flashy products like the iPod and iPhone, Cook was quietly working behind the scenes to ensure that those products would be wildly profitable. Cook immediately made an impact at Apple by getting the company out of manufacturing. Numerous factories and warehouses were closed and much of Apple’s production was instead contracted out. Cook also sought suppliers who were near Apple’s factories, which further improved manufacturing efficiency. Without having to deal

After Cook took the CEO title permanently in August, and especially following Jobs’ death on Oct. 5, a hot topic in Silicon Valley and on Wall Street has been whether or not Cook can keep the blockbusters coming. The biggest concern about Cook is that he is not a design genius – that was Jobs’ domain. That should not be an issue in the near term, as Apple’s top-secret product pipeline is supposedly full. And by serving on the board of directors of Nike since 2005, Cook has gained valuable insight from a company that, like Apple, is known for its product development and marketing. Still, until Apple unveils a megahit under Cook’s watch there will always be doubts about him. The odds are good, however, that Apple will continue to thrive. Cook is a demanding boss who starts his work day at 4:30 in the morning and expects total dedication from his subordinates. He knows how to push the talent at Apple to deliver results – he just does it more quietly than the sometimes mercurial Jobs did. Given Cook’s past track record of success, one should probably assume that he will do just fine at the helm. And given his unassuming personality, it is also a good bet that he would be the last to talk about it.

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LUXEMBOURG MICROFINANCE INVESTMENT VEHICLES

Luxembourg Microfinance Investment Vehicles Setting up microfinance investment vehicles Microfinance investment vehicles (MIVs) play an increasing role in channelling supplementary resources to microfinance institutions.

According to the MicroRate 6th annual survey, the MIVs market has been steadily growing both in number and assets over recent years, albeit at a slower pace in 2009 and 2010. These MIVs can use widely varying legal structures from donor funds to regulated commercially-oriented mutual funds. Worldwide, there are more than hundred microfinance investment intermediariesmost are set up as MIVs. More than 15 MIVs have been launched over the past 24 months, most of them having been registered in Luxembourg. Luxembourg is the jurisdiction of choice for MIVs Luxembourg emerges as major microfinance centre of excellence for setting up, structuring and registering MIVs. Luxembourg appears to have a head start in the microfinance niche market as its hosts the majority of the regulated microfinance funds worldwide. Generally speaking, Luxembourg offers an appropriate legal, regulatory and fiscal

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framework for the incorporation of MIVs. The flexibility of the available product range, combined with a recognised regulatory framework, a favourable tax environment and a well-developed double tax treaties network, shape the Luxembourg financial sector’s attractiveness. Since the fiscal year 2010, microfinance investment funds set up in Luxembourg have been exempted from the annual subscription tax. It appears, furthermore, that service providers present in Luxembourg offer the skills and experience that are required in order to respond to the somewhat specific needs of MIVs. The overall reputation and the professional experience of the service providers with regard to investment funds are generally speaking beneficial for the Luxembourg financial centre to attract investment vehicles dedicated to microfinance. In the light of the characteristics of MIVs, it appears that microfinance sponsors and initiators may choose to organise its vehicle as either: a retail non-UCITS fund generally

Daniel Dax General Manager LuxFLAG Tel.: + 352 22 30 26 30 Fax: + 352 22 30 93 info@luxflag.org

five of the top ten MIVs have been granted the LuxFLAG microfinance label. The interest of institutional and retail investors for responsible investment opportunities remains strong. This may also be reinforced by the fact that, due to the financial crisis, investors may want to rethink the allocation of their investments, balancing their decisions between socially responsible and purely profit motivated investments.

referred to as a Part II UCI (SICAV or FCP); a specialised investment fund reserved for well informed investors (SIFs- SICAV or FCP); or, an investment company in risk capital (Sociétés d’Investissment en Capital à RisqueSICAR). Part II UCIs, SIFs and SICARs are all regulated funds. The Luxembourg financial sector has already attracted a proportionally significant number of MIVs and a number of further projects are about to be launched. Twenty LuxFLAG microfinance labels The LuxFLAG (Luxembourg Fund Labelling Agency) Microfinance Label has been granted to 20 MIVs holding approximately US$2,9bn assets under management as of the end of September 2011, with some more labels expected to be added before the end of 2011. As at the date of writing, 9 Part II UCIs, 9 SIFs and 2 SICARs have obtained the LuxFLAG microfinance label. The funds labelled by LuxFLAG account for more than 80% of the total microfinance fund assets in Luxembourg. At the end of 2010, six of the top ten MIVs have been established in Luxembourg, and

As the number of MIVs expands, there is a need to assist investors in their choice of investment, especially since the complexity of the different structures and similarity of investment policies make it difficult for potential investors to choose their microfinance investment. Providing a concrete tool to reassure investors that the MIV actually invests directly or indirectly in the microfinance sector is the key element that sustains the objectives of LuxFLAG. By awarding a distinctive label to eligible MIVs, LuxFLAG contributes to continuously enhance transparency. In June 2011, LuxFLAG launched the LuxFLAG environment label that will be developed together with the LuxFLAG microfinance label in its continuous efforts to support the financing of sustainable development and of responsible investments. The present Luxembourg MIVs Report 2011 provides an in-depth overview on product innovation, and legal and regulatory frameworks, as well as on fund managers and administrators and other key microfinance stakeholders’ perspectives.

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LuXeMBourG MICroFINANCe INVeSTMeNT VehICLeS

Alain Thilmany alain.thilmany@credit-suisse.com Credit Suisse Investor Services Fund Solutions & Client Services

Fund administration- and custodian bank know-how for microfinance funds- an ongoing initiative at Credit Suisse Credit Suisse has been involved in microfinance for nearly a decade. It was one of the first financial institutions in Switzerland to recognise the potential of micro-credits. Our microfinance team based in Zurich guides interested private banking clients towards the achievement of their social goals by offering a series of innovative solutions, including investments in microfinance

investment vehicles (MIVs). Credit Suisse developed a high level of expertise and its dedicated microfinance team offers fund solutions, market leading fund administration and custodian bank services. Today it is one of the most sophisticated service providers in this niche market. By co-founding the company responsAbility Social Investments AG in 2003, Credit Suisse was initially involved in the set up of the responsAbility Global Microfinance Fund, designed for the retail investor segment. The fund was initially registered for public offering in Luxembourg and in 2005 it was authorised by the Swiss Supervisory Authority for public distribution in Switzerland. Today, Credit Suisse is providing administration and custodian services to responsAbility Social Investments A.G. for four microfinance funds aimed at both, retail and institutional investors, as well as a private equity fund, which gives investors a direct stake in microfinance companies and institutions. The assets under management currently amount to CHF million 820. During the last couple of years, Credit Suisse has been further mandated as central administrator and custodian bank for three dedicated Investment Funds (Regional MSME Investment Fund for Sub-Saharan Africa, Microfinance Enhancement Facility and Rural Impulse Fund II) targeting public sector investors including governments and development agencies as well as international financial institutions and donor

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organisations. From a fund accounting perspective, Credit Suisse gained a lot of experience by setting up ten different investment vehicles and is now in a position to cover all of the nontraditional specifics of a MIV that depend on the type of investors, investment style and asset class. The multi-class capability of our fund accounting system fulfils the requirements of a multi-layer fund set up, reflecting the risk/return profile of potential investors. Based on predefined and duly approved ’waterfall rules‘, the system allows to allocate the profit and loss result to a specific share class having its own risk profile, governance representation and target dividend return. All investments, independent of their geographical allocation, made by the fund in a microfinance finance institution (MFI), either by way of debt, equity or guarantee

facility, have to be considered as a nontraditional asset class, for which independent pricing sources do not exist. For this reason, the fund administrator in charge of the net asset value calculation, has to apply a ’fair value pricing‘, which means a consistent, transparent and prudent valuation approach. Within this context, Credit Suisse relies for each valuation on a ’critical situation report‘ provided by the investment manager. This report is evaluated by a dedicated pricing team taking into account the quality of the information provided and comparing the market analysis of different investment managers; whereby the latter becomes a rather indicative comparison because Credit Suisse offers fund administration services to a multitude of microfinance portfolio managers. In addition and due to the lack of historical data on MFIs, Credit Suisse has built a strong and transparent process in order to mitigate

valuation risks deriving from microfinance investments. Within this context, Credit Suisse encourages fund promoters to agree prior to the fund launch on a transparent provision policy for the valuation of promissory notes and loans (impairment provisions), thus allowing the anticipation and gradual amortisation of possible future losses. One of the key parameters in the provision building process is the portfolio at risk (PAR) analysis performed by the respective portfolio manager within its own risk management process. The PAR 30 is a standard international measure of portfolio quality that measures the portion of a portfolio, which is deemed at risk because payments are overdue for more than 30 days. For private equity investments, similar to investments in a debt loan portfolio, Credit Suisse relies on a regular reporting provided

by the investment manager, enabling the fund administrator to run a fair value valuation and allowing the custodian bank to monitor the private equity assets from initial acquisition until disinvestment. Besides the regulatory KYC and AML requirements, the transfer agency department of Credit Suisse is currently offering a tailor made investor control of the preceding and ongoing investor conditions deriving from the underlying subscription/commitment agreement. The realm of microfinance and social responsible investments is relatively young and evolving rapidly. This offers new opportunities for innovative fund solutions and service providers. Credit Suisse is further strengthening its expertise and engagement in both roles by continuously reviewing its strategy and adapting accordingly in order to maintain a leadership position in this niche market.

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LuXeMBourG MICroFINANCe INVeSTMeNT VehICLeS Elvinger, Hoss & Prussen Jacques Elvinger, Marc Elvinger, Frédérique Lifrange Partners Tel: (00352) 44 66 44 0 jacqueselvinger@ehp.lu www.ehp.lu

Which European framework for microfinance investment funds? For quite a while now, some have been calling for the creation of a specific European regulatory framework that could adequately govern microfinance funds and offer them the benefits of a European passport in order for them to be easily marketed throughout the EU. The objective is twofold: namely to enhance fundraising for the microfinance sector while providing adequate protection for investors. Today, in order to benefit from such a European passport, a fund must qualify as a UCITS under Directive 2009/65/EC (the so-called UCITS Directive). For the sake of completeness, a European passport is available under Directive 2003/71/EC (the socalled Prospectus Directive); yet only closedended funds may benefit from this passport and the passport is in principle attached to the prospectus itself, although a series of member states have actually extended it to the product. If UCITS are allowed a certain exposure to microfinance, any such exposure must remain very limited due to specific rules imposed on UCITS, which aim at ensuring actual liquidity of the investment portfolio. As of July 2013, another European passport will be introduced for funds not qualifying as UCITS, namely the European passport of the Directive on Alternative Investment Fund Managers, the so-called AIFMD (Directive 2011/61/EU). Yet, contrary to that granted under the UCITS Directive, the AIFMD passport will be restricted to marketing to professional investors. The AIFMD aims at regulating investment managers, the AIFMs and, indirectly, the funds they manage ‟ the AIFs. The passport thus comes with a series of rules and conditions to be complied with at the level of both the manager and the fund. Among the requirements applicable at the level of the fund, there is a requirement for a depositary, a valuation agent and a series of reporting vis-à-vis the investors and regulators. The AIFMD has a truly all-encompassing scope (outside of that covered by the UCITS Directive). It is applicable to all EU managers who manage EU and non-EU funds. It also applies to all non-EU managers who manage

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EU funds and who market EU funds or nonEU funds in the EU. This directive is also all-encompassing in terms of asset classes in which funds invest. In that respect, it covers a variety of funds, such as private equity funds, real estate funds, commodity funds or hedge funds, but also microfinance funds. The ‘one size fits all’ approach of the AIFMD is often pointed out as being a major inadequacy of the directive that does not consider the diversity of funds covered. With respect to microfinance funds in particular, the fear is that some requirements will not only be inappropriate but will also imply significant burden and costs likely to be difficult to cope with for funds that are usually particularly cost-sensitive, and their managers. It should be noted, however, that the AIFMD allows for a series of exclusions and exemptions that may be relevant for microfinance funds. First, some types of vehicles are out of scope as they are not considered as investment funds, such as holding companies and securitisation vehicles. Also, supranational institutions, such as the World Bank, the EIB and the European Development Finance Institutions, are out of the scope of the AIFMD if the funds they manage are acting in the public interest. In addition, certain grandfathering provisions also apply to existing funds that do not accept any further subscriptions. More importantly, a lighter registration regime is offered to small managers with assets under management of less than €100m or less than €500m in relation to non-leverage funds, where investors have no redemption rights for a period of five years. The flip side of those exclusions and exemptions is the lack of benefit of the European passport granted under the AIFMD. In that respect, it is worth noting that small managers referred to in the foregoing paragraph may choose not to be exempted and opt in to the full regime of the AIFMD, thus including the benefit of the European passport. An adequate European framework for microfinance funds could be the outcome of a recent consultation paper on social

investment funds released by the European Commission (The Social Business Initiative: Promoting Social Investment Funds, European Commission, Public Consultation, 13 July 2011). This paper discusses possible measures to support social business via private investment funds. Although at this stage there are no certainties as to the European measures that could be adopted in that context, one of the possible options could be the creation of a European ad hoc regime dedicated to social investment funds. This regime could be accompanied by a European passport for those funds complying with it. It should be noted that there is also uncertainty surrounding the scope of the contemplated measures such that it is difficult to determine at this stage whether microfinance funds, or rather, which of them would be covered. The consultation paper notably discusses the definition of social business and the features of social investment funds in that specific context. Among others, it discusses whether or to what extent social investment funds may have the distribution of profits to investors as an objective besides the achievement of social goals. In any case, this initiative of the European Commission and its future developments are definitely to be closely watched by those involved in the microfinance funds sector. It is already merited with having somewhat acknowledged that existing European frameworks are not adequate for all types of investment funds and having given the opportunity to highlight the specific needs of investment funds with a social focus.

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LuXeMBourG MICroFINANCe INVeSTMeNT VehICLeS Oppenheim Asset Management Services S.à r.l. Johann Will Vice President 4, rue Jean Monnet L-2180 Luxembourg johann.will@oppenheim.lu

Tel. +352 221522 423 Fax: +352 221522 9423 koeln@oppenheim.de

Prize-wining investments with a positive effect – microfinance funds from Sal. Oppenheim Sal. Oppenheim jr. & Cie.was founded in 1789, and with assets under management of more than €60bn, it is one of the leading private banks specialising in asset management today. The bank supports high-net-worth private clients and institutional investors, such as churches, foundations, associations and companies. It offers a unique investment process that caters to private and institutional client requirements alike. This expertise and the high quality of advisory services were recently recognised in a survey by the Institute for Asset Accumulation (Institut für Vermögensaufbau) and finance magazine Euro with a test result of “very good”.

Microfinance Activities by Sal. Oppenheim. Oppenheim has also had many years of success in microfinance investments. For over five years, the Luxembourg subsidiary Oppenheim Asset Management Services S.à r.l. (OPAM), together with Finance in Motion GmbH, Frankfurt (investment adviser), has managed the European Fund for Southeast Europe (EFSE), which was initiated by KfW Entwicklungsbank (Development Bank) with financial support from the Federal Ministry for Economic Cooperation and Development and the European Commission. The fund provides small loans via local partner financial institutions to micro and small enterprises (MSEs) in eastern and south-eastern Europe, as well as in the Caucasus region. At fund launch, invested capital was around €66m, while today the total is approximately €675m in 67 local financial institutions. As investment manager, OPAM has particular responsibility for investor acquisition and support, along with asset liability management and cash management. The money invested is to be raised from both public investors and private and institutional investors using a public-private partnership model. This innovative financing concept has found wide international recognition. At the G-20 Summit in Seoul in 2010, the fund was named the world’s best model for mobilising private funding for small and medium-sized enterprises in developing and emerging market countries. The EFSE is now seen as a model example for development funds in other regions and sectors. The EFSE plans to make numerous further investments in local financial institutions in the target countries until 2014, in order to finance over 400,000 MSEs and, in the future, to promote medium-sized enterprises too. This should create around 400,000 jobs. OPAM has launched a further microfinance fund in a consortium with Finance in Motion GmbH and in cooperation with the Federal Ministry for Economic Cooperation and Development, the EU and KfW Entwicklungsbank. The SANAD Fund will provide debt and equity financing to partner institutions in the Middle East and North

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Africa (MENA) region that serve micro, small and medium enterprises (MSMEs). By facilitating access to finance in the region, SANAD - literally “support” in Arabic - aims to strengthen the MSME sector and local financial markets in the MEMA region in line with the principles of Responsible Finance. In addition to the EFSE and SANAD, OPAM manages together with Finance in Motion GmbH a further fund the Green for Growth Fund, South-East Europe (“GGF”). Initiated by the European Investment Bank and KfW Entwicklungsbank, GGF is the first specialized fund to advance energy efficiency (EE) and renewable energy (RE) in Southeast Europe, including Turkey. The mission of the GGF is to contribute, in the form of a public private partnership with a layered risk/return structure, to enhancing energy efficiency and fostering renewable energies. GGF investments seek to achieve a 20% reduction in energy consumption and/or a 20% reduction in CO2 emission. Sustainability - a tradition of ours Sustainable and ethically responsible investment is nothing new for Sal. Oppenheim. Following sustainability criteria for environmentally and socially responsible investment is not only important in economic and social policy but is also increasingly a factor in private investment decisions too. We therefore offer our clients in private asset management options for ethically oriented investment. In this ‘ethical asset management’ we invest exclusively in companies with ethical and environmental principles that use natural resources sparingly while remaining open to technological progress and/or set themselves apart from their competitors with more sustainable production methods.

Luxembourg Microfinance and Development Fund 2, place de Metz, L-1930 Luxembourg Kaspar Wansleben Executive Director

Tel: +352 27 47 35 kaspar@lmdf.lu www.lmdf.lu

Public-private fund structure to finance next generation of microfinance institutions The fund is a joint initiative of the Luxembourg government (Direction de la Coopération & Ministère des Finances), the NGO sector (ADA), banks and insurance companies of the financial place (Dexia BIL, BGL BNP Paribas, BCEE, Banque de Luxembourg, Banque Fortuna, Compagnie de Banque privée, Foyer, Etika & La Luxembourgeoise) and the Luxembourg public. The fund is authorised for retail distribution by the financial sector supervisor. LMDF has developed a three-tiered share class structure in order to accommodate these different types of investors. Class A is for public and not-for profit investors and retains largely control over the governance of the fund. Class B is an institutional share class with a preferred financial return. Class C

shares are only open to private and notfor-profit investors and benefit from a microfinance counterparty risk coverage from Class A share capital. In case of an impairment of a financial instrument due to counterparty risks of a microfinance institution, Class A share capital absorbs the loss for Class C shares in view of rendering an investment in microfinance attractive to retail investors. The fund aims at a financial return for its Class A and C shareholders that compensates at least for inflation to preserve invested capital in real terms. Class B shares have higher return targets. LMDF is distributed by most retail banks in Luxembourg. On the investment side, the fund may use debt, equity, guarantees and related financial instruments to invest in promising, but small microfinance institutions (so called ‘tier 2’ or ‘tier 3’ MFIs). These microfinance institutions lend the invested funds to thousands of local micro-entrepreneurs, mostly active in small services and trade (60% of all clients) or agricultural activities (20%). The geographic investment focus is on the developing countries with a high degree of financial exclusion in Latin America, Africa and South and South-East Asia. By the end of September 2011, the Fund had invested €6m in 21 microfinance institutions in 12 countries. Forty one percent of total investments are in Sub-Saharan Africa where the need to foster microfinance institutions remains particularly large. LMDF also strives to develop sound financial risk management of the smaller microfinance institutions. For example, local currency financing has long been considered important in lowering the risk profile of microfinance institutions that lend mainly in local currency to their clients. LMDF became investor in MFX Solutions, a provider of currency hedging instruments to the microfinance community. The fund actively promotes local currency financing and has granted, at the end of September 2011, 48% of all financing in local currency loans. Since the fund started operating at the beginning of 2010, the microfinance industry has embarked on a serious debate about what constitutes responsible practices if your clients are among the poor and vulnerable. In

order to live up to its investment objectives, LMDF has developed a proprietary due diligence methodology that includes social dimensions. Particularly important is the outreach of the microfinance institution to specific client groups (rural areas, poorer regions, women) and whether products and services, including their pricing, are suitable for the economic activities of these groups. The analysis incorporates also several performance metrics on efficiency in view of minimising social opportunity costs on investment. The incorporation of social performance criteria in the governance of the institution is another key factor. In view of its role to develop smaller institutions, LMDF includes covenants on transparency in its loan contracts or shareholder agreements such as the obligation to regularly conduct financial and social ratings by one of the specialised microfinance rating agencies. Finally, LMDF’s investments are often coordinated with like-minded investors and providers of technical assistance. LMDF’s track record still needs to be built. However, less than two years after its start, the fund benefits 21,000 micro-entrepreneurs in some of the poorest countries on the planet. This article contains information regarding the Luxembourg Microfinance and Development Fund- Social Venture Capital Sub-Fund for publication in the global business magazine. This article explains the structuring, objectives and strategies of the fund to a professional audience and is not an invitation to subscribe shares in the fund. This article is specifically not addressed to investors residing outside of the Grand Duchy of Luxembourg. Subscription of shares is only feasible in the Grand Duchy of Luxembourg on the basis of the Prospectus accompanied by the most recent annual report and the latest semi-annual report if the latter is more recent, available at the registered office or the website of the fund (www.lmdf.lu). Please seek advice from your lawyer or financial adviser if you are in doubt regarding the information presented in this article and whether you are an eligible investor.

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ShArIAh CoMPLIANT FuNd rePorT 2011

Shariah Compliant Fund Report 2011

Luxembourg and Islamic finance: From its emergence 30 years ago to the recent acceleration Islamic finance (IF) first appeared in Luxembourg in 1978 with the arrival of the Islamic Banking System International Holding SA, the first IF institution to set up in a western country. Five years later, the first shariah-compliant (SC) insurance company in Europe was established in Luxembourg, and, in 2002, Luxembourg was the first European stock exchange to list a sukuk. While these first IF activities date back three decades, the pace has picked up sharply over the past few years, reflecting the commitment of both the authorities and stakeholders in the financial sector to developing these activities.

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In 2008, the government set up a taskforce to identify obstacles to the development of IF and to promote its growth, leading to research into assets eligible for SC funds, the development of best-practice guidelines for financial services and a review of the tax treatment of SC vehicles, all conducted by a dedicated working group within ALFI, the representative body of the fund industry. The working group reported back favourably, noting that Luxembourg was able to offer a range of vehicles addressing the specific needs of both investors and promoters interested in SC investment with a limited need for specific additional legislation In a May 2011 note, the CSSF, the Grand Duchy’s financial regulator, took the same view, concluding that no specific legislation was required for SC investment funds, since Luxembourg’s current law contains no obstacles to it. The CSSF also noted that the role of the Shariah Board would have to be described in each fund’s prospectus. Taxation was the only area in which special action was taken. In January 2010, Luxembourg’s direct tax authority published a circular on IF, clarifying the tax treatment of murabaha contracts and sukuk transactions, and in June 2010, a circular from the indirect tax authority clarified treatment of murabaha and ijara contracts. Luxembourg’s strengths in conventional investment funds make SC investment funds a natural next step. Over the past 20 years, the Grand Duchy has become the leading centre for global fund distribution and Europe’s number one fund domicile in terms of assets. It now also ranks in the top five domiciles for Islamic funds. There are two main drivers behind this recent interest. The first is the demand for transparency and increased investor protection that resulted from the financial crisis. The trend in the financial sector is towards high quality regulation- what an increasing number of investors expect and what the Grand Duchy has to offer. A trend for relocating offshore funds onshore has been observed over the past three years and Luxembourg has been among the beneficiaries. The second is that several financial groups involved in the Islamic funds business in different parts of the world have reached a certain size and want to expand internationally. Having an undertaking for collective investment in transferable securities (UCITS) product can help extend their investor base and penetrate new markets. UCITS is a European type of investment funds derived from a 20 December 1985 European Directive that introduced a single EU-wide regulatory regime for open-ended funds investing in transferable securities such as shares, or bonds. One key aspect of UCITS is the ‘European passport’, which makes it easy for a fund domiciled in one EU country to be sold to investors in all the others. Over the years, UCITS has become a strong global brand, and these funds are now widely accepted in nonEuropean jurisdictions. Luxembourg has emerged as

the leading cross-border distribution centre, with 75% of all cross-border UCITS registrations belonging to Luxembourg funds. Today, Luxembourg-domiciled investment structures are distributed in more than 65 countries around the globe, with a particular focus on Europe, Asia, Latin America and the Middle East. Luxembourg’s leadership in cross-border fund distribution has made a decisive contribution to its growth, attracting fund promoters from around the world. More recently, these have included promoters of SC funds; a natural development since the UCITS structure is well suited to the principles of IF. Because UCITS funds are designed primarily for retail investors, their main concern is safety, and their rigorous investment policies are consistent with Shariah law’s prohibition of gharar (uncertainty). UCITS funds are therefore especially appropriate for SC fund promoters targeting retail or institutional investors worldwide. The list of fund promoters with SC vehicles in Luxembourg shows that prominent international names in conventional investment funds have been quick to climb aboard. In most cases, these promoters already had a conventional range domiciled in Luxembourg and simply added a SC fund. More recently, smaller players from the Middle East have also begun setting up funds in the Grand Duchy. These promoters usually already operate funds for domestic investors in their home countries but have difficulty selling them abroad. For them, Luxembourg’s international reach has definite appeal. While this is still a new trend, it is set to intensify in the coming months, with a number of projects in the pipeline. Though UCITS is the preferred structure for Islamic fund promoters targeting retail or institutional investors in different countries, SIFs (specialised investment funds) and other structures may be more appropriate, depending on the promoter’s investment strategy and targeted investor base. When SIFs were introduced four years ago, they paved the way for a new generation of alternative investment funds targeting an international, qualified investor base. More than 1,200 SIFs have been launched since this option was created, and they are often used for SC real estate and private equity funds. Today, there are over 40 SC fund units domiciled in Luxembourg. Compared with the total of 13,000 Luxembourg-domiciled fund units, they are still a niche activity- but this is clearly only the beginning of the story. Key figures in both government and the financial sector see SC funds as a promising opportunity for growth.

Pierre Oberlé Business development manager ALFI (Association of the Luxembourg Fund Industry) ALFI 12, rue Erasme L-1468 Luxembourg www.alfi.lu info@alfi.lu

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ShArIAh CoMPLIANT FuNd rePorT 2011

Shariahcompliant investment funds in Luxembourg

Luxembourg is today among the five leading domiciles for Islamic funds in the world, and, as of September 2011, there were 39 regulated Shariahcompliant funds established under Luxembourg law. The commitment of the authorities to develop Islamic finance, the flexible implementation of laws and regulations, the recognised expertise of Luxembourg in terms of financial services in general and investment funds, in particular, are some of the features that may drive the interest of asset managers to create shariah-compliant investment funds in Luxembourg. As far as the two last points are concerned, as leader in investment funds, Luxembourg is offering its expertise in connection with a full range of vehicles available to meet all investment management capacities: from the most regulated vehicle (the undertakings for collective investment in transferable securities- UCITS) offering the major advantage of the EU passport, to less regulated vehicles like the specialised investment fund (SIF). In addition, Luxembourg law offers the flexibility to create multicompartment structures, whose compartments’ assets and liabilities are segregated. More than 70% of the Luxembourg Islamic funds have been set up as UCITS. One of the main features of the UCITS regime is the high level of investor protection. The rules that ensure that UCITS remain reliable products make them also well suited for Shariahcompliance (investment in liquid assets, compliance with investment restrictions, risk diversification, valuation and transparency, etc). In particular, it is worth mentioning that Shariah-compliant instruments (like Murabaha, Sukuks, etc) may be eligible investments for UCITS. More importantly, UCITS may be easily adapted in terms of structure and documentation to include the features of a Shariahcompliant fund.

Arendt & Medernach Florence Stainier Partner Bishr Shiblaq Head of Dubai Representative Office Tel : (352) 40 78 78 657 florence.stainier@arendt.com bishr.shiblaq@arendt.com www.arendt.com 22 • GBM • November 2011

Another advantage of UCITS is that it has a worldwide recognition and the benefits of its EU passport. A Shariah-compliant fund manager deciding to create a UCITS fund in Luxembourg will have the opportunity to sell units or shares of this fund without additional formalities that may otherwise incur throughout the EU. Moreover, UCITS funds are not only recognised throughout Europe, but also by a large number of other countries in other regions, including the Middle East and Asia. According to recent numbers, more than 700 Luxembourg funds are registered for distribution in Bahrain, traditionally the leading fund domicile in the Middle East. If compared to the number of 127 local funds, registered according to the Central Bank as of August 2011 in Bahrain, one realises the importance of Luxembourg for the international distribution of funds, be it conventional or Shariah-compliant. With regard to the other Luxembourg Shariahcompliant funds, around 15% of these funds have been set up as SIFs. This fund type benefits from great flexibility in terms of organisation, eligible assets and investments. In addition to the ‘traditional’ institutional investor, SIFs can be offered to ‘professional’ investors within the meaning of Directive 2004/39/EC, as well as other well-informed investors.

The legal framework in Luxembourg does not create any obstacles for Shariah-compliant funds. As confirmed by the Luxembourg supervisory authority, CSSF, there are no specific additional legal requirements concerning Shariah-compliant funds set up under Luxembourg law. It is common practice that Shariah funds set up a Shariah board where scholars assess the compliance of the investments with the principles of Shariah. Where such a Shariah board is envisaged, the role, the competences and the practical details of the board have to be described in the prospectus in principle without any additional regulatory requirement. Shariah compliance is often further established at the level of the fund’s portfolio, with funds investing for instance only in equities of companies that are not involved in any Haram activities (ie, being unethical and violating the rules of the Shariah) and providing for a cleansing mechanism where income is derived from such Haram investments. In addition, investment funds are not subject to income or wealth tax, but only to a contribution tax of 0.01% or 0.05%, depending on their regime- with even some exceptions. Shareholders and unit-holders are, in principle, not subject to tax on capital gains and income derived from the fund in Luxembourg, except for residents and those with a permanent establishment in Luxembourg. As regards the access to the Luxembourg tax treaty network, a distinction must be made between UCITS and SIFs set up as corporations and those set up as contractual vehicles (FCPs). Double tax treaties signed by Luxembourg are not applicable to FCPs, but double tax treaties concluded between the country of residence of the investor and the country of the investment may be applicable. For corporate forms of investment vehicle, certain double tax treaties may apply on a case-bycase basis. These funds may also be created as so-called exchange traded funds (representing a basket of securities that track a particular index). They may further be easily listed on the Luxembourg Stock Exchange. Luxembourg non-regulated investment structures are also used on a frequent basis for Islamic real estate and private equity investments globally. The Islamic finance community has recognised the important role Luxembourg has played over the years as the European hub for Islamic finance. As a leading centre for investment management with a proactive government supporting the development of ethical projects and, among others, socially responsible and microfinance investment funds, and service providers that are keen on developing this sector, Luxembourg is very well equipped to remain a preferred jurisdiction for the structuring of Islamic finance products.

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ShArIAh CoMPLIANT FuNd rePorT 2011

Sharia funds: The Luxembourg platform

There has been a recent surge in demand for Shariacompliant instruments from Islamic investors and conventional investors. This has accelerated the growth of Sharia-compliant entities investing in a wide range of sectors, such as equity, real estate, private equity, infrastructure, etc. Worldwide, there are more than 800 Sharia-compliant investment funds active, and their number is growing. There are currently about 40 (regulated) Shariacompliant investment funds in Luxembourg. The number of unregulated Sharia-compliant entities is difficult to determine, but it is clear that Luxembourg is a key player in this sector. Islamic financial products differ from conventional financial products due to prohibitions on interest, gambling, uncertainty, short selling and trading in unlawful products (like alcoholic drinks, weapons, adult entertainment, etc). Under Sharia, an investor is like a business partner seeking to obtain profits from underlying assets or businesses (but is generally exposed to the losses as well) and can never be a creditor expecting a fixed interest return on loans granted. The key elements for setting up Sharia-compliant investment funds in Luxembourg are as follows: Regulatory

David CAPOCCI Tax Partner Cross-Border Tax - M&A Deloitte S.A. 560, rue de Neudorf, L-2220 Luxembourg, Grand Duchy of Luxembourg Tel/Direct: +352 451 452 437 Fax: +352 451 453 505 dcapocci@deloitte.lu www.deloitte.lu M. HOSSEN Partner | Assurance Deloitte S.A. 560, rue de Neudorf, L-2220 Luxembourg, Grand-Duchy of Luxembourg Tel/Direct: +352 45145 2780 Mobile: +352 661451107 mchossen@deloitte.lu www.deloitte.lu 24 • GBM • November 2011

Luxembourg has a variety of vehicles that can accommodate Sharia-compliant investments. Regulated vehicles (such as UCITS- undertakings for collective investment in transferable securities), lightly regulated vehicles (such as Sociétés d’Investissment en Capital à Risque- SICAR and specialised investment funds- SIF) and unregulated vehicles (Sociétsé de Participations Financières - SOPARFI and certain securitisation vehicles) are available to promoters and investors. The range of vehicles can cover all types of Sharia-compliant instruments and can be tailored for all types of investors, including retail investors, high-net-worth individuals, and professional or institutional investors. Moreover the Luxembourg regulator (CSSF) is aware of Sharia business and has issued a circular letter to define the treatment of Sukuk from a regulatory point of view in order to facilitate issuance of such instruments. The CSSF also confirmed that the role of the Sharia board is an advisory or consultancy one, assisting the manager in the decision making process. Taxation Luxembourg offers tax-efficient structuring possibilities for investments made by local entities and for tax efficient cash repatriation. The Luxembourg tax authorities are familiar with Shariacompliant structures and issued two circular letters in 2010 to confirm a substance over form approach for Sharia-compliant transactions, ensuring that there is no difference in tax treatment of Sharia-compliant transactions compared to conventional transactions. The first circular deals with the direct tax treatment of murabaha and sukuk and also describes various other Sharia-compliant instruments (musharaka, mudaraba, ijara, ijarawa-lqtina and istisna). The circular confirms that the taxation of the margin generated from murabaha agreements can be deferred over the term of the transaction (as is the case in a conventional financing arrangement with annual interest being generated on financing). The circular also explicitly confirms that, for Luxembourg tax purposes, Sukuk would be treated in the same way as conventional

bonds and consequently the yield on Sukuk would be treated as deductible (similar to interest payments on conventional debt instruments). The second circular focuses on indirect tax. The circular covers various VAT and transfer tax aspects related to murabaha and ijara agreements and ensures that the indirect tax treatment applicable to Shariacompliant agreements is similar to conventional finance agreements. Profit margins under murabaha and ijara agreements are, for example, assimilated to conventional interest and consequently not subject to VAT. The circular also covers mitigation of the transfer tax impact regarding resale transactions of Luxembourg real estate. Accounting and auditing requirements Accounting for Sharia-compliant vehicles does not differ from any other legal structure. For regulated structures like SICAVs (Sociétés d'Investissement à Capital Variable), FCPs (Fonds commun de placement) or SIFs, account balances are to be stated at fair value whereas for other structures, valuation is at the lower of cost or market. The auditor expresses an opinion that the accounts give a true and fair view of the financial position of the entity and of the results of their operations and changes in their net assets for the year, in accordance with Luxembourg legal and regulatory requirements. For some regulated funds, the auditor has to prepare an ‘Analytical report of the auditor’, in which an opinion is given on compliance with, inter alia, the entity’s investment policies and restrictions. This report is addressed to the Supervisory Authorities and the Board of Directors. It is not distributed to other parties. Publication requirements Every year, all entities are required to lodge their audited annual accounts with the Register of Commerce. Regulated entities are required to submit a copy of the same annual accounts and the ‘Analytical report of the auditor’ to the supervisory authorities. Funds under Part I or II of the Law of 17 December 2010 are required to publish their NAVs at least twice a month for Part I funds and once a month for Part II funds. Service providers There is a good range of Luxembourg service providers capable of serving Sharia-compliant structures. Dedicated specialised services, such as screening, purification, zakat calculations and Sharia advisory services are available as well. In summary, Luxembourg historically has played a first mover role in the area of Islamic finance. Opportunities in this sector are moreover important, as the country has all the tools to attract more Sharia’a funds: a flexible set of suitable vehicles, which can be structured in a tax efficient way, and service providers ready to serve.

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Assurance

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Advisory

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Outsourcing

São Paulo • Belo Horizonte • Fortaleza • Manaus • Porto Alegre • Recife • Rio de Janeiro • Vitória

GLoBAL TrANSLATIoN SerVICeS

Global Translation Services Devanshu Kalra Founder of Global Language Association www.gla.org.in info@gla.org.in +919810748973

Curtains on language barrier Globalisation has opened the market for products and services. It has also created a demand for localisation. Language services meet this demand in various avatars.

The present day globalisation is a better version of imperialism because it does factor in human rights. The former colonial powers, such as Britain, France, Portugal, German, Holland and Spain, have to market their products and services in the third world languages. Local languages that would have gone out of circulation re-enter the market as essentials of first world products and services. The World Bank and International Monetary Fund literacy projects in the impoverished south enable the majority of the world’s population to read and listen to advertisements of products/services of multinational corporations (MNCs). The competition for markets among international majors translates into a competition arming themselves with local language skills. The imperialism of languages backed by economic and military mite gets piped at the third world market post. For example, the Indian language industry is estimated to be over US$500m with a growth rate hovering around 30-60%. However, many believe that it is nowhere close to the kind of potential India has in this field. With mammoth linguistic, ethnic, social, cultural and geographical diversities in India, there is

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an expectation that India will corner a large share of international market in the years to come. However, many believe that there is a prominent trend reversal in this industry. Earlier, with most of the IT industry’s clients situated in developed countries, and business process outsourcing business taking India by storm, there was demand mostly for foreign languages. Now, a balance has been struck with increasing demand for Indian languages, as international manufactures and service providers are looking to tap the great Indian market by localising their services for a better reach to the masses. A small section of India and China with adequate purchasing power alone is a huge market for MNC products and services. While in India the information of products/ services is consumed largely in English, and to some extent in vernacular languages, in China it is Chinese all the way. Over the years, the government of India has started various projects developing software for machine translation of Indian languages, national language translation mission (translation of higher learning textbooks into Indian languages) and preservation of classic and about-to-be extant languages.

There is scope for translation from European and other languages to Indian languages; for example, Coke advertises its products in Hinglish (English peppered by metro Hindi) and other third world languages. The rise in democratic aspirations in Asia, Latin America and Africa has increased the media interest in less-known cultures, hence the need for translation of their propaganda material. China and France are promoting English learning to gain the top business spot. Britain and the US, through books, media and entertainment, are keeping English alive and national elites afloat.

language experts/providers, universities and software providers in direct contact with the end clients (buyers of language services).

search time for options. It is the insight into the changing usage of experts that makes a translation work.

Common Sense Advisory calculates that the market for outsourced language services was worth US$26.327bn in 2010. According to the year-to-year changes in revenue and the expected earnings reported by the local service providers surveyed, the language services market is growing at an annual rate of 13.15%. Over the coming five years, Common Sense Advisory expects the market to reach US$38.14bn (‘The Language Services Market’ May 2010).

The clients are looking for translation of manuals, polices and websites, eLearning modules, drafting contracts, letters and an array of localisation services. With significant increase in the number of people who have access to the Internet in the developing world, corporates are looking to expand their customer base through localising their websites into different languages.

The Global Language Association (GLA) has for some time taken up the turn of breaking language barriers; in GLA’s word: “Helping defuse the language barrier, globally!” It is a platform for language users the world over. It has observed the phenomenal growth in the demand for language service providers.

The increase in the number of corporates is not the only reason cited for the sudden spike in the demand for the translation services by corporates; it is the expansion of these corporates that has given a leg up to this service industry. A combination of large corporates increasing their market share and small companies getting international exposure has contributed to this industry.

The aim of the GLA is to bring language entities located across the world under one roof and therefore act as a platform for international integration that involves an array of social, cultural, economical and political togetherness. GLA brings the

The industry has attracted language experts and professionals from academics and media. Experts of decades of research and experience are developing new methods and tools to bring in the communication revolution. The machine tools have cut the

The business of language is not just restricted to translation. There is huge demand for other services as well, such as interpretation, transcription, voiceover, dubbing, sub-titling, etc. Media is the biggest client for these services. The price for translation into foreign languages has entered a crucial phase after the onset of the second meltdown in the world economy. The spiking dollar rate eats into the profit margin of the agencies that pay the translators in dollar. Moreover, the remuneration that the translator demands is directly proportional to the cost of living, which refuses to come down even marginally.

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Mexico, Brazil, USA and Canada Corporate Translations SC Alejandro Berea Founder Tel: +52 (55)5250 2687 Mob: +52 (55) 3333 8084 alejandro.berea@corptranslations.com www.corptranslations.com

Translations for the information age Translation as a utility… really? At least nine in every ten Internet users have at some point used Google Automatic Translation. As the Global phenomenon grows, global citizens gain more and more access to products, ideas and services from all over the world and very, but very, few humans speak more than five languages, and even if they do speak, let’s say, 15 languages fluently, the chances of finding materials in a language that we are not familiar with, are great. The good news is that we don’t need to miss out on these things anymore; a simple click will most often grant us at least partial access to the otherwise cryptic find. And yes, the resulting translation is imperfect at best, but still understandable. Reality check: most of us need translation at some level today, and in consequence, translation needs to be readily available to end-users, rather than a strategic professional need, as Jaap van der Meer put it in the FIT 2011 closing lecture. Thirty years ago, translations were specialised services needed only by a few large organisations and translators were perceived as remote. If you came across a translator back then, he or she would often be a knowledgeable but mostly not very sociable person; in fact, translators were rarely seen out back in the day, the nature of our work implied sitting in front of a typing device for hours. However, just like so many other industries, language services (LS) are evolving, in fact, changes over the past ten years in the LS industry have run at the same pace as technology has. Long story short: the specialised language services of the past have become subject of automation through a series of technology innovations. The first attempt of translation automation, machine translation (MT), took place in 1953 with the Georgetown-IBM Machine Translation system in Russian. When it became clear that the attempt had failed, the translator community was relieved. However, attempts did not stop there; development of MT kept going until

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1968, when LATSEC, the first MT company, was established. Few translators were aware of this fact, and the market was relatively easy until 19751985, when the translation community began to embrace automation. Since then, MT has reached unthinkable heights: most of us have laughed at the resulting translation from the Google Automated Translation engine, but highly-specialised software, servers and sharing tools can create surprisingly accurate translations for short texts, and rather reliable results for long simple-texts. How has the industry reacted? Slowly, but surely, translation professionals have been reluctantly shifting to computer assisted translation (CAT) tools; however, most members of the translation community harbour at least a mild fear of being replaced by computers. Debates regarding this issue in congresses, lectures and LS events have become a must in all agendas. The medium-term fact: computers cannot yet keep up with the constant evolution of language that we humans produce; yet, there is a positive standpoint for the industry. It is estimated that the demand for translation in the world grows at a rate of 30% annually, while supply grows only modestly (perhaps 12%). Therefore harnessing the possibilities yielded by technology breakthroughs poses the opportunity of translating faster, better and of course, of providing more competitive services altogether to our clients. The ‘utility’ feature also applies to the whole LS range. As boundaries grow thinner, many companies and investors turn their attention to new emerging markets, as opportunities to expand and succeed in today’s highly competitive business environment. Reality has shown that language barriers, more often than expected, bring down considerable deals or complicate them to unbelievable extents. It is also common to hear about transnational consortiums undergoing unnecessary obstacles because of inefficient local communication, which demonstrates how translation is a growing day-to-day need

in more and more environments. Whether you embark on an investment venture to a new emerging market, or already operate across borders, the relevance of contracting proper LSs is now clear, as is the fact that technology may prove to be a valuable ally in international endeavours. Just as utility providers have struggled to improve their offering to consumers as a consequence of competitiveness, it has become clear that language services providers (LSPs), as new utility companies, should go the extra mile too; the idea? Let your LSP capitalise on its local market awareness and serve as your liaison. LSPs can even help you find the right law firm, the best possible realtor, appropriate research agencies, and anything else your venture requires to succeed- the more intelligence on your target market, the better. Traditionally, law firms serve as docking agents for foreign investors, but why not getting additional help and a fresh perspective from your LSP? Let the right LSP gain your trust, and let us do more for you and your venture.

CIKLOPEA® | One-stop translation services provider in southeast Europe CIKLOPEA d.o.o. Marina Orešković Operations manager Tel: +385 1 37 51 736 info@ciklopea.com www.ciklopea.com

Translation, interpreting, localisation, consulting CIKLOPEA®- communicating your ideas CIKLOPEA prides itself on being one of the leading translation and localisation service providers within Croatia and equally the wider region of southeast Europe (SEE). Managing and overseeing complex translation and localisation projects, offering certified court interpretations and translations, copywriting, copyediting and proofreading services, DTP services (desktop publishing) and simultaneous and consecutive interpreting is within our expertise. Additionally, we can successfully offer full technical support services for corporate conference organisation including conference interpreting, translation consultancy and educational services for the translation industry, as well as business language training.

in relation to the investment they make; place a huge emphasis on achieving a high level of customer satisfaction in terms of the services we offer and our operational effectiveness; work on minimising the expenses of people, processes and technologies in our translation services; and, update and consult our clients on innovations trough technological advances in the industry. Mission Our mission is to provide and ensure language solutions to businesses and institutions in order for them to correctly communicate their vision and ideas penetrating their target market and clients. By exceeding our clients’ expectations through quality, services costs and ethical standards of our work, we aim to successfully continue our expansion enhancing client satisfaction.

and German. If your required language combination is not mentioned above, please contact us as we will be able to suggest the most suitable solution. Quality CIKLOPEA has successfully gained the ISO 9001:2008 Quality Assurance Certificate (quality management systems certificate) and EN 15038:2006 (quality standard for translation services). Fields of specialisation

Our services portfolio covers basic services as follows: translation, interpreting, localisation and consulting.

Our fields of specialisation are divided into four main areas: technical, medical and scientific (user guides, installation manuals, online help, training materials, IT documentation, etc); legal and financial (reports and investor relations, contracts, annual reports, HR training materials and documentation, etc); marketing and communications (marketing and sales materials, press release service, customer magazines, etc); and, website and software (user interface, e-training, e-commerce portals, blogs, SEO, games, apps, etc).

Project management

Capacities During 2010, CIKLOPEA translated more than 20 million words, which means that we managed and delivered more than 60,000 words per day.

Equally, our network of translators constantly expands new terminological databases, which in turn positively reflects our services’ added benefits, as well as longterm value with regard to future translation projects.

CIKLOPEA has developed and established a unified project management system and infrastructure. All projects are carried out in accordance with the highest certifiable standards. Every project manager represents a single point of contact and client interface to the company’s resources and team of translators. Project managers are responsible for communication with the client and defining commercial terms (cost estimate and delivery deadline) for every single project. They are also responsible for the analysis of the materials and forming an appropriate team for the project as well as post-delivery services.

Values

Languages

The basic values we hold when doing business are visible in the way we: endeavour to give our clients a maximum return for their money in terms of the services we offer

Our main language pairs are: Croatian, Slovenian, Serbian, Bosnian, Macedonian, Montenegrin, Albanian, Bulgarian and Romanian in combination with English

CIKLOPEA is ideally positioned in the global market specialising in the translation and localisation of languages of SEE combining all European languages and handling different varieties of requests in the wider languages across the globe. Our company has grown due to our constant investment in our employees and the organisation, as well as our investments into the latest technology and equipment. As a result, we confidently assure the quality of the spectrum of services we offer within the translation sector. Our project managers have a thorough experience with CAT (computer assisted translation) tools and localisation processes.

Services

Our diﬀerentiation We are focused on the SEE region (Croatian, Slovenian, Serbian, Bosnian, Macedonian, Montenegrin, Albanian, Bulgarian and Romanian languages, in combination with English and German) and on quality of services (ISO 9001:200 and EN 15038:2006). We provide diverse areas of specialisation, do not multilevel subcontract (strong in-country resources management and production office with high capacity) and are technology independent with a unified project management system. We have a strong focus on real customer needs, are fast, faster, the fastest, and we can be your language services partner for the SEE region.

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Global Discover language technology solutions from SDL

SDL Argyro Kyriakidou Senior Manager, Marketing Tel: 01628 687 460 akyriakidou@sdl.com www.sdl.com

SDL is the world leader in providing language technology solutions. With over 25 years of a leading presence in the market, SDL’s solutions increase business agility to corporations by accelerating the delivery of high quality multilingual content to global markets. SDL’s market leading language technology platform connects the world’s most extensive supply chain of global corporations, translation agencies and freelance translators. Analyst research shows that for many companies, a high percentage of customers buy based on the content they read, never touching the product itself. Additionally, for many global organisations, two thirds of their revenues can come from outside of their home markets. The growth of global business and the increasing amounts of content on the internet have made it imperative for companies to manage their content and language in a sophisticated and strategic fashion in order to: • Ensure brand consistency around the world • Reduce the time it takes to release products to global markets • Improve the global customer experience. The language technology solutions from SDL provide an integrated software platform that enables content creators, localisation departments, all translators and developers to: • Ensure consistency of brand • Automate manual processes in delivering and reusing global content • Reuse content and improve translator productivity in content and software localisation • Take advantage of machine translation to improve efficiencies. Style and branding Ensuring consistency in a brand’s terminology, as well as adhering to style and grammar rules, is a key component in ensuring global brand consistency and customer satisfaction. It is also important to reuse previously created content to improve productivity when producing content, as well as to help deliver a consistent message to customers worldwide. SDL provides two integrated solutions that connect to the other language solutions used by both corporations and translators, so that you can be confident of the quality of both your source and multilingual content:

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• SDL Global Authoring Management System™ • SDL MultiTerm®. Translation process automation There are many manual tasks involved in typical localisation processes. These delay the ability to get products to market on time and cause inefficiencies in the process of delivering multilingual content. A translation management system helps automate the process of localisation, ensuring one system manages different tasks and is a central place for everyone involved in the localisation process to manage, translate and review content. It also provides a system for centralising all content that is translated and reused across the corporation, the language service provider and by different translators. This centralised approach provides greater control and monitoring of the localisation process for further efficiencies. SDL’s key solution for managing the localisation process is: • SDL WorldServer™. This solution can be independently and securely hosted remotely through ‘the Cloud’ or deployed on-premise in your organisation. Our experienced consultants will help pick the right solution for you. Translation productivity The different components from SDL’s solutions are integrated and linked to ensure that all parties involved in the process can work together. Enterprises work with translators and it is crucial that the files they need translated, along with all supporting information, can be passed from enterprise to translator, translated and then passed securely back to the enterprise. SDL provides the solutions for translators to translate content and software more productively. These solutions hook into the enterprise translation management systems and the translation process to centralise and reuse content and to ensure that no information is lost in passing content back and forth: • • • •

SDL Trados® Studio SDL MultiTerm SDL Passolo™ SDL TM Server™.

Automated and crowd translation Increasingly, global businesses are looking at the ways of reducing the time and costs of delivering multilingual content to global customers. Automated or machine translation is one way that companies can do this. It can provide automatic translation of content held within websites, technical documentation and knowledge bases. What is key, however, is that it is integrated as part of a process for managing the company’s overall localisation. SDL also integrates automated translation into its translation productivity solutions, to enable translators around the world to benefit from the efficiencies gained through this technology. SDL provides solutions for both automated translation alone, as well as automated translation with human postediting for when higher quality is required: • SDL Automated Translation Solutions™. Some companies are already starting to look at the idea of the crowd, where the public or their customers, translate content. SDL is constantly evaluating trends such as the crowd and, with its hosted software offerings, is always looking at ways to do this more effectively. About SDL SDL is the leader in global information management. Global information management enables companies to engage with their customers throughout the customer journey, from brand awareness to sales and after-sales support, and across languages, cultures and channels. SDL’s best-of-breed web content management, e-commerce, structured content and language technologies, combined with its language services drive down the cost of content creation, management, translation and publishing. SDL solutions increase conversion ratios and customer satisfaction through targeted information across all customer touch points. Global industry leaders that rely on SDL include ABN-Amro, Bosch, Canon, CNH, FICO, GlaxoSmithKline, Hewlett-Packard, KLM, Microsoft, NetApp, Philips, SAP and Sony. SDL has over 1,500 enterprise customers, has deployed over 170,000 software licences and provides access to on-demand portals for ten million customers per month. It has a global infrastructure of more than 60 oﬃces in 35 countries. For more information, visit www.sdl.com.

Germany Lemoine International GmbH Clever Str 13-15, D-50668 Cologne, Germany Phone: +49-221-888-843-0 Fax: +49-221-888-843-99 www.lemoine-international.com

Vicky Athanasiou Business development manager Günter Lemoine Managing director

The translation market in ten years – outlook Demand for translation services has risen following the expansion of the EU. The analysts are in agreement: the volume of translated documents will increase over the next ten years. Nevertheless, opinions are divided as to the extent to which this will happen. For example, the linguistic diversity following the EU expansion does not only lead to more translations of documents, such as records or draft laws within the EU institutions. It has also led to greater demand for translations by commercial firms and processing companies, as the EU requires all technical documents to be translated into the national languages (Directive 79/112/EEC). Globalisation, and its associated growth, will lead to a huge upturn in the GILT sectors (globalisation, internationalisation, localisation and translation). The European Union of Associations of Translation Companies (EUATC) believes that the translation market will record annual growth of around 5% over the coming years. Notwithstanding the use of English as a lingua franca, a further trend has become clear- the protection of cultures and languages. The translation market is bound to benefit from this trend. Furthermore, the growing recognition of an ever-more multilingual population in the US and other countries will increase the demand for language services. In addition to these developments, technological innovations and continually growing product portfolios require higher translation quality and more flexible translation agencies. The growing demand for translations in the near future will be intensified by the existing lack of translators for many special fields and certain language combinations. International companies that avail of translation services must be prepared to adjust to these developments or to take appropriate measures to avoid this shortage. As part of its strategic positioning for the future, a company should first determine what texts have to be translated over the next five to ten years and which languages are required.

Moreover, companies requesting translation services will have to be more transparent toward their translators in the future. This will allow translators to obtain an overview of processes and of the corporate language. Companies should regard translation services as an investment and not purely as a cost factor. Given the rapid increase in language combinations for translations and the evershorter delivery times, professional project and quality management will play a more important role in the future. Translations will be prepared directly in the customer’s content management system (CMS), using the latest technical possibilities. Translation agencies can directly assume some of the project management tasks that are currently performed in the company. In the future, it will therefore be critical for companies to collaborate with a translation agency offering as many language combinations as possible and the broadest possible range of technology. While the growing number of documents to be translated and increasing translation volumes may be a cause of concern to many companies, they can also be seen as an advantage. Thanks to the large translation volumes, many chunks of text will be repeated. It will therefore become more and more important to prepare the documentation in such a way that text elements are available not only for further documents, but also for translation, so that they do not constantly have to be retranslated. An efficient data management system (DMS) and CMS are the basic prerequisites for implementing cost-effective and terminologically consistent translations. In the future, this will be the only way to meet the growing demand for quality. Use of CAT tools will become indispensable in order to develop terminology databases, glossaries and so on. Although at first glance it may appear as though terminology management is very time-consuming, the benefits are self-evident for translators and companies: translators can translate large

volumes of text more quickly and at less cost, while customers will have more control over the quality of translations into a language that they do not master. To meet these changing market and customer requirements for shorter turnaround times at lower cost, Lemoine International is dedicated to providing and managing multilingual translation solutions for a wide range of deliverables, including software, websites and marketing materials, products and documentation, multimedia, e-learning and training. Lemoine International’s translation and localisation solutions are based on state-of-the-art technologies and meet the highest quality standards, such as ISO 9001 and EN 15038. Due to its strong presence within the GILT industry Lemoine International has completed major multilingual projects for large corporations over the past 14 years, contributed to various successful market entries and ensured a real competitive advantage for customers. Past experience, resulting in many multifaceted translation and localisation projects, guarantees extensive knowledge in the successful implementation of projects in terms of linguistic quality, consistency, timely delivery and cost control. The high level of qualification of its employees gives Lemoine International the structure and flexibility necessary to a successful handling of a translation or localisation project. Keeping in close and constant exchange with its customers, the company provides and manages top-level translation and localisation solutions in order to ensure real competitive advantage for the customer. Professional terminology management, the use of commercial and proprietary CAT tools, customised project management and more than a decade of market presence make Lemoine International one of the strongest and most reliable providers of multilingual translation and localisation solutions in the world.

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Croatia If you want quality, ask for quality certificates Choosing a translation company is a very responsible task. From a sea of translation service providers, you should pick the ones who are qualified for the job and who are regularly monitored and audited by an independent certification body. Precedence should always be given to those translation companies or agencies that have such certificates of quality. They should at least have the certificate of Quality Management System according to ISO 9001. Furthermore, the translation company or the agency should preferably have a certificate provided by an independent certification body proving that the translation services it offers are in accordance with EN 15038 (European Quality Standard for Translation Services). Among other things, certification according to this industry-specific standard guarantees to the customers that translation tasks are assigned only to translators with strictly defined professional competencies. Additionally, a reviser with defined

competencies and work experience is also involved in every translation process, regardless of the workload. Thus, every translation is double-checked and the possibility of human error is reduced as much as possible. The standard also stipulates transparency of all costs when ordering a translation service and strict observance of agreed terms. Appropriate hardware and software equipment is also mandatory- all with the aim to ensure full customer satisfaction. Several Croatian translation companies and agencies are certified in accordance with strict requirements of these standards. VERBA has been an industry leader in the field of translation, localisation and multilingual desktop publishing in Croatia since 1998. The company is ISO 9001 and EN 15038 certified, providing highquality services in the field of translation, proofreading, revising, editing and localisation at competitive prices. In addition to our competent in-house team comprised of certified translators, revisers, proofreaders, editors and language services managers,

VERBA Learning & Translation Vanja Keindl (Mrs) General manager Tel: + 385 1 4576 194 info@verba.hr www.verba.hr

VERBA also hires Croatian court-appointed translators for English, German and Croatian. Translations signed and sealed by a courtappointed translator (court interpreter) are legally valid documents. Our clients are large international corporations with branches in Croatia, small local companies, foreign translation agencies and the public

Global Lost in translation buying? Accurate, persuasive translation is a key component of successfully launching products abroad. But experience tells us it is often left to the last minute and handed to people who have little or no experience in the subject and who also have to juggle its complexities alongside a full time day job! If you have found yourself in this position we hope that this brief two step guide will help. Translation is often viewed as the simple conversion of one language to another. In reality, it is far more complex than that. Consideration needs to be given to the cultural, technical and social demands of each target market. The guide is intended as a brief overview. For more detailed explanation, do not hesitate to contact Conversis for a free consultation. Step one: Identify the type of translation you need. Is it a simple word translation piece, a technical piece or a creative piece? Simple word translation is a technical and creative free piece which may be suitable for machine translation followed by human proof reading. Technical translation covers the translation of many kinds of specialized texts and requires a high level of subject knowledge and mastery of the relevant terminology and writing conventions e.g. if the translation piece is a medical piece then it would require an expert in that sector to correctly translate the terminology.

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Creative translation is often known as transcreation and requires s a large amount of localisation. Transcreation is about taking a concept in one language and completely recreating it in another language – it is normally applied to the marketing of an idea, product or service to international audiences. The ultimate aim is to have a suitable creative piece for each language which will get the same reaction. Step two: Choosing the right supplier. Once you are aware of what is actually required to translate and localise your product, the next step is choosing a vendor. Evidently, you will need a service provider which offers the type of translation you need but there are other aspects which you must also consider: What level of support, human interaction and flexibility you require? What price are you willing to pay? How important is quality and speed? What does your team require? In particular, you should be looking for a translation vendor who will take the time to understand your particular requirements, will only use suitably qualified in-country linguists, and uses the correct project management disciplines to ensure your translation is delivered, on time, in budget and to the right quality. For most people buying translation and localisation services is only a small part of their job and so it is important to choose an agency that will support you through the process and will communicate clearly and transparently through the whole process.

CEO & Director: Gary Muddyman Conversis,Bignal Park Barns, Chesterton, Bicester, Oxford, UK OX26 1TD www.conversisglobal.com www.conversismedicaltranslation.com Enquiries@conversisglobal.com Social Media: www.facebook.com/Conversis twitter.com/ConversisGlobal http://twitter.com/Muddyisms Conversis is one of the world’s fastest growing and most innovative providers of Globalisation, Internationalisation, Localisation and Translation (GILT) services. As a multilingual one-stop-shop translation and localisation company, Conversis serves clients in more than 30 markets worldwide and is dedicated to advancing the understanding and use of GILT as a strategic business tool.

United States and Latin America Ushuaia Solutions Rioja 919 (S2000AYK) Rosario, Argentina Phone: +54 341 449 3064 info@ushuaiasolutions.com

Ms Julieta Coirini: coirini@ushuaiasolutions.com www.ushuaiasolutions.com Time zone: GMT -3

Ushuaia: It’s all about you Finding a reliable Latin American translation and localisation service to help you convey the right message to the right audience at the right time means far more than identifying someone who will correctly transpose words from one language to the other. The only way to effectively communicate across linguistic, geographic, and social borders is to secure a longterm partner with a firm grasp on the intricacies of the markets you’re targeting and an intimate understanding of the distinct cultures that inhabit each of them.

For over a decade, Ushuaia Solutions has been coupling this deeper, more keenly aware brand of linguistic expertise with creative, customised approaches driven by our clients’ diverse needs. We understand that every company is different, every market is unique, and the one-size-fits-all strategies that have traditionally characterised the translation industry have no place in today’s highly competitive global marketplace. Meaningful results can only be achieved when a comprehensive understanding of your business and its objectives is combined with flexible translation and localisation services tailored to both your products and services, and to the markets you’re entering. That means our work is built upon knowing you, listening to you, and helping you make the best choices. You’ll find this fundamental philosophy and the critical difference it makes assumes a central role in everything we do. It starts with masterful English/ Spanish/Brazilian Portuguese translations that feature all the linguistic nuances and cultural subtleties necessary for pitch-perfect audience comprehension and precision messaging.

outside the proverbial box and meet the translation and localisation challenges that stand between their products and the world’s increasingly lucrative Latin American and Spanish markets. Whether you simply need some basic consulting to get going or want a full-time, full-service partner always prepared to go the extra mile to ensure your company can go anywhere it wants to without a second thought, you’ll find it waiting at Ushuaia Solutions. And that’s an idea that needs no translation at all. Julieta Coirini President

Yet our relationship will involve much more than this. In Ushuaia, you’ll have a single partner who is able to execute the full range of complementary functions needed for your Latin American, North American Hispanic, and Iberian efforts. We’ll manage your entire project from start to finish: from initial evaluation to software localisation, engineering and testing. We can help you select and manage the right tools for the tasks at hand, whether it’s file extraction, parsing, prepping, or translation memory management and desktop publishing. And if we can’t locate the tools you need to achieve success, our custom solution development team can create them for you. Yes, we think it really should be that simple. That’s why companies of all kinds count on Ushuaia each and every day to think

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Free FLIGhT uPGrAdeS - Are They urBAN MyThS?

F R E E F L I GH T U P G R AD E S AR E THE Y J U S T AN U R B AN MY T H ? Ten years ago, you could watch people arriving at an airport and predict which class they would be travelling. But now, in these straitened times of corporate budgetary constraints and capped expense accounts, the pattern is more fluid.

In recent years we have seen a growing trend of business travellers downgrading to premium economy or even economy-class, and there are several reasons for this. In a struggling economy, any organisation that is perceived as spending excessive amounts of public money on luxuries for individuals is likely to arouse widespread disapproval; consequently some institutions find it politically expedient to pack their executives off economy-class. Other mega-corporations are under pressure from shareholders to squeeze overheads. And a lot of businesses have been told by their accountants to cut costs wherever they can. The result: more empty seats in first and business class, and more travellers chafing at the bit to upgrade.

Getting a free upgrade is a nobrainer ... or is it? Recently we’ve seen a mini-explosion of books and blogs promising to tell you how to get a free upgrade. Apparently it’s easy; you simply need to know a few closely-guarded secrets – which they will share with you, me, and anybody else who asks. Let’s take a look at some of the ruses they suggest. We’ll start with a couple of myths that have been in circulation for a very long time, and which, like all the best myths, happen to be founded on a grain of truth.

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The ‘check in late’ approach The most common myth of all goes something like this: Airlines are so incompetent that they lose track of how many tickets have been sold. If you check in late for economy class on a busy flight, there’s a good chance they won’t have a seat left. The airline will be so embarrassed that they’ll offer you an upgrade. There might possibly be an outside chance that this will work. However, it’s more likely that if the airline does decide to upgrade somebody, it will bestow the favour on a frequent traveller who checked in early, and you’ll get their economy seat if you’re lucky. There’s also a sporting chance that they will point to the clock, point to the small print, and offer you an economy-class seat on the next flight. The grain of truth in this particular myth is that technically airlines do overbook flights on a regular basis. However, they do it by design, not by mistake, and usually they get away with it. In an ideal world – ideal from the airline operator’s point of view, that is – every seat on every flight would be sold at its advertised tariff, and every passenger would turn up and check in like clockwork. But when you translate a business model from the ideal world into the real one, with real people are involved, it never is quite perfect. People are unpredictable. People book tickets, then change their mind and cancel them at the last minute. Or they simply don’t show up; maybe they were detained at home by some last-minute drama, or their car broke down, or they missed a connecting flight. Having monitored this phenomenon over the years, airlines can predict fairly accurately the percentage of passengers who will fail to turn up. They then maximise revenue by double-booking on the number of seats they believe would otherwise go unclaimed. If you told them this was unethical, they could argue that it keeps ticket prices down. Unfortunately for the airlines, people are unpredictable even in their unpredictability, and so there may be occasions when not a single passenger has any problem with making the flight. This is bad for the airline operator because turning away customers who have made a booking generates bad PR. It’s good news for the passengers because this is when the free upgrades are handed out. But since this is a situation that the airline knows will arise every now and then, there are procedures for dealing with it. There is no reason to expect the airline to panic, giving away upgrades willy-nilly out of sheer embarrassment. Upgrades will as far as possible be used as

positive PR, targeted at loyal customers, frequent flyers and clients on that flight who are, for whatever reason, flagged up as key accounts. It is highly unlikely that any airline will decide to give a passenger a valuable upgrade for no reason other than that he has arrived late, as this would be of no benefit to the airline.

The ‘all you have to do is ask at check-in’ approach This may have worked in the dark ages when there were fewer people ‘in the know’. Now that the secret is out, it doesn’t take much imagination to work out that checkin staff get extremely tired of being asked the same question time after time. Like the pretty barmaid who is asked a hundred times a night what time her shift finishes, they develop an automatic response mechanism, and the question barely even registers. The grain of truth here is that making a good impression at the check-in desk might improve your chances. There are occasions when the check-in staff have discretion to allocate upgrades. However, asking straight out is not the way to make a good impression. A more effective approach with a busy person working in a stressful environment is to be calm, polite, and treat them like a real person rather than a stuffed uniform. If you’ve exchanged a few pleasantries and made them smile, and happen to be hovering conveniently nearly, aloof but alert and ready to catch their eye, then realistically you have done all you can to maximise your chances of getting an upgrade at check-in.

The ‘re-arrange your diary around getting an upgrade’ approach There are other well-recommended ruses that pre-suppose you can pick and choose flights according to type of aircraft and how busy

the flight is likely to be, rather than because you need to get to a certain destination by a certain time. The thinking here – which does make some sense – is that if you always fly on a wide-bodied aircraft like a 777, you have a better chance of being upgraded simply because there is more business and first class accommodation available. Flying on a 777 that is heading to a popular holiday destination, on a weekend in August, raises your chances still higher. But for most business travellers, this isn’t really an option. Another trick that may work, when a flight is heavily overbooked and not all passengers can be accommodated, is to volunteer to stand down and take a later flight. Yes, you probably will be offered an upgrade. But there comes a point when you have to ask whether it’s worth it. One could make it one’s mission in life to practise and perfect these ruses; indeed, it appears that some bloggers do just that. They deserve to succeed. But quite frankly, by the time you’ve gone to so much time, effort and inconvenience to get something, it’s no longer free. And if in the process you are jeopardising business appointments or risking delaying your return to the office, you stand to lose considerably more than you gain.

The reality As a genuine business traveller, there are three very good reasons to suppose you are already in pole position to receive a flight upgrade without lifting a finger. Firstly, you probably travel alone – or if you happen to be travelling with a colleague, it probably wouldn’t take more than half a second to persuade you to trade his/her company for a more comfortable seat. Lone travellers are far, far more likely to be offered an upgrade because they are more amenable to being moved round and slotted in; they won’t try to insist on partner or friends being

upgraded too. Secondly, you probably look respectable. The youth wearing a tee-shirt with a provocative slogan writ large across his chest may be a lovely lad underneath, but unless he’s paid for a first or business class ticket, the airline is unlikely to want him and his tee-shirt there. Thirdly and very importantly, you should be a member of the airline’s loyalty scheme. If you’re not, join it, because this is the very best route to getting a free upgrade. By collecting air miles assiduously and patronising retail outlets and service providers who are partners in the same scheme, you can earn ‘free’ upgrades. Even if you don’t collect many points, the very fact that you are in the scheme makes you a valued customer in the eyes of the airline. As a postscript to this point, if there is a designated person who makes all your company’s travel arrangements, he or she ought to have developed a good relationship with the backroom team at the airline. Should your company ever have cause to complain, you will benefit. It all hinges on relationship management; airlines don’t want to lose good customers to the competition.

Finally - how to feel smug even if you can’t get a free upgrade As a very rough rule of thumb, a first-class passenger takes up about one-and-a-half times more space than a business-class passenger, who takes up about twice as much space as a premium economy passenger, who takes twice as much space as an economy passenger. By not upgrading, you make a far smaller carbon footprint. So if it turns out not to be your lucky day, you can always console yourself with the knowledge that whilst you may not be in the best seat in the plane, you are in a very superior position in terms of eco-credentials.

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eNerGy MINING & NATurAL reSourCeS rePorT 2011

2011 energy, mining and natural resources sector report The mining industry plays a key role in the global economy and is central to developing a modern society. Players in the market are diverse, ranging from publicly quoted multinational companies with a truly global reach through state-owned or partially stateowned enterprises to small independent operations. The minerals and metals produced play an essential role in almost all aspects of contemporary life.

Over time, the economic performance of mining-dependent economies has been highly variable. While the policy mechanisms needed to transform mineral wealth into sustainable economic growth are better understood, international attention must continue to focus on applying them more widely. Ensuring that mining contributes to economic development and poverty reduction is a critical issue for many countries in the world. More than 50 countries are significantly dependent on mining. In some cases, mining can sometimes account for between 60- 90% of foreign investment flows, and between 3060% of export earnings. The recent boom in mineral exports and prices has also generated billions of dollars of extra revenues for governments of resourcerich countries, often dwarfing aid flows. Global demand for minerals is expected to grow significantly in coming decades, whatever the fluctuations in the short-term. Past experience suggests that if not effectively managed, extraction and use of a country’s natural resource endowment may not translate into overall benefits in producing countries. However, under the right conditions, mining can provide an important, even critical, positive contribution. The exploitation of mineral wealth has provided part of the springboard to broader development for some of the world’s most successful economies. This potential continues today. The role of ICMM Over the past century, mining’s contribution to the world has been viewed as a mixed blessing. Minerals and metals provide essential products, wealth, jobs and opportunity. At the same time, poor management of natural resources has led to the ‘resource curse’ theory- suggesting that mineral wealth leads to negative influences on economic or social growth. In some countries, these resources have been misused and squandered, fuelling conflict, political problems and economic stagnation. There have been conflicts over land use and property rights. There have also been

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concerns over environmental damage and issues over a lack of transparency around mining revenues at local and national levels. Much of the mining industry’s work is carried out in parts of the world that boast rich natural resources and are socially and environmentally sensitive. Looking beyond the wealth created and delivering a sustainable performance through the full project life cycle is a critical part of any responsible mining operation. The International Council on Mining and Metals (ICMM) was created in 2001 to deliver change, driven by the ideas of sustainability within the industry. Its 21 member companies employ close to a million of the 2.5 million people working in the mining and metals sector worldwide. These companies have some 800 operations in 62 countries and produce much of the world’s commodities- 38% of the gold, 30% of the iron ore, 37% of the platinum and 34% of the nickel. Through its network of 33 member associations, ICMM can reach another 1,500 companies. Not surprisingly, the operations of ICMM members place them on the front line in dealing with many of today’s complex economic, environmental and social issues. The risks and benefits from mining within a country can be on a broad front. Mining is rarely short-term. It is measured in generations and post-closure activities can extend to centuries. From exploration through operations, closure and postclosure, an approach is called for that leads to a distribution of benefits, costs, risks and responsibilities that is acceptable to all participating interests. This is a tough challenge and inevitably entails collaboration- no one party can achieve what’s needed on their own. For its part, ICMM members are serving in a leadership role in strengthening environmental and social performance across the mining and metals industry. However, many of the issues that must be addressed are outside the ability of individual companies to address on their own. As a result, developing an ability to seek solutions using collaborative approaches involving companies, governments, inter-governmental organisations, NGOs and communities is key.

Transparency and anti-corruption measures Alongside the mining industry, a range of other global organisations are driving important initiatives on high profile issues, such as transparency and anti-corruption measures. For example, the Extractive Industries Transparency Initiative (EITI) puts in place a system in which companies disclose revenue payments made to governments and simultaneously countries publish payments received. These revenues flows are verified through an independent third-party process. An important success factor is its tripartite nature, bringing together governments, civil society and industry at every level of the process. To date, 12 countries have reached compliant status, another 23 are candidates and many more are in advanced state of preparation for entering into the process. Recently, the US government committed to seeking candidate status joining Norway as the second OECD country entering the EITI process. ICMM has supported the EITI process since its inception in 2002. As president of ICMM, I sit on the EITI board and all our member companies are required to report on mineral revenue payments in participating countries. Being part of the EITI is a substantial commitment by countries and ICMM commends all those governments that have signed up. For the mining and metals industry, there is everything to gain by enhancing transparency and making clear to the world the nature and extent of its contribution. Some western governments are also moving towards regulation. In the US, the DoddFrank Wall Street Reform and Consumer Protection Act (July 2010) came into force in April 2011 to reform the US financial services sector after the recent recession. Section 1504 of the Act requires all oil, gas and mining companies registered with the US Securities and Exchange Commission to report their payments to all governments on a countryby-country, and a project-by-project basis. Meanwhile, the European Parliament has recently sent a strong signal to the European Commission by endorsing plans for EU laws that will require oil, gas and mining companies to be more transparent about their tax payments to governments around the world. This follows growing pressure from civil society groups calling for the introduction of country-by-country financial reporting mechanisms for extractive companies in EU member states this year.

Supporters believe that strong EU laws will put pressure on other G20 countries, like Australia, Canada, South Africa and China, to put in place similar legislation of their own. They are talking to Commission officials about how to build US and prospective EU rules into a global standard of transparency. But some industry representatives are concerned that regional legislation could fragment the global transparency process and lead to the creation of conflicting and onerous reporting procedures. ICMM believes that any regulatory efforts must not seek to supplant the EITI; the strength of the initiative lies in its in-country process, bringing together companies, governments and communities to address the relevant challenges on the ground. Business and human rights Human rights have also been high on the agenda this year. In June 2011, the UN’s leading human rights body endorsed guiding principles for businesses in this area. These principles, which support implementation of the ‘Protect, Respect and Remedy’ framework, developed by special representative to the UN Secretary General, Professor John Ruggie, completes a sixyear review process on the responsibilities of transnational corporations in relation to human rights. The guiding principles affirm that while governments are primarily responsible for protecting human rights, businesses have a responsibility to respect them and affected individuals must have access to a remedial process. In his final report, John Ruggie emphasised that business is a major source of investment in job creation. Markets can be a highly efficient means for allocating scarce resources, capable of generating economic growth, reducing poverty and increasing demand for the rule of law, thereby contributing to a broad spectrum of human rights. Yet recent decades have also witnessed a growing misalignment between the expectations of government and business in relation to human rights. Abuses continue to take place due to conflict, corporate behaviour or where governments lack the capacity or will to govern in the public interest. The new guidelines provide an excellent framework to begin to address these difficult issues. In another initiative, a consortium of leading global organisations launched a first-of-itskind practical guide in September to help

companies maintain operational security while ensuring respect for human rights and humanitarian law. A set of guidance tools has been developed to accompany the widely recognised ‘Voluntary principles on security and human rights’. These principles were developed in 2000 by governments, companies in the extractive and energy sectors, and non-governmental organisations. The tools are targeted at companies operating in geographical areas of conflict and weak governance- especially at staff responsible for corporate security and human rights commitment at the project level. With support from the International Committee of the Red Cross, this hands-on toolkit was developed and co-financed by ICMM, the International Finance Corporation (a member of the World Bank Group) and the global oil and gas industry association for environmental and social issues (IPIECA). The way forward Looking to the future, ICMM believes that acceptable economic and social development evolves through collaboration and is shared by local people, with respect for their values and way of life. Different interests reflecting different values must be brought together because no single party has the means to solve the issues we face in the world today. The mining, minerals and metals industry brings significant challenges, but it also presents huge opportunities if undertaken in a way that reflects respect for people. Mining has a key contribution to make- achieving poverty and hunger reduction, gender equity, health, education, and environmental and developmental objectives in line with the Millennium Development Goals. Mining companies are action and results oriented. They are experienced in bringing people together and collaborating to find solutions and design best practice. Yet alone they cannot unlock the economic and social development benefits from mining- the link in the chain is partnership. Mineral deposits are where they are. The local conditions are always unique. There is no textbook, no formula and no one answer. Many social, economic and environmental issues cannot be addressed solely by governments, companies, civil society organisations or communities- they call for concerted joint action if the needed progress is to be made.

R Anthony Hodge, President International Council on Mining and Metals (ICMM) 35-38 Portman Square London W1H 6LR Tel. +44 (0)207 467 5070 Fax. +44 (0)207 467 5071

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eNerGy MINING & NATurAL reSourCeS rePorT 2011

SUPPORTING THE GLOBAL EXTRACTIVE INDUSTRIES IN A CHALLENGING PERIOD OF CHANGE The extractive industries are currently facing significant challenges as they look to provide the raw materials and energy for economies to progress. The background to this environment is one of accessing raw material resources in their natural state, of lower concentration and in increasingly remote locations, and this is common with energy resources being exploited in diverse and increasingly harsh environments. There is pressure to increase supply levels to meet both the developed and developing economies’ demands for increased living standards while looking forward to meet the global challenges of sustainability, carbon abatement and cost efficiency.

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These demands on the extractive industries must be met while the workforce is going through a period of significant change. The baby boomer generation is reaching retirement age, and the organisation and leadership of the supply chain that enables the provision of the raw materials and energy for the world economy, is moving to a different generation- one that has a 15-year recruitment gap caused by contraction in this sector from the mid-1980s through to the early 2000s. The maintenance and improvement in standards for those practising in these industries, to provide essential resources while maintaining and exceeding present-day safety, cost and environmental performance standards, will not happen by accident. It

will need planning, application and the best use of existing and evolving techniques, technologies, and materials to support, inform and mentor professionals to meet the technical and commercial demands being placed upon them. The professional engineering institutions (PEIs) were established in the 19th Century, partly in response to major incidents and the associated loss of life, public outrage, political and judicial response and financial impact. Key objectives of the PEIs have been to help develop and maintain the competence of engineers to improve safety and efficiency (leading through to profitability). To support this, UK PEIs have developed systems to assess the technical competence of professional engineers and technicians in a systematic way that is internationally recognised and leads to registration as a chartered engineer (CEng), chartered scientist (CSi), chartered environmentalist (CEnv), incorporated engineer (IEng) or engineering technician (EngTech).

As one of the UK’s major engineering institutions, the Institute of Materials, Minerals and Mining (IOM3), offers professional recognition for engineers across the full range of the materials cycle. With the growth in world demand for energy and raw materials to support both the developed and the developing economies, the demand is set to increase for the supply of professional engineers who are supported, well informed and have the opportunity to link in to the range of support services available from the PEIs. Knowledge transfer One of the key roles of IOM3 as an organisation supporting members in a major international industry is the effective promotion and co-ordination of knowledge transfer. IOM3 achieves this through national and international conferences, local events and seminars, its member magazines, its website and its mining and minerals library. This IOM3 knowledge exchange activity is co-ordinated through IMMa (the International Mining and Minerals Association), which links four individual technology communities within the broader IOM3 membership. IOM3 also provides access to IMMAGE (Information on Mining, Metallurgy and Geological Exploration), the world’s foremost reference database of abstracts and citations of scientific and engineering literature for the international minerals industry. As a frequently updated electronic search facility for technical information, with a powerful search engine, IMMAGE covers material published from 1979 to the present day in over 110,000 records, with two to three thousand new references being added each year.

The IOM3 resource divisions also contribute regularly to IMM Abstracts, which form a current awareness bulletin for technical literature in the extractive industries, published quarterly as a hardback version of the technical information available on the IMMAGE database. IMM Abstracts recently celebrated 60 years of publication.

is an important aspect for the future, as the metalliferous and energy industries face increasingly more challenging environments with smaller reserves bases, requiring higher performance from existing materials and providing opportunities for future materials. These in turn will require the support of the materials science base within IOM3.

Standards for minerals reporting

No less important, IMMa supports the maintenance and forging of links with other organisations to promote the objectives of IOM3 and the interests of the members of the resource divisions, and through them the minerals and energy industries both at home and overseas It also maintains contacts with academia and industry to ensure that the needs of both are appropriately addressed, encouraging membership of IOM3 where appropriate to further the promotion of the mineral and energy industries worldwide.

Following a series of mergers of professional institutions, representing the materials, mineral and mining communities, the Reserves Committee set up by the former Institution of Mining and Metallurgy in the UK to set standards for reporting mineral exploration results, mineral resources and reserves was re-constituted with a broader remit, as the Pan-European Reserves and Resources Reporting Committee (PERC). PERC is the European equivalent of the Australasian JORC in Australasia, SAMREC in South Africa, and similar reserves standards bodies in the US, Canada, and Chile, and with them is a constituent member of the Committee for (Mineral) Reserves International Reporting Standards (CRIRSCO- www.crirsco.com). Representation on PERC covers major and junior mining sectors, industrial minerals, aggregates, coal, the investment and financial community and the professional accreditation organisations including IOM3 and IMMa. PERC launched the definitive version of its new minerals reporting code in 2008 (see www.percreserves.com). Some CRIRSCO meetings are open to the public, and in November 2011 the international community that reports under this body is due to meet in London, the open meetings being held at IOM3 headquarters at 1 Carlton House Terrace. Further details will be posted on the CRIRSCO and IOM3/IMMa websites. Wider dimensions IMMa also provides a link between IOM3 local societies with minerals interests (both home and overseas) and other IOM3 communities, ensuring a flow of information between the resource extractive and materials science dimensions of IOM3. This

The Institute of Materials, Minerals and Mining (IOM3) 1 Carlton House Terrace, London SW1Y 5DB Chief executive: Dr Bernie Rickinson Tel: 020 7451 7300 bernie.rickinson@iom3.org www.iom3.org

About IMMa and IOM3 IOM3 is an international professional body that serves its Royal Charter by representing materials, minerals and mining to governments, industry, academia, media, the public and other professional bodies. IOM3 provides a global network encompassing the complete materials cycle, embracing exploration, extraction, mineral processing, materials processing, manufacture, product design and applications, recycling and sustainability. IMMa is part of IOM3, serving members with interests in the minerals industries and providing a focus for the worldwide community of professionals engaged in the resource extractive/energy industries. IMMa works closely with the four IOM3 technical mineral extraction-related divisions: applied earth science; mineral processing and extractive metallurgy; mining technology; and, petroleum and drilling engineering. It encompasses all the interests that resided in the former Institution of Mining and Metallurgy, which merged with The Institute of Materials in 2002 to form IOM3. By Martin Cox, Chairman of IMMa (International Mining and Minerals Association)

The International Mining and Minerals Association (IMMa) Chairman: Martin Cox imma@iom3.org www.imma.uk.com

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GLOBAL

eNerGy MINING & NATurAL reSourCeS rePorT 2011

RESOURCE NATIONALISM IN THE MINING INDUSTRY The mining and metals industry endured a raft of tax increases from 2003-2008 as governments of mineral rich countries sought a larger share of profits from the commodities price boom. This ended abruptly after prices collapsed following the global financial crisis. But, as the mining and metals sector rebounded quickly, it has again become a target for governments, giving rise to a new wave of what is now referred to as ‘resource nationalism’. Over the past 12-18 months, at least 25 countries have either announced an intention to increase the government’s tax take from mining or have done so already, whilst other governments have been looking to increase local equity participation in projects or to renegotiate signed mining agreements- a trend that is likely to continue. However, in order to generate confidence among mining companies operating in any jurisdiction (or considering doing so), contracts entered into and licences granted by a host government need to be honoured and the local regulatory regime must remain stable. Acts by a state against investors’ interests jeopardise prospects for continued investment in the development of that state’s resources. The mining climate in Zambia, Africa’s largest copper mining nation, is uncertain following the recent presidential election. Before his election, Michael Sata said that he would seek more revenue from mining companies operating in Zambia. Following his election, metal export permits were quickly suspended as the country began to prepare new guidelines for the country’s copper sector. The new mines minister has also hinted that mining companies will face higher taxes, although promised to engage industry over the issue. The government has, however, insisted that there will be no nationalisation in Zambia, and that foreign investment is protected by law. A number of large mining companies have refrained from investing in the Democratic Republic of Congo until pioneer companies proved that their projects were secure. In 2009, in the context of a review of mining contracts entered into with state-owned mining companies, the Kolwezi tailings project under construction by First Quantum

Minerals was cancelled and seized, as was the case a few months later with the company’s other mines in the country. Two years later, the state-owned mining company Gécamines has just announced that it is starting another ‘audit’ of its mining joint ventures. Since the death of long-standing president of Guinea, Lansana Conté, in 2008, a number of mining contracts have come under scrutiny. President Alpha Condé was elected in 2010 under promises to review existing mining contracts and develop a new mining code, which was promulgated in September 2011. This code takes a much stronger stance, in favour of the state, in terms of the balance between the rights and obligations of mining investors including the state’s shareholding in mining projects, approval of changes of control and taxes. Zimbabwe’s Indigenisation and Economic Empowerment Regulations, which came into force in 2010, require all foreign or whiteowned companies with an annual turnover of over $0.5m to dispose of 51% of equity to black Zimbabweans. 45 operations have so far met the new ownership demands (Bloomberg, 07/09/11). Foreign direct investment into South Africa has slumped by over 70% since 2009, (UN’s World Investment Report for 2011) due partly to the government’s failure to convince investors that nationalisation and expropriation of private assets are off the table. The ANC Youth leader, Julius Malema, recently stated that mines in SA should be nationalised, although this position does not appear to be supported by President Jacob Zuma.

There are steps that investors can take to minimise resource nationalism risk, including fostering transparent relations with the host country and the local communities and seeking to address their expectations. Whilst this engagement is essential, legal protections are equally so. At the outset, the existence of a valid mining title is paramount; any short-cut taken in securing legal title and any irregularities in developing a project may jeopardise the enforceability and validity of titles and contracts and may be exploited by a host country seeking to re-open arrangements. Tax stability clauses may be included in investment or mining agreements, as is the case with international arbitration clauses, a key feature provided that the host country is a signatory of the New York Convention on the recognition of foreign arbitral awards. Bilateral investment treaties between the host country and the country of the investor can also offer very valuable protections.

In Asia, new equity divestment obligations were introduced in Indonesia in 2009: foreign investors may own 100% of projects initially, but must divest at least 20% after five years to central or regional government, state enterprises or domestic private companies. Foreign investors operating in Mongolia became concerned by the recent announcement by the government that it wanted to bring forward the timeframe set out in the Oyu Tolgoi Investment Agreement for the government’s interest to increase to 50% although it subsequently announced that it will stand by the terms of the agreement.

Iain Duncan Managing Associate T +44 20 7825 3137 iain.duncan@simmons-simmons.com Simmons & Simmons LLP CityPoint, One Ropemaker Street London EC2Y 9SS UK

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The decision epitomises the balancing act that is seen in most of the projects described above in countries that are heavily reliant on the natural resources sector. Oyu Tolgoi is a project that could only be developed by a major mining company so attracting foreign investment is essential; and yet as a project with the potential to change the fortunes of the whole country, keeping value in country is critical.

Yves Baratte Partner T +33 1 5329 1614 yves.baratte@simmons-simmons.com Simmons & Simmons LLP 5 boulevard de la Madeleine 75001 Paris, France

Following the 2008 economic crisis, the global mining industry witnessed resurgent growth, driven largely by increased consumption by developing countries. Future outlook for the sector is positive given the relevance of minerals in the overall strategy of a country’s economic development. India produces 87 minerals including 4 fuel minerals, 10 metallic, 47 non-metallic, 3 atomic and 23 minor minerals, with abundant reserves of key minerals. The industry is still dominated by the public sector, accounting for almost 75% of the total mineral production in India in FY 2010-11. Although India is among the world’s largest producers and exporters of significant ores, it has largely been unable to leverage this strength. This untapped potential, coupled with the spiralling global and domestic demand makes India a favourable investment destination for this industry. However, reality suggests otherwise. According to a report, the total value of mineral production (excluding atomic minerals) during 2010–11 is estimated at INR 2,006 billion. Government estimates suggest the contribution of the mineral sector to the country’s GDP is merely about 2.5%, compared to 7.5% in Australia. Lack of adequate infrastructure in the mining areas and procedural delays are factors primarily responsible for lack of adequate investments into the Indian mining sector . The Planning Commission of India constituted a High Level Committee to address these issues. Based on its recommendations, the National Mineral Policy 2008 (NMP) was formulated, thereby replacing the 1993 policy. Complex mining regulations have always been a major cause of concern for domestic mining industry as well as foreign investors, and the Indian government now proposes to overhaul the regulatory regime. The Mines & Minerals (Development & Regulation) Bill 2011 is a step in that direction. The Cabinet has approved the draft and

proposes to introduce this Bill in Parliament. Some of the important proposals are: The absence of security of tenure, i.e., the right of a holder of a reconnaissance permit to a prospecting license and thereafter to the mining lease over the relevant area, has been an issue that has discouraged investments in these capital intensive ventures. The Bill seeks to address this by doing away with a number of provisions in the present law that creates uncertainty in terms of the ability of the investor to ultimately obtain mining leases over areas in respect of which he has invested substantial funds at the reconnaissance and prospecting stage. The process for grant of mineral concessions prescribed under the current dispensation is widely seen as open to abuse. This is clearly seen as a disincentive to invest in the mining industry. The Bill seeks to address this by providing for grant of mineral concessions through a transparent bidding process to ensure a level playing field for all stakeholders. Apart from various proposals in the Bill aimed at making the Indian mining industry competitive, the Bill also seeks to provide for compensation to persons and families affected by mining related operations. The Bill provides for the establishment of the District Mineral Foundation. It is proposed that holders of mining leases should deposit with this Foundation an amount equal to the royalty paid every financial year. In the case of coal and lignite, however, the lessee will be required to deposit 26% of the profits arising from mining operations in respect of that lease. The Bill also provides that the company holding the mining lease must also allot to each person of the affected family at least one non-transferable share at par for consideration other than cash. Further, the holder of a mining lease will also be required to provide to such affected persons employment or other assistance in accordance with the rehabilitation and resettlement policy of the concerned state government. As expected, these proposals have evoked substantial debate and discussion within the industry. Non-exclusive reconnaissance licences, high technology reconnaissance-cum-exploration licences and certain prospecting licences

Upendra Joshi Partner Rekha Daniel Senior Associate Khaitan & Co One Indiabulls Centre, 13th Floor, Tower 1, 841 Senapati Bapat Marg,

will be freely transferable subject to a notice of such transfer being given to the state government. The transfer will be effective at the end of the notice period except if the state government disapproves the transfer; the grounds for such disapproval will be limited only to ineligibility of the transferee to hold such licences. Currently, prospecting licences and mining leases are granted in respect of areas of not more than 25 square kilometres and 10 square kilometres respectively. The Bill seeks to increase these limits substantially, which could significantly add to the viability of these operations and encourage investments. Inordinate delays in the grant of mineral concessions have been a major concern for the industry. The Bill seeks to address these by providing for clear timelines for disposal of applications including for interim stages, which could dramatically cut down the time taken in the entire process. The Bill provides for the establishment of the National Mining Tribunal and State Mining Tribunals to facilitate the implementation of the provisions of the Bill and the various new initiatives under the Bill. The Bill also provides for establishment of the National Mining Regulatory Authority with powers to regulate the technical aspects relating to mining, reviewing and revising the royalty and dead rents, as well as to generally protect the interests of end-use industries for assured long-term supply of minerals. The Bill clearly attempts to strike a balance between social/environmental sustainability and long-term profitability of mining enterprises. The focus of the proposed reforms is largely on two counts: to simplify the legal framework and make it conducive to business, and to limit any adverse impact on environment and indigenous population. The intentions seem right, although the compensation issues may still need some deliberation. It is hoped that the new law should catalyse growth in this high potential area; however, the Bill is yet to be presented in the Parliament and the form of the new law that finally comes through remains to be seen.

Mumbai 400 013, India Tel: (91) 22 6636 5000 Fax: (91) 22 6636 5050 upendra.joshi@khaitanco.com rekha.daniel@khaitanco.com Bangalore Kolkata Mumbai New Delhi

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INDIA

INDIAN MINING REGULATION: HOPES AND ASPIRATIONS

GHANA

eNerGy MINING & NATurAL reSourCeS rePorT 2011

MINING BUSINESS IN GHANA Ghana is a mineral rich country. For a long time, gold has been the major mineral. Some critics believe Ghana holds its mineral wealth in trust for external investors. The outlook here is to attract foreign investors as much as possible, knowing full well that local expertise face fiscal and technical challenge. We give a brief but incisive overview of Ghana’s mining industry, reflecting specifically on the administrative set up, taxation and social obligations of the miner. Administrative infrastructure Ghana has a dedicated administrative office to manage and promote mining business. The start point for a new mining investor is the Minerals Commission- a mining repository and administrative set up that holds the drawings of mineral rich areas in Ghana. The right to mine is usually given to the mining company, while ownership of the land is retained by the Ghanaian government. A mineral right holder for a particular concession cannot sell this right without the government’s approval. Chamber of Mines: Mining and mining services companies run an own-funded Chamber that overseas member interest. The Chamber has negotiated many positions for mining companies and increasingly promotes membership interest. All mining and mining services companies are members of the chamber. Common agreement: Foreign investors find it prudent to protect their investments, particularly in Africa, due to a past history of political instability and known instances of business seizures. Such a revolutionary approach to redistribute wealth has proven to be distasteful to foreign investors who desire to move capital around for profit. To assure a safe environment within the mining industry, the government enters into some form of agreement with mining companies to guarantee a safe fiscal and regulatory regime for a predetermined period of time. The fiscal and regulatory terms of the agreements usually differ from one company to the other. Mining Taxation regime The industry receives favoured direct and indirect tax regimes. Indirect taxation: Port duties- the mining industry has a special port duties regime whereby a mining list has been compiled. Items on the list come in free of duty and in the larger case free of VAT. The mining list is revised every two years. The list keeps on shortening as every year the relevance of some items as dedicated mining items run out of time.

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VAT- mining inputs, except where exempt carry the VAT charge. But due to the fact that exports generally are zero rated, mining companies tend to have huge VAT refund claim. The Ghana Revenue Authority runs a restricted use of a VAT Relief Purchase Order (VRPO) scheme for mining companies. The scheme enables the mining companies to purchase VAT assessed on permitted goods and services with the VRPO to lessen the cash outflow needed to purchase the VAT. Corporate taxation: The Internal Revenue Act 592 [2000] is the principal act governing mining taxation here in Ghana. The corporate tax rate is generally 25% for all business entities including mining and mining service companies. Act 592 recognises the heavy infrastructural development and intensive capital inflow required by a mining enterprise in the set up period and during its operational life cycle. Act 592 gives very favourable capital allowance of 105% recovery on class three assets used in the mining business. Unutilised capital allowances are usually carried forward forever. Class three assets are defined to include mineral production rights, assets used in mineral prospecting, exploration, or development, buildings structures and works of a permanent nature, machinery and equipment, etc. Unlike many other industrial endeavours, business losses are permitted to be carried forward for five years. Royalty: The royalty charge is 5% on sales value of minerals won. The rate moved from 3% to 5% in the year 2010. Companies with a fixed royalty rate of 3% have strongly argued to keep this rate to expiry date of the provisions within their agreement. Government shareholding: The government holds a mandatory non-contributing share of 10% of all mines. Some mining companies have successfully negotiated the purchase of the government’s 10% shareholding, leaving them as 100% owners of the mining business. Social responsibility Act 592 encourages mining companies to strengthen their social perspectives of the environment in which they operate. Tax deduction for expenditures that are social or environmentally inclined, such as contributions to charities, scholarships schemes, donations for rural development,

donations for sports development and promotion and donation to the government for a worthwhile cause, are allowed as normal deductible business expenditure when duly approved. This has encouraged many companies to sponsor football to Ghana’s great advantage. Many of the mining companies undertake local infrastructural development for roads, basic schools, health care and the promotion of customary activities. The mining companies have come together to support the University of Mines and Technology at Tarkwa, a major gold mining city. In summary The government desires to promote investment in the extractive sector but believes time is up for a gold refinery to be established. This is an opportunity investors could look at. Investors have government guarantees of safe entry and safe exit of equity, interest and dividends earned without any form of hindrance. The government will seek international arbitration for dispute resolution.

On 27 July 2010, Ecuador passed a reform to the hydrocarbons law that created a new independent government entity, the ‘Hydrocarbons Secretariat’, for executing oil exploration and production contracts. In the past, oil exploration and production contracts were executed with Petroecuador, Ecuador’s state-owned oil company, making Petroecuador both a competitor and oversight entity. We found this change to be positive for development and the future of oil exploration and production in Ecuador. The law also provided for a new type of contract, where the contracting company receives a pre-negotiated tariff paid in US dollars or in oil per produced and delivered barrel. The main points considered for negotiating the tariff are: number of reserves; committed activities with referential investments; operating costs; and, a pre-agreed rate of return.

The law provided that every existing contract had to be renegotiated under the new model. Some companies decided not to renegotiate their contracts, ie Petrobras, and returned all production to the state and started discussions for receiving compensation for their investments. Most of the companies operating in Ecuador decided to renegotiate their contracts and continue operating. The renegotiations that took place in October/November 2010 and January 2011 were quite a challenge for those of us who advised clients in this respect. We represented our longstanding client ENAP Sipetrol SA, a company owned by the Republic of Chile, as well as Agip Oil Ecuador S.A., which

successfully completed the negotiations, resulting in new investments and potentially good benefits for Ecuador and said companies. Following the set of new contracts executed in November 2011, we believe the investment atmosphere has improved for oil exploration and production. We have been very active, assisting clients on new ventures and on the usual legal needs regarding drilling campaigns and oil activities. On 3 October 2011, ENAP executed a new contract for exploration and production in the Jambelí Block (part inland and part offshore) on the Ecuadorian coast. Roque Bustamante played a major role in this negotiation and we are proud that it has been the only oil contract executed in 2011, aside from the mandatory contracts executed as a result of the changes to the hydrocarbons law. This has put our firm, and especially Roque, in a leading position on what is going with hydrocarbon contracts in Ecuador. We consider that there are many more opportunities for investment in Ecuador, but, based on our experience, many companies are not even interested in reviewing the concepts or do not understand the new model. In our opinion, it is evident that we are moving towards large-scale development of oil exploration and production and we encourage investors to promptly look at the alternatives. As always, there are risks involved, but we consider that the right advice will mitigate such risks. The cost of entering is still reasonable. The government has announced that almost 20 new blocks in the southeast of Ecuador and some offshore will be put up for bid, in addition to the marginal field contracts in process and the mature fields programme. We would recommend considering them.

Roque Bernardo Bustamante Senior partner Bustamante & Bustamante Law Firm Aves Patria y Amazonas, Ed COFIEC, 10mo Piso Quito, Ecuador Tel: +593 22 562 680, ext 440

Fax: +593 22 559 992 rbbustamante@bustamante.com.ec

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ECUADOR

HEADING: NEW OIL EXPLORATION AND PRODUCTION OPPORTUNITIES IN ECUADOR

MINd Body & WorK - MedITATIoN

Meditation for Busy Professionals

The adrenal glands sit on top of the kidneys. In poorly drawn diagrams, they often resemble cone shaped party hats crowning the twin organs. The central region of the gland produces the ‘excitement’ hormone adrenaline (or as they prefer to call it across the Atlantic, epinephrine). The cortex of the adrenal gland produces cortisol which has been labelled the ‘stress’ hormone. It is a crucial chemical in the normal functioning of the human body. It helps regulate the metabolism which, in turn, helps regulate blood pressure. Just as importantly, cortisol acts to reduce the body’s inﬂammatory response to injury and is an essential immune suppressor: it slows down the action of white blood cells that help ﬁght disease so that, when their job is done, they do not attack and destroy the body’s own cells and tissues. Cortisol is also one of the hormones implicated in the human body's beautifully evolved “fight or flight” response which is initiated as a response to immediate and possibly overwhelming danger. We have cortisol to thank, in no small part, for the very survival of human beings as a species. Secretion of cortisol in such urgent instances gives the besieged being instant energy, increased memory, and a higher pain threshold. However, this hormone is not only triggered in such potentially life and death scenarios. When faced with constant or repeated stressful stimuli the threshold at which the adrenal glands secrete this hormone becomes progressively lower. Over time, what were its benefits become detrimental to our health. As it interacts with other hormones circulating in the blood, what once manifested as increased short term memory turns into cognitive decline and cortisol's suppressive effects on the immune system make fighting infections difficult and even a usually mild bug can take an unusually heavy toll. Be under no illusion, stress is a physiological condition.

The Cost of Stress Perhaps it is the perception of stress as a mental or psychological illness and the stigma that carries that makes people reluctant to admit that this is something they have difficulties dealing with. Measuring its effects in an individual can be as difficult as doing so

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in any given population as many symptoms and complications of stress manifest themselves in more easily identifiable conditions. Stress and stress related illnesses, according to the Health and Safety Executive, combine to cost the UK economy £530million annually and is responsible for more than 13.5 million lost working days. In the USA, it is estimated by the National Institute for Occupational Safety and Health that 70% to 90% of hospital visits by working people are in some way stress related. The cost of lost working days to US employers is a staggering $200 billion. No doubt putting in place measures aimed at alleviating stress and protecting oneself and staff from its effects would be time, money and effort well spent.

The Cost of Preventing Stress As the old adage goes, “An ounce of prevention is worth a pound of cure.” This must be doubly so for stress – a condition which unrecognised and untreated can have lifelong consequences that include back pain, depression and reduced immunity to disease. These physical ailments are equalled by the social and psychological effects of stress which can lead to addiction, family breakdown, and secondary mental health problems and in the very worst instances, suicide. When a preventative measure can also be used to relieve and combat stress – not just in the work place but in any situation life may present - it is beyond value. Meditation has this potential.

Whatever the chosen career path one expends energy and money and even years in training for it. Dedicated professionals will refine and update their skills while seeking to learn and acquire new ones. Stress prevention and management should be but, sadly, too often is not, taught right from the very start. Too often is the phrase “work-life balance” bandied about as if working hours were time taken out from life? Indeed, do many professionals not use skills from their work beyond working hours and bring valuable life skills and experience to bear in the working day? A far more holistic approach to combatting and preventing stress is required – no - it is necessary.

Scientiﬁcally Proven Beneﬁts of Meditation It has long been known that meditation can help relieve chronic pain and many of its associated symptoms most of which are also common in sufferers of chronic stress – indeed stress and pain almost always co-exist. Forty-five years ago, scientists looking at the brain waves of Buddhist monks observed that a certain type of brain wave - alpha rhythms – was elevated in these habitual meditators. In April 2011, neuroscience researchers working at Harvard and MIT published a paper in the well respected and peer reviewed Brain Research Bulletin. Their paper described some of the possible neurophysiological mechanisms underlying these effects. They studied twelve individuals none of whom had ever meditated before. The group was divided and half underwent eight weeks of meditation training. This consisted of an introductory 150 minute session and forty-five minutes of guided meditation (using a CD) every day for the next fifty-five days. The group who had been taught to meditate achieved significantly higher scores on tasks designed to test attention processing than did the control group. They could even modulate their alpha rhythms up or down in anticipation of a stimulus being delivered. MIT neuroscientist and the paper's lead author, Christopher Moore, states, “meditation training makes you better at focusing, in part by allowing you to better regulate how things that arise will impact you.” Proof positive of the preventative powers of meditation.

stress relieving effects of this habit have nothing to do with smoking per se but everything to do with taking deep breaths. Meditating is an active process that requires focus. That focus cannot be that which is causing the stressful reaction. Using meditative and contemplative techniques one must leave stress aside and engage only with oneself. Moreover, it has no deleterious side effects.

Let Your Mind Go Blank Meditation is a skill. It can be learned and called upon when required. The idea of letting the mind go blank can be terrifying for many people, especially those who are used to a high level of control. It is not always a necessary step. The problem with trying to clear the mind of all thought is that, to do so in this way, invariably involves thinking about it. It is for this reason mantras (words or sounds repeated slowly over and over again) are used. They also help slow and regulate breathing. Some people prefer to use prayer beads or another focus. There are many good CDs available to guide beginners through meditation. With practice though, these often become unnecessary and one can meditate just about anywhere. Just like other skills learned in the work place, the ability to meditate and be in a mindful state has benefits in all areas of life. Both anecdote and research has shown company where mindfulness and contemplation are encouraged and part of the culture, tend to be more peaceful and productive with fewer confrontations. The ability to have a degree of control over how changes will impact you is not just empowering in professional life but for life as a whole. Advancing meditation training and mindfulness is a holistic approach to managing stress, increasing productivity and general health and wellbeing. It can help prevent the day to day stresses and worries of work seeping into and ruining home-life and vice versa. Again, it is worth reiterating there is no “work-life balance” to strike but to, instead, to be able to adapt and cope with whatever stress and anxiety life itself brings.

A 2003 study conducted at the Laboratory for Affective Neuroscience, Wisconsin, showed that as little as fifteen minutes of mediation each day has demonstrable effects on the immune system and could thus reduce absenteeism. Sixteen subjects, none of whom had received vaccination against influenza were divided into two groups as in the previous study. The group who had learned to meditate had a statistically significantly fewer 'flu related absences than the nonmeditators. Of course, when the study was terminated, all sixteen were allowed to get their 'flu shots!

Bringing Meditation into the Workplace Many multinational companies, leaders in their fields have introduced training in meditation and mindfulness for their staff. These include AOL Time Warner Incorporated who, in 2006, when reorganising their workforce gave employees access to meditation and mindfulness classes to ease them through the stress of the changes. They are by no means alone. Google, Deutsche Bank and EBay have meditation and mindfulness classes for their employees and have recorded greater productivity and reduced absenteeism and length of absences. At this point, it is worth considering the measures people already take to relieve work related stress. Often these “stress busters” have the effect of reducing productivity and, in the long run, amplifying the undeniable effects of stress. Perhaps the most popular way to relieve stress is to have a break from the work at hand. This alone only has a very limited effect and will often need to be repeated: that which is causing the stress or anxiety in the first place often leaves and returns with the worker. All too commonly, break will involve a cigarette. (Or two, or three). It goes without saying that smoking does only harm to the immune system and that smokers have a greater number and more prolonged absences than non-smokers. In fact, the purported Disclaimer: This article is for general information only, and should not be treated as a substitute for medical advice. Global Business Magazine is not responsible or liable for any diagnosis based on the content of this article. Always consult your doctor before commencing any kind of dietary or health and ﬁtness regime.

November 2011 • GBM • 45

CouNTry ProFILe - uKrAINe

: w e e i n v i r a e r v The uk A country o

The Ukraine is a transition market economy state with significant investment potential. It has the highest rate of GDP growth in Europe. While the World Bank classifies the Ukraine as a middleincome state, in 2007 the Ukrainian stock market recorded the second highest growth in the world of 130%. In 2006, the market capitalisation of the Ukrainian stock market was $111.8bn. Growing sectors of the Ukrainian economy include the information technology (IT) market, which topped all other Central and Eastern European countries in 2007, growing some 40%.

The Ukraine has a key advantage of a favourable geopolitical position with granted access to three strategic regional marketsthe EU, Russia and Asia. Four out of ten European transport corridors run through the Ukraine- 273,700km of highways, 22,510kms of railways, 500kms of waterways, 42,900kms of pipelines and 250,000kms of air routes. It also has the means of connecting with the Middle East region via its sea routes. The Ukraine is regarded as being a developing economy with high potential for future success; however, such a development is thought to be likely only with new allencompassing economic and legal reforms. The Ukraine is a dynamically evolving consumer market. Direct actions of the state reveal its intention to attract investors to this market and assist them, particularly through a series of legislative initiatives. The state has simplified and reduced tax requirements, thus, according to the new tax system the investor has an opportunity to submit the electronic application for VAT refund. The requirements for the minimum capitalisation of the enterprises have been mitigated. There is a mechanism of automatic compensation for exporters. Ukrainian agriculture has been evolving since it achieved independence in 1991, following the breakup of the Soviet Union. The Ukraine is among the best in the world in the agricultural branch. It possesses a third of the

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world’s black soils while 56% of the country has been deemed suitable for agricultural purpose. Of the Ukraine’s total land area of 60 million hectares, roughly 42 million is classified as agricultural land, which includes cultivated land (grains, technical crops, forages, potatoes and vegetables, and fallow), gardens, orchards, vineyards, and permanent meadows and pastures. Ukrainian land is very fertile. Agricultural land in the Ukraine is owned by individuals and leased to agricultural companies on a three- to five-year basis. Strong global grain prices have triggered demand for arable land, and lease rates in the Ukraine have doubled to $60-80/ha/year since 2006. Energy The Ukraine was 6th top gas importer in 2009 (en.wikipedia.org/wiki/Energy_in_ Ukraine#cite_note-IEA2010-1). Naftogaz is the state owned gas company. In 2009, 80 % of the EU gas from Russia was delivered via the Ukraine. The Ukraine was 8th top nuclear electricity producer in 2009 and 46.7 % of domestic electricity generation was nuclear. This was 2nd top, only France was higher (http://en.wikipedia.org/wiki/ Energy_in_Ukraine#cite_note-IEA2010-1). Energoatom (National Nuclear Energy Generating Company of Ukraine) is the state nuclear company found 17.10.1996 in Kiev. The Ukraine has also been jointly selected

to host the UEFA Euro 2012 Championship, opening doors of opportunities for investment and the general enhancement of the cities within the Ukraine. Matches are to be played in the four main cities of the Ukraine: Kyiv, Donetsk, Kharkiv and Lviv. All four cities will experience mass changes with the upgrading of stadia, airports, national roads, public transport, hotels, utilities and other related infrastructure. With all these changes in the Ukraine, the job opportunities are endless. Employment in the Ukraine These days many people from the West and East alike are interested in coming to the Ukraine to work and do business. Hundreds or thousands of expats are already living and working here successfully. Although each person has his own reasons for coming to the Ukraine to work, there seem to be several main reasons: The Ukraine appears to be on its way to becoming a European country, which means that during the next few decades the country will require intensive economic and infrastructural development. If the new government makes good on its campaign promises, the Ukraine will soon become a more attractive place to do business. Many foreign men are interested in meeting and marrying Ukrainian women, and coming here to work and live for a period of time seems to be a good way to meet people in a natural environment, as well as get to know the culture and language. Students of Russian and Ukrainian see the Ukraine as a good place to obtain work and language experience for a future career related to Eastern Europe. The Ukraine, with its low cost of living, transition economy, and ‘backward’ society (from a western standpoint), seems to attract adventurous souls looking for a new kind of lifestyle. Tourism The Ukraine occupies 8th place in the world by the number of tourists visiting, according to the World Tourism Organisation rankings. The Ukraine is a destination on the crossroads between central and eastern Europe, between north and south. It borders Russia and is not far from Turkey. It has mountain ranges, namely the Carpathian Mountains suitable for skiing, hiking, fishing and hunting. The coastline on the Black Sea is a popular summer destination for vacationers. The Ukraine has vineyards where they produce native wines, ruins of ancient castles, historical parks, Orthodox and Catholic churches as well as a few

mosques and synagogues. Kiev, the country’s capital city has many unique structures, such as Saint Sophia Cathedral and broad boulevards. There are other cities well-known to tourists, such as the harbour town Odessa and the old city of Lviv in the west. The Crimea, a little ‘continent’ of its own, is a popular vacation destination for tourists for swimming or sun tanning on the Black Sea with its warm climate, rugged mountains, plateaus and ancient ruins. Cities there include Sevastopol and Yalta- the location of the peace conference at the end of World War II. Visitors can also take cruise tours by ship on Dnieper River from Kiev to the Black Sea coastline. Ukrainian cuisine has a long history and offers a wide variety of original dishes. Transportation The share of the transport sector in the Ukraine’s gross domestic product (according to Goskomstat) as of 2009 was 11.3%. The number of workers employed in the sector is almost 7% of total employment. The transportation infrastructure of the Ukraine is adequately developed overall, however it is obsolete and in need of major modernisation. A remarkable boost in the recent development of the country’s transportation infrastructure was noticed after winning the right to host a major continental sport event the UEFA Euro 2012. In 2009, Ukrainian infrastructure provided for the transportation of 1.5 billion tons of cargo and 7.3 billion passengers. As the Embassy of Ukraine Second Secretary Makukha Yuriy y.makukha@ukremb.org.uk 020 7727 6312

global financial crisis took hold and demand for major export commodities in 2009 fell, the volume of freight traffic decreased by 17.6% when compared with figures from 2008; passenger transport fell by 12.7%. Aviation The aviation section in the Ukraine is developing very quickly, having recently established a visa-free program for EU nationals and citizens of a number of other western nations (http://en.wikipedia.org/ wiki/Transport_in_Ukraine#cite_note-3), and the nation’s aviation sector is handling a significantly increased number of travellers. Additionally, the granting of the Euro 2012 football tournament to Poland and the Ukraine as joint hosts has prompted the government to invest huge amounts of money into transport infrastructure, and in particular airports (http://en.wikipedia.org/ wiki/Transport_in_Ukraine#cite_note-4). Currently there are three major new airport terminals under construction in Donetsk, Lviv and Kiev; a new airport has already opened in Kharkiv and Kiev’s Boryspil International Airport has recently begun operations at Terminal F (http://en.wikipedia. org/wiki/Transport_in_Ukraine#cite_note5), the first of its two new international terminals. The Ukraine has a number of airlines, the largest of which are the nation’s flag carriers, Aerosvit and UIA. Antonov Airlines, a subsidiary of the Antonov Aerospace Design Bureau is the only operator of the world’s largest fixed wing aircraft, the An-225.

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CouNTry ProFILe - uKrAINe

Ukrainian Competition Law and Enforcement Today – Recent Trends More than ever before, competition law is playing a crucial role in the business of the Ukraine and worldwide. It has a diverse application in more traditional matters like merger control, joint ventures, joint activities and cartels, and also in more unique but well developing new areas like distribution agreement, licence schemes, etc.

It is also worth mentioning that the AMC has put more effort now to develop other than traditional in the Ukraine competition law enforcement areas, namely, cartel investigation, challenge of public procurement with anticompetitive behaviour on the part of its participants, investigations in distributions channels, etc.

The Antimonopoly Committee of the Ukraine (AMC), the main competition law regulator in the Ukraine, is a very active body. It has always been one of the most transparent and market oriented state agencies, and the market expects that this good tradition will be kept going forward.

Hardly any industry does not involve distribution; therefore distribution issues are very widespread. However, not so many market representatives know that Ukrainian competition law, like legislation of many other countries in the world, contains a series of provisions that regulate distribution arrangements. The compliance of such arrangement with provisions of competition law is vital to safeguard fair competition in the market. Recently, the AMC became quite active in monitoring compliance of distribution arrangements of market players with provision of Ukrainian competition law. The first steps were taken towards companies with significant market shares acting on socially important markets (pharma, food, fast moving consumer goods, etc) since they are often the rule setters in the market and thus their conduct has mostly significant impact on competition.

The competition law of the Ukraine changes very rapidly, as do changes to its enforcement by the AMC. There are currently many draft laws registered in the parliament of the Ukraine that concern the development of competition law in substance and the activities of the AMC in general. From the recent legislation adopted in the Ukraine in the area, there is now a very far reaching obligation on the part of groups of undertakings obtaining approvals in the Ukraine for global transactions to disclose the beneficiaries in their off-shore entities (entities registered in so-called tax havens jurisdictions). It is a known fact that there are many instruments introduced in such off-shore jurisdictions that conceal the beneficiaries of such businesses, but the obligations to make a full disclose of the beneficiaries of such entities to the AMC is now explicit and mandatory. There is also a draft law on introduction of criminal liability for certain types of competition law infringements in the Ukraine. Mainly it concerns government procurement procedures and anticompetitive actions undertaken by the participants of such procedures. The enforcement of these rules will be predominantly interesting to all market players in the pharma market, agri-business market in the Ukraine, etc, ie, all socially sensitive markets in the Ukraine that are always under scrutiny of the AMC. The changes concern not only the substance of the competition law regulation but also the role of the AMC as the state body. The AMC has always been a state body with special status with very far reaching competences (in terms of conducting investigations, searching the premises of the companies, imposing fines in the amount of up to 10% of global annual turnover of the group of undertaking, etc). The AMC has always tried to keep its status as independent as possible from other

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Antonina Yaholnyk Partner, Head of Competition and Compliance Law Practice antonina.yaholnyk@bakermckenzie.com Baker & McKenzie – CIS, Limited Renaissance Business Center 24 Vorovskoho St. Kyiv 01054, Ukraine Tel: +380 44 590 0101 Fax: +380 44 590 0110 state authorities and general governmental trends and policies. With the last draft laws suggested by parliament in this regard, the AMC might become a more dependent state body, especially dependent of the executive power of the Ukraine (the government), which in combination with the far reaching competences it has will enable the AMC to achieve certain political goals the government can put in front of it. The market sincerely hopes that all such powers vested upon the AMC under its current status and especially after the draft law becomes effective will be used wisely and moderately. In terms of enforcement of competition law in the Ukraine, it is important to develop a greater level of private enforcement of competition law through courts. Not many market players try to challenge the decisions of the AMC in the Ukrainian courts today or enforce competition law in courts as alternative to administrative procedure in the AMC. This is mainly due to the fact that the courts lack expertise in narrowly specialised competition law matter and usually defer to the AMC’s position on individual cases. But as the market develops further, more market players might consider court proceedings, as court decisions are law as opposed to the decision of the state authority.

Inadequate awareness of this and other competition law matters, and the resulting failure to comply with competition law rules in the Ukraine, may lead to significant monetary sanctions both for companies and their owners, some times even for employees. In addition to heavy fines, the parties may be exposed to court claims for damages. It is vital to raise awareness of the companies operating in the Ukraine and their employees with competition law rules of the Ukraine and to always consult good specialists in the market on arrangements if they raise or may raise diverse competition law issues. This is becoming even more vital with the new global trend of stringent compliance policies and legislations adopted in this regard in a number of jurisdictions.

Corporate debt restructuring procedure In the current economic climate, some industries are facing liquidity shortages caused by the aftershocks of the financial crisis. For many companies, the situation was worsened because their level of borrowed capital was based on the explosive economic growth that preceded the crisis. As a result, market decline was so dramatic that the default on their debt obligations was equivalent to bankruptcy and complete liquidation of the business. In this context, the restructuring of corporate debts is an attractive alternative for such debtors, and sometimes the only way out. Having advised on the first and, to date, only completed multimillion financial restructuring of a major Ukrainian industrial conglomerate, we use our knowledge of the peculiarities of the Ukrainian market to address key principles and stages of debt restructuring widely accepted in developed markets. Naturally, not all western approaches can be adapted to fit Ukrainian realities and legislative requirements. Nevertheless, our experience has shown that it is on the basis of western rules that ﬁnancial debt of large Ukrainian corporates is restructured. Preparatory stage An important precondition to a successful restructuring is the passing of all relevant decisions long before the company’s actual default on its financial obligations. This allows any necessary preparatory work to be conducted with the creditors, prevents their unwanted worries and demonstrates managerial foresight. Coordination committee of lenders In most cases, many creditors participate in the restructuring process, each pursuing its own goals, and it is necessary to coordinate their actions. For this purpose, a creditor’s coordination mechanism or steering committee is usually put in place. Members of a coordination committee are usually creditors with the greatest exposure and the most experience in similar transactions. A steering committee generally coordinates the actions of all creditors, conducts negotiations with the borrower and provides non-binding recommendations to the wider lending group. Participation in restructuring may be problematic for some types of creditors. For example, banks, as professional financial lenders, are accustomed to restructuring, while bondholders, often securities traders or other market players, are not interested in such long-term investments. Similarly, trade creditors and government authorities rarely participate in restructurings. Standstill agreement The development and conciliation of

instalments; capitalisation of interest; provision of additional security; increase or decrease of interest rate; deferral or instalment payment of interest; conversion of debt into equity; placement of shares among existing shareholders or third party investors; sale of assets, subsidiaries or structural subdivisions; collection of debts from debtors; involvement of new credit resources; and, reorganisation of the debtor.

DLA Piper Ukraine Oleksandr Kurdydyk, partner, head of finance and projects T: +380 44 490 9570 F: +380 44 490 9577 E: oleksandr.kurdydyk@dlapiper.com W: www.dlapiper.com Illya Muchnyk, legal director, finance and projects T: +380 44 495 1780 F: +380 44 490 9577 E: illya.muchnyk@dlapiper.com W: www.dlapiper.com the restructuring offer, as well as its implementation, requires a significant amount of time during which a borrower must be sure that none of its creditors will claim for repayment of their debts. At the same time, creditors themselves are concerned that no other creditor is able to enforce its debts as this risks other creditors being left with nothing. A way out of this situation is to enter into a standstill agreement. Key principles of a standstill agreement are: standstill period lasts until completion of restructuring or a breach by the borrower of its obligations; payment of principal is deferred until expiry of standstill period; lenders will not claim early repayment or initiate bankruptcy proceedings; all lenders are treated equally in respect of obligations, repayments, provision of information and undertake not to improve their position compared to the other lenders; and, lenders waive breaches of existing defaults. Implementation of restructuring Documents used in the course of the restructuring may differ depending on the debtor and the nature of debt. In particular, the following restructuring tools may be applied (as a standalone method or in various combinations): deferral of payment of the loan principal for a certain period; payment of the loan principal by

The application of a particular method will vary significantly, depending on the sector and specific features of each individual debtor and creditors. Banks, for instance, usually reject offers to convert their receivables into shares, preferring payment in monetary form (for obvious reasons). They also often refuse a deferral of interest since an ability to pay interest regularly is perceived as a key element of the company’s viability. In contrast, non-bank creditors may prefer a partial or full conversion of their receivables into company’s capital thereby providing them with full or partial control. Evidently the structure of legal documentation to formalise the restructuring may vary depending upon the method applied. Nevertheless, there is usually a single document between all lenders and borrowers describing the terms of restructuring: for example, a restructuring agreement, also sometimes a framework or override agreement. Certain tools customarily used for restructurings in the UK or EU may have only limited enforceability in the Ukraine. For example, the concept of an override agreement, entered into between all lenders and borrowers intended to prevail over all individual loan agreements, may be unenforceable in respect of certain types of loans, in particular, cross-border loan agreements which must be registered with the National Bank of Ukraine. Similarly, security sharing mechanisms involving a security trustee or an agent in its common meaning may be unenforceable and require significant re-development. Bank account pledges used as part of a cash control mechanism and other cash pooling instruments also have limited enforceability under Ukrainian law. Furthermore, there are significant issues related to Ukrainian currency control rules causing difficulties in the conversion of Ukrainian Hryvnya to or from foreign currency, as well as making certain payments abroad difficult without the permission of the National Bank of Ukraine. Overall, with certain modifications and exceptions, widely recognised western financial restructuring techniques may be successfully applied in the Ukraine, protecting both lenders and the borrower.

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CouNTry ProFILe - uKrAINe

The Ukraine is an undisputed leader in the CEE outsourcing market The Ukraine is getting a great amount of attention as a very attractive outsourcing destination. Being ranked the first by the volume of IT outsourcing services provided, in the number of IT outsourcing companies operating in the market and in the number of IT specialists working in the industry among 16 Central and Eastern European countries, the Ukraine remains a natural choice for the western European and North American companies looking to outsource their IT works. Western-oriented government policies, adopted intellectual property legislation and better regulations in economy sector, encourage partnership and close business ties with US and EU companies. Although, the Ukraine’s economy experienced the slowdown during the global financial recession, it has resumed its stable growth, mainly due to the measures taken by government to overcome the negative consequences of the crisis. But despite the stable economic situation, the Ukraine remains in need of investment in all sectors of industry. The share of foreign investments in the Ukraine is currently estimated at 19% of GDP, indicating that the Ukrainian economy has huge growth potential. In contrast, the share of foreign investments in the economies of developed European countries has reached around 28-30% of GDP. The favourable geographical location, shorter journey times, insignificant or no time zone differences (negligible for Europe) and allowing to overlap with the US, proficient foreign language skills and cultural proximity make it very attractive for conducting business here, specifically for nearshoring. Moreover, there is no need in visa for entering the country for all western European and North American countries. The Ukraine is the most attractive location for nearshore and offshore software development due to low cost of services, strong hi-tech educational system, large number of universities and research and development (R&D) centres, and of course the available pool of IT resources. The IT outsourcing sector in the Ukraine employs over 20,000 IT specialists and this figure is likely to increase over the coming years. The availability of extensive IT talent pool and educational systems that have a strong focus on fundamental engineering education ensures that outsourcing industry gets highly qualified IT workforce. According to Ukrainian Hi-Tech Initiative, in 2011 the number of IT specialists working in the industry reached 25,000 people with 20% growth. With 16,000 IT specialists graduating from Ukrainian universities each year, the

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significant number of specialists employed and volume of outsourcing services provided. In 2011, the number of companies providing outsourcing services reached more than 1,000 companies. Mainly these are small-sized and middle-sized companies. Inna Sergiychuk COO, Ukrainian Hi-Tech Initiative Email: innas@hi-tech.org.ua Phone: +380 44 458 1753 Website: http://hi-tech.org.ua Blog: http://blog.hi-tech.org.ua

country is among the top ten countries with the most certified IT specialists, following the US, India, and Russia. However, it must be noted that the significant potential of high school graduates with educations in IT specialties are not being fully used. For example, in the Ukraine, of 16,000 IT graduates only 4,000-5,000 are employed in companies that provide professional IT services. This number could easily double if the Ukrainian government helped foster more favourable conditions for IT outsourcing business development. Reasonable costs, reliable and well-developed infrastructure, telecommunications and a legal system allow creating very favourable conditions for business in the Ukraine. Jointly with Poland, the Ukraine has been appointed to co-cost UEFA EURO 2012. There are expectations that this event is likely to bring possible economic benefits and improvements in infrastructure and quality of life. Thus, the main airports have been modernised, and new terminals were opened in Kyiv, Odessa, and Kharkiv airports. The new terminals are expected to be opened in other largest cities like Lviv, Dnipropetrovsk and Donetsk. Many hotels have been also modernised and new ones have been built. This means that travelling to the Ukraine and around the country is now becoming more convenient and easier. The Ukraine’s IT outsourcing industry demonstrates a stable growth in the past several years and shows the highest rates of market growth, comparatively to the CEE countries, leaving other countries far behind in terms of the volume of IT outsourcing services exported. In 2011, the volume of IT outsourcing services market indicated the growth of 20% and reached US$1.1bn (source: Ukrainian Hi-Tech Initiative). The market development process is also defined by the number of companies operating in the country’s market. One of the main features of developed markets is a substantial share of large companies with a

However, growing technical expertise and demand for IT specialists has led to increasing cost of services; but with highly skilled IT labour that is still far cheaper than in western Europe or North America. Moreover, rates remain lower than in EU counties as the Ukraine is not the EU member and cost of life is lower, respectively. One of the indicators of the maturity of the industry is the presence of professional associations and communities. Such leading association in software development and IT outsourcing industry in the Ukraine is Ukrainian Hi-Tech Initiative. The association unites more than 70 members that employ more than 8,500 IT specialists. Ukrainian Hi-Tech Initiative has been working in IT outsourcing services market since 2003 and conducting different activities aimed at promotion of the Ukrainian market of IT outsourcing services provision to global markets. The association provides consultations on the market opportunities and development and offers assistance with selection of the potential partners and providers of outsourcing services. Primarily because of high quality of services provided and outsourcing companies that appear to have all the necessary skills and a more in-depth understanding of their clients needs, the Ukraine is one the best destinations for outsourcing in the CEE region.

Outsourcing IT project vs. development centre establishment Outsource IT to the Ukraine Having won many appraisal rewards, the Ukraine is definitely among the most attractive IT outsourcing destinations in the world. It is ranked the first in Central and Eastern Europe and enters the world top 30. For several years running, Ukrainian IT outsourcing industry has shown a stable growth, notwithstanding the global financial ups and downs. For the past five years, the volume of Ukrainian IT service export market has doubled; today, the volume is about $1bn- the fifth in the world. It proves not only the potential of the industry, but also the stability for long-term prospects. About a thousand companies are represented in Ukrainian IT outsourcing, covering almost all technical specialisations, industries, types of services and fitting all customers’ directions and sizes. The advantages are evident: cost efficiency, big pool of highqualified specialists, European business standards and standardised quality systems (ISO, CMMI), applied by IT service providers. Geographical location makes Ukraine a nearshore destination for European customers, and a hi-tech century ensures no obstacles for successful cooperation with the Americas. So, the facts are vivid: it’s advantageous to outsource IT to the Ukraine. But the message is not new- lots of research agencies herald it. How to outsource to the Ukraine is not also the point of this article- all the hints and instructions can easily be found

you company, if you’ve decided to outsource. Questions to answer before outsourcing Softengi 35-37 Vasylia Stusa St Kyiv, Ukraine, 03142 Phone: +380 (44) 222 6035 Fax: +380 (44) 323 0081 www.softengi.com info@softengi.com CEO and managing partner Ruslan Olkhovsky in the manuals of global level outsourcing professionals. The question is what outsourcing will you choose? Two ways to outsource IT outsourcers are flexible in offering customers methods and models of cooperation. Whatever you are offered can be divided into two main directions: ‘pure’ outsourcing, and your own development centre establishment. None is the best or the worst; each just pursues different aims and is applied for different strategies of your company’s IT development. What is ‘pure’ IT outsourcing? It’s when you place some IT process(es) of your company to a service provider team. What is development centre (DC)? It’s when you place some IT process(es) of your company to a team, established and supported by a service provider. The difference in output is: in first case you possess the product created/ services provided; in the second one you own the product created/ services provided and the team who executes it. Operation costs for both models differ slightly, except for the start-up and closure costs, which should be born for a DC. These two outsourcing approaches have been also much elucidated by the analysts, so we’ll offer you the hints to choose a more appropriate way for

Is the IT process to outsource a task to solve or a part of strategy? For the purpose of solving an IT task for better performance of your company, both variants are suitable, depending on your preference. But if it is a part of your company’s long-term IT development strategy, think about the DC establishment and it will be the part of your company, and thus will best serve for the overall strategic purposes. What extent of control and management is more suitable for you? The transparency of the processes for the services provided is very high nowadays among IT outsourcers, so you can gain full control over your project in both approaches. But, if you want to manage the process, the team and the costs yourselves, and you have the personnel and possibility to do it, go ahead with the DC. Are you ready to be involved in the process entirely? Your engagement in the technical aspects of the process in the ‘pure’ outsourcing approach depends on your wish and abilities. You won’t be involved into a staff routine- study, social support, teambuilding, etc. The DC approach presupposes your complete engagement into the both aspects. It requires certain efforts, but you’ll create the team with your own methods and culture- more fitted for the strategies achievement. What approach to choose is up to you, and our company, Softengi, can support you in both cases, offering stable, high-level services and reliability. Being a professional IT outsourcing service provider with 15-years experience in the field, we specialise in both outsourcing software development and development centre establishment and operating. In both cases we cover the complete cycle of the processes. We’ve been providing services for our customer from almost all the industries, with a profound experience in banking, finance, insurance, government, environment, and health and safety. The geography of our projects now embraces the US (TX, CA), Switzerland, Germany, Belgium, Greece, the Ukraine and Georgia. The sizes of our project varies depending on our customers- from rapid fixed projects to the ten-year ones with 100 FTEs involved. We are always up-to-date and up-to-market, so you will, for sure, find our support in the majority of technologies and services ranges.

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CouNTry ProFILe - uKrAINe

What are the benefits of developing software in Ukraine? Why nowadays many companies are interested in offshore software development? What are the strengths of Ukrainian software companies? Why should you prefer the Ukrainian Offshore Development Market to others?

availability of resources, availability of programming specialists, low labor costs, technical excellence, R&D focus, strong fundamental education, and experience with complicated projects, European culture and great potential.

Offshore software development is always a good option for companies working in Europe and US where human resources cost significantly higher. At the same time, Ukraine is a country with strong system of education and R&D infrastructure, and the very Ukrainian culture fits best to this type of activity: Ukrainian mentality provides for digging into the nature of things, establishing non-obvious relations and correlations, developing in the intensive way instead of the extensive one. Such features are particularly important in the IT market. Most of offshore clients note the ability of Ukrainian engineers to apply new knowledge and find suitable solutions for various challenges. This means that offshore software development in Ukraine can have higher intellectual level, which makes this process more intensive and therefore profitable.

According to the expert appraisal, market size of the offshore outsourcing accounted for a $1.5 billion. At the same time the rate of growth for the last three years has been about 30-35%, which demonstrates the high level of confidence from the viewpoint of foreign partners.

Since the beginning of 2011 Ukraine’s new Tax Code has introduced one of the favorable novelties into the regulations governing taxation of IT-services making them exempt from the VAT. Ukrainian offshore software development has several strong features which

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What are the main services proposed by OCTETIS?

OCTETIS Nataliya DAVIDOVA Director Tel: +38 050 382 33 92 Fax: +38 044 280 30 48 n.davydova@octetis.com www.octetis.com provide positive benefits for international organizations that consider working with software development resources from Ukraine. Among them without doubt are

Our company offers Technical Consulting and Software Development Outsourcing Services that meet your requirements at a competitive price. This services include Offshore Development, Architecture Design, Application Development and Maintenance, and Testing Services. Our Clear Software Outsourcing services are based on a unique combination of fix-price engagement, smart on-site delivery model for clear communication and agile development methodology in creating its exceptional software outsourcing solution. Our employees are the persons who have degrees from French and US universities and they are always ready to help you.

Meet the largest IT Outsourcing company in and most

innovative

Ukraine

Innovation Commitment Engineering Excellence Industry Domain Expertise Best-in-class processes Global Delivery Flexible Engagement Framework Transparency and Compliance

Luxoft Ukraine - 2011 Offshoring Destination of the Year by European Outsourcing Association Competitive Strategy Innovation Award by Frost & Sullivan - 2011 European Telematics and Infotainment 2011 Top Global Services 100 rating 2011 R&D Service Provider rating by Zinnov

Investing in Innovation Luxoft Ukraine is the region’s leading IT outsourcing provider, delivering software development services to global and national organizations. Established in 2005 Luxoft Ukraine now includes 1800+ professionals serving more than 28 global clients from locations in Kiev, Odessa and Dnepropetrovsk. Leveraging the country’s engineering legacy and Luxoft’s best-in-class processes, flexible engagement models and innovative approach to software delivery Luxoft Ukraine has proven experience in Banking&Finance, Aerospace, Telecommunications, E-commerce, Automotive, Transport, Energy&Utilities. Luxoft’s Ukraine deep expertise combined with innovative approach and adherence to highest quality standards

enables company to meet the needs, solve critical problems and deliver complex projects to our clients. The Luxoft’s global delivery model offers value far beyond labour arbitrage. Luxoft empowers its worldwide clients with: synergistic resources, superior people talent, the agility to respond to business and the ability to leverage each location’s unique advantages. Outstanding people are the driving force behind Luxoft’s growth, innovation and leadership. With its global reach, Luxoft is ideally positioned to tap into the best talent in Ukraine. At Luxoft, we understand the power and value of innovation; that’s why we are committed to a long-term investment in research

and development. From mobile application development to testing and project automation, we are constantly advancing our knowledge and skill sets to meet and exceed customer needs. With Luxoft Ukraine you can outsource innovation.

DMITRY KUSHNIR Managing Director Luxoft Ukraine 10/14 building B, Radishcheva Str. 03680 Kyiv, Ukraine Tel: +38 044 238 8108 Fax: +38 044 238 8109 kiev@luxoft.com

LuXury BrANd SerIeS – SKI reSorTS

Luxury Brand Series

Ski Resorts 2011

Plan your winter vacation with some of the leading Ski Resorts of the world.

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Kicking Horse British Columbia At Kicking Horse, we’re proud to garner rave reviews for our incredible verticals, deep ‘champagne’ powder and a truly spectacular and unique terrain mix. At 4,133 vertical feet and over 2,800 acres of skiable terrain, Kicking Horse offers the experience of back-country style skiing with gondola access. As the fourth highest vertical drop in North America, the raw ruggedness of our mountain, our amazing always-fresh powder, and the sheer beauty of our pristine scenery sets Kicking Horse apart as one of the most exceptional ski resorts in British Columbia, hands down. Kicking Horse also offers mountain top dining at the award winning Eagle’s Eye Restaurant. Located at 7,700 feet, it gives you the opportunity to experience dining at the highest elevation in Canada. The resort is located in Golden, British Columbia just 1.5 hours west of Banff (90 miles) and 2.5 hours west of Calgary (165 miles) on the Trans-Canada highway. The easiest way to get here is to fly into Calgary International Airport and drive or take the Brewster Shuttle straight to the resort. Dining - Kicking Horse Mountain Resort has a culinary experience for every palate. From fine dining to a quick snack to seven course meals, choose from eight distinct restaurants, cafes, pubs and even a mid-mountain Yurt. We also proudly offer some of the finest wines and scotches, local brews and imported beers found in the Rockies.

Shopping - Kicking Horse offers a variety of shopping and services in the heart of the Village Plaza. Whether you are looking for groceries to fill the condo, resort logo apparel to show your friends back home, gifts for loved ones, clothing or upgraded equipment, our mountain shops have your needs covered. Heli Skiing – Explore the pristine summits and snow fields of the Purcell Mountains with flexible daily or multi-day packages tailored to your needs. Packages include ski-in ski-out accommodation, lift tickets throughout your stay, and daily heli ski trips from the Purcell Heli Pad located in Golden. Tubing - The location of Tube Zone in the heart of the Kicking Horse Plaza is accessed by the Jelly Bean surface lift, we make tubing easy. Snowshoeing - Whether you’re looking for adventure, good exercise or simply want to enjoy a little quiet solitude, snowshoeing fits the bill. Explore our forested 2km and 4km loop trails just off the Palliser Trail road. Ice Skating - The Village Rink ice surface is located at our new Learning Center. It features benches, a fire pit, warming hut and music.

Hotel Contact Info Kicking Horse Mountain Resort – 1-866-SKIKICK. info@kickinghorseresort.com

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LuXury BrANd SerIeS – SKI reSorTS

Avoriaz 1800 « Welcome to somewhere diﬀerent » Avoriaz, a mountain resort. that blends with the surrounding nature: Avoriaz has been a car free resort since its beginnings.Vehicles remain in car park outside resort and traffic inside resort is only possible on skis, by foot or using one of the resort’s ‘taxis’, a horse sleigh.Streets turn into ski runs and every residence in resort is ski-in ski-out to provide holiday makers as stress free and comfortable a stay as possible. In the streets, sleighs replace cars, skiers can ski right to their door, children go around in sledges, and the bars and terrace cafés soak up the sun..Every chalet and residence is covered with red cedar, giving a warm and cosy atmosphere to this resort, renowned for its daring architecture, in harmony with its environment. Ski among the prettiest panoramas in the alps 650 km of happiness. Avoriaz is right in the center of the huge Portes du Soleil ski area located between lac Geneva and the Mont Blanc, with access to hight-altitude skiing for everyone. Crossing borders between France and Switzerland, the domain offers a multitude of ski runs, with open panoramic views of the Dents du Midi, les Dents Blanches and Lac de Montriond, from family friendly to the most confirmed level, suiting every skier. Avoriaz is well known for its Snowcross areas (secured off

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piste areas), its canyon (natural but secured canyon piste), and its various snowparks designed for every level. The newest trendy snowpark, the Stash, is a huge ecological snowpark, its 80 features are all made up of wood and rock and hidden in a forest, creating a unique run where riders can have fun progressing their all-mountain freestyle skills The ski area "Grand Avoriaz" offers fun for everybody...The altitude guarantees snow throughout the season, an average of 8m per winter. Mountain Eats The smell of cheese fondues wafts over from the Swiss side, but on French soil you are more likely to enjoy galettes (pancakes), pizzas and strong mountain sausages. Check out the bucolic goat-herding hamlet of Les Lindarets for Alpine mountain restaurants. Après-ski The après-ski scene is lively but contained, very much like the resort itself. It all happens in the centre with afternoon happy hour prices and late-night live bands. What’s on this winter: Family events Christmas in Avoriaz 24-31 december and Snow Carnival 11 February-9 march

Avoriaz Ski&Music World Avoriaz is the only ski resort in Europe to schedule a season-long series of 'snowsports and music' festival events, making it the biggest mountain snow-dance floor destination.The varied programme runs throughout the entire season, based around various headliner events.The concept in each case is a simple one: to try to match up a certain skiing or snowsports discipline with a particular musical genre, based on the resort's key values. Snowsports Celebration 11-12 December 2011 Avoriaz Cabaret 7 to 13 January 2012 Avoriaz Night Parties[28 January - 10 February 2012] Rock the pistes Festival: 24-28 March 2012 Festival Jazz Up 31 March to 6 April 2012 To book your holiday,information and reservations at www.avoriaz.com “Hotel des Dromonts was one of the first buildings in Avoriaz designed by Jacques Labro – Architect, Rome Awards Laureate. This architectural achievement is well known

as it is covered with a particular wood « Red cellar » and its special shape in pine cone. The combination of the 2 aspects gives different colors to the building depending on the lights. Hotel des Dromonts remains a unique place which passed through years without losing its charm. Since its creation, the same philosophy is perpetuated and appreciated by each “people” who spent a journey there: from Brigitte Bardot to Steven Spielberg. The Hotel was a central place for Festival du Film Fantastique in Avoriaz. When he acquired the hotel in 2000, Christophe Leroy decided to improve its comfort but overall to keep the character of the place. By now, the hotel is more trendy and cozy and hosts the most famous restaurant in Avoriaz: La Table du Marché. You can experience the particular warm atmosphere of the chalet in all rooms : the

lounge bar, the living room with its fireplace, the library, the tea room, the Thalgo beauty center and obviously the restaurant La Table du Marché dedicated to Savoy Specialties. Hotel des Dromonts is ideally located in Avoriaz – which is a pedestration ski station and the perfect access point to the Portes du Soleil”.

Hotel des Dromonts Hôtel, Restaurant, Lounge bar 40 place des Dromonts 74110 Avoriaz Tel : 33 (0)4 50 74 08 11

Located in the middle of the snowy summits of Avoriaz, the Hotel of Dromonts, mythical and warm establishment, found its fantastic brightness. It gives a special situation in the middle of the pedestrianized station, paradise of the children, an impregnable view, a direct access to lanes and of quality facilities.

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LuXury BrANd SerIeS – SKI reSorTS

ST. ANTON AM ARLBERG – The cradle of Alpine skiing Snow guarantee from the beginning of December to the end of April, 84 lifts, 280 kilometres of marked ski runs and 180 kilometres of off-piste possibilities are waiting for you. Perfectly prepared and diverse pistes, stunning landscapes, dazzling white snow and an appealing, relaxing atmosphere on both the mountains as well as down in the valley, which transform the area in and around Arlberg into one of Austria’s finest freestyle regions. TOURIST OFFICE Dorfstraße 8 A-6580 St. Anton am Arlberg Tel. +43-5446-2269 Fax +43-5446-2532 www.stantonamarlberg.com info@stantonamarlberg.com

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Hotel Garni Matterhorn Focus Zermatt Switzerland Zermatt is a very special resort, Europe‟s highest lifts, one of the world‟s biggest lift-served verticals and the iconic backdrop of the Matterhorn make it hard to beat. The resort is full of top class accommodation too, so to stand-out is a challenge, and the answer from the Matterhorn Focus was to design the hotel like a work of art. The 4-star Superior „Design and Lifestyle‟ Hotel Garni Matterhorn Focus was created by Heinz Julen, world famous for his eye-catching creations. With its distinct lines, the architectural style is elegant, without being obtrusive, blending perfectly into the mountain environment. The combination of modern architecture, genial comfort, attentive service and fascinating countryside create a very special ambience. The splendid location with an unbeatable view of the Matterhorn emphasizes the high standards that the hosts set for the hotel. Most of the 30 spacious rooms and suites offer a view of the famous „Matterhorn“, some even from the free-standing bath tubs. While from the other rooms there is a view of the buzz of activity in the charming Valais village of Zermatt. The spacious and exclusive wellness area invites guests to relax in luxury, where all their needs will be catered for. It is very important to the hosts, that the guests are able to enjoy to the fullest their welldeserved and always too short holiday. To this end, a splendid indoor pool, an outdoor whirlpool, a saline bath, a caldarium and a Finnish sauna are waiting for the guests. A rest room with heated couches provide relaxation. Massages and beauty treatments, well-fit courses and various leisure activities ensure complete well-being. Zermatt is, amongst many other things, a perfect setting for seminars and conferences, away from “every-day-life”, promoting mental freedom. The light and spacious meeting room of the Hotel Garni Matterhorn Focus is fitted with all the technical features necessary for a successful event. Flexibility is one of the big advantages and ensures success oriented and focused activities. But the key element of the success of the

Matterhorn Focus, behind the great design and the excellent facilities, is the discreet but attentive service to the high standard required by the owners, Chris & Sonja Noti and their team.

Phone +41 (0)27 966 24 Fax +41 (0)27 966 24 25 info@matterhorn-fous.ch www.matterhorn-focus.ch

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Luxury Brand Series – SKI RESORTS

Waldorf Astoria Park City Canyons Resort, Park City, Utah Located in Park City, Canyons is Utah’s largest single ski and snowboard resort. Boasting 4,000 acres of skiable terrain with 182 trails and 19 lifts, Canyons Resort is a wonderful destination for the whole family to enjoy. On mountain you will find a 1.1 mile long terrain park, six natural half pipes, 7 diverse lodging properties, more than 15 dining venues, and two state-of-the-art spas. Located only 35 minutes from Salt Lake City International Airport, Canyons Resort is an easily accessible world-class mountain destination. Dining at Canyons Resort is an experience itself. Lead by award-winning Executive Chef John Murcko of the Talisker Restaurant Collection, Canyons raises the bar on slopeside dining. With seven new restaurants opened in the 2010/2011 season, guests can enjoy many of Park City’s best restaurants right on the mountain. There are seven dining facilities for the hungry skier/rider located on the slopes, including Cloud Dine, featuring healthy salads, soups, gourmet pizzas and sandwiches with a culinary twist, and Lookout Cabin, known for known for its impeccable table-served Rocky Mountain cuisine and incredible views of the Wasatch

Range. In the Resort Village, guests can find a wide range of dining options in nine locations, including three gourmet food carts providing guests with a quick bite to go, and The Farm, serving New American style locally sourced, seasonal, organic cuisine expressed in an innovative dining experience. In addition to the gastronomy, guests can find a wide range of après ski spots to relish in the day spent on the mountain. Red Tail Grill, located on the Ski Beach, is a perfect spot to grab a drink and a bite to eat with friends, with a southwestern cuisine and an outdoor deck to enjoy the afternoon sun. The Umbrella Bar, located in the Resort Village area, is a lively new spot and a great location for ice-cold drafts and delicious gourmet hot dogs. Also with an outdoor deck, The Umbrella Bar is the ideal spot for enjoying the Spring Concert Series that runs every Saturday from February 18th through the end of the ski season. For those looking to relax in their hotel after a day on the mountain, there is no better spot than the Waldorf Astoria Park City. Conveniently located at the Base of the resort with a dedicated gondola for mountain access, the Waldorf gives luxurious new meaning to mountain vacations. The property offers 175 guest rooms, ranging from Deluxe to four bedroom suites, and is also home to one of six locations of the Golden Door Spa and SLOPES by Talisker for your dining needs. There is something for everyone at Canyons Resort: snow sport, spa, and dining enthusiasts alike. For more information and to book your vacation, please visit www.thecanyons.com.

Waldorf Astoria Park City Canyons Resort Park City, Utah www.thecanyons.com/hotels.html

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Transport and Aviation The transportation industry is a highly complex system governed by a wide variety of international treaties and diverse national laws and regulations, establishing the legal and regulatory structure within which its members operate. In the US, this legal framework includes diverse agencies within the national and state governments that administer an intricate legal and regulatory web. These include a variety of agencies within the US government, including numerous modal agencies within the US Department of Transportation and the Department of Homeland Security, as well as independent agencies such as the Surface Transportation Board and a variety of other national and state administrative agencies. The activities of these national and state executive branch agencies are, in turn, overseen by the courts. These legal structures govern the operations of all of the various modes, and include such areas as: economic regulation; transportation safety; transportation security; customs; environmental matters; contractual business arrangements between and among carriers and shippers; liability; and, a host of other subjects. Moreover, as transportation has become increasingly global, international bodies have become increasingly important. Early on, it was recognised that there was a need for a professional association within the transportation industry to represent the professional needs of the legal community in transportation. The Association of Transportation Law Professionals (ATLP) was formed to meet this need. It was organised in 1929 as the bar association of the first national transportation regulatory agency in the US. It has evolved through the years to include all practitioners in the transportation law profession, covering all modes. It has over 600 members, and includes practicing transportation attorneys, policy leaders, government officials, company counsel involved in transportation, industry practitioners, academic experts and others. Its mission is to equip its members

with the necessary tools to be vital resources for their companies, firms, customers and clients who compete in a constantly changing and increasingly global transportation and logistics marketplace. ATLP has taken the lead in working with transportation regulatory agencies to develop standards of expertise for those who seek to represent others before those agencies. It provides a variety of educational opportunities each year, including biannual transportation forums at which current topics of interest in transportation are explored. More importantly, ATLP organises a comprehensive annual programme addressing topics of interest and importance in the field of transportation law and policy. ATLP’s annual meeting brings together legal practitioners in the field of transportation, congressional and academic experts, and policymakers to exchange views and information on legal and policy developments in the field of transportation. These meetings and forums provide ATLP members a chance to interact with their peers and develop a professional network. In addition to providing its members with educational and networking opportunities, ATLP publishes a quarterly Journal of Transportation Law, Logistics & Policy. The Journal contains academic-quality articles on timely subjects of interest to transportation attorneys, government officials and a wide variety of policy, legal and academic experts in the field. Articles in the Journal cover all

modes (rail, truck, air and water), and all aspects of transportation law and policy, including both freight and passenger issues, and matters of interest both nationally and internationally. Contributors to the Journal include practicing attorneys, legal and academic experts, government officials and many others. Over the past year, the Journal has included articles on such topics as: an analysis of the Department of Transportation’s new programme for assuring motor carrier safety and its possible effects on the industry; a detailed study of transportation between the US and the People’s Republic of China; and, a comprehensive analysis of intelligent railway systems and an analysis of factors that may predict truck crash involvement. The Journal’s subscribers consist of Association members, transportation experts and policymakers, Supreme, federal, state and local courts, government libraries, as well as university libraries around the world. In addition, ATLP’s bi-monthly newsletter, Association Highlights, is the most comprehensive and authoritative digest of current developments in transportation law, regulation and court activity in the US today. Highlights is written by attorneys highly respected in their specific fields, and provides updates on antitrust, aviation, hazardous materials transportation, customs, labour law, maritime, trucking, railroads, and agency developments, transportation safety and transportation security.

Information about ATLP can be found on its website at www.atlp.org. Persons interested in ATLP can contact ATLP’s executive director Lauren Michalski at PO Box 5407, Annapolis, MD 21403, call (410) 268-1311 or email michalski@atlp. org. Persons interested in ATLP’s Journal of Transportation Law, Logistics and Policy can contact Nicholas J DiMichael | editor-in-chief, at Thompson Hine LLP 1920 N St, NW, Washington, DC | (202) 341-6148 nick.dimichael@thompsonhine.com.

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WorK heALThy - CreATING A Good WorK eNVIroNMeNT

Does a tidy office really make for a tidy mind? As we explore how this saying is pertinent now more than ever, we offer some advice about how to improve the area in which you work. The scenario of making your desk an honorary dumping ground for coffee cups, files, paper, post-it notes, books and stationery is familiar to all hardened office workers. Remember losing that important contract? Always wasting time rummaging through miscellaneous paperwork? Frequently pestering your busy colleagues by asking where some office equipment is? Commonplace these office antics may be, but in this age of commercial pressure, resourcefulness, deadlines and time efficiency, this muddled way of working can damage productivity and have a detrimental impact on how companies perform. There are a few quick-fixes that can help improve your working environment, including: 1. Keep your desk tidy and clear of clutter 2. Throw away what you don't need

The Oxford Dictionary defines the word lean as: “...(of a person or animal) thin, especially healthily so; having no superfluous fat…” In business terms, this can be interpreted as: “...(of a business process) streamlined, especially healthily so; having no superfluous methods or processes...” Simply put, Lean management is a set of tools that can be used to work more resourcefully to optimise efficiency. One of the cornerstones of Lean working highlights that untidy, cluttered work areas are not productive. To solve this, Lean offers a standard approach to housekeeping with the 5S techniques – Sort, Set, Shine, Standardise and Sustain. As well as the physical implications of clutter interfering with work and dirt compromising quality, people are generally happier in a clean and tidy environment and therefore more inclined to work hard with due care and attention.

3. Categorise and file correspondence as you receive it

The individual items within the Lean 5S are:

4. Keep a ‘to-do’ list

1. Sort (organise)

o Add an entry on the to-do list o Complete jobs by priority o Cross items off the to-do list as they're completed o Re-write the to-do list weekly 5. Diarise all important actions and projects However, perhaps one of the most efficient ways of creating and maintaining a good working area – wider than just your desk space – is Lean management.

This is the series of steps that identify things being held in the workplace when they shouldn't, or things being held in the wrong place. For example, your office may have a large area devoted to binding equipment, guillotines, fax machines, hole-punches and laminators – some of which are needed regularly and some used infrequently. This presents several problems, including: • People are unable to find the item they need. The time spent searching is ultimately a waste. If the items needed regularly are held in a prominent position you can eliminate this waste. • Health and safety issues and trip hazards. • Cluttered items in the workplace make it harder to move around and communicate. The main element of the Sort stage is to have a critical, objective look at the area. Involving different teams or looking at each other's working areas is a good idea as people can miss weaknesses in their own workplace so a fresh outlook can help. Another practical aspect of the Sort approach involves giving each item a label that clearly says what it is, which location it is in and when it was identified there. Other items may be deemed necessary but used infrequently, so an alternative location can be found.

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2. Set (orderliness) This is a series of steps that integrate the organisation identified in the first stage; in essence a continuation of the actions described in the Sort phase. There should be a place for everything in the office and everything should always be in its place. Items should be arranged to promote efficient work flow, with equipment used most often being the most easily accessible. A good place to start is the equipment you have on your desk or in areas nearby. You can then move further afield and consider where all equipment is located, for example relocating a fax machine to enable items to be completed in one work area rather than requiring a significant movement across the office. The removal of surplus items will create space, which will be visible and facilitate the alternative layout of the area. Placement of equipment is also important; people should not have to twist or bend repeatedly to access items. Each filing cabinet or piece of equipment should be kept close to where it will be used to align the working path. This is one of the many facets that makes Lean 5S techniques unique. 3. Shine (cleanliness) The principle of the Shine stage is that people are happier and more productive in clean surroundings. It is practical too as items/areas are clean and therefore immediately ready for use. Furthermore, imagine presenting a printed contract or document that has been marked with dust or dirt. This is unprofessional and will give an immediately negative impression to the recipient. Health and safety is also an issue, such as spilling a discarded coffee mug onto live electricity or slipping in ink from a leaked printer cartridge. The objective of the Shine stage is to establish the maintenance of a clean environment as a continuous programme. Time should be dedicated to the Shine stage at frequencies depending on your office function, such as weekly or fortnightly. It can then become part of a stringent preventive maintenance programme. The successful implementation of this stage revolves around two main elements. 1. Identify who is responsible for each area of the office 2. Make a ‘Shine schedule’ that clearly states who does what and when This can also include such elements as agreeing inspections at scheduled intervals to establish how each activity within the programme is carried out. 4. Standardise (create rules) The emphasis here is on the ways in which the first three stages are maintained. The main risk associated with any improvement activity or change is that once the focus is removed and another pressing issue grabs management attention, things go back to the way they were with problems resurfacing. The Standardise stage is a set of techniques used to prevent this happening. Simple procedures can be implemented with great success, such as creating standard work instruction sheets (SWIS) that display an illustrated, step-by-step guide to how the new-fangled printer/ scanner/photocopier works. This is a good standard rule for all office machinery. Posters for all cupboards – containing equipment strategically placed

in the Sort and Set phases – not only improve working efficiency, but also prevent interruption and disruption in the office. Another broader standardisation method involves setting a schedule by which all the 5S elements are revisited on a regular basis. The first step in the cycle is a periodic review of the area, perhaps involving red tagging but certainly involving people from other areas of the business. This identifies if and where standards have slipped, for example where archive boxes are no longer being put in the remote location agreed at the outset and consequently a corridor is now blocked. The second step in the cycle is to undertake the activities as prompted by the first step. Finally, people from other areas visit and cast an impartial eye over the condition of the area. Again, an external assessor may notice things that are not clear to the people who work in the area. The use of a checklist, whereby the assessor marks the area against key criterion defined at the outset of the programme, is a good idea. For example, are the storage areas still clearly defined? Does the stationery cupboard still have clear outlines or profiles for each piece of equipment to be stored in it? Does the area meet the general standards of cleanliness? 5. Sustain (self discipline – continuous improvement) There is a fundamental difference between standardise and sustain. Standardise is the introduction of a formal review programme to ensure that the benefits of the approach are maintained, whereas sustain is the set of approaches we use to stimulate people – encouraging the application of good practice in organisation and housekeeping. There are a number of elements to any ongoing improvement activity in any business, including: • Education

o People need to understand the concepts and the techniques. Training, personal development programmes and continuous improvement schemes provide a robust forum for education.

• Communication

o We need people to be aware of what we are trying to achieve and why. Effective communication is imperative and teamwork improves participation and morale.

• Reward and Recognition

o People need to be incentivised and feel that their efforts are recognised. Whether that is some form of award (financial gain, certificate or prize) depends on the organisation, but reward and recognition can help to keep people’s interest.

• Time

o If you want the Lean 5S programme to be integrated successfully, you have to make sure people are given realistic timelines. It is unfair to delegate tasks at the same time as insisting more time is spent achieving productivity targets.

• Structure

o We need to identify what is to be done, by whom, and ensure that schedules are updated and clearly visible.

The key is to understand Lean 5S techniques as we do all aspects of other types of improvement. A bespoke programme for your own business can then be created. The elements of Lean 5S are all valuable individually but together they form a potent part of establishing good practice, working smarter and improving the area in which people spend a significant amount of their lives. November 2011 • GBM • 63

CouNTry ProFILe - TurKey

Country profile -Turkey Vast opportunities in Turkey Turkey is a young, ambitious, robust and rapidly growing market. Long established as one of the world’s most popular tourist destinations, Turkey is now emerging as a key place to do business and regional hub for overseas companies of all sizes. The figures speak for themselves. According to research by Goldman Sachs, Turkey’s economy- which increased by 11.65% in the first quarter of 2011, making it the world’s fastest growing large economy for that time period- will be the second biggest in Europe and one of the largest in the world by 2050. Turkey is also home to a skilled, well educated, quality conscious workforce. It has more young people than any of the EU’s 27 member states (over half the population is under 28). And it takes around six days to set up a business, compared to the world average of 34. Burgeoning British brands Many British global brands already enjoy a strong presence in Turkey, including Rolls Royce, Vodafone, HSBC and Tesco. Since purchasing Izmir-based supermarket chain Kipa in 2003, Tesco has been steadily expanding in the Turkish market, increasing the number of stores under the Tesco-Kipa name from five in 2003 to 131 currently; and it has ambitious plans to boost this to 150 stores by the end of the financial year. Meanwhile, British luxury retail brand Harvey Nichols opened in Turkey last year. Significantly, Harvey Nichols only has 12 overseas stores and two of these are in

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Turkey (one in Istanbul and one in Ankara). And other major UK companies are following suit. In the past year alone, RMJM (the global architecture firm), Mott MacDonald (the world’s leading consulting group) and DLA Piper, (one of the world’s biggest legal consultancies) have all opened offices in Turkey. There are more than 2,200 UK companies currently active in Turkey, and, according to figures from the Turkish Treasury, some 26,000 foreign enterprises overall. We are also seeing a growing interest in Turkey from high quality British SMEs, such as Poke London and Redmint Communications. There are a whole range of sectors where UK firms can work with Turkish counterpartsblending respective skills and expertise in areas as diverse as ICT (information and communications technology), agriculture, energy, financial and professional services, education and skills and infrastructure. Building bridges So where are these opportunities to be found? Take infrastructure. With the Turkish government committing US$60bn up to 2023 to upgrade, develop and reform the passenger and freight rail sector, there are major opportunities for Turkish construction

firms and UK counterparts in architecture and design to work together. With planned projects covering high speed lines, rail-led solutions in freight and urban transportation in major cities, there are openings for UK companies to provide expertise in multi-disciplinary consultancy (engineering design, project management and systems integration) electrification, signalling and specialist services. Significantly, Turkey’s third Bosporus Bridge, linking Asia to Europe, will be constructed and completed within five years. The tender will be released in early 2012- unlocking further possibilities for UK companies to work with local Turkish partners. Green solutions There are opportunities in the energy sector too. Annual demand for electricity is set to grow in Turkey by 6% between 2009 and 2023, and the Turkish government is privatising state owned firms and plans to introduce competition in energy production and distribution. With its extensive knowledge and experience in this area, including renewable energy, the UK is well placed to benefit from these changes. For example, with new Turkish energy performance regulations requiring

improved efficiencies and energy reductions in buildings, there are opportunities for UK companies to share expertise in designing and developing world leading energy efficient building processes to help Turkey meet its targets. Turkey also adopted an environmental law in 2006 to bring its environmental regulations in line with EU standards. This process, which will take around ten to fifteen years to implement, is creating a burgeoning market for environmental infrastructure and related technologies that is expected to be worth some $96bn in 2024. And the UK, which is rapidly becoming a global hub for leading low carbon solutions, can offer Turkish businesses a broad spectrum of bespoke, cost effective and innovative low-carbon technologies that can be tailored to local legislation and fiscal drivers. Meanwhile, the Turkish government is planning to develop Istanbul as a regional financial centre and UK companies can play a key part in helping Turkey to achieve this. Partnership opportunities can be found in accounting, financial investment, insurance, legal services and qualifications, all areas where UK businesses can work closely with Turkish counterparts in the development of new products and solutions. Greatest show on earth And in the world of sport, while the strategic and cohesive planning of London 2012 is setting a precedent for future hosts, the UK can share its knowledge and experience of preparing and delivering the Olympic and Paralympic Games. Turkey hosted the 2011 Winter University Games in January 2011 and it has also bid to host the 2020 Olympic Games, unlocking considerable potential for mutual working. And there are opportunities beyond Turkey too. Turkey offers a hub from which to reach the Middle East, North Africa and Central Asia, as well as most of Europe- all within a maximum of four hours flying. Turkish companies have long experience of working effectively in these markets, and British companies can take advantage of this by working in partnership with them to extend their range. First steps So how do UK firms go about doing business in Turkey? One way is through UK Trade

& Investment (UKTI), the government department that helps UK firms do business overseas and supports overseas firms to set up or expand in the UK. Because every enterprise is unique, UKTI tailors its services to suit specific needs, from export training and networking opportunities to providing overseas contacts and bespoke market reports, including its Overseas Market Introduction Service (OMIS). Succeeding in Turkey Through its OMIS service, UKTI has helped hundreds of UK companies to access new markets, Belfast-based Devenish Nutrition being one of them. Devenish is a leading edge agri-technology company, specialising in the research, development and quality pre-mixes for pigs, poultry, horses, ruminants and pets. Devenish already exports to some 30 countries around the world. In January 2010, it decided to take a closer look at Turkey and find a local distributor that would have the contacts necessary to get the Devenish brand well established. Having already worked with regional development agency Invest Northern Ireland and used UKTI’s OMIS when researching opportunities in the Far East, Devenish choose to commission UKTI again when looking into Turkey. UKTI’s brief was to help Devenish qualify the list of potential distributors that it already had and identify others. When Devenish went to Turkey in March 2010, UKTI dealt with the logistics of their visit, including organising a programme of meetings for them. On returning home, Devenish continued discussions with ANC, one of the companies it had met and in September 2010, the two companies signed a distribution agreement. Turkish company ANC has already registered some of Devenish’s range and continues to expand the list of products it will offer locally. Through its network of international trade teams (ITTs) at overseas posts, UKTI help firms navigate the issues that come with entering new markets. As well as providing general help on all aspects of exporting, the ITTs run a wide range of roadshows, seminars and other events in Turkey and worldwide, working

in conjunction with their counterparts (international trade advisers) in the UK to provide reach-back support. Overcoming obstacles Being realistic, there are challenges too and things can go wrong in any market. Unfamiliar laws, regulations and language can cause problems. The UKTI team in Turkey, working with the Turkish authorities, local business organisations, legal and business professionals, and supported by a powerful home network in the UK, can provide support and advice to ensure resolution and a positive outcome. How UKTI can help Even if a company is not sure whether it is ready to trade overseas, UKTI’s Passport to Export programme will assess its readiness for international business, develop its export potential and bring it to international trade capacity. The programme offers new and inexperienced exporters free capability assessments, support in visiting potential markets, mentoring from a local export professional, customised and subsidised training and ongoing support once up and running. And once the initial homework has been done, UKTI can help with the business of starting afresh in a new country through its range of market visits and overseas missions, sector-specific and networking events incountry. Various trade shows and exhibitions also take place in Turkey throughout the year and can be an excellent way to meet potential customers face to face. As Turkey continues to build its reputation as a place to do business, UK companies should seize the ever-growing opportunities that are emerging in this flourishing market, sharing skills and expertise and playing its part in the country’s bright future.

If you would like to find out more about doing business in Turkey, please contact: Akoto Agyeman Country manager - Turkey +44 (0)20 7215 4741 akoto.agyeman@ukti.gsi.gov.uk

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CouNTry ProFILe - TurKey

Developments in Turkish financings Unlike many financial markets around the world, the Turkish market is currently very active, with well-capitalised domestic financial institutions providing plenty of liquidity for the ambitious plans that local companies have for continued development and growth. All the financial data for Turkey looks impressive- high growth, low inflation and a recent upgrade to investment status for local currency by Standard & Poor’s. While there have been muted concerns regarding the economy overheating, a recent depreciation in the value of the lira and external concerns over political tensions within Turkey and some neighbouring countries, these do not appear to have dented continued growth or enthusiasm for future projects. Following an early financial crisis in 2001, coupled with an overhaul of the regulatory regime, local banks have taken time to get their houses in order, and many are still in the process of fundraising through a variety of innovative structures, including sukuks. The government has many plans for the future, including large infrastructure, healthcare and energy projects; however, local banks alone do not have sufficient liquidity to finance all these projects. While many international institutions are showing great interest in investing into Turkey, some have yet to dip their toes in, instead waiting for the ideal opportunity and market conditions. Partly in response to the importance of attracting international capital to further boost the economy and the government’s planned projects, the Turkish parliament enacted a new Turkish Commercial Code (TCC) and new Turkish Code of Obligations (TCO) in January 2011, overhauling the previous legislation that had been in place for over 60 years. Much has been written of this new legislation in general and will continue to be written until well after both pieces of legislation come into effect in July 2012. But does the legislation make financing projects and businesses in Turkey more attractive to international financing institutions? While most of articles have focused on

the corporate aspects of the new codes, it is important to consider whether this new legislation will assist future financing projects. For the most part, the legislation is a positive step. It brings the corporate regime more in line with recognisable regimes from across the EU, and promotes transparency and international accounting standards. The new CC simplifies shareholding structures by allowing single shareholder companies to exist, moving away from the traditional family-run businesses where a myriad of minority shareholders had to be brought to the negotiation table. This makes the completion and financing of transactions much more certain and removes the execution risk. More importantly for financing structures, it makes the taking of share security much simpler, avoiding the need to seek security from nominee shareholders not involved in the business where guarantees could be held void. The new CC also removes lingering doubts as to whether a share pledge over registered shares could be easily enforced in a disaster scenario. Arguably, directors currently have the discretion to refuse to register a share transfer (including on an enforcement) limiting a financial institution’s ability to swiftly enforce a share pledge and sell the asset. The new CC requires the directors to find “just cause” to refuse to register, and only if the company’s articles allow the directors to exercise such veto rights. As with all financings, due diligence needs to be undertaken to ensure the lender is well protected, but this move is a step in the right direction. On the downside, there is a related provision allowing the directors to seek an alternative purchaser (either an existing shareholder or a third party) to acquire the shares at market value (set by the court). While this could slow down restructurings, ultimately the lending institutions will retain the ability to sell. Similarly, there are aspects of the new CC seeking to prevent a parent company inflicting losses on subsidiary undertakings by transferring assets, reducing or

Tamsyn Mileham tamsyn.mileham@dlapiper.com DLA Piper Danışmanlık Hizmetleri Avukatlık Ortaklığı Büyükdere Caddesi No: 127 Astoria Tower A, 5th Floor 34394 Esentepe

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Istanbul, Turkey T +90 212 340 05 86 M +90 533 235 89 97

transferring profits, or, more crucially, requiring the subsidiary to make payments on behalf of the parent company. These provisions can be relied upon by minority shareholders or creditors of the subsidiary business. The scope of this provision could prove to be difficult for traditional acquisition financing structures whereby the assets of the subsidiaries are used to secure the borrowings of the parent undertaking. Some comfort can be taken from the provisions reducing or removing minority shareholdings in corporates, but this is one provision that we will all be interested in reviewing as the legislation is discussed and fine tuned over the coming year. The biggest change for local financings will be those required to be made to financing general terms, conditions and sureties. While such terms and conditions have been used frequently in domestic financings, they now need to be examined in detail to ensure the terms are not unduly onerous. Any terms and conditions that breach the new CCO carry a heavy penalty- they will become void and unenforceable- so local banks need to make sure they are fully in compliance with the legislation ahead of the implementation date to ensure that they do not inadvertently enter into financing structures that become void. In such a fast-paced market, both legal market terms and financing structures change quickly. At DLA Piper Foreign Attorney Partnership, working with YükselKarkınKüçük, we are privileged to be working with both local and international institutions on both the borrowing and the lending side, and are therefore ideally placed to advise on the impact of the new legislation and the swiftly moving economy. As familiarity brings great comfort, these new moves will encourage international institutions to investigate local projects more closely.

Turkish M&A and private equity: Opportunities and considerations 2011 has been a great year for M&A and private equity transactions so far. Deal numbers have already eclipsed 2010 figures and deal value has already increased this year to the highest level since the failure of Lehman Brothers in 2008. There have been two $2.1bn transactions this year: TPG and Actera’s disposal of Mey Içki (Turkey’s largest spirits producer and distributor) to Diageo plc; and, the merger between Turkey’s Genel Energy and Vallares Plc (an investment company run by former British Petroleum CEO Tony Hayward). As the eye-catching exit of TPG and Actera shows, private equity has been involved in many of the Turkish M&A transactions this year and it is a tribute to the maturity of the Turkish market that activity has been at different deal sizes and stages of fund cycle. Other private equity disposals of note were BC Partners privately placing a 17.4% stake in Migros (Turkey’s largest supermarket conglomerate) for $515m and selling subsidiary discount supermarket brand Sok for $380m. There has also been a host of mid market acquisitions in sectors, such as education (Carlyle and Turkven), pharmaceuticals (NBGI) and infrastructure (CVCI). In addition, despite choppy global economic conditions, new Turkey-centric funds in the $500m+ range were announced by Actera and Cerberus/Garanti Securities. All of this shows a healthy investor appetite for Turkish M&A deals, fuelled by Turkey’s high economic growth and consumer confidence combined with low levels of household debt. In a legal environment where two major pieces of legislation affecting Turkish companies and contractual relationships - the new Turkish Commercial Code and Code of Obligations - were enacted earlier this year and will come into effect in July 2012, what legal issues should companies and funds bear in mind when investing in Turkey? Four important high-level considerations that companies and funds should be aware of when doing Turkish M&A deals are as follows: (1) Transaction timing issues and costs: Although Turkish Competition Board thresholds have recently been relaxed, Turkish M&A transactions very rarely have simultaneous signing and closing. Acquisitions in regulated sectors such as banking, energy, insurance, media and mining also require regulatory pre-consents. This will naturally extend the timeline and cost of an acquisition. Acquirers should also consider how to deal with Turkish stamp duty, currently charged on 0.825% of the highest figure stated in each original of a relevant transaction document.

(2) Security is important: Legal risks arising from due diligence are often difficult to ‘bottom out’ given limited due diligence documentation and a lack of detail as to sanctions in relevant legislation. In particular, tax risks often present potential liabilities that are difficult to precisely define. Therefore, for a buyer, contractual protections are important, and are often accepted by sellers, but need to be secured. Post-closing adjustments are one important way of securing price, but escrow accounts or other securities, such as irrevocable and unconditional letters or guarantee or share pledges, are also helpful tools. The new Turkish Commercial Code contains a number of provisions that promote transparency (such as requirements for Turkish companies to publish information on websites and comply with International Financial Reporting Standards) that will help reduce the impact of this issue. (3) Beware of asset transfers: Asset transfers are less useful Turkish transactions than in other jurisdictions. There are two areas of concern here. First, under the Turkish Code of Obligations, if all or a substantial part of the assets of a company are transferred to the transferee, all liabilities of the transferor relating to the transferred business and existing before the transfer date may follow the transferee. Second, there are various issues with the transferability of particular types of assets (eg, if a Turkish contract is silent as to assignability the general rule is that the contract cannot be assigned without the consent of the counterparty). (4) Shareholders’ agreements - reserved matters and exit mechanisms: Although the new Turkish Commercial Code expands minority shareholder rights, minority investors still do not receive much protection under Turkish law. Therefore, reserved matters or veto rights become important. Minority investors need to be careful how they document these rights and they will need to be split into ‘board’ and ‘shareholder’ reserved matters if they are to be correctly reflected in a company’s articles of association. In addition, ‘deadlock’ mechanisms may be difficult to enforce given ongoing legal debate as to whether it is possible to obtain specific performance for breach of share transfer obligations. And this debate is also relevant for share transfer provisions relating to ‘exit’ mechanisms, which are of key importance in private equity investments. The new Turkish Commercial Code contains two provisions that will help these issues. First, single shareholder companies are possible (previously the minimum number of shareholders in a Turkish joint stock company was five), which will clear up

Jonathan Clarke jonathan.clarke@dlapiper.com DLA Piper Danışmanlık Hizmetleri Avukatlık Ortaklığı Büyükdere Caddesi No: 127 Astoria Tower A, 5th Floor 34394 Esentepe Istanbul, Turkey T +90 212 340 05 84 M +90 533 232 3639 Cüneyt Yüksel cyuksel@yukselkarkinkucuk.av.tr YükselKarkınKüçük Attorney Partnership Büyükdere Caddesi No: 127 Astoria Tower A, 6-26-27 34394 Esentepe, Istanbul, Turkey

group structures and simplify share transfer mechanisms or share pledge security. Second, where previously a board could theoretically refuse to register a share transfer for any reason, it now needs to provide an ‘important’ reason for doing so (which must be clearly set out in a company’s articles). In summary Both trade and private equity investors are looking to capitalise on M&A investment opportunities in Turkey in a legislative environment that is becoming increasingly investor-friendly. Ho wever, Turkish deals have their own peculiarities and it is important that investors are aware of these as early as possible in a transaction so that they can negotiate them effectively. At DLA Piper Foreign Attorney Partnership, working with YükselKarkınKüçük, we have a strong track record of helping local and international corporates and private equity funds make their investments in Turkey. Therefore, we are in a good position to help investors capitalise on the positive signs from the Turkish market.

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CouNTry ProFILe - TurKey

Merger and acquisition control under Turkish legislation A major issue facing M&A lawyers, irrespective of whether they are in Europe, North America or elsewhere, is obtaining competition clearance for a transaction. While the competition legislation governing M&A control is at a highly advanced stage in developed countries (such as European Union or the United States), it is still struggling to make its baby steps in developing countries (Bolivia, Paraguay, El Salvador, etc). Between these two extremes, Turkey adopted the Law on Protection of the Competition (Law No 4054- LPC) on 7 December 1994, the first national legislation governing M&A control and setting forth sanctions and remedies for anti-competitive behaviour. The main purpose of the Competition Board (CB), established by the LPC, was the protection and the development of effective competition in the relevant markets. Through communiqués issued between 1990 and 2000, the CB shaped the way M&A control was implemented in Turkey. By placing most of its attention on the protection of competition, the most effective tool and precondition for the establishment of a free market in the way described by Adam Smith in the 18th century, the CB aimed to filter transactions likely to injure the competitive structure of the markets. It did so by implementing an active control of transactions ranging from simple acquisitions to disguised transfers of control under long-term lease agreements. The first significant accomplishment of the CB in this respect was the issuance of the Communiqué No: 1997/I regarding Mergers and Acquisitions Requiring the Approval of the CB, which was, to a certain extent, based on the By-Laws 4064/1989 of the European Council (1997/I). In accordance with the definitions in article 2 of 1997/I, the takeover of assets or partnership interests in an enterprise, in whole or in part, by another person or enterprise was within the scope of 1997/I. According to article 4 of 1997/I, if as a result of a merger or acquisition listed in article 2, the combined market share of the parties in the relevant market was to reach 25%, or if the combined turnover of the parties in the relevant market would be TRY 25m, such transaction would be subject

to the authorisation of the CB and the filing of an application would be required. Even a foreign transaction that did not directly involve any Turkish entity might be subject to a notification process in Turkey, if, as a result of such transaction, the competition in the relevant good or service markets within Turkey were affected pursuant to article 3 LPC. M&As that were not generating a dominant position or did not strengthen an existing dominant position and consequently did not significantly prevent an effective competition, were usually permitted by the CB. Although it had set up a consistent and reliable framework for M&A control, the definitions and thresholds provided for under 1997/I had several major inconveniences. First, the alternative threshold mechanism, triggered either in terms of turnover or market share, imposed the necessity of defining the relevant market as a prerequisite for the calculation of the market shares; yet this was far from an easy task. As the CB reserved the sole discretion to define the relevant market, many companies that were unsure as to whether their own market definition was accurate, proceeded to competition filings just to avoid the risk of being imposed fines a posteriori for not having asked the CB’s permission for the relevant transaction. Second, the necessity to proceed with a filing irrespective of whether the transaction had in fact impacted competition in the relevant market. Finally, as the ancillary restraints were not directly covered by 1997/I, the CB had to specifically address these issues for each transaction in its decisions and make an assessment on whether they would impair the competition of the concerned market. In the attempt to remedy the foregoing issues and keep up with several amendments implemented in European legislation after the issuance of 1997/I, the CB published the Communiqué No: 2010/4 regarding Mergers and Acquisitions Requiring the Approval the CB on 7 October 2010 (2010/4) replacing 1997/I as of 1 January 2011. 2010/4 was considered a positive development as it cured many of the often criticised deficiencies of 1997/I. First, it imposed a new threshold

system that excluded the market shares mechanism. According to the new system, a merger or acquisition must be notified to the CB if: the combined turnover of the parties to the transaction exceeds TRY 100m in Turkey and at least two of the parties’ respective turnovers exceed TRY 30m in Turkey; or, the worldwide turnover of one of the parties to the transaction exceeds TRY 500m and at least the turnover of one of the other parties exceeds TRY 5m in Turkey. Another improvement introduced by article 7 of 2010/4 is the contingency of the filing requirement on the existence of an affected market, except for joint-venture transactions. While under 1997/I, the concerned parties were required to seek the CB’s permission once the thresholds were met, irrespective of whether the competition was impaired in a particular market, 2010/4 annulled this rule and stated that there will be no filing unless there is an affected market. Another significant amendment introduced by 2010/4 relates to the ancillary restraints and their assessments by the parties to the transaction. Article 13 of 2010/4 provides that ancillary restraints directly related to the implementation of the transaction such as non-competition or confidentiality, will also be covered by the CB’s decision and the concerned parties will have the authority to decide whether all other ancillary measures implemented by the transaction are within the boundaries of the CB’s decision. Some other Some other major amendments introduced by the Communiqué No.2010/4 are (i) the possibility to file a notification before the execution of the final agreements, (ii) a clearer definition of intra-group transfers which do not result in a change of control, and (iii) two different notification forms to be used depending on the transaction's potential impact on competition. In keeping with the requirements of Turkey’s candidature to join the EU, Turkish legislation has been going through a significant reform process for the past few years. A bill of amendment to the LPC is currently before the parliament for the purpose of ensuring increased compliance with European legislation on the subject.

Ak Hukuk Bürosu Sehnaz Gungor Senior associate Tel: +09 212 211 72 00 sgungor@ak.av.tr www.ak.av.tr

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Ak Hukuk Bürosu Attorneys and Counsellors at Law Maya Akar Center Büyükdere cad. No:100-102 K: 23 D: 89 Esentepe 34394 Istanbul, Turkey

From a legal perspective, Turkey is not an emerging market Most commonly ranked as the world’s 16th largest economy, Turkey is not usually included amongst the well-known fastgrowing BRICS countries. This is certainly mainly due to the relative size of the country (as compared with extremely populated countries such as India or China), but some analysts do not hesitate to include Turkey in this list, based on its recent economic performance and, to a certain extent and from a different perspective, its new trend of nonaligned strategy in terms of foreign policy. In recent years, Turkey appears to have gained confidence in its capacity to become a major player in the world economy. The financial crisis has not hit Turkey as hard as its neighbours, and most commentators continue to laud the quality of the Turkish banking system and Ankara’s macro-economic policy, which has been recently reflected in Turkey’s upgrade by international agencies. Nevertheless, threats have started to appear. Mainly due to the current global turmoil, the country’s exchange deficit and changes in the currency level of the Turkish lira, Turkey recently announced that growth in 2012 should be limited to 4%, compared with 7.5% in 2011. Despite this, the overall picture remains quite satisfactory compared to that of its main neighbours, and foreign investors’ appetite for the country has been strong until now. It therefore seems to be a good opportunity to try to gain an insight into the Turkish legal framework, and its recent evolutions, from an external perspective. In this respect, one should note that over the last year, the Turkish legal system has been continuously improved as part of a coordinated move that has been expected for several years. In 2011 and 2012, Turkey will, in particular, implement a new code of obligations, a new civil procedure code, and a new commercial code. Furthermore, negotiations should start soon with regard to the adoption of a new constitution.

most important development. All Turkish actors are now actively preparing to comply with its provisions. Apart from corporate governance and financial transparency issues (with financial audits becoming mandatory for joint-stock companies), which will require adaptations from all companies in the country, one should note that this new code will bring the questions of “corporate interest” of companies (as opposed to the interest of shareholders) and “financial assistance” into the spotlight in a move that brings business practices into line with those of the EU countries. In particular, this may have a significant impact on the structuring of private equity transactions- a market that is growing, albeit slowly, in Turkey. This may also impact the level of exigencies of the Turkish Capital Markets Board towards companies on the Istanbul Stock Exchange (a communiqué relating to the Determination and Implementation of Corporate Governance Principles was enacted in October 2011, applicable to Index 30 companies). A new Civil Procedure Code has also been enacted, which sets out a number of legal principles that have been discussed over the years by Turkish scholars. The main purpose of this new code is to provide faster trials in line with principles of a decent state of law. It will clearly bring additional efficiency to legal proceedings in Turkey, even if no fast-track proceeding has been included in the law. The fact that the role of judicial experts is now more clearly defined and that courts of appeal should be implemented soon will also provide additional reassurance for foreign stakeholders involved in litigation in Turkey. Of course, most of the actors in the Turkish

economy seem to be still waiting for additional improvements in specific sectors, such as energy (although new regulations have been enacted recently), infrastructure projects and public private partnerships (PPPs) (the new law is expected to be approved before the end of the year and would, in particular, extend PPP models to previously neglected domains). Both the legislation itself and the quality of its interpretation have also been improving over the years. This can easily be seen through the most recent decisions of the Turkish Competition Board, which has become increasingly active in the control of local players, while keeping a balanced and sophisticated approach. In this respect, recent judgments such as a decision published in July 2011, which approved a long-term bancassurance relationship, appear to be in line with the latest EU trends. This professional approach appears to be shared by most Turkish administrative bodies, and allows local players to enter into transactions in line with international standards (eg, in the financial sector, the recent issuances of covered bonds and the potential return of securitisation transactions to the market are encouraging signs). As a result, in terms of its legal system, Turkey appears to be much more a pure old Europe country than an emerging one. In this respect, investing in Turkey may be much more secure than investments in some of its BRICS competitors. And oddly, now that Turkish companies are increasingly eyeing up investment opportunities in neighbouring countries, they appear to be somehow disappointed not to find similar levels of legal comfort in some of these countries.

From a business perspective, the new Turkish Commercial Code, which will come into force by the end of June 2012, is the

Gide Loyrette Nouel Jean-Gabriel Flandrois Partner Tel: + 90 212 385 0400 gln.istanbul@gide.com www.gide.com

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eNVIroMeNTAL LAW

nvironmental law: A prerequisite for sustainable development and for business The starting point of environmental legislation worldwide and in the EU was the Conference of the United Nations in Stockholm 1972. Over the past four decades, environmental law has gained a crucial role in policy and economics. In numerous countries, also in emerging countries throughout the world, new environmental legislation has been enacted, often with the support of international cooperation. Environmental law is, first of all, important for the protection of the environment. However, it also provides legal certainty and is thus a precondition for economic investment as well. Last but not least, environmental law offers business opportunities. Therefore, for the business sector too, the acquirement of and the compliance with environmental law is an essential condition for economic success today.

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The objective of environmental law is the implementation of a coherent environmental policy aiming at, according to the Treaty of the Functioning of the EU (art 191), preserving, protecting and improving the quality of the environment, along with protecting human health and guarantying a prudent and rational utilisation of natural resources. Today, basic principles of environmental law, such as the polluter pays principle, the prevention and the precautionary principle, are enshrined in the EU treaties, in most national legislations, as well as in numerous international conventions, such as the United Nations Framework Convention on Climate Change or the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal. The polluter pays principle allocates the costs of pollution prevention and control measures along with the costs for the cleanup of damage

to the environment to the polluter. The precautionary principle is the most recent and also the most controversial one. Principle 15 of the Rio Declaration (1992) reads as follows: “Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.” Consequently, environmental protection measures can be justified under the precautionary principle despite scientific uncertainty and clear cause effect relationships are not (yet) established. These principles are substantiated and tightened through various instruments. In the beginning of environmental politics, the most important one was the ‘commandand-control’ law; it had important results in the past- ‘classical’ air pollution (SO2, CO, particles) was

dramatically reduced throughout the EU, just as the quality of water resources being improved. On the other hand, challenges like climate change or the extinction of species cannot only be solved through classical legal instruments. Economic instruments like tradable permits, liability rules or green taxes, therefore, obtained more importance over the past years. Finally, ‘soft’ instruments, such as environmental management systems, life-cycle assessments, voluntary agreements or product labelling, are more and more commonly used by companies on a voluntary basis in order to improve their environmental performance. In the past, the business sector used to regard environmental law as a hurdle to investments or economic activity in general. Today, this perception should be substituted or at least complemented by a more proactive approach. Environmental law also offers market opportunities and chancescompanies, well informed about the existing legal framework, but also about the laws not yet in force but in the political pipeline, may have a competitive advantage. In fields like renewable energy, water treatment or waste recovery, law is even the most important promoter for economic progress. Without instruments like feed-in tariffs or quotas subsidising renewables, the change in energy policy would not exist. Another example: the phase out of chemical substances certainly has a negative impact on the companies producing these substances, but offers market chances for those producing substitutes. The perspective on environmental law, therefore, should be more orientated towards these opportunities instead of lobbying against new laws. Political and legal trends, such as the phasing out of nuclear energy in Germany, should be much more

anticipated by companies. Within the EU, the knowledge of environmental law for companies is a must. Environmental management systems like ISO 14001 or the European Environmental Management and Audit Scheme (EMAS) do not only require the compliance with environmental regulation, but also the implementation of a system that guaranties the permanent follow-up of new regulation. Still, for companies seeking business opportunities in environmental technologies in emerging countries, information on the legal framework, including environmental law, is an essential step. A research project of two German university institutes has set up an information tool in order to provide this information for four pilot countries (www. clima-pro.de- in German only). Environmental law is continuously evolving. In order to exchange ideas, compare best solutions and improve communication, a

group of lawyers from various countries decided to initiate the Environmental Law Network International (elni) in 1990 for the promotion of international communication and cooperation worldwide. Since then, elni has grown to a network of about 350 individuals and organisations from all over the world. elni coordinates a number of different activities in order to facilitate the communication and connections of those interested in environmental law around the world. It publishes the elni Review, a bi-annual, English language law review. elni Review is published by Öko-Institut (the Institute for Applied Ecology), IESAR (the Institute for Environmental Studies and Applied Research, hosted by the University of Applied Sciences in Bingen) and sofia (the Society for Institutional Analysis, located at the University of Darmstadt). The Coordinating Bureau is currently hosted by the University of Bingen (www.elni.org). elni provides valuable information through its activities and its members.

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deal directory Acal PLC: Acquisition On 5 October 2011, Acal plc, the European specialist provider of technology services, announced the acquisition of 100% of MTC Micro Tech Components GmbH and its affiliate EMC Innovation Limited (togetherMTC), for an upfront cash consideration of €2.4m (£2.1m) before expenses. Additionally, a deferred cash consideration of up to €1.1m (£1.0m) will be payable in January 2013 subject to the business achieving agreed growth targets over the period to 31 December 2012. MTC is a specialist provider of Electromagnetic shielding products to the European and Asian industrial electronic markets and has been acquired from Mr G Bächer.

build leadership positions across all global markets in line with the company’s value and values strategy.

AVEVA Group Plc: Acquisition On 10 October 2011, AVEVA announced that, through its wholly owned subsidiary AVEVA Solutions Limited, it completed the acquisition of Z+F UK Limited (a subsidiary of Z+F GmbH) on 7 October 2011 for a net consideration of £6.3m on a debt-free/cashfree basis, satisfied from the company’s existing cash resources. As part of this acquisition of Z+F UK, Z+F GmbH has also been granted a licence to continue to distribute the Z+F UK software together with Z+F GmbH’s laser scanning hardware products.

Aegis Group Plc: Acquisition On 3 October 2011, Aegis Group plc, one of the world’s leading media and digital marketing communications groups, announced it had acquired sister companies Dubblera and Smicker, two leading Swedish customer relationship marketing (CRM) and direct marketing agencies from DM-Konsult AB (a marketing consultancy). As at 31 December 2010, Dubblera and Smicker had gross assets of €824,000. The acquisition offers Aegis a leading position in end-to-end relationship marketing in Sweden, enabling the existing operation, Lentus, to employ a full communication approach with all of Scandinavia in view. Following the acquisition, Dubblera and Smicker will become part of the Aegis Aztec network.

Akzo Nobel NV: Completion of acquisition On 7 October 2011, AkzoNobel completed its acquisition of more than 95% percent of the shares of coatings manufacturer Schramm Holding AG. The deal was first announced in June 2011. In addition to the Schramm deal, the company expects to finalise the acquisition of Korean SSCP’s coatings business as of 1 November 2011. These acquisitions underline AkzoNobel’s determination to accelerate growth and to

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Hathaway family of companies,” said Warren Buffett, Berkshire Hathaway CEO. “We expect to see continued strong performance from the company as it executes its growth strategies.”

AZ Electronic Materials: Acquisition On 4 October 2011, AZ Electronic Materials S.A., a leading global producer and supplier of high quality, high-purity specialty chemical materials used in the manufacture of integrated circuits and flat panel displays, announced that it had acquired the polysilazanes coatings and resins business of Clariant AG, for a cash consideration of approximately €4m. Geoff Wild, CEO of AZ, commented: “This small but strategically important acquisition allows us to consolidate our global position in polysilazane technology and provides us with access to key raw materials necessary for our planned growth in the LED and solar markets.”

Berkshire Hathaway completes acquisition of Lubrizol On 16 September 2011, Berkshire Hathaway Inc announced the completion of the acquisition of Lubrizol for $135 per share in an all-cash transaction. The transaction, having been overwhelmingly approved by Lubrizol shareholders and having met all US and non-US regulatory filing requirements, is valued at approximately $9.7bn, including approximately $0.7bn in net debt. “Lubrizol is a great addition to the Berkshire

Bunzl PLC: Acquisition On 26 September 2011, Bunzl plc, the international distribution and outsourcing Group, announced two further acquisitions together with the completion of the acquisition of Majestic Products. The Company acquired Ideal Global Sistemas de Higiene Ltda. Based in São Paulo with three warehouses throughout Brazil, Ideal is a leading supplier of cleaning and hygiene consumable products to facilities management companies, contract cleaners and other customers in the industrial, healthcare and education sectors. At the beginning of September, the Company acquired D-Care BV. Based near Utrecht, the business is principally engaged in the distribution of medical disposable products to hospitals and other healthcare customers throughout the Netherlands. Finally, the Company has completed the acquisition of Majestic Products BV and its associated companies following clearance of the transaction by the competition authority in the Netherlands.

Charles Taylor Cons: Acquisition of Alico IoM Limited On 10 October 2011, CTC announced that it had entered into an agreement to acquire the issued share capital of Alico IoM, an international life assurance company in runoff, from American Life Insurance Company. CTC will rationalise the operations of Alico IoM by transferring its business into LCL International Life Assurance Company Limited, CTC’s wholly owned Isle of Man-registered closed life business, and integrating its management into CTC’s life insurance services company, LCL Services (IOM) Ltd. The acquisition is subject to regulatory approval by the Isle of Man Insurance and Pensions Authority. The business transfer into LCLI is subject to court approvals.

Compass Group Plc: Acquisition On 3 August 2011, Compass Group agreed to acquire the entire issued share capital of Obasan Gıda İnşaat Sanayi ve Ticaret Anonim Şirketi, subject to obtaining clearance from the board of the competition authority of the Republic of Turkey. The necessary clearance has now been received and the acquisition completed on 3 October 2011. Compass Group is a world leading food and support services company that specialises in providing food and a range of support services across the core sectors of business & industry, defence, offshore & remote site, healthcare, education, sports & leisure and vending with an established brand portfolio

Domino Printing: Acquisition On 6 October 2011, Domino Printing Sciences Plc completed the purchase of 88% of the issued share capital of Kameleon Source Codes AS, taking its shareholding in the company to 98%. Kameleon is based in Norway and has developed software that enables the factory-wide monitoring and control of printing equipment.

acquired 100% of the issued share capital of AW Flow Holdings Limited and its subsidiary undertakings, a UK-based specialist valve manufacturer for the oil and gas sector. The consideration is £24m on a debt-free/ cash-free basis, funded entirely from Hamworthy’s own cash reserves. £21.6m was paid on completion with a further £2.4m of deferred consideration payable over the next two years.

Hikma Pharmaceutical: Acquisition On 3 October 2011, Hikma Pharmaceuticals Plc, the fast growing multinational pharmaceutical group, announced that it had acquired 63.9% of Société de Promotion Pharmaceutique du Maghreb S.A. from a consortium of shareholders, comprising existing management, institutions and related parties. The acquisition was for an aggregate cash consideration of $111.2m (MAD 912.8m) and will launch a mandatory tender offer for the remaining 36.1% of the Company.

The shares were purchased from KMH Holding AS, Litjguten Holding AS and Fat AS for consideration of NOK 12,232,907 (approximately £1,355,000) paid in cash. The remaining 2% of the shares are retained by Fat AS and will be sold to Domino over the next three years at a price dependent on the success of the Kameleon business and subject to a maximum of £423,692.

Leni Gas & Oil PLC: Major acquisition in Trinidad

Golar LNG Partners L.P.: Acquisition of Golar Freeze

The assignment of the IPSC requires the approval of both Petrotrin and the Trinidad and Tobago Ministry of Energy and Energy Affairs. The application process was started in August and is anticipated to take up to a further three months to conclude.

On 6 October 2011, Golar LNG Partners LP announced that it had entered into an agreement to acquire the companies that own the floating storage and regasification unit Golar Freeze from Golar LNG Limited for a purchase price of $330m. The transaction is expected to close before the end of October 2011. The acquisition will be financed by the assumption of approximately $108m of senior bank debt and with vendor financing provided by Golar LNG in the form of a loan in the amount of approximately $222m.

Hamworthy plc: Acquisition of AW Flow Holdings On 4 October 2011, Hamworthy, a world leader in the design and manufacture of innovative marine and offshore fluid handling systems, announced that it had

On 3 October 2011, Leni Gas & Oil plc (LGO) announced the acquisition of Goudron E&P Limited, a company that holds exclusive rights to acquire the incremental production service contract (IPSC) for the Petroleum Company of Trinidad Limited-owned Goudron Field in onshore south-eastern Trinidad.

LGO has paid Sorgenia US$1m to acquire 100% of the outstanding shares in GEPL. Contingent on the successful completion of the transfer of the IPSC to LGO, a further consideration of US$1m will be paid to Sorgenia International BV for the geological, reservoir engineering and environmental studies conducted on the field. Conditional payments to Sorgenia International BV will also be payable when and if field production reaches 1,000bopd (US$1m) and 2,000 bopd (US$2m). Based on initial field redevelopment plans these levels will be reached in early 2013 and in 2014 respectively. A payment of up to a maximum of US$4m will also be due on transfer of the IPSC

LXB Retail Props Plc: Acquisition at South East Ayr On 4 October 2011, LXB Retail Properties Plc, the real estate investment company, announced that it had acquired 118 acres at Corton, South East Ayr from John Lynch (Builders) Ltd. The purchase price is £7.075m with an additional £2m payable on signing of a section 75 agreement relating to the grant of a satisfactory planning permission. Tim Walton, CEO of LXB Manager LLP, said: “This acquisition represents a unique opportunity to create a foodstore anchored District Retail Centre investment as part of a major strategic development supported by South Ayrshire Council. South Ayr is an aﬄuent area of Scotland and a foodstore in this location will be a very strong addition to LXB’s portfolio of retail investments.”

Metric acquires Pierpoint Retail Park, King’s Lynn Metric Property Investments plc, the UK specialist retail real estate investment trust, announced that it had acquired Pierpoint Retail Park, King’s Lynn from Black Pearl Investments. The purchase price is £15.1m (net of acquisition costs), reflecting a net initial yield of 6.3%. The Company will use its existing financial resources to finance the purchase. Andrew Jones, chief executive of Metric, commented: “Pierpoint Retail Park is a terrific opportunity to acquire an asset off low passing rents with high occupier contentment. As leases expire we will aim to increase our total rental income by reconfiguring and sub-dividing some of the larger units into smaller, more attractive premises as well as looking to add new accommodation onto the site.”

NWF Group PLC: Acquisition of Swan Petroleum Ltd On 3 October 2011, NWF, the specialist agricultural and distribution business, announced the acquisition of Swan Petroleum Limited, a 42 million litre depot-based fuel distribution business operating in the north west of England. The acquisition will increase NWF fuels division’s volume by 10% and enhance NWF’s current penetration across the northwest and North Wales. The consideration of £2.75m is on debtfree, cash-free basis with a normal level of working capital and will be subject to finalisation of agreed completion accounts. The consideration will be satisfied through the Group’s existing bank facilities and the acquisition is expected to be earnings

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enhancing in the first full financial year of ownership.

Pinnacle Telecom Group: Acquisition On 10 October 2011, Pinnacle Telecom Group plc, the provider of cloud-based technology solutions, announced, through its subsidiary Pinnacle Cloud Solutions Ltd (Pinnacle), it had acquired the entire share capital of RMS Managed ICT Security Limited, a leading provider of IT security software and consultancy solutions to the mid-market and public sector. At completion, the initial consideration of £25,000 to be satisfied in cash and the issue of a two-year interest bearing convertible loan note for the value of £100,000 of ordinary shares of Pinnacle Telecom Group plc. This will be followed by deferred payments totalling £343,301, satisfied in cash, between the 31 October 2011 and 25 December 2014.

Premier Oil Plc: Acquisition of EnCore Oil plc On 5 October 2011, Premier announced the recommended acquisition of EnCore for cash with a share alternative for a consideration of £221m (approximately $340m). Simon Lockett, chief executive, commented: “Today marks a significant milestone for Premier. We continue to prove our ability to execute development projects and to identify acquisition opportunities which enhance our portfolio and growth profile … In addition to our organic growth, today’s recommended acquisition is an example of our ability to use our strong balance sheet to capitalize on opportunities. Together, these show that Premier is on track to deliver on its stated strategy and to realize its medium-term target of 100,000 boepd.”

Restore Plc: Acquisition of Thoroughshred On 10 October 2011, Restore plc announced that Restore Shred Limited, its recently formed subsidiary, had acquired the business and assets of Thoroughshred, a provider of secure shredding and recycling services, from TGM Environmental Limited. The acquisition of Thoroughshred is an important step in broadening the capabilities of the Company to offer additional office services alongside its existing records management, document scanning, and office relocation activities. Charles Skinner, chief executive of Restore

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plc, said: “It has long been the Board’s aim for Restore plc to enter the secure shredding and recycling market, and Restore Shred’s acquisition of Thoroughshred provides us with an excellent platform for rapid growth...”.

Spectris PLC: Acquisition On 6 October 2011, Spectris plc, the productivity-enhancing instrumentation and controls company, announced that it had completed the acquisition of Sixnet LLC, a privately-held business located in North America that designs, builds and markets rugged remote terminal units, I/O modules, Ethernet network switches and wireless products for the broad industrial and process market. The net purchase consideration of $72m (approximately £44m), on a debt- and cash-free basis, will be met from existing cash and bank facilities and is subject to routine balance sheet adjustments. Sixnet will become part of Red Lion Controls in the Industrial Controls segment. Its hardened Ethernet networking switches complement those of Red Lion’s N Tron subsidiary (acquired in October 2010) and the remote automation solutions complement Red Lion’s own product range.

St Ives Plc: Acquisition(s) On 14 September 2011, St Ives plc announced the acquisition of Response One Holdings Limited. The acquisition represents a further step in St Ives’s strategy to create a complementary range of digital and marketing services, whilst reducing exposure to commoditised print markets, and to enable the Group to add further value to existing and new clients. St Ives has agreed to acquire all of the issued share capital of Response One, on a cash- and debt-free basis, for a multiple of 6.5x the audited EBITDA of Response One for the year ending 31 October 2011, subject to a cap of £19m.

Ubisense Group plc: Acquisition of UK geospatial consultancy On 5 October 2011, Ubisense Group plc, the market-leading location solutions company, announced the acquisition of Realworld OO Systems Ltd, a geospatial location solutions consultancy, for £2.4m. Realworld is the UK subsidiary of Realworld Holding BV. The cash consideration consists of £1.25m on completion and a performance based payment of up to £1.15m over the next two years.

Richard Green, Ubisense CEO, commented: “This strategically important UK acquisition will expand and significantly improve our UK presence and brings additional skills for our UK operation. Realworld are very well known to us, being located within the same building as our Cambridge operation. We will be able to utilise their skills to expand our existing team and support our customers such as Mini, Aston Martin, Airbus and BAE.”

Kantar acquires remaining shares in LMRB in Sri Lanka On 7 October 2011, WPP announced that its wholly-owned operating company Kantar, the consumer insight group, had acquired all remaining shares in Lanka Market Research Bureau (Private) Limited (LMRB), a leading Sri Lankan market research agency. This acquisition takes Kantar’s stake in LMRB from 49% to 100%. Founded in 1981, LMRB employs 81 people and is based in Colombo, with field offices in Galle and Kandy. As well as quantitative and qualitative market research LMRB operates a household panel, a People Meter-based audience measurement system, a National Media Survey and tracks radio listener data. Clients include Unilever Sri Lanka Ltd, Fonterra Brands Lanka (Pvt) Ltd, SmithKline Beecham (Pvt) Ltd (GSK) and Dialog Axiata PLC.

Xstrata Coal acquires Lossan deposit On 7 October 2011, Xstrata Coal agreed to acquire 100% of the Lossan metallurgical coal deposit from Cline Mining Corporation for CDN$40m, subject to customary conditions. The acquisition is expected to complete on 12 October 2011. Lossan is located in the Peace River Coalfield of north eastern British Columbia, Canada, and is surrounded by a group of licences recently acquired by Xstrata Coal through the acquisition of First Coal Corporation in early August 2011.

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