Year: 2011

T&T targets new investor strategy

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Along with its business opportunities, Trinidad and Tobago has committed to an open, market-driven economy, fuelled by trade liberalisation and both local and foreign investment. Its strategic location makes it a gateway to the Americas; and natural resources, a highly-educated labour force, excellent infrastructure developments and a pro-investment climate continue to attract business.

The country boasts no foreign exchange controls and 100 percent ownership of locally-registered private companies, with legislation supporting a drive towards an enabling business environment. Trinidad and Tobago is focusing strongly on specific priority areas for investment, including information and communication technology, tourism, and the creative industries.

Tamana Intech Park
The flagship IT project of Trinidad and Tobago’s Ministry of Trade and Industry, the Tamana Intech Park is a truly exciting investment opportunity. The park is situated on 1,100 acres on the former Wallerfield airbase, 30 percent of which is green space, offering a quality of work-life environment second-to-none in the world. Just 45 minutes from the Port of Spain and 10 minutes from Piarco International Airport, Tamana also offers investors flexibility in accommodation, including a build-to-suit option and a tenant building with state-of-the-art customisable ICT infrastructure and security systems, high-capacity, flexible and cost effective data management and storage, with added assistance of disaster recovery in the rare event of a disruption.

Tourism
The country’s tourism product is not typical of most island nations. The unique double experience offered by Trinidad and Tobago, which is the result of a multi-cultural, multi-ethnic social structure, is thought by many to be unmatched anywhere else. There are significant opportunities in resort development and conference tourism, with the recent inauguration of the Trinidad and Tobago Conference Bureau.

Along with its strong tourism focus, the sister island of Tobago is also involved in the process of economic diversification. The Tobago House of Assembly has established an eco-industrial and business park at the Cove estate in the south-western peninsular of the island where would-be investors can move good business ideas from conceptualisation to profitable commercialisation and established investors can expand and grow their businesses with the enhanced access to foreign markets and appropriate technology.

Activities at the Cove will include light eco-industrial production – industries targeted for the site include organic and greenhouse agriculture, agro-processing, food and beverage production, IT and other professional services, light manufacturing, intermediate goods processing and natural gas-intensive operations.

At the heart of the Cove’s ability to bring investors’ ideas to realisation and to grow businesses is the suite of support services it will provide through two business incubators, an innovation centre, a business centre and six factory shell complexes.

Cultural and creative industries
The islands’ strong creative sector is receiving renewed focus, and the Trinidad and Tobago Entertainment Company Limited was formed to spearhead the development of entertainment products and talented artistes, who are growing in international brand recognition. At the same time the Film Company Limited is pushing the development of the local film industry, ensuring that Trinidad and Tobago becomes known as both a location venue and a site for high quality pre and post-production facilities.

Investment
In terms of FDI in Trinidad and Tobago’s economy, the major investors have been the USA, the UK, Canada, Germany and Japan. The country welcomes investment from all nations – particularly in the form of joint ventures and other strategic business alliances between local firms and their foreign counterparts.

Trinidad and Tobago’s private sector enterprises received varying amounts of direct investment capital, which represent the changes occurring in the economy: there is an emphasis is on diversifying away from dependence on energy revenues, and towards creating globally competitive products.

The nation is establishing new frontiers in terms of economic growth sectors, and has maintained extremely high levels of political stability amid recent electoral transitions. Business opportunities exist in Trinidad and Tobago in a wide range of sectors such as:
– ICT
– Tourism
– Food & Beverages
– Maritime – Merchant Marine and Yachting
– Financial Services
– Downstream Energy & Energy Services
– Creative Industries – Film, Music, Fashion, Animation

Trinidad and Tobago investment advantages
Steady economic growth
Trinidad and Tobago is one of the world’s fastest growing nations and is developing into the business, commercial and investment hub of the region. The country has experienced 16 consecutive years of economic growth, with a GDP growth rate of 12 percent in 2006.

Strong economic base and diverse economy
Trinidad and Tobago’s economy is energy based and also diversified enough into business and services to support any range of financial interests and industrial requirements.

Highly developed air and sea transport
Trinidad and Tobago has two of the largest and most well-developed ports in the Caribbean, at Port of Spain and Point Lisas, handling dry and general cargo, industrial bulk and containers. The two airports, Piarco and Crown Point International, service some of the largest airlines in the world, including American Airlines, British Airways, Virgin Atlantic, Continental Airlines and Delta Airlines.

Enhanced market access
Trinidad and Tobago, as members of CARICOM, has embarked on a drive to secure greater market access for its manufacturers and service providers through bilateral trade agreements with its Latin neighbours. So far it has arrangements in place with Colombia, Cuba, Costa Rica, Venezuela and the Dominican Republic.

Educated workforce
Trinidad and Tobago has one of the highest literacy rates in the English speaking Caribbean, and the government provides a range of educational benefits, in particular for tertiary level and technical education.

Lower cost of living
Due to currency value and economies of scale, the cost of living in Trinidad and Tobago compares favourably with other Eastern Caribbean territories.

Diverse range of social activities
Trinidad and Tobago has more to offer than most other Caribbean islands in terms of social activities, nightlife, restaurants, cultural events and festivals, all of which enhance the overall quality of life for the country’s citizens.

Ethnically and culturally diverse
Due to its history, Trinidad and Tobago has become famous for its ethnic mix and tolerance of diversity, which ensure that all people are welcomed to live and work on the islands. The solid educational system includes schools which follow both the American and Canadian systems.

Highest concentration of foreign missions in the Caribbean
Along with the United States, the UK and Canada, the presence here of representatives from several major European and Commonwealth countries is testament to the long-standing positive relationships which the international community has enjoyed with Trinidad and Tobago. Essentially, visitors will have immediate contact to their home territories whenever necessary.

Wind power becomes mainstream

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Vestas, as the market leader, is taking wind power to new, unprecedented heights. Solid financial results for Vestas, in a testing year, have helped confirm wind as the leading source of renewable energy. Vestas’ order intake in 2010 increased by 182 percent, rising from 3,072 to 8,673 MW, the highest in the company’s, and the industry’s, history. The highlight was the EDP Renovaveis deal, the biggest order in the industry’s history. Signed between Vestas and the Portuguese company in April last year, the deal provides wind turbines with a total capacity of 1,500 MW to be delivered to North America, South America and Europe in 2011 and 2012, with the possibility for an additional 600 MW.

The surge in order intake was accompanied by substantial growth in other key financial areas. Generated revenue increased from €5,079m in 2009 to €6,920m. EBIT, before one-off costs, rose from €468m from €251m, corresponding to an EBIT margin of 6.8 percent, up from 4.9 percent. Meanwhile, the number of wind turbines delivered to customers rose from 4,764 to 5,842 MW.

Vestas’ position at the forefront of the global wind power industry was reinforced by two landmark announcements in January this year.

The first was on 25 January 2011, when Vestas won the prestigious Zayed Future Energy Prize for its innovation, leadership and long-term vision with renewable energy and sustainability, according to the jury. Vestas competed for the unique prize against 391 companies, organisations and individuals from 69 different countries around the world.

This came just days after the groundbreaking announcement of the new global consumer label Windmade, which Vestas launched in co-operation with its partners UN, WWF, GWEC, Bloomberg, LEGO and PwC. The eco label allows consumers to select products from companies using wind energy in their production.

“We are making history today,” said Ditlev Engel, Vestas’ CEO. “This is indeed a remarkable event – and to top it all off, it was the second in a row.”

Vestas also recently signed an agreement with WindPlus for the world’s first offshore project integrating a wind turbine with a full-scale semi-submersible floating platform. The project, which will take place off the coast of Portugal later this year, will involve a Vestas’ V80-2.0 MW turbine.

Bright outlook for 2011
Vestas is, therefore, moving into 2011 with great momentum and optimism. In 2011, it expects another high order intake of 7-8,000 MW. Shipments are set to rise from 4,057 MW in 2010 to 6,000 MW by the end of 2011, when Vestas is expected to have installed around 50,000 MW. Meanwhile, the company expects to achieve an EBIT margin of seven percent and revenue of €7bn.

In 2011, Vestas will continue its role as an advocate for sustainable growth and green jobs. At the G20 summit in Seoul and COP 16 in Mexico last year, Vestas made recommendations on how to increase the competitiveness and development of renewable sources of energy. They include, putting a stable price on carbon, allowing free trade in green goods and services, scaling up research and development and abolishing fossil-fuel subsidies within the shortest time frame.

Vestas believes that if the necessary political decisions on a national and international level are made now, the share of wind power relative to the total electricity production can be increased from about two percent today to at least 10 percent by 2020. This translates into an installed wind power capacity of at least one million MW, as compared with around 200,000 MW at the end of 2010, of which Vestas had installed a total of 44,114 MW.

Along the way, the wind power industry, including the many suppliers, will be able to create more than two million jobs. The key to realising the potential is having long-term, national schemes that provide the industry with the necessary opportunities to plan and invest in employees, technology and production facilities.

Tough conditions, tough choices
Vestas’ achievements in 2010 appear even more dramatic as they coincided with the credit crisis and the industry operating in a recovering market.

Two decisions helped ensure that Vestas remained the world’s leading wind turbine manufacturer in 2010: the regionalisation of production and continued dedication to quality, research and technology development.
Vestas has regionalised its production platform under the principle, “In the region, for the region.” The transfer of production from Europe to two of its biggest markets, the United States and China, substantially lowered manufacturing and transport costs and ensured shorter distances to customers and markets.

Vestas previously manufactured turbines in Europe to transport them to other regions such as North America, but in 2011, 80-90 percent of a Vestas turbine will be manufactured locally, including components from suppliers.

In 2010, Vestas opened a nacelle and a tower factory in Pueblo, Colorado – the largest in the world. Together with three other factories in the state, Vestas employs over 1,400 locals, enabling the company to accommodate demand in the North American market in the most cost-effective way.

Compared with 2006, four times as many employees currently develop and design not only wind turbines but entire wind power plants and model wind landscapes to identify the best location for each turbine. Vestas turbines in many locations, therefore, harvest all the wind power available, optimally.

Lower than expected demand in the European market, where earnings were previously the highest, led in October 2010 to Vestas abolishing 3,000 jobs, shutting down five factories and implementing cost savings in a number of administrative functions. Northern Europe, especially Denmark, where costs are the highest, was particularly hit.

In total, this resulted in the dismissal of 2,200 employees. In the first half of 2011, the remaining jobs will be terminated, especially in connection with the establishment of a number of shared service centres. The layoffs in Denmark offset staff additions, especially in the US and China. By the end of 2010, Vestas had 23,253 employees, with 8,127 of them from outside of Europe.

In order to retain its technology leadership position, Vestas invested heavily in development facilities. In 2010, Vestas increased the headcount in Vestas Technology R&D from 1,490 to 2,277.

Combined with centres in Denmark, the UK, India, Singapore, Germany and the US, Vestas opened a new R&D centre in Beijing, China, which is the first international centre solely dedicated to wind energy in the country. This investment will allow the company to attract skilled and dedicated employees in all important markets.

As green as it gets
Investment in wind power technology development totalled €372m in 2010, and is expected to continue this year. The key to Vestas’ development activities is the goal to increase output per kilogram turbine and to build turbines using easily accessible materials, which can be broken down or recycled. The goal is to recycle a wind turbine completely at the end of its lifetime. Today, for example, 80 percent of a V112-3.0 MW can be usefully recycled. 

The elimination race following the global credit crunch has increased the value of quality in new and existing products and services. Combined with regional production and closer relations with its customers, Vestas was able to reach a record order intake in a market, which in the short term, was smaller and more competitive than previously predicted.

Vestas continues to develop, manufacture, sell, service and monitor wind power plants in 66 countries around the world. The building of closer ties with its customers has meant the company has been able to deliver products at ever-increasing speed.

But there is still a long way to go, insists Mr Engel. “Vestas must perform even better and at lower costs,” he says. “Shorter deadlines, lower inventories, fewer employees per MW and fewer injuries are focus areas.

“We are always working on making a more effective Vestas, which is heading towards making wind power an energy source on par with oil and gas.”

Wealth manager targets innovation

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The investment management area of Banif, the Portuguese financial group, has been establishing a successful track record in terms of Growth and Innovation.

Banif Investment Managers (BIM) recorded strong growth in 2010, with assets under management (in mutual funds, real estate funds, alternative asset funds, pension funds and other managed portfolios) reaching €4bn in December 2010, largely in Portugal, Brazil and Spain, a growth of 28 percent over the year.

This growth in AuM took place in the final stage of a 5-year period between December 2005 and the end of 2010, during which AuM recorded sustained and significant growth of 127 percent.

Besides the growth in AuM and income, Banif Investment Managers has been trying to position itself strategically as an innovative and added-value investment manager, providing asset management services to retail, private banking and institutional clients in several countries by setting up unique and innovative investment products, especially in alternative asset areas such as art and media, energy and environment, real estate, infrastructure, subordinated debt, emerging markets (in particular Brazil, where we are currently developing a similar strategy of creating a range of added-value mutual, real estate and alternative funds) and absolute long/short return Iberian equities. We were the first in Portugal, in early 2004, to launch a fairly flexible Special Purpose Investment Fund whose legal framework and regulations were created at the end of 2003. This cornerstone legislation was behind the outstanding growth in AuM of these funds over the last seven years. 

BIM is managing these and its other funds from its Lisbon head office (25 investment managers for mutual funds, real estate funds, alternative/private equity funds, pension funds and other portfolios), from its São Paulo (Brazil) office and also by setting up specific partnerships with other entities in Portugal, Brazil and Spain.

Banif Investment Managers positions itself as a key player in the investment management business and aims to develop this business over the next few years by entering markets where we can establish and develop our skills and know-how in several areas, either on a stand-alone basis or by building new partnerships in sectors or geographical areas, with interesting potential for the future.

Funds managed by BIM
– Art Fund
– Cinema and Media Fund
– Subordinated Debt Funds
– Carbon Credits Fund (as advisor)
– Renewable Energy Fund (as advisor)
– Infrastructure Funds
– Balanced Multi Asset Brazilian Funds
– Brazilian Real Estate Funds
– Long/Short Iberian Equity Fund
– Real Estate Fund (with Oporto Municipality)
– Tailor-made privately held Real Estate Funds

Raul Marques is Vice-Chairman of Banif Investment Managers

AMAN nominated “Best Takaful Provider”

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This global nomination marks a remarkable achievement for a composite insurance company based in the United Arab Emirates. It is truly a testament to Aman’s dedicated team of highly qualified professionals and the security clients feel that Islamic insurance products can provide.

Established in 2002 as a national takaful insurance provider owned exclusively by UAE shareholders, Aman distinguished itself as a pioneer in the Emirates, successfully introducing Islamic insurance to the UAE and in 2004 being listed as a public company. Today Aman comprises one of the largest insurance teams of UAE nationals. Aman’s Takaful policies are backed by the world’s most recognised and top rated Reinsurers consistent with international standards to provide first class security. All investment and insurance activities follow Shariah guidelines under the supervision of a Fatwa and our esteemed Shariah Supervisory Board. With a comprehensive range of fully Shariah compliant products including life and medical insurance, Aman is consolidating its position as a leading composite national Islamic insurer – having generated an annual premium volume over AED 615 million within a short span of eight years. Furthermore, Aman maintains a sound and solid financial position that is recognised by a S&P rating of BBB that confirms its stable financial outlook. Aman was recently named the second largest Takaful Company in the GCC region by Alpen Capital.

Commenting on the growing demand for Islamic Insurance, Husein Al Meeza, Managing Director and CEO of Aman said: “Despite the global slow-down, the Islamic financial assets have exceeded the $1trn mark. The Islamic Financial Industry is definitely resuming its growth path and it is continuously drawing positive attention in media headlines of both Muslim and non-Muslim countries. The industry presents ample opportunities for growth and globalisation, which will spur further demand for Takaful. The main reason for this is because the emerging countries whose population constitute primarily Muslims are in fact witnessing modest economic development while most of the world’s major developed economies are contracting. Moreover, the Islamic Finance industry is becoming more sophisticated and developing new products and services that better address the needs of large corporate as well as mass retail customers. Non-Muslim countries are also supporting the industry mainly through legislation that facilitates the integration of Islamic finance sector into their economies.”

Islamic insurance is a collective system of support for individuals or groups who share the risk of potential loss. The Takaful operator manages their contributions through this shared system of mutual cooperation and distributes the surplus, if any, resulting from insurance and from premiums invested for policyholders on an annual basis. In the event of claims, the participants settle the cost incurred amongst themselves from their collective contributions. The profits from shareholder capital investments in excess of expenses are distributed evenly amongst them. Islamic Insurance is a proven cooperative system that supports social solidarity, helps protect the community and the fortunes of many pay for the misfortunes of the few.

Under the hybrid Takaful model, Aman manages the insurance operations for the insured as their agent under the Wakala system of Islamic Insurance. Aman invests funds on their behalf as fund manager, employing the Islamic Mudaraba system, combining a fixed fee for managing insurance operations and a share of profits for investing funds. This system enables policyholders to benefit from risk protection and investment services at the same time.

Bancatakaful is another model pioneered by Aman which is gaining popularity within insurance circles.

Takaful operators have played a key role in promoting Bancassurance within the Middle East and Asia Pacific region to meet the growing demands of Islamic banks and financial institutions. Aman is one of the first insurers in Bancassurance in UAE and since 2006 provides Shariah compliant products and services to ten of the largest Islamic Banks and financial institutions in the UAE, generating an annual premium volume of more than $50m. Aman has strategic partnerships with key corporate entities throughout the region as well, providing them with Islamic solutions for their employees and protection for assets.

Today as one of the largest BancaTakaful providers in the United Arab Emirates, Aman offers a range of Shariah compliant investment linked products and high quality savings programmes to banking customers and to other financial institutions through their own distribution channels. Aman also provides group family takaful, credit family takaful, critical illness and involuntary loss of employment coverage and home finance family takaful.

“Being a fundamental part of the Islamic finance industry, the takaful business would certainly benefit from the positive drivers of the industry to carry on the superior growth level registered in the past few years,” said Husein Al Meeza.

Aman also offers general insurance products for individuals, corporations and industrial businesses and various levels of risk protection for many different hazards to minimise financial consequences. These products include general accident and liability insurance, travel insurance, haj and umra protection packages for pilgrims; fire insurance, fidelity and banker’s blanket cover; engineering and construction insurance; marine and aviation insurance; motor insurance for both private and commercial vehicles; and healthcare, offering a broad coverage to protect individuals and company employees with both voluntary and mandatory coverage. In addition to its standard general takaful and family takaful insurance products, Aman can customise innovative insurance solutions to suit the individual requirements of customers.

Aman’s remarkable success is attributed to its strategic and transparent approach to Islamic insurance across the region, the capable leadership of its board and the visionary guidance of its management. Personal lines insurance remains an untapped market within the UAE and across the region for takaful operators to address. As Aman has proven the soundness of the Takaful business model, the company will now be looking forward to exploring regional expansion of its successful operations. Supported by an ambitious and dependable workforce, Aman is known for establishing enduring relationships with clients built on trust, confidence and expert understanding of risk. Aman remains resolutely focused on offering a unique line of Islamic insurance services to provide communities with a greater sense of security and stability. Adhering to the takaful concept, Aman upholds a distinctive responsibility to share profits with its stakeholders and policy holders in an honourable Islamic manner.

For more information Tel: 00971 (0)4 3193111; Fax: 00971 (0)4 3193114; Email: info@aman.ae; www.aman.ae

Emerging market tonic for pharmas

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Pfizer, GlaxoSmithKline, Procter & Gamble, Astra Zeneca and Johnson & Johnson are among the immediately recognisable global brand names in the pharmaceuticals industry. Due to the non-cyclical nature of the industry, pharmaceuticals companies were some of the most likely to have prospered during the economic crisis, and the industry is expected to grow by five percent to seven percent in 2011. 

Despite facing serious challenges in some markets – as governments rein in spending by their national healthcare systems as part of their fiscal strategy – pharmaceuticals companies are profiting from growing demand from emerging markets. This is particularly clear in the so-called ‘BRIC’ countries of Brazil, Russia, India and China. In contrast to Western Europe and the USA, these burgeoning economic powers are increasing their public spending on healthcare.

In a number of countries – including Germany, Sweden and Mexico – where market deregulation or competition from ‘over the counter’ (OTC) and generic products are challenging the ‘big name’ brands. The leading players in these countries, mainly well capitalised members of major international groups, are coping well. Smaller wholesalers who, characteristically, have low equity investment and poorer cash flow, are more vulnerable to the impact of reduced margins. They are being closely monitored by Atradius underwriters.

Despite that, Atradius’ experience is that companies operating in this sector generally have a lower default and insolvency rate than those in other industries. However, in France, while pharmaceutical producers are maintaining their margins and equity, the future looks far less optimistic for pharmacies and wholesalers, which have so far been cushioned by the state, but who will in the future face more competition from abroad.

Another issue that the pharmaceutical industry faces is that of expiring patents. Many of the patents issued in the 1990s, giving pharmaceutical companies time to recoup their R&D costs, are due to end, clearing the way for generic versions to enter the marketplace. But again, Atradius is generally upbeat on the future health of the industry, with the pattern of consolidation and consequent economies of scale, coupled with healthy demand from emerging markets, providing a cushion against such challenges.

Andreas Tesch is the Director of Atradius Global, Oceania and New Markets for  Atradius Credit Insurance.
For more information www.atradius.com

Apple files patent suit against Samsung

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Apple has filed a lawsuit against South Korean electronics group Samsung alleging its mobile phones and tablet computer are a copy of its iPhone and iPad.
 
The case against Samsung was filed by Apple on Friday at the US District Court for the Northern District in California but details were not released until Tuesday when the Wall Street Journal obtained a copy of the file.
 
Apple is alleging Samsung has breached several Apple patents and trademarks, saying: “Samsung’s Galaxy Tab computer tablet slavishly copies a combination of several elements of the Apple Product Configuration Trade Dress.”
 
Examples cited in the lawsuit include patent infringement such as core technology and aesthetics. Apple moreover draws attention to the arrangement of icons and packaging similarities between the Galaxy phones and the iPhone saying they violate patents issued in 2009 and 2010.

Synthes reports merger talks with Johnson & Johnson

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Swiss medical device manufacturer Synthes said on Monday it is in preliminary takeover talks with health conglomerate Johnson & Johnson.
 
The deal could be worth up to $20bn and if completed would be one of the largest healthcare takeover deals in recent years, according to sources familiar with the process.
 
The company said in a statement: “In response to market speculation Synthes confirms that it is engaged in discussions with Johnson & Johnson about a potential business combination transaction.”
 
“No assurance can be given as to whether, when or on what terms any possible transaction might occur,” it added.
 
Synthes said it does not intend to make any further public statements unless and until a definitive agreement has been reached, or until discussions between the parties have terminated.

Mistakes by corporate trustees

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In a recent decision, the Court of Appeal has significantly cut down the scope of this rule, noting that it had taken on a life of its own over a long line of cases and that this was a rare example of the law “taking a seriously wrong turn”.

This has important implications for all trustees, including corporate trustees, where the trust deed is governed by English law, since they will no longer be able to use the rule to correct mistakes which have adverse consequences for beneficiaries. The decision also has important implications for beneficiaries, such as noteholders, under those trust structures because in re-stating the relevant principle, the Court of Appeal said that it is necessary for beneficiaries to bring court action against a trustee and prove breach of duty if they are aggrieved by a trustee’s actions.

What is the Hastings-Bass rule?
In brief, the rule in Hastings-Bass was to the effect that where trustees exercised a discretion, but the effect of doing so was different from what they intended, the decision could be declared invalid if the trustee had failed to take into account relevant considerations or if they had taken into account irrelevant considerations. It seems to have been deployed most commonly where a trustee had taken a decision that turned out to have unintended adverse tax consequences, but its potential application was much wider and it could be used even if the decision had been taken with the benefit of professional advice.

What is the position now following the Court of Appeal decision?
The Court of Appeal has now held that if trustees have exercised a discretion which is within their powers, but they have done so in breach of their fiduciary duties, the trustees’ decision may be voidable, i.e. capable of being unwound. If the exercise of the discretion is outside the scope of the trustees’ powers, it will be void. It will normally be for the beneficiaries to apply to have the trustees’ decision set aside and whether such a claim succeeds will be at the discretion of the Court.

It is important to appreciate that even under the ‘new look’ rule, failing to take into account relevant considerations (including fiscal considerations) or taking into account irrelevant considerations will normally constitute a breach of duty by a trustee. A common example is where a corporate trustee has a discretion to modify or amend the trust deed or to waive certain rights that it has under the trust deed, provided this will not result in “material prejudice” to bondholders. If the corporate trustee fails to take into account relevant matters in assessing whether this would result in “material prejudice” to bondholders, the trustee may be found to be in breach of its fiduciary duty.

The principle may even apply in circumstances where corporate trustees have acted upon a direction from the requisite majority of bondholders, depending on the terms of the resolution. For example, a trustee may be left with a discretion to implement matters that may be incidental to the direction or there may be some element of discretion that remains with the trustee, such as in the timing or manner in which the direction is exercised. If the trustee fails to take into account relevant matters in deciding when the particular matter is to be implemented or in deciding how it should be implemented, the trustee may be found to be in breach of its fiduciary duty.

In a positive step, the Court of Appeal has confirmed that trustees will not be in breach of duty – and the exercise of the discretion will not be voidable – if they have acted on appropriate professional advice. Trustees should, therefore, be able to protect themselves by obtaining appropriate legal or other professional advice to ensure that decisions are taken on the correct legal and factual basis. Trustees who fail to take professional advice may be in a more vulnerable position, although corporate trustees are often protected from personal liability by special indemnity provisions in the trust deed.

If trustees have acted on the basis of wrong advice, the Court of Appeal has made it clear that the appropriate action lies against the professional adviser. This is an action that the trustee may be faced with having to commence, since the claim is likely to be trust property. Whilst the potential for professional negligence claims against advisers does, therefore, seem to have increased, it does not necessarily follow that this type of action will be any easier to establish. Professional advisers may specifically disclaim responsibility for advising on certain matters.

The somewhat perverse result of the Court of Appeal’s decision may be that beneficiaries who are affected by the unintended consequences of a trustee’s actions may be left with no remedy, whether against the trustee or the professional adviser. If so, beneficiaries who are aggrieved by a trustee’s actions may decide that there is little point in bringing an action, despite the Court of Appeal’s insistence that beneficiaries need to “grasp the nettle”.

Rani Mina is a Partner in the Commercial Dispute Resolution group of Mayer Brown International LLP

Nestlé sales fall 9% but growth up 6.4%

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Nestlé, the world’s biggest food group by sales, saw a 9 percent drop in Q1 sales to CHF22.26bn compared to CHF22.34bn the previous year, the company announced on Friday.
 
The decrease in sales were due to the sale of its Alcon eye care business and foreign exchange rates by the Swiss franc which has been trading close to record levels against the Euro and dollar over the past three months, Nestlé said.
 
Organic growth rose 6.4 percent despite a sharp increase in commodity prices and the currency impact, the Swiss confectioner reported.
 
The company’s development of 6.4 percent reflects strong growth in emerging markets and price increases. The breakdown of growth reported by the company is 4.3 percent in the Americas, 3.9 percent in Europe and 13.8 percent in Asia, Oceania and Africa. Developed markets grew 3 percent, while emerging markets achieved around 12 percent organic growth.
 
Regarding the outlook for the remainder of the year, the company expects organic growth between 5 and 6 percent and a margin improvement in constant currencies.
 
CEO Paul Bulcke said: “We achieved growth in all categories in the first three months of 2011, maintaining last year’s momentum. In view of the strong start to the year, we are able to reconfirm our guidance for 2011 as a whole.”

Glencore to float stock worth up to $11bn

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Glencore, the world’s largest commodities trading group by revenue intends to sell between $9bn-11bn in shares in its IPO on the Hong Kong and London stock exchanges, the Swiss company announced on Thursday.

The group will use in the next three years around $5bn of the profits from the IPO for capital expenditure and around $2.2bn toward debt reduction and the increase in its stake in mining firm Kazzinc, it said.

Glencore, which owns a major share of the global trade in raw materials including corn, copper and coal, is planning to sell between 15 and 20 percent of its stock, which would value the company at around $60bn.

Ivan Glasenberg, Glencore’s CEO said in a statement: “Over many decades, we have developed Glencore into an unrivalled global integrated commodity producer and marketer, active in almost every bulk commodity market.”

“An IPO is the next logical step in our development and strategy. It will provide us with the financial flexibility to capitalise upon long-term growth opportunities throughout our business and achieve further sustainable growth,” he added.

JPMorgan Q1 profits up 67%

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JPMorgan Chase, the second largest bank by assets in the US, beat forecasts from Wall Street analysts by reporting a 67 percent rise in Q1 profits, bringing figures to $5.56bn compared with $3.33bn in the same period last year.

The jump in results was attributed to an increased performance from the credit card group and its investment banking and trading businesses, which helped offset losses from the retail bank.

Net revenue fell 8.5 percent year-on-year to $25.79bn from $28.2bn and was blamed on lower income from mortgage fees and a decrease in securities gains.

Jamie Dimon, CEO and chairman of JPMorgan, said: “The firm’s results reflected a strong quarter across the investment bank and solid performance from card services, commercial banking, treasury & securities services, and asset management. However, this performance was more than offset by the extraordinarily high losses we still are bearing on mortgage-related issues. Unfortunately, these losses will continue for a while.”

BP Rosneft deal grows uncertain

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The Russian half of the Russian-British TNK-BP joint venture is threatening to file a law suit for up to $10m against its parent company BP, saying BP breached its shareholder agreement for going straight to state oil company OAO Rosneft rather than through TNK-BP, sources said.

Rosneft and BP signed a share swap deal in January which agreed the joint development of the Russian Arctic shelf and entitled Rosneft to 5 percent in BP in exchange for 9 percent of its own shares. The deal however was blocked by AAR, the company representing the interests of four billionaires in TNK-BP, because it felt the contract with Rosneft had broken their own agreement.

TNK-BP subsequently claims losses because of BP’s actions, saying it has lost an opportunity to explore within the Russsian Arctic and will therefore be seeking damages.

The $18bn deal between BP and Rosneft was left in limbo however, after its key supporter Igor Sechin stepped down as Rosneft’s chairman on Monday. Sechin, who is also the deputy prime minister of Russia, resigned from his position after President Dmitry Medvedev ordered the removal of ministers from the board of state companies.