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Kuwaiti FX broker wins key to Europe

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Founded in 2005, Arab Financial Brokers (AFB) provides online brokerage and trading services, alongside micro trading services through its AFB and AFB Multi Terminal online trading platforms. Its clients can be found in 52 countries – they vary from individual speculators to asset managers, white labels and introductory brokers. And as a mark of the company’s progress, were awarded Best Arabic Online Platform and Support (2009, 2010) at the Middle East Forex Trading Awards.

A closed shareholding corporation registered under Kuwaiti commercial law, AFB was created to address the increasing number of currency and futures trading demands in the Middle East (and in the Gulf Region in particular) and to cater for clients investing heavily in the futures and spot forex markets.

According to General Manager Abdullah Abbas, AFB’s management team identified the opportunity for a regional trading platform that would develop a niche market geared for individual forex traders and speculators.

“At Arab Financial Brokers, our goal is to provide the best online brokerage services for investors by offering competitive conditions and high quality services while building a long term relationship with our clients,” says Mr Abbas. “Our management team created a new generation of brokerage firms that resolved customers’ needs for speed, accuracy and accountability in order to pursue forex pricing and trading.

“At the same time, we leveraged relationships with strategic alliances and experienced forex professionals, and employed a team of experts to serve our customers in the Middle East, Gulf Region and countries worldwide.

“Our founding principles are aimed at initiating the best technological infrastructure and utilising the most advanced forex trading software, while at the same time delivering the best possible client services,” he says.
AFB provides an online trading platform for individuals, introducing brokers and financial institutions that want to speculate on the exchange rate between two currencies.

In doing so, traders buy and sell currencies with the hope of making a profit when the value of the currencies changes in their favour, whether from market news or events that take place in the world.

The forex market is the largest market in the world with daily volume of over $1.7trn making it one of the most exciting markets for trading.

“The main advantage of the forex market is that it is a true 24-hour market,” explains Mr Abbas. “No matter what time it is, there are always buyers and sellers somewhere in the world actively trading forex, which means that investors can respond to breaking news immediately.”

Forex Islamic and swap free accounts
Aiming to meet the needs of Muslim forex traders, and in strict compliance with Islamic Shariah Law, AFB offers swap-free Islamic accounts to traders, for whom interest and swaps contravene their religious beliefs. They also give their owners an opportunity to hold their positions for an unlimited amount of time.

“We are like no other world traders,” says Mr Abbas. “We respond to our Arab and Islamic clients’ needs and in compliance with the Islamic Shariah, we have the opportunity to run our own forex accounts, referred to as Forex Islamic Accounts.

Low trading rate of $50
Alongside offering this vital service for their Muslim clients, AFB provides individual investors with access to all major capital market sectors. It focuses on providing retail clients with professional tools to profit from multiple markets, not just forex.

AFB provides its customers with the chance to start trading at a rate as low as $50, through its Micro Account service.

“Our Micro Account is a great opportunity for traders from all over the world to trade smaller transactions online under real market conditions and there is a minimum investment of only $50 to open an account,” says Mr Abbas. “Traders can deposit and withdraw funds easily and quickly when it is convenient for them via our website, making it more straightforward than ever to get started.”

For the more serious investor, a fast, reliable and secure online trading platform is also available in the form of AFB Trader. This platform enables clients to trade all major forex, energy, metal, soft commodity, equity and indices right from their desktop.

“Our advanced online trading platform, AFB Trader, provides a unique trading experience delivering fast, reliable and secure trades in an easy to use interface,” says Mr Abbas. “It gives our clients access to real-time tradable prices and the power to trade global markets from one integrated account 24 hours a day.”

Traders are also able to get full access to their account and all the services provided by AFB, at anytime from anywhere, through AFB’s mobile service.

“Our AFB Wap technology allows anyone with a mobile phone to check the current market quotes around the clock and get access to real time prices worldwide,” says Mr Abbas.

Individual investors
The key to AFB’s popularity with independent affiliates is its ability to deliver reliable, competitive currency pricing and quality in its products and services, says Mr Abbas. “Traders who use AFB achieve maximum security and reliability to get the information needed for instant results,” he says. “Our systems utilise a fast order execution and trading structure supported by multiple redundant server clusters, internet connections and backup power systems.”

As a leader in foreign currency trading, Arab Financial Brokers is also able to offer smaller transactional sizes and allow traders of almost any size, including individual speculators or companies, the opportunity to trade the same rates and price movements as the large players who once dominated the forex market.

But what makes AFB so successful? The advantages of dealing with his firm, according to Mr Abbas, are clear.
“Our strength and stability is structured and based on the foundations of the Kuwaiti trading regulatory authority laws and our activities, trading and services policy is built and committed to maintain security and protection for our client’s investments,” he says.

“Aside from our swap-free accounts, we offer added benefits which include 24 hour trading online and via the telephone, instant fills, free news and research resources, a low minimum investment, multilingual support… We also provide real-time streaming quotes, charts, account information and management, a fully secured platform and full product range, varying from foreign exchange to future contracts, and instant online support is available through our experienced and knowledgeable staff members.”

Good customer service is especially vital, he says: “We have clients in 52 different countries, including some in Europe and the USA, however our main customers come from the Middle East, North Africa and the Far East such as India and Pakistan, so in turn we provide 24 hour customer support in a wide range of languages; English, Arabic, Indonesian, Indian, Mauritian, Urdu and Turkish.”

Key to Europe
All of these services have made AFB one of the world’s leading forex brokers, but it also has plans to expand further over the coming months.

Following on from its success in attaining the Cyprus Investment Firm registration license [CIF] from the CySEC in 2010, AFB has set its sights on London.

“The license from Cyprus was the first ever CIF license to be issued to a firm from the State of Kuwait,” says Mr Abbas. “[It] will help us spread our means and attract more clients, mainly from Europe, Russia and the USA.”

So the future looks bright for AFB; with a registration license from Cyprus obtained, one from London on the horizon and its wide range of unique client services, AFB are sure to keep providing one of the best online brokerage services for investors in the Middle East and around the world.

Kesko pursues sustainable growth

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Kesko was established in 1940 by four regional wholesale companies, with the purpose of sourcing and delivering goods to K-retailers on competitive terms. This function has remained, although the operation has expanded to cover the management and development of store chains, retailing and store site operations.

Kesko was listed on the stock exchange in 1960. At the end of 2010, there were over 38,000 shareholders, of whom 26 percent were foreign. In 2010, Kesko’s net sales totalled some €8.8bn and the whole K-Group’s (i.e. Kesko and retailers) sales amounted to some €11bn. Kesko operates in eight countries and has about 22,000 employees, while the whole K-Group staff is 45,000. More than a million customers shop at K-stores every day. Since 2005, Kesko’s President and CEO has been Matti Halmesmäki, MSc (Econ), LL.M.

Seventy years of responsible operation
In 2010, Kesko’s net sales returned to growth with an increase of 3.9 percent from the previous year. Improved management of inventories coupled with cost reductions contributed to a more than 70 percent improvement in operating profit over the previous year. Kesko has a very strong balance sheet and the company has no net indebtedness. This enables capital expenditure on future growth areas, and capital expenditure will grow in 2011 – with the main emphasis on the food trade and the building and home improvement trade. Growth is sought especially in the rapidly developing Russian market.

For years, Kesko has been included in the most important sustainability indices and ranked among the best companies in the world in the compliance with the principles of sustainable development. Kesko is included in the Dow Jones sustainability indices DJSI World and DJSI Europe. In the 2010 assessment, Kesko ranked the best in the sector in operational eco-efficiency, environmental reporting, risk management, and anti-corruption and anti-bribery practices. Kesko is included in the FTSE4Good Global and FTSE4Good Europe indices focusing on responsible investment.

Kesko is also included in The Global 100 Most Sustainable Corporations in the World list, published annually at the meeting of the World Economic Forum in Davos. Kesko has been on the list since 2005. Kesko’s ranking on the list published in January 2011 was 26, compared with 33 a year before.

In the Sustainability Yearbook 2010, published by the SAM Group in January 2010, Kesko’s sustainability work qualified in the SAM Silver Class in the Food and Drug Retailers sector. Kesko was also recognised as the ‘Sector Mover,’ a qualification given to the company that has achieved the biggest proportional improvement in its sustainability performance. Kesko’s responsibility programme covers the period 2008-12 and the updating will start in 2011. The CSR report provides information on the performance of the programme with various indicators and case studies.

Sustainable business success
Kesko is strongly committed to the best of good corporate governance practices – openness, transparency and the pursuit of the best interests of the company and its shareholders – encouraging confidence in internal and external stakeholders.

A continuous improvement of Kesko’s corporate governance has prominently featured on the agenda of Kesko’s board of directors and top management, says Anne Leppälä-Nilsson, the Kesko Group’s General Counsel. She is responsible for the Kesko Group’s legal affairs, enterprise risk management and internal audit, all of which are key corporate governance support functions.

Anne Leppälä-Nilsson has actively contributed, not only to the development of Kesko’s corporate governance, but also to the self-regulation concerning all listed companies in Finland and the Nordic countries. Ms Leppälä-Nilsson chaired the corporate governance working group which updated the Finnish Corporate Governance Code 2008, represented Finland in the Nordic corporate governance working group, and was a member of the 2003 and 2010 corporate governance working groups.

Communications and responsibilities
Kesko has wanted to exceed the level of corporate governance obligations of listed companies and to establish explicit and transparent decision-making structures and systems which are communicated to the market in an open and up-to-date manner. Kesko’s website at www.kesko.fi/investors provides the most up-to-date information, with the company’s corporate governance principles, decision-making structures, decision-makers and their background, board and management remuneration and reporting all easily accessible to stakeholders.
Kesko’s enterprise risk management, major risks, and the internal control and internal audit functions are described extensively.

Kesko’s one-tier governance model is clear. The board is composed of seven non-executive directors, all of whom are elected for a three-year term at Kesko’s general meeting. The operative management is not represented on the board, as the board’s principal functions include choosing the managing director as well as supervising and controlling the company’s top operative management.

The decisions of the board members are made in the best interests of all shareholders and the company – it is therefore important that the majority of the board’s members are independent of the company, and all board members are independent of significant shareholders.

Committees enhance preparation
The audit committee and the remuneration committee are elected by the board from its own members to enhance the efficient preparation of matters for the board. The committees have no autonomous decision-making power, and all decisions are made by the board. The board has confirmed a charter for the committees, which defines the matters to be prepared by them. This enables the board to concentrate more extensively on strategic matters.

The audit committee addresses and evaluates financial reports regularly released to the market; the audits, reports and consultation services provided by auditors; the efficiency and function of internal audit and risk management functions; and the implementation of Kesko’s responsible operating principles. The audit committee also regularly conducts a competitive tendering of auditing services and prepares a proposal for the auditor elected by the general meeting.

The remuneration committee evaluates and prepares, for decision-making by Kesko’s board, competitive and appropriate remuneration and compensation plans for the Kesko Group’s top management. Long-term compensation plans are aimed to align the objectives of Kesko’s shareholders and management with the positive long-term development of the company’s shareholder value. The annual short-term bonus system provides rewards for achieving annual targets to the extent that predetermined criteria are fulfilled. The performance based bonuses have maximum amounts. Any share or share-based compensation plans are resolved by the general meeting.

Kesko’s compensation plans are linked to pre-determined objectives and their realisation. The remuneration schemes are designed to have an incentive effect in enhancing the long-term growth of shareholder value, not in short-term risk-taking.

The openness of remuneration, remunerations schemes and decision-making play a key part in good corporate governance and confidence. On its website, Kesko discloses detailed information on the compensation, fees, benefits, retirement benefits, annual bonuses, option or share remuneration and remuneration criteria of the board members, the President and CEO, and the Corporate Management board as part of Kesko’s remuneration statement.

The board does not have share-based fees. All of the board’s fees are resolved by the general meeting. All of the fees and remuneration schemes of the top management are decided by the board.

Strategic objectives
Profitable growth
– Our objective is to grow faster than market
– We seek growth in nearby areas, particularly in Russia
– We invest in our store network
– We develop e-commerce solutions
– We increase our shareholder value

Sales and services for consumer-customers
– We increase the value of our brands
– Our customer satisfaction exceeds that of our competitors
– Our competitive asset is the K-retailers who know the local customers and their needs
– We use loyal customer information efficiently and commit our customers

Responsible and efficient operating practices
– Our operating practices are responsible
– We efficiently combine retailer entrepreneurship and chain operations
– We leverage our economies of scale and competence for the benefit of customers
– We automate our routines and processes

Kesko’s divisions
Food trade
Kesko Food is the leading operator in the Finnish grocery trade. K-retailers, with whom Kesko Food applies the chain business model, are responsible for customer satisfaction at the more than 1,000 K-food stores.

Kesko Food manages four K-food store chains. Kesko Food’s main functions include the centralised purchasing of products, selection management, logistics, and the development of chain concepts and the store site network. Chain operations ensure the efficiency and competitiveness of business. In addition, Kesko Food’s subsidiary Kespro is the leading wholesaler in the Finnish HoReCa business.

Home and speciality goods trade
Kesko’s home and speciality goods trade consists of clothing, home goods, sports, leisure, home technology, entertainment electronics and furniture. The total number of home and speciality goods stores is 427, which operate in 13 chains.

Building and home improvement trade
Rautakesko is an international service provider which retails building, renovation and home improvement supplies in Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Russia and Belarus. Rautakesko manages and develops the K-rauta, Rautia, K-maatalous, Byggmakker, Senukai and OMA retail chains and B2B sales in its operating area.

Rautakesko’s main functions include the centralised development of chain selections, centralised purchasing and logistics, and the development of chain concepts and the store network. There are 331 building and home improvement stores in eight countries and 88 agricultural stores in Finland. All stores in Finland are run by retailers.

Car and machinery trade
This division consists of VV-Auto and Konekesko with their subsidiaries. VV-Auto imports and markets Volkswagen, Audi and Seat passenger cars, and Volkswagen commercial vehicles in Finland, and it also imports and markets Seat passenger cars in Estonia and Latvia. VV-Auto is also engaged in car retailing and provides after-sales services.

Konekesko is a service company specialising in the import, marketing and after-sales services of recreational machinery, construction and materials handling machinery, agricultural machinery, and buses and trucks. Konekesko operates in Finland, Estonia, Latvia, Lithuania and Russia. Konekesko arranges the manufacture of and sells Yamarin boats in Finland and exports them to several European countries and Russia.

Enel Group targets carbon neutrality

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To protect the planet, as well as to ensure its competitiveness and develop its business, the Enel Group is investing in the best technologies available for reducing emissions of GHG and pollutants, as well as in innovative research.

Enel’s strategy is based on five specific approaches, which cover all of the main elements of carbon neutrality:
– Use of the best existing technologies: Enel’s thermoelectric generation operations are gradually moving towards a mix which includes the exclusive use of high-efficiency plants, and therefore, reduced emissions;
– Developing ‘zero emissions’ sources of energy, such as renewable and nuclear power: Enel’s longstanding leadership in the renewables sector is being consolidated through its renewable energy company Enel Green Power, while an increasingly important role is planned for nuclear power within the group’s generation mix;
– Energy efficiency: Programmes are underway to make the networks more efficient and initiatives are in place to promote the effectiveness of end usage through the group’s energy service companies;
– Research and innovation: Enel is committing important investments to implement demo projects for CCS systems and to develop innovative solar technologies and intelligent networks (smart grids) from 2009 to 2013. It will also promote the spread of electric mobility;
– Global commitment to reduce CO2 emissions through activities to extend projects and best practices in Eastern European and developing countries. Enel will also use the flexible mechanisms introduced by the Kyoto Protocol (Clean Development Mechanism and Joint Implementation), in which the group is a global leader.

Green from the ground up
Since 2004 Enel has played an active role in developing projects – especially CDM – to abate greenhouse gas emissions. Such projects make it possible to optimise the costs of compliance to the European Emission Trading Scheme system (EU ETS), while at the same time favouring the transfer of technologies and sustainable development in Emerging and Least Developed Countries.

Enel has implemented these activities by using a model of vertical integration through its direct involvement in the development of projects in all the technical, commercial, and authorisation phases of the project life cycle. Among private and single buyers, Enel is the world’s largest CDM operator in the primary market. It has contributed with abatement projects that amount to potential avoided greenhouse gas emissions of 200m tonnes up to 2020, both by direct participation and through international funds.

Scouting activities on projects have involved the major developing countries that are currently active in the low carbon market, particularly China, India and South America, where the opportunity to generate important greenhouse gases reductions have been successfully developed.

Many of the projects in Enel’s current portfolio are being developed in China, mainly thanks to the Sino-Italian Cooperation Programme (SICP), which was set up in 1999 by the Italian Ministry of the Environment together with the Chinese State Environmental Protection Administration (SEPA) and other primary Chinese institutions. The central goal of the agreement is to fully implement concrete initiatives for sustainable development in China.

Other initiatives include the Memorandum of Understanding signed in 2009 between the Ministry of Science and Technology of the Chinese People’s Republic and the Ministry of the Environment and Protection of Italian Territory and Sea. The objective of the agreement is a feasibility study aimed at constructing a plant to capture the CO2 produced and its injection into a petrol deposit, at a Chinese coal-fired plant, involving the subsequent use of the carbon dioxide, thus making it possible to improve extraction performance through Enhanced Oil Recovery (EOR) technology.

M&A growth
The acquisition of Endesa, the largest Spanish electricity company and the largest private operator in Latin America, has further strengthened Enel’s leadership position in the carbon market. Endesa has in fact launched Endesa Carbono, an operator specialising in the supply of commercial credit and the origination and development of projects to abate emissions for third-party clients. The Endesa Carbono portfolio can count on a wide range of projects, from wind to geothermal, to hydro and co-generation plants in a well diversified set of countries all over the world that are managed from offices located in Europe, USA, Latin America and the Far East.

One of Endesa Carbono’s chief strengths is its active presence in these different markets, permitting it to identify CDM projects both in Enel’s installations and in those of its customers. Its position in the US is also key to the start-up of the carbon market in this country, which has made a firm commitment to cut emissions.
The Enel portfolio includes 105 projects, in addition to its participation in nine funds, five of which are World Bank initiatives. The portfolio includes projects from renewable sources (68 projects including hydroelectric, wind and biomass), energy efficiency (15 projects) and greenhouse gas abatement from chemical and fossil fuel upstream activities (22 projects). The whole Enel portfolio accounts for about 70m tonnes of CO2 equivalent emission reductions certified to date, the equivalent of 12 percent of credits already certified in the world.

To effectively accomplish business initiatives in the carbon markets, in 2009 Enel created the Carbon Strategy Unit by integrating Enel-Endesa skills and portfolios. This unit acts as a single point of responsibility for the group’s compliance strategies, origination activities, market operations and portfolio optimisation for all carbon credit markets. The Enel Carbon Unit is the key instrument to operate in all carbon markets for the implementation of the Enel Group strategic effort to reduce greenhouse gases emissions, by means of Kyoto Protocol flexible mechanisms.

About Enel
Enel is Italy’s largest power company, and Europe’s second largest listed utility by installed capacity. It is an integrated player which produces, distributes and sells electricity and gas.

The Enel Group has a presence in 40 countries over four continents, has around 95,000 MW of net installed capacity and sells power and gas to more than 61 million customers.

Enel is also the second-largest Italian operator in the natural gas market, with approximately 2.7 million customers and a 10 percent market share in terms of volume.

The company’s growth is based on a strategy of financial solidity and the profitability of its long-term business plan, while respecting stakeholders and the equilibrium among the economic, environmental and social variables.

Value generation, discussion with communities, safety for employees and suppliers, action against climate change: these are only a few of the commitments attesting Enel’s engagement in corporate responsibility.

Blom Bank maintains drive to diversify

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As one of the oldest established banks in Lebanon, if not the region, Blom Bank has always been at the centre of the country’s banking system. Its universal banking services revolve around trust and credibility, built with its clients through long-term personal relationships, integrity, and the strong financial results that it has consistently delivered.

The bank’s renowned conservative management has paid off over the years: for decades, Blom Bank has been the most profitable and among the largest banks in Lebanon. It is proud to have become its clients’ preferred banking partner and investment reference, meeting all their financial needs and ensuring their peace of mind.

Blom Bank is also proud to extend this ‘Peace of Mind’ vision to the larger community, through its CSR activities like Blom Beirut Marathon, the Blom Mastercard “Giving Card,” and its educational initiative “Blom Shabeb.”

Throughout its history, Blom Bank has maintained a track record of exceptional performance. The bank’s operational and managerial efficiency in 2010 helped it maintain the lowest cost–to-income ratio among its peers, of 35.6 percent. Blom Bank’s profit increased by a CAGR of 13 percent to reach $330.7m by 2010. This implied the highest return on average equity at 21.1 percent among listed banks. In addition, assets increased at a CAGR of eight percent to a total of 22.4bn, and customer deposits increased at a CAGR of nine percent, to $19.6bn by December 2010.

Safety in numbers
Moreover, Blom’s consolidated Basel II Capital Adequacy reflected solid solvency with a ratio of 14 percent, well beyond the international minimum of eight percent. Additionally, Tier I Capital increased by 12.3 percent to $1.83m at end 2010, attributed mainly to increases in retained profits. In fact, the bank’s policy is to strike a balance with respect to maximising shareholder value without compromising its Tier I capital growth.

Blom Bank’s strategy is based on regional expansion and the diversification of its services to become a leading regional bank. In this respect, Blom Bank has the widest foreign presence among Lebanese Banks, and is currently present in Lebanon, Syria, Jordan, UAE, France, UK, Switzerland, Romania, Cyprus, Egypt, Qatar, and Saudi Arabia.

Blom conducts its international operations either directly or through its subsidiaries: Bank of Syria and Overseas, Blom Bank France, Blom Bank (Switzerland), Blom Bank Egypt, Blom Egypt Securities, Syria and Overseas for financial services, Blom Bank Qatar, Blom Invest Saudi Arabi, Blom Invest Bank, Blom Development Bank (Islamic Bank), Arope Insurance, Arope Syria Insurance, Arope Egypt Insurance and Life Insurance.

In a drive to diversify its revenue base and enrich its asset class, Blom is prioritising its regional expansion through a policy of organic growth. To this end, the bank is capitalising on its competitive edge in terms of common culture, existing relationships and the replicability of its excellent products to strengthen its foothold in the region and beyond.

Blom Bank Group services
– Commercial banking
– Corporate banking
– Private and investment banking   
– Asset management
– Retail banking
– Islamic banking
– Brokerage services
– Insurance products and services

Funding boosts Brazil housing

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Gafisa’s trademark brand recently celebrated the completion of its thousandth development, Terraças Alto do Lapa, in São Paulo, a testament to the company’s experience, expertise, and execution capacity. It was fitting that this ceremony took place in the city where the company is headquartered, although as a national homebuilder Gafisa is present in 136 cities in 22 states plus the Federal District, offering a diverse range of housing to Brazilians of all socioeconomic levels. The previous decade has been transformative for both Gafisa and Brazil. The company, which was founded more than 50 years ago, has kept pace with the extraordinary growth of the Brazilian economy and seized the unprecedented opportunities that exist in the homebuilding sector. Today, Gafisa’s market capitalisation is approximately $2.8bn.

Gafisa has enjoyed many important accomplishments in the past decade, including its IPO on the Bovespa Novo Mercado in 2006, and a public offering on the New York Stock Exchange (NYSE) in 2007. The listing on the Novo Mercado segment of the market, Brazil’s most demanding in terms of corporate governance, signalled Gafisa’s commitment to all of its shareholders. Inclusion on the NYSE was also a defining moment for the company. Gafisa was the first, and remains the only, Brazilian real estate company with a listing on the Big Board in the US, which affords the company a strong reputation for operational and financial transparency through full compliance with Sarbanes-Oxley. It also established Gafisa as a professionally managed, world-class corporation in an industry commonly associated with family-run enterprises, and ensured exceptional access to capital. Moreover, having all of its shares publicly traded, without the presence of a controlling shareholder, today Gafisa is a fully public corporation, which is common in Europe and the United States but still not the convention in Brazil.

The listings on the Bovespa and NYSE combined, made Gafisa the most liquidly traded of Brazilian homebuilders, and lay part of the foundation for an aggressive growth plan based on geographic expansion and the assembly of a broad product portfolio. This expansion and diversification has leveraged Gafisa’s considerable experience and reputation for building high quality homes, a professional culture which has always prioritised the cultivation of talent within the company, and a commitment to bringing innovative, sustainable home products to Brazilian homebuyers.

Geographic expansion through land acquisition, the formation of local partnerships in high-growth markets and the acquisition of two important homebuilders – AlphaVille, the leader in community developments, and Tenda, a leading homebuilder for the lower entry level segment – has provided the company with the capacity to execute on a national scale. By extending the reach of Gafisa’s well regarded product portfolio to the inhabitants of 23 of Brazil’s 27 states and districts, and building a national sales infrastructure, the company has gained the flexibility to selectively develop its land bank based on local or regional market trends, thereby maximising returns to shareholders. Importantly, the geographic distribution of Gafisa’s land bank is reasonably in keeping with Brazilian GDP distribution.

As recently as December 2006, the Gafisa brand higher income products represented 100 percent of the company’s revenues, pre-sales and launches, but Gafisa enters 2011 with a streamlined corporate structure that features three leading businesses and brands, with Gafisa, AlphaVille, and Tenda each serving their respective market segments. The Gafisa segment represents close to 50 percent of development launches, with AlphaVille and Tenda making growing contributions to overall results.

AlphaVille offers innovative, residential community living to middle and high income homebuyers. The acquisition of this innovator in the Brazilian market positions Gafisa well to benefit as suburban living becomes more  common in Brazil due to massive infrastructure investments and changing demographics. Tenda, which offers affordable and entry-level homes at some of the lowest price points in the industry, is helping to address the current housing deficit throughout Brazil.

Former president Luiz Inácio Lula da Silva’s government committed to provide financing for one million new homes for this sector by the end of 2010 through a programme called Minha Casa Minha Vida (My House, My Life). Brazil’s new government has demonstrated its commitment to continuing the federal programme in support of home purchasing through 2014 by adding an additional two million homes and allocating $40bn to the second phase of Minha Casa, Minha Vida, which aims to further reduce Brazil’s housing deficit. Tenda is strategically positioned to be a strong player in closing this gap.

Environmental, social & governance fundamentals
Professional management distinguishes Gafisa from many of its Brazilian counterparts, and the company is proud of a tradition of investing heavily in its human capital. Its management training programme is recognised as a leading one among Brazilian corporations from any sector, and the company has been successful in retaining top talent due to its meritocratic culture. With the expansion of Brazil’s homebuilding sector in recent years, the labour market has tightened considerably, and Gafisa’s cultivation of talent from within is likely to give it a competitive advantage into the future.

Supporting the sustainable and socially responsible development of the business in a way that benefits society as a whole is a priority for the company. Promoting proper waste management through reduced volume, the reuse of materials and recycling in all offices and also at all job-sites are examples of some of our important initiatives. AlphaVille’s standard practices of setting aside development land for conservation and using rainwater collection systems for non-household uses are other measures that reduce environmental impact and encourage the conscientious and rational use of natural resources.

No example better illustrates Gafisa’s environmental and societal objectives than the successful launch of the Eldorado Business Tower in 2007, which demonstrated an awareness that conservation and minimisation of environmental impact extend to the post-construction phase of the project. This was the first project in Latin America and the fourth in the world certified with the Leed (Leadership in Energy and Environmental Design) CS 2.0 Platinum seal from the US Green Building Council, as the use of new technologies allowed a significant reduction in the consumption of inputs like water and energy, both during construction and after its conclusion. Gafisa also procured 47 percent of the total inputs from local suppliers, thus helping to reduce pollution and supporting local businesses.

Gafisa has long enjoyed strong relationships with financial institutions and the capital markets, and during 2010, successful primary share and debt offerings in March and September respectively signalled investors’ continued recognition of the company’s leading market position and favourable growth prospects. Proceeds of the offerings – which totalled more than $800m – are being using for working capital, new developments, land acquisition, strategic joint ventures, and acquisitions; and will contribute to Gafisa’s execution of a robust business plan in 2011 and beyond.

Brazil continues to enjoy very favourable fundamentals that support economic prosperity, factors which combined with government programmes in support of the homebuilding sector bode very well for the industry. The expansion of real wages, record low unemployment rates (just 6.1 percent in January), strong consumer confidence and the availability of credit are stimulating growth. Brazil’s nominal and real interest rates also continue to be at historic lows. In addition, the availability of loan tenors of up to 30 years on mortgages is helping to make monthly payments much more financially viable for consumers.

Signs that demand for new homes in Brazil will remain strong continue to abound. The most recent study by the Fundação João Pinheiro measured the housing deficit in Brazil at 5.8 million homes, and a poll conducted by Data Popular in late 2010 pointed to the intended purchase of 9.1 million homes within the coming twelve month period, nearly double the figure projected at the end of 2008.

As one of Brazil’s leading nationwide homebuilders with a broad geographic reach and truly diversified product offerings for people of all income levels, today Gafisa is ideally positioned to capitalise on the expanding marketplace. The management team is excited about the tremendous opportunities that lie ahead and remain confident in their ability to execute the company’s long-term growth strategy. Thanks to the hard work and dedication of all of its employees, Gafisa continues to deliver high quality residences to all income segments of the population and is helping to build a bright future for the people of Brazil.

German bank enters UK market

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Berenberg Bank is proud of its 420 year history. The Hamburg-based bank provides services for wealthy private customers and institutional investors, as well as commercial banking services for medium-sized businesses.

In 1585, as Dutch Protestants were given the choice either to convert to Catholicism or leave the country, the Protestant Berenberg family from Antwerp, which was then the richest and busiest city in Europe, left in search of a new home. They found it in Hamburg, which is where brothers Hans and Paul Berenberg founded the company in 1590.

The company was active in the cloth trade and the general import and export business. Dutch Protestants were seemingly highly ambitious and successful; at the beginning of the 17th century, 32 of the 42 firms in Hamburg that achieved turnovers of over 100,000 marks were of Dutch origin. The Berenberg brothers were ranked in 15th and 16th place. At that time, Dutch people in Hamburg were subject to heavy restrictions, such as being forbidden to do business with other foreigners within the city limits. After the Thirty Years’ War, the third generation of the Berenberg family, namely Cornelius Berenberg, played an active part in the economic life of Hamburg. In 1684 he took the citizen’s oath and paved the way for subsequent generations to hold public office. He also increased the trade in goods far beyond Germany’s borders.

From a trading house to a bank
The lack of a functioning banking system meant that traders used to provide financial backing for transactions themselves. They granted loans to their customers and made advance payments to suppliers for their deliveries. The sheer number of currencies also formed the basis for an extensive exchange business which provided good earning opportunities. Cornelius built on the wealth he had acquired through trade and became more active as a banker. The reputation of the Berenberg brothers grew. Cornelius’s son Rudolph was elected to the city council, and family members later became senators.

As well as founding new businesses in Boston and New York, the Berenbergs quickly realised the importance of the newly created stock corporations and were founding shareholders for many well-known companies during the era of industrial expansion in the mid-19th century. Thanks to their international activities, which were already widespread, the Berenbergs were also co-founders of several Scandinavian banks, as well as the Hong Kong and Shanghai Banking Corporation HSBC.

The USP
Today, Berenberg Bank is one of Germany’s most prestigious banks. While many private banks have since become part of international finance conglomerates, Berenberg is still managed today by personally liable partners who, along with the Berenberg family, hold the majority of shares in the company.

‘The trust that our customers place in us reflects our commitment to responsibility and our sense of duty’, says Dr Hans-Walter Peters, spokesperson for the personally liable partners of the bank. ‘The customers value the fact that a private bank like ours is managed by personally liable partners.’ According to Peters, it is not just the indispensable skills of the company advisors that are important, especially as these form the basis of good working relationships, but also their personal commitment and the lasting nature of the relationship between client and advisor. The personal atmosphere and high level of confidentiality is greatly valued, as is the personal service and independence from corporate interests.

The bank’s successful development can be attributed to its clear strategic positioning and focus on ‘service instead of selling products,’ as Peters succinctly puts it. As well as private banking services, which are always perceived to be the most important aspects of a private bank, Berenberg is also highly successful at providing individual solutions and advisory services in the fields of investment banking, asset management and commercial banking.

As Peters states, ‘the art of managing assets in a professional way lies in minimising risks while achieving attractive returns’. This means the advice that the bank provides is not just limited to stocks, but rather incorporates all kinds of investment opportunities. This comprehensive approach towards assets entrusted to the bank not only appeals to a constantly increasing number of investors, but also ensures that Berenberg is consistently noted for its high level of quality in market surveys. As well as winning a number of awards for equity research and private banking, Berenberg recieves regular prestigious commendation from international publications such as World Finance, Euromoney or Handelsblatt.

UK private banking operations
Berenberg Bank launched its UK private banking operations in January this year. The bank sees the UK market as a strategic next step in developing its international private banking operations and will provide a full advisory service. Andreas Brodtmann, one of the bank’s three Managing Partners, commented “Berenberg is a highly ranked independent private bank. We already advise a large number of foreign investors, who respect our banking style, especially in terms of customised service. The UK offers a dynamic entrepreneurial market for us, with good long-term prospects for wealth creation, within which we can add significant value to our clients.”

Ross Elder and Fred Hervey, both formerly at Barclays Wealth, will be heading the private banking team from the bank’s UK headquarters in Threadneedle Street, London.

Facts and figures
Founded: 1590
Assets under management: €25bn
Liable equity capital: €213m
Annual net profit: €62m
Return on equity: 45%
Employees: 1,000

Business divisions
Private banking
Investment banking
Asset management
Commercial banking
   
Personally liable managing partners
Dr Hans-Walter Peters (spokesperson), Andreas Brodtmann, Hendrik Riehmer

Locations
Hamburg, Bielefeld, Braunschweig, Bremen, Düsseldorf, Frankfurt, Munich, Stuttgart, Wiesbaden, Geneva, London, Luxembourg, Paris, Salzburg, Shanghai, Vienna, Zurich

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

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.