ICPAC - Accountancy Cyprus No.125

3Πώς να εξασφαλίσετεµε επιτυχία τη λήψη τωνευρωπαϊκών κονδυλίωνΠοιες μικρομεσαίες επιχειρήσεις της Κύπρου δικαιούνται χρηματοδότηση.Πώς τα Ευρωπαϊκά Προγράμματα και τα Διαρθρωτικά Ταμεία μπορούν νατις βοηθήσουν στην επίτευξη των στόχων τους.Το Συνέδριο αποτελεί οδηγόενημέρωσης και εξειδικευμένηςπρακτικής καθοδήγησης για επιτυχήλήψη χρηματοδοτήσεων και ευρωπαϊκώνκονδυλίων από τις κυπριακέςμικρομεσαίες επιχειρήσεις. Επίσης θαπαρουσιαστούν -μεταξύ άλλων- απόεκπροσώπους κυπριακών επιχειρήσεωντόσο εγκεκριμένα προγράμματα όσο καιsuccess stories.Το συνέδριο ενδιαφέρει επιχειρήσεις στους τομείς του:• Tουρισμού • Εκπαίδευσης• Tεχνολογίας • Μεταποίηση• Γεωργίας • Start-ups• Επικοινωνίας • M.M.E.Τετάρτη 1 Φεβρουαρίου 2017 | 08:30-13:45 | Ξενοδοχείο Hilton Park | Λευκωσία Για πληροφορίες & εγγραφές: IMH, Τηλ: +357 22 505555, Φαξ: +357 22 679820, e-mail: [email protected], website: www.imhbusiness.com Online registration: www.imhbusiness.comΟργανωτής Χορηγοί επικοινωνίας Χορηγός

102 ACCOUNTANCY CYPRUS BUSINESS IN CYPRUS HUMAN CAPITAL INVESTMENTIN THE HOTEL INDUSTRY IS IMPERATIVEBy Dr Sotiroula Liasidou,Lecturer, Cyprus University of Technology,Faculty of Management and Economics –Department of Hotel and Tourism ManagementIn recent years, political tensions in the Eastern Mediter- the success of the industry downturn in Cyprus, hotel- ranean region have established Cyprus as an attractive and the achievement of iers have reacted with layoffs destination for holidays, especially for Russian tourists. exceptional results. Addition- and wage reductions and set But if today’s tourism industry is simply the result of ally, human resources are a unfavourable working con- a devastated Syria and the chaotic situation in Turkey, dynamic prerequisite that can ditions. These have dam- due to the failed coup and the dictatorial rule of the lead to strategic leadership aged even further the imageTurkish President, there is a long road ahead if we are to be- and to a positive effect on of the hotel industry, whichcome really successful. Problems exist in tourism and efforts organisational performance. is not considered as an op-should be made to determine the ways in which its quality portunity for employment,can be improved substantially. In the case of both new especially among young and renovated hotels, the professionals.Many sophisticated and enough adequately skilled and staff should be local andluxurious hotels are currently trained staff to accommodate able to meet high standards Local staff members canunder construction and will its needs. Undoubtedly, the and deliver genuine Cypriot be more committed and ableenter the market in the near success of the hotel industry hospitality to clients. Since to fulfil the desire for qualityfuture, including a casino can be achieved through 2013 and the economic services in the hotels. They arehotel in Limassol that will be investment and the adoptionunique in the Eastern Medi- of an appropriate policy withterranean. However, follow- ethical and responsible corpo-ing the hotel industry’s new rate procedures towards thesuperstructure and facelift, staff. Human resources areone wonders whether there is the main capital to guarantee

103ACCOUNTANCY CYPRUS a competitive advantage as a tourism destination, it is imperative to take corrective action and to concentrate on creating appropriate em- ployment regulations in the industry. The hotel industry should redefine its HR strat- egy and develop training and promotional schemes. These will enable the indus- try to regain its credibility as an employer with the power to act as the foundation for quality standards. It is deemed necessary to invest in human capital because this is a one-way success for Cyprus as a tour- The hotel industry is not considered as an opportunity for employment, especially among young professionalsthe front line for hospitality conditions are not ideal. a high-quality destination. ism destination. The islandand the core for differentiat- Thus, the political cir- Appropriate foundations, will regain its competitiveing the island from proxy and based on the exact tourism advantage and become asimilar tourism destinations. cumstances in the Mediter- situation of the island, must truly quality destination thatThe main issue of concern is ranean region should not be set for the coming years. reflects value for money.to identify whether they are be taken as an opportunity, The main issue of concern It is the time to invest inequipped with professional given the decline in tourism should be the ability to of- the people of Cyprus andand academic qualifications arrivals in previous years, fer quality services at prices to provide new opportuni-and encouraged to pursue a when the political situation that reflect their real value. ties for employment in thecareer in the industry. Admit- in the country’s competi- Furthermore, the reality of hotel industry. Satisfiedtedly, the current situation in tors was stable. Obviously, the employment conditions employees are motivated tohotels discourages people from the decrease in arrivals and in the hotel industry should satisfy customers and thatentering the industry, and revenues was a result of the be considered thoroughly, leads to profitable hotels.there is a common consensus inability to implement a including salary policies and Undoubtedly, a healthy andthat hotel employees’ working national tourism strategy working hours. To regain wealthy hotel industry will and establish the island as have multiple effects on all areas of economic activity. Thus, investment in human capital is imperative.

104 ACCOUNTANCY CYPRUS BUSINESS IN CYPRUS FINANCIAL FAIR PLAY The financial advanTages of keeping Track of clubs’ debTs UEFA President Aleksander Čeferin. By Christos Antoniou, Chairman, Larnaca-Famagusta Coordinating between June 2014 and June 2016). In C Committee of ICPAC, Member, Education Committee of ICPAC other words, the implementation of FFP M and the severe sanctions imposed have led YA detailed review of over 700 football clubs (latest UEFA statistics) shows to a 92% decrease in overdue payables. CM a constant decrease in the combined club losses for the fourth consecu- MY tive year of implementation of the Financial Fair Play (FFP) regulations. UEFA’s seventh club licensing CY Whereas fifteen years ago, virtually no action was taken to significantly benchmarking report (The European CMY alter the financial performance of European football clubs, with the FFP Club Footballing Landscape) presents K regulations the clubs have had an opportunity to discover more efficient data on pre- and post-FFP implemen-and effective methods of financial control. Indeed, the FFP regulations have a proven track tation, while looking to the future ofrecord for nurturing the financial sustainability of European football clubs, which is further commercial and broadcast deals in ansupported by UEFA. This is acknowledged by FIFA President Gianni Infantino who states in increasingly globalized world of foot-his foreword to the report that, “While we should remain cautious, it appears that the worst ball. The following key findings sum-financial excesses of European football reported in 2010 and 2011 are potentially behind us.” marise the overarching trends due toMoreover, he emphasises the importance of club licensing as “the perfect platform for the the FFP regulations:future growth and prosperity of European club football.” • The record underlying operating losses of 2011 have been transformed into the A remarkable increase in the net profit making a profit. Moreover, the benefits of largest combined operating profits thatposition is observed in a number of Eu- FFP are also visible in the decline in over- European club football has ever producedropean countries (up from 15 countries due payables (from €57m in 2011 to just (€805 million in 2014)in 2014 to 25 in 2015). There have never €5m in June 2016), and the reduction of • Bottom-line net losses, after financingbeen so many top divisions (46 out of disputed and deferred payments to play- and transfer activity, have been cut by53) reaching break-even point and even ers (down by 72% and 37% respectively two thirds, from a low of €1.67 billion in 2011 to a much- improved aggregate loss of €485 million in 2014 • Clubs’ net debt has decreased by more than €1 billion and the balance between

105ACCOUNTANCY CYPRUSclub assets and liabilities has improved a solid point of reference for monitoring ver of €50 million, aggregate league wages of €29 million, with a 58%dramatically, with clubs’ net assets in- performance and policy developments in wages to revenue ratio. In addition, it is worth noting that seven clubs in thecreasing by 50% over the first three years European football clubs. Cyprus league recorded operating prof- its in 2014. These numbers prove thatof FFP break-even rules The Licensing Manager of the Cy- the FFP regulations are achieving their financial objectives and desired im-• FFP has encouraged owner investment prus Football Association has stated pacts. Understanding the performance of such regulations gives national asso-in assets. Clubs’ balance sheet net assets that football club licensing in Cyprus is ciations important insights into how to achieve their financial goals and sustainhave risen by more than €1.6 billion in financial advantages while keeping track of clubs’ debts.the last three years with FFP boosting The implementationowner contributions, which have com-fortably exceeded losses. Clubs’ balance of FFP and the severesheet assets now exceed all debts and li- sanctions imposed haveabilities by €4.9 billlion. The report demonstrates the continu- led to a 92% decreaseous financial improvement of European in overdue payablesfootball clubs, which satisfies their short-term and long-term financial goals in anumber of ways. Moreover, after a decadein which wage growth outstripped rev- an ongoing process which enhances theenue growth, revenues have now grown financial capability and the quality offaster than wages for two consecutive clubs’ management. Ten years ago, theyears. Such positive financial results have debts of Cypriot football clubs stood atencouraged national associations to adopt more than €90 million; this amountmore practices for the future, which will has fallen to €65 million and is expect-help sustainability become the norm re- ed to be reduced even further. Basedgarding European clubs’ relative financial on the latest licensing report (2014),00peCrIfMorMmASaTnEcRe.AHD 2e0n8cXe1,4t0h.eairepo2rt p1r1o/v0i7d/e1s6 14:05Cyprus football clubs reported a turno-

106 ACCOUNTANCY CYPRUS MEET THE CFOGEORGEHADJINEOPHYTOUAlthough the Chief Executive Officer (CEO) of a throughout the organisation to helpcompany or organization is the person with ultimate other parts of the business performresponsibility for ensuring that it functions properly better. This has been my own experi-and implements the strategy set out by the Board, the ence at Atalaya Mining Plc. With theChief Financial Officer (CFO) is becoming increasingly company being dual-listed on theimportant and powerful. We spoke to George AIM in London and TSX in Canada,Hadjineophytou, Chief Financial Officer at Atalaya Mining and having commenced commercialPlc and Chairman of the CFO Committee of ICPAC. production of copper concentrate in February 2016, there are a number ofNumerous reports in recent years proper controls are in place across the challenges that need to be faced andsuggest that the role of a company’s organisation. Economic uncertainty, overcome, some of which would notChief Financial Officer (CFO) is increased regulatory requirements, necessarily be associated with the “tra-changing rapidly all over the world. compliance and greater investor and ditional” CFO role.Is this your experience? stakeholder scrutiny are forcing themYes. The role of the CFO has been more and more into the spotlight. It is said that the CFO is perhapsevolving over the years, both locally The role of the CFO has always been the one person in an organisationand globally. This has been more to take care of the financial affairs of who sees the ‘big picture’, whichapparent in Cyprus over the past 2-3 his/her organisation, looking after its suggests that the roles of CEO andyears, especially after the events of assets by minimising risk and getting CFO are growing closer. WouldMarch 2013 and the financial crisis the books right and running a tight you agree?that followed. finance operation that is efficient and I fully agree with both statements.Today, the role of the CFO is under effective. The change in the role has The finance department/function sitsgreater scrutiny, both within the or- meant that CFOs are becoming more at the centre of all the other depart-ganisation and from external sources. strategic, helping to shape overall ments/functions in an organisation. ItCFOs face continuous pressure to cut strategy and direction, and applying affects and is affected by the actionscosts, grow revenue and ensure that a financial approach and mindset of all these departments as, inevitably, all actions in an organisation have a financial impact, which needs to be managed by the finance department. The CFO must be in a position to see the big picture in order to act proactively. This inevitably puts the

107ACCOUNTANCY CYPRUS

108 ACCOUNTANCY CYPRUS MEET THE CFOCFO in the shoes of the CEO, which The key to doing a good job is alwaysis why the two senior executives of an good corporate governanceorganisation must have a very goodworking relationship in order to beable to supplement and complementeach other.Have you had to develop certain this information. This is why a grow- Atalaya is unique by Cyprus stan-new skills for your position in to- ing number of CFOs take on the role dards. It is a junior mining com-day’s changing corporate world? and responsibility of looking after pany, owner of a significant assetLearning and developing new skills their organisation’s IT systems to en- (copper mine) in the south of Spain.is an ongoing process. As a CFO, sure that technology is being properly The needs and cycle of the miningyou cannot afford to remain stag- utilised to meet these growing infor- industry are quite different fromnant when everything around you is mation needs. those of a typical trading company aschanging. Your core skill is finance there is a heavy investment upfront,but you also need to develop the How much pressure is placed in order to get a mine permitted andnecessary skills to either resolve issues on the CFO these days due to operational. This means that youyourself or, at least, identify where stricter regulation and compliance need to ensure that the companythere is lack of a certain skill and get requirements? is adequately funded in the initialsome specialist help. This is where A CFO’s time is increasingly spent stages, which could last a good fewhaving good external advisors with on compliance matters, reflecting the years by the time you receive all thegood knowledge of your business changing business and regulatory en- necessary permits for mining to com-counts a lot. vironment in which an organisation mence. This is the reason why Ata- has to operate. This puts additional laya is listed on two stock exchangesTechnology is changing business in pressure on the CFO in terms of time – AIM (London) and TSX (Canada).many ways. Has it had a direct im- allocation, training needs and ensur- The company has used both mar-pact on your work as CFO? ing that both his team and systems kets for equity raising over the pastTechnology is both a blessing and a can meet the increasing demand for twelve years. Dealing with the dif-curse! The fast pace at which busi- compliance. There is always a fine ferent stock exchanges, shareholdersnesses work today means that infor- balance between achieving the right and investors is a challenge in itself,mation needs are increasing, both in level of compliance and spending too as their demands and expectationsvolume and complexity. Information much time on compliance instead of are very high and there is little roomhas to be on time – sometimes in real focusing on operational matters. for error. Any mistakes have an im-time – accurate and available to dif- mediate impact on your share price,ferent people who may be based all In your personal role at Atalaya as overseas markets (unlike Cyprus)over the world (hence connectivity Mining Plc, are there aspects of the punish or reward companies in anand accessibility is of major impor- work that are very specific to the efficient way. The key to doing atance). Accurate and timely informa- company and the sector or is a CFO good job is always good corporatetion is vital to a CFO to enable him/ doing pretty much the same thing governance. This starts at Board levelher to take the right decisions. In or- in any company or organisation? and flows down to the managementder to achieve this, he/she has to rely and employees of the company.on technology and systems to produce Good corporate governance ensures that things are done properly and As a CFO, you cannot afford to that there is clarity and visibility forremain stagnant when everything all stakeholders, and it provides as- surance to both existing sharehold- around you is changing ers (and stakeholders) and potential shareholders of the company.

ENERGY NEWSwww.energynews.com.cy Energy News Portal EnergyNews.com.cy is the online portal for up-to-date energy-related news from Cyprusand the rest of the world. Well-rounded and objective information on all energy-related issues for businesses, professionals and consumers in Cyprus is presented and all organizations, bodies and companies active in the broader energy sector are promoted. Electricity | Oil | Renewable Energy Sources (photovoltaic, wind, hydro-electric and solar thermal power, biomass and geothermal energy) | Natural Gas | Energy Conservation | Environment | Business | Subsidies/Grant SchemesΙΜΗ Collaboration5 Aigaleo Str., 2057 Strovolos, P.O.Box 21185, 1503, Nicosia, CyprusTel.+357 22505555 Fax. + 357 22679820, E-mail: [email protected] details· Andreas Leontiades, tel. 22 505535, email: [email protected]· Christopher Constantinou, tel. 22 505565, email: [email protected] www.energynews.com.cy

110 ACCOUNTANCY CYPRUS FINANCIAL SERVICESTHE NEW ERA IN OCCUPATIONALPENSIONSThe disadvanTages or shorTcomings of The ProvidenT fund,which may have discouraged emPloyers from offering TheirPeoPle a Pension scheme, have been efficienTly addressedvia The inTroducTion of Pension Plans under class vii.By Christis Provident Funds have long What are the mainMichaelides, monopolised the occupational characteristicsHead of pensions arena in Cyprus, and benefitsBusiness given that, until recently, of the Class VIIDevelopment, there was a lack of noteworthy offering?Ancoria alternatives. However, a 2014Insurance amendment to the Law on Hassle-free set-upPublic Ltd the Establishment, Activities with administration costs and Supervision of Pension Funds has paved the way for As opposed to Provident Funds the introduction of a new that involve the formation of a legal breed of occupational pension entity, Class VII is implemented by schemes, governed by Class VII of the Insurance Law. way of an agreement between the Equipped with a practical and modern regulatory Plan provider and the Plan sponsor. framework, insurance companies are well-versed to of- It thus requires no set-up or annual fer new and innovative occupational pension schemes costs, nor does it involve any ad- that eliminate the administration involved with creating ministration or the need to submit and running a Provident Fund. A significant milestone, financial accounts or an investment which eliminates the need for a Provident Fund Invest- policy. This makes it cost-efficient ment Committee, is the personalised investment policy for all types and sizes of organisa- by which members follow their own investment policy, tion, even those with only a hand- tailored to their individual requirements and investment ful of employees. profile.

111ACCOUNTANCY CYPRUSIndividualised Flexibility Insuranceinvestment policy Members are entitled to change their companies areMembers can choose their personal rate of contribution, make lump-sum well-versedinvestment strategy and switch be- contributions or transfer in funds from to offertween Funds. This is a fundamental existing pensions. newdifference with the Provident Fund, andin which members have to follow Supervision innovativea uniform investment policy and occupationalmaintain an Investment Committee, Class VII falls under the authority of the pensionthus distracting employees from their Insurance Superintendent and, conse- schemesdaily activities and requiring that they quently, within the Solvency II Directivemake investment decisions for which (implemented as of 1 January, 2016), thatthey may not be qualified. codifies and harmonises the EU Insurance regulation. The key objectives are primar-Tax benefits ily concerned with the capital adequacy that EU insurance companies must holdBoth employee and employer contri- to reduce the risk of insolvency as well asbutions are eligible for tax deductibil- modernised supervision, which aims toity from taxable income – up to 10% shift supervisors’ focus from complianceof each employee’s annual income. monitoring and capital to evaluating insurers’ risk profiles and the quality ofCustomisation their risk management and governance systems.Class VII is highly customisable to In conclusion, some of the disadvantagesfit the requirements and characteris- or shortcomings of the Provident Fundtics of any organisation. Changes to that may have discouraged employersthe terms of the Plan can easily be from offering their people a pensioneffected at any time without prior scheme, have been efficiently addressedconsent from any regulatory body or via the introduction of Pension Plansauthority. under Class VII.

112 ACCOUNTANCY CYPRUS FINANCIAL SERVICES interviewTFI MARKETSENJOYS ARECORD YEARTFI Markets Ltd is an EU-licensed Financial Institution, which, since order to remain relevant, we need to 1999, has provided bespoke currency solutions including multi-currency deliver a level of service to our clients international payments, hedging products for its corporate clientele and that produces tangible benefits to multi-platform currency trading. CEO Loucas Marangos looks back their operations. In addition to our over a difficult period for the Cyprus economy and explains how TFI competitively priced service offer- Markets survive the crisis and has just enjoyed a record-breaking year. ing, we pay close attention to really understanding each client’s needs andAs CEO of TFI Markets, what would Continuing the successful trend of the we provide a personalised approachyou say has been the main challenge last years, 2016 was another profitable when communicating with clientsof your career so far? year with record new client registrations and responding to their enquiries.I would say that the major strategic and record transaction numbers. It is al- We also consider crucial the prudentdirectional change of 2008, when the ways useful to look behind the numbers risk management practices that havecompany moved its focus from trade and 2016 was also a success for a variety been instrumental in dealing withfinance to the provision of foreign of other factors. We are also pleased periods of heightened uncertaintyexchange payment and risk-hedging to see a much more diversified client and also with managing unforeseensolutions to corporates, has defined the base and significant improvements to events, e.g. the breaking of the Swisscompany. I was a young CEO back our efficiency when dealing with client franc/euro peg in 2015.then and, to be honest, pulling that transactions. Also of primary importance is theoff looked at times to be an impossible company’s capability to seize newtask! But the quality of the TFI team What do you see as TFI Markets’ opportunities as these present them-and the collective effort was the driving competitive advantage over other selves. We pride ourselves in ourforce behind the successful reposition- Financial Institutions? flexible decision-making mechanismsing the company. There are a number of factors that and the calibre of our people, who are have contributed to the success of quick to react to change and positiveHow would you describe the compa- our business model but everything about exploiting new opportunities.ny’s financial performance in 2016? stems from the philosophy that, in What were the main challenges faced by the company in the last 3 years and how did you respond to

113ACCOUNTANCY CYPRUS In order to remain relevant, we need to deliver a level of service to our clients that produces tangible benefits to their operationsthose challenges? The reputation of the Cyprus regulation and compliance that willIn the period immediately after the economy and its banking system inevitably influence how financial2013 crisis, the company – although was dealt a severe blow in 2013. Has institutions are run?not directly affected by the haircut of public and investor confidence now In recent years we have seen a pleth-deposits – had to deal with the con- returned? ora of new regulatory requirementssiderable uncertainty in the economic I have to say that, on balance, the and the trend appears to be one ofand financial environment and the country looked significantly better increased regulation and control.imposition of capital controls. The in 2016 than I would have thought MiFID II, PSD II and the 4th AMLfact that the company was “open for possible back in 2013. Over the last directive are all major upcoming reg-business” and was able to service its two years we have seen a consider- ulations that will impact the sectorsclients during a difficult period was able improvement as the economy that we are involved in. I believe thatinstrumental in establishing TFI as a has bottomed out and is rebounding. both costs and the changes to busi-reliable business partner. Having said However, I believe that confidence ness models that are being driven bythat, I feel that the most challenging is something that is hard-earned but compliance and regulation are amongissue for a company like TFI is the very easily tarnished and although the main factors shaping the financialconstant need to keep up with the public and investor confidence has industry landscape. The result will bepace of change in an environment been improving, the process will be a a more robust financial system withwhere competition is increasing and gradual and long one. increased transparency and fairerwhere technology and compliance ap- practices for the end client. I alsopear to be always in a state of flux. Are there any upcoming changes to believe that there will be a number of mergers/acquisitions as larger firms are better suited to absorb compliance costs but a smaller number of firms and increased cost structures may have the undesirable effect of reduc- ing competition and can ultimately result in comparatively higher prices for clients. What are your plans for TFI Markets over the next 3-5 years? Without wanting to go into a lot of detail, I would single out two strategic objectives for the medium term. One is the extended automation of our sys- tems and processes to handle the larger transaction volumes and the second is the significant strengthening of our sales team with the aim of further improving on our geographical coverage as well as reaching specific client segments.

114 ACCOUNTANCY CYPRUS MANAGEMENTFORMING, STORMING,NORMING, PERFORMING How work groups operate. Stage 3: NormiNg is, the more power its norms have over members. Members By Demetris Ergatoudes, FCIB, After a variable period of time, of more cohesive Groups will former Senior Manager, Popular Bank the Group becomes less a also feel more secure. Research collection of individuals and carried out a few years ago dis-Agroup is a collection of individu- members see themselves as just covered the following: als who have regular contact and that – members – of a group • The less cohesive the Group, frequent interaction, mutual in- which they wish to maintain. the greater the tendency of fluence, a common feeling of ca- This social view is typified by members to feel nervous on the maraderie, and who work to- a lack of conflict, whilst roles job. gether to achieve a common and standards emerge and are • The greater the influence of set of goals. Formal groups are accepted, and potential conflict norms over the individual, the those formed by the decision of is avoided; harmony is the order more likely it is the individual the management of the organisa- of the day. Task objectives are will feel a desire to stay within tion, e.g. the deposits department continued by open exchanges the Group.of a bank, the sellers department of a company, etc. of views and ideas. Again, no • The more secure an individualInformal groups in the work situation may be formed for conflict is evident and members feels within a Group, the morevarious reasons, e.g. shared social or sporting interests, a seem willing to listen to each he/she will react aggressively tocommon background, age group, level in the organisation or other. other Groups’ hostility. The lesstechnical background. The informal group may or may not cohesive a Group is, the morebe the same as the formal work group. Stage 4: PerformiNg likely it is that the Group will re-Groups pass through four main stages in a set sequence. act to insults from other GroupsEach stage is characterised by a specific task and social goals. On a task level, solutions to by passive resistance.These stages are as follows: problems become a collective view with constructive efforts to imPortaNCe of SmallStage1: formiNg achieve Group objectives. So- grouPS cially, Group roles and attitudesThis is a period of orientation. Group members see that the have been formalised and thus Small groups outperform indi-task of the moment is to establish the constraints within individuals can concentrate on viduals acting alone and theywhich they work, to find out just what the task objectives are the tasks in hand. This does also outperform large organi-and the resources available to fulfil the task. On a social level, not mean that rigid behaviour sational groups. The relativelymembers are seeking appropriate behaviour, there is a ten- patterns have been adopted. small Group is flexible, so itdency towards dependence and strong leadership is sought. The general atmosphere lacks can respond to changing tension and a flexible approach needs and events. It recog-Stage 2: StormiNg is possible. nizes the fact that people feel a need to belong to aAs the name suggests, this stage is characterised by conflict. CoNSequeNCeS of CoheSioN working Group, take prideOn the task level, the individual resists the demands made by in contributing to the Groupthe Group towards consensus, especially where his/her per- Group cohesion is the extent to and want it to achieve a highception for the situation differs from that expressed by other which individual members of performance level.group members. Social issues polarise, with each individual the Group want to stay withinworking towards his/her own goals. Attempts are made to it. The more cohesive a Groupinfluence the Group towards the individual’s view ratherthan collective agreement. Small groups outperform individuals acting alone and they also outperform large ORGANISATIONAL GROUPS

MANAGEMENT 115ACCOUNTANCY CYPRUS Meetings should have a specific purpose to accomplish OH NONOT ANOTHER MEETING!WHY SO MANY WORK MEETINGS END UP BEING A WASTE OF TIMEIwas training a team of people on By Andrie Penta, inviting the Wrong PeoPLe Time Management the other day Trainer In Business Skills and I mentioned that a large per- When people lose focus and start check- centage of our work time in the the meeting will progress. In case you ing e-mails on their smartphones rather course of the year is consumed by notice that your meetings are taking than actively taking part in the meeting, meetings, which are beyond our much longer than initially estimated, it is a strong signal that the content of the control. The people in the room they probably lack a clear purpose. meeting is not correct. If you realise thatthought that, in small to medium sized you are only fully engaging one or twocompanies especially, this is very typical. Poor Moderation SkiLLS employees at a time while everyone elseWe moved on to discuss how meetings checks their phone or daydreams, thencan and cannot be productive. Out of If you are aware that a specific member of you’re wasting your time and theirs.the discussion, we all agreed that meet- your team knows more about a topic ofings should have a specific purpose to discussion than you do, let them lead that no foLLoW-uPaccomplish. Meetings should improve part of the meeting to keep things mov-productivity, teamwork, communica- ing quickly. It saves time, while keeping Follow-up is key to successful meetings,tion, attitude, motivation and the overall your team alert and ready to speak. especially if you have assigned tasks andfeeling of wellbeing, at work. In my deliverables. Keep track of the end resultexperience, leaders and managers al- eMotionaL reaSonS and don’t rely on just your own thoughts.locate almost half of their daily working Get a sense of whether or not your teamhours to preparing and holding meet- Employees often feel frustrated when they thinks the aim you set out to achieve at theings, which does not leave much time cannot express themselves freely. Frustra- beginning was actually fulfilled. Be openfor actually getting things done. tion arises when they have things to say but to suggestions on how future meetingsSo, why are the majority of meetings need to hold back because they are afraid could be improved.unproductive? Here are six possible ex- of stepping on one another’s toes. Preventplanations. this frustration by establishing a code of BoredoM conduct. Set a time limit on the meetingLack of an agenda and allow specific portions of time for each Repetitive meetings can make people feel employee to speak. Don’t let politeness tired and often overwhelmed. By shiftingPrior to the initiation of any meeting, interfere with getting things done. between various meeting locations, you pre-make sure that everyone is on the same vent boredom and increase participation andpage. Clarify the meeting’s agenda and productivity. Often a simple change of scen-the purpose it is trying to serve. Tell ery can bring back the good energy of theyour team what the main objective of team, which leads to good ideas. Ask yourgetting together is, and determine how team if they enjoyed the change of scenery. If they enjoyed it but didn’t find it construc- tive, try something else the next time.

116 ACCOUNTANCY CYPRUS REAL ESTATE WANTED HOMESHOLIDAY HOMESWANTED grounds,whichbringalot sis, it better to use the services of local and foreign visitors of an agent who deals with such during the off-season. A few rentals. It might cost you 20% months ago, an annual futsal of the rent but there is nothing competition took place, with worse than being woken up atInvestors could approximately 2,500 people 2.00am because the aircondi- attending and six hotels filled by tioning isn’t working.take advantage the participating teams, parents Paphos villas command a and relatives, etc. As a result, lower rental (€1,000-€1,500 of the current villa rentals were thriving and per week), depending on theshortage of good places of entertainment were number of bedrooms, the qual- busy. Recently announced new ity and time of the season. In aqualIty propertIes infrastructure plans, including recent address, the Chairman additional sports grounds, beach of the Cyprus Hotel Associ- By Antonis Loizou F.R.I.C.S., front walkways (based on the ation cited statistics showingAntonis Loizou & Associates Ltd Limassol promenade project) that 15% of visitors to Cyprus and various other new social do not stay in hotels. It is rea-T he Famagusta district and, especially, activities are indicative of the sonable to assume that at least the Protaras area is running out of hol- district’s development moving a third of these (approximately iday homes for sale. Indeed, it is debat- in the right direction. Villas 120,000 people), stay in villa- able if there are even five or six beach are, of course, available to let in to-let accommodation, much units available to potential buyers. Paphos and, to a lesser extent, to the delight of the car rental There are some in the Ayia Napa/Sot- in Limassol and Larnaca and it companies, restaurants and su- ira area but that’s all. Just off the beach is quite surprising that, despite permarkets, and of course villas line, the number is increasing but not the general facilities provided provide an alternative type of including entertainment places, accommodation at almost half the latter two towns have not price. to a satisfactory degree. Notwithstand- attracted villa-to-let clients to Now that financiers wish to ing the fact that there may appear to be the extent that Paphos and rid themselves of unfinished ornumerous units for sale (not on the beach), many of them have Paralimni have. abandoned villa projects, thisproblems relating to permits, mortgages, bad construction, etc. Villas in demand for letting could represent an opportunityWhat is left and “suitable” for sale is less than 50% of what is on are those of 3-4 bedrooms with for anyone with spare cashthe market. Some buyers may take the risk to buy and undertake a small garden and a swimming looking for a real estate in-any procedures and costs to solve possible problems themselves. pool (at least 4m x 8m). They vestment. Returns are aroundThe prices of on/near the beach units have remained at relatively must be fully 4%-5% p.a. (nethigh levels with beach units in the Protaras area reaching almost equipped and of expenses),€5,000-€7,000/sq.m. depending on the precise location and furnished and, Prices of beach which is not of course, units in the bad, but a pro-those in Ayia Napa/Sotira around €4,000-€5,000/sq.m. The cleaned week- motional set-upprices of off-beach units range from €2,000-€2,500/sq.m., again ly but, more Protaras area and a technical importantly, have reached team on standbydepending on their location and available facilities. a handyman almost are both required.Also notable is the keen demand from visitors to rent such units.Beach units (at least 3 bedrooms) have a rental period of around should be at €5,000- Moreover, the7-9 months (at an approximate rental of €2,500 per week) the ready at €7,000/ hoped-for bet-whereas, off the beach, the rental period is 4-5 months with an all hours to ter future of theincome of €1,500 per week. So in the end, purchasing could be attend to any real estate marketan investment with a reasonable return, if retained partly for one’s repairs. If you regarding capitalown use. let out your sq.m. gains is an added It is also significant to note other benefits of the district, with property on a plus. Food forthe Ayia Napa Marina now under construction and the football short-term ba- thought?

117ACCOUNTANCY CYPRUSREAL ESTATECYPRUS PROPERTY MARKETPRICES STABILIZE ASTRANSACTIONS INCREASEBy George Mouskides, General Manager, FOX Smart Estate Agency, Chairman Cyprus Property Owners AssociationP ositive signs of both Cypriot and erty market sectors. registry could provide an analy- foreign buyer activity continue to be Plot and land prices come sis of the type of properties sold, observed. Property prices have stabilized i.e. flats, houses, offices etc. It while rents are gradually increasing. with a question mark as they would also be useful if we could Sales to foreigners increased by are not covered by either of have a breakdown between 36.2% during November 2016 com- the two indices. We believe, new and resale properties. The pared to the same month in 2015. however, that land has shown more information the market During the first 11 months of 2016, the largest decrease since gets from the authorities, the property sales to foreigners increased 2008, after having a higher more efficient it becomes and by 20.2%. This rate of increase was increase during 2000-2007. the better it can help stakehold-less than that of total sales islandwide, which, for January-No- Building plots have shown a ers take better decisions. If onlyvember 2016 showed a 33.6% rise compared to the same period higher decrease since 2008 a few insiders are privy to thein 2015. In November, 651 property sales were recorded, a compared to built properties, said information, they have a46% increase compared to November 2015, following the up- though again not as sharp award trend of the previous four months. drop as land. Development comparative but plots/land in seafront areas unfair advantage We expect Cypriots to have bought around 4,900 properties and commercial plots over the rest ofduring the whole of 2016 and foreigners 1,600, registering a total in town centres the market’sof 6,500 sales for the year. Cypriots thus account for 75% of sales would seem to be partici-and foreigners 25%. We estimate the share of foreign purchas- the exceptions pants. Iners in value to be higher, because of the passport and residence to the rule. It conclusion,permit incentives, but we do not have the necessary data from the would be nice we expectgovernment to prove this conclusively. if the land the upward sales trend and The average number of sales during 2000-2013 was about 13,500 annually. A decent property prices sta-property market should conclude about bilization to continue.10,000 to 12,000 sales per year. The Demand for rentalnumbers tell us that we currently stand properties will remainat about 60% of an average market. strong as many people whoBarring any negative developments, would like to buy property dowe expect the property market not have the financial means toto head to around the 11,000 do so. Our projections do notmark in annual sales in the take into account a probablenext 2-3 years. solution of the Cyprus problem, as this would change the equa- Regarding prices, both tion considerably.the Central Bank indexas well as that of Demand for rental properties willRICS clearly point remain strong as many people whotowards a stabi- would like to buy property do notlizing trend in have the financial means to do somost prop-

118 ACCOUNTANCY CYPRUS REAL ESTATEFAVOURABLE CONDITIONSEXPECTED FOR REAL ESTATEINVESTMENT IN 2017 decline over the next year is moving towards favour- towards growth. Investors are ing buying property. Most still cautious, possibly a re- investors think the lending flection of worries about how situation in Europe will not income growth will be affect- be any different in 2017. The ed by a slowing economy. net balance across the year of the survey has remained Around 44% of investors slightly negative (favour- take the position of holding ing tightening) for lending assets across all sectors. The net balance change suggests that majority opinion of holdBy Panos Danos FRICS, VRS, C. Env., Managing Director,DANOS (An Alliance Member of BNP Paribas Real Estate)The BNP Paribas Real Estate Confidence Index (RECI) quantifies how the different combination of challenges facing real estate in the present environment impact on investor sentiment, tracking the proportion of investors who think that investment conditions will improve, worsen or stay the same over the next12 months. The latest RECI tells us that investors expect 2017will see favourable conditions for real estate investment, albeit ata slowing pace. Changes in performance expectations underpinthis shift and are likely to manifest in actual buying decisions asinvestors exercise even greater selection with property.The key ReCI fIndIngsNo change in business conditions in 2017 is the majorityopinion of real estate investors (70%) across the Europeanmarkets in Q3. This position was subject to a dip in Q2, driven by UKinvestors who reacted negatively to the Brexit vote, only tobounce back in Q3. Investors in France and Germany werelargely unmoved by that event. The path of the RECI with itsQ3 net balance figure of -11% shows that majority opinionmay be to anticipate a slower market. With total returns, netbalance of investor opinion is moving away from anticipating

119ACCOUNTANCY CYPRUSconditions in 2017. All of this year, there are reasons prus, the Netherlands and ries, should companies decidethis suggests investors believe to be optimistic. Inflation in Ireland are showing solid to relocate staff from London.that central bank action is the eurozone is projected to GDP growth. However, for the time being,only having a limited effect stay extremely low, in line most occupiers appear to be inon the commercial real estate with oil prices, hence we More than ever, real estate “wait and see” mode as theymarket. anticipate that the European looks attractive compared to monitor how the UK’s with- Central Bank will increase its bond and equity markets. drawal from the EU plays out. Despite weaker expected quantitative easing policy. As Indeed the bond market is There is no evidence, as yet, ofeconomic activity in Europe a result, the euro is expected less and less rewarding, while any significant exodus of oc- to stay low against the major the equity market is more and cupiers from London, but the More than currencies; this will support more volatile. On the back of UK’s exit from the EU will ever, real estate purchasing power across this analysis, we expect that be factored into occupiers’ looks attractive Europe. In Germany and the the fundamentals in most decision- making over the me- UK, unemployment rates re- European Real Estate markets dium term. compared main at historical lows, albeit will be resilient in 2017. With to bond and with limited impact on wages our expectations of further If the real estate sector is to equity markets but consumption is rising on yield compression, as well as play an increasingly promi- the back of weak inflation pick-up in rental growth, Eu- nent role in financial market and increasing consumer ropean real estate looks to be activity, then it is equally im- confidence. At the same time, an attractive investment. portant to understand its rela- countries such as Spain, Cy- tive past and how that might There has been consider- inform decision-making for able press attention on the a more stable and secure potential impact of the Brexit future. Unlike other asset decision on European occu- classes such as equities, bonds pier markets, with cities such or even commodities, real as Frankfurt, Paris and Dublin estate has both a functional touted as possible beneficia- and financial dimension that complicates its understanding as a cyclical investment. Long- term rental contracts do not align well with the short-term planning horizon of many tenants, and capital valuations of properties depend on large variations in investor discount and borrowing rates. “Europe looks well set,” conclude some global investors. There is an improving macro- economic picture, unemploy- ment is improving, supply has been minimal for many years, and banks and investors are becoming active in terms of cleaning up their balance sheets and selling assets. That is creating a lot of interest. There is a continuing appetite for real estate, and that demand is coming from a pretty broad spectrum of investor types – pension funds, retail investors, wealth management, sovereign wealth and the larger insurance companies.

120 ACCOUNTANCY CYPRUSICTCLOUD SERVICES AND SOLUTIONSKEEP MICROSOFTAHEAD IN CYPRUSGeorge Petrakides, Country Manager at Microsoft Cyprus& Malta, explains how today’s mobile-first, Cloud-first world is changing business across the islandMMicrosoft is one of the biggest names in comput- is becoming a technology company. ers and technology. How has its business evolved over the years since the Cyprus branch of the How significant is Cloud Comput- company was established? ing to businesses? Are Cypriot firms Technology has become part of who we are and taking advantage of the Cloud to the is well-integrated into our daily lives. Currently, extent that you would expect? we’re standing at yet another very important turn- Cloud technology has made possible ing point: we each own multiple devices, we expect opportunities that can be truly transfor- to be constantly connected and are used to having mative for businesses. The adoption of information available anytime, anywhere. Trends Cloud services worldwide has contin-like mobility and big data are dissolving the boundaries between personal and profes- ued to accelerate at an incredible pace.sional life. Microsoft’s mission is grounded in both the world in which we live and For almost all industries, the Cloudthe future that we are striving to create. Today, we live in a mobile-first, Cloud-first changes how people work, where theyworld, and the transformation we are driving across our businesses is designed to en- work, and how they do business. Withable Microsoft and our customers to thrive in this world. Microsoft Cyprus has striv- the emergence of Cloud Computing,en to be Cyprus’s partner in growth for nearly 15 years. We will continue to invest in today’s IT organisations are playing anthe country and our business partners and we will always be looking for more ways in increasingly important role in drivingwhich to help our customers address new market challenges. business strategy. Choosing a Cloud service provider is an important deci-How important is it for businesses to engage with their customers, empower sion for the organisation’s future. Whenmake the necessary digital transfor- their employees, optimize their op- you put your data in the Cloud, you aremation and invest in modern tech- erations and reinvent products and asking another entity to be its custodiannology solutions? business models. The key is a systems and, however powerful a technologyIrrespective of the industry in which approach. And it’s not just technology. may be, people will only use it if theyit operates, every business has to start It is about the combination of tech- trust it. This is particularly true in Eu-thinking and operating like a digital nology, people and processes, it’s the rope, which is why our drive to helpcompany, an interconnected company. systems approach to how you become customers unlock productivity usingIt’s no longer just about procuring and a digital company that defines com- the Cloud is underpinned by our com-deploying one solution. A business petitiveness and the ability to change mitment to fostering and maintainingneeds to think about its own future as industries – from automotive to en- trust in our Cloud services. Microsofta digital company, building out what ergy, manufacturing to healthcare andwe refer to as systems of intelligence. the public sector. As part of this fourthThese systems will help businesses Industrial Revolution, every company

121ACCOUNTANCY CYPRUSis committed – starting at the top – to • Security. We take your security very ing new certifications and partneringproviding a Cloud you can trust. It is seriously – we spend over $1 billion a with regulators and standards bodies toembedded in the DNA of our Cloud. year on our security practices and tech- develop new regulations and standardsCypriot companies are fully taking nologies. Our comprehensive approach when we identify opportunities to in-advantage of the Cloud and I couldn’t to security helps protect your data crease digital privacy and safety.be happier with the current adoption. wherever it may be – in a data centre, • Transparency. Transparency plays anOur customers perceive Cloud services on a phone, on a desktop or en route important role in developing trust – weas a way to help them reach business via the Internet. work tirelessly to increase not only ouragility, both inside and outside their • Privacy and control. At Microsoft, we own transparency but the transpar-company walls, allowing them to drive fundamentally believe that our custom- ency of the industry and its regulators.maximum productivity. Our Cloud so- ers’ data is their own, whether it sits in We publish reports detailing govern-lutions, such as Office 365, Windows our Cloud or in their own data centre. ment requests for customer data. WeAzure and CRM Online, allow busi- We invest heavily in technology devel- notify individual customers when thenesses of all sizes to stay flexible, reduce opment and practices to ensure that we government requests any of their dataIT Management and significantly actively protect your privacy and provide or makes applications when legally al-reduce costs. the necessary tools to control both the lowed to do so. Finally, we submit to a privacy and administrative aspects of the set of third-party audits and publish theYou mentioned the issue of trust data you put in the Microsoft Cloud. results for our customers.where Cloud services are concerned. • Compliance. Our extensive experi- • Reliability. Microsoft invests in state-How do you ensure that your cus- ence working with the world’s largest of-the-art hardware and infrastructuretomers trust you with their data? governments and enterprises in the to meet customers’ immediate needsAre Cypriot firms taking these issues most highly regulated industries has and anticipate future requirements. Weseriously enough? been transferred to our Cloud services. provide world-class availability, recoveryTo help us deliver technology that Our investments in compliance-related and backup capabilities for organisationscustomers can trust, we’ve established a technology, resources and staff help around the world with industry-leading,set of principles for wherever we deliver ensure that we are proactively adopt- financially-backed uptime commitment.concrete engineering work, legal work We proactively publish service healthand compliance work. Those principles information for increased access to keyare security, privacy and control, trans- availability information for Azure Statusparency, compliance, and availability. at https://status.azure.com, with Office and Dynamics at Office 365 uptime stats. What are your plans for Microsoft Cyprus over the next 3-5 years? Despite market challenges, I am confident that Microsoft Cyprus will continue to grow year-on-year and remain the largest IT Company in Cyprus. The main drivers of this stable performance arise from the fact that, as a company, Microsoft is transforming, increasing its product portfolio and becoming a Cloud leader. We are also committed as a company, through our Corporate Social Responsibility pres- ence in Cyprus and numerous related activities, to address some of today’s toughest challenges, drive job creation, create economic opportunities and empower people and organisations in Cyprus to achieve more. As part of this fourth Industrial Revolution, every company is becoming a technology company

122 ACCOUNTANCY CYPRUS OUT OF OFFICEOUT OF THE BLACKAND INTO THE BLUEAll ICPAC members naturally have a life beyond accountancy and, in each issue of the competitive sailing, especially in freezingmagazine, we take a look at how one of them spends his free time. Nicos Charalambides, or adverse weather conditions! Similarly,Director of ISOTAX Ltd, is President of the Limassol Nautical Club, where he not only en- in summer, I might spend seven hours atcourages young people to take up water sports but has also become a competitive sailor the sea in 40-degree temperatures and it’shimself, to the bemusement (and amusement) of some of his accounting colleagues. really funny when my friends keep asking me what I’ve been doing all that time!When did your passion for water Nicos Charalambides (centre). Limassol Nautical Club has over 300sports start? sportsmen and women in competitiveIt started when my elder daughter took her and that makes all your day-to-day teams including Olympic silver medal-first swimming lessons and later joined the “problems” go away. Then it’s the magic list Pavlos Kontides and ParalympicLimassol Nautical Club’s swimming acad- of the vast expanse of blue and your inter- gold medallist Karolina Pelendritou.emy. Some people from the club asked me action with marine life. Has their success, in particular, creat-to help them out with organisational mat- ed new interest in water sports amongters and, through my association with the What has your involvement in water younger people?club, my passion for water sports grew on a sports taught you? In truth, it has not created a huge inter-scale that I had never really anticipated. It has taught me that, even though Cyprus est, especially in sailing, for many rea- is an island, water sports are not so popular sons. As I mentioned earlier, Cypriots areWhich particular sports do you practise with Cypriots until they become familiar football-mad and the media bombards usyourself? with them and then they become hooked. I 24/7 with football, which means that otherI started offshore sailing two years ago think there is too much emphasis on foot- sports – including like water sports – getwhen I took the Royal Yacht Association ball here and perhaps a certain fear of the limited exposure, despite the success ofcourses and obtained a skipper’s licence. I sea, though in recent years, more and more people like Pavlos and Karolina. Amongstalso do indoor rowing on a regular basis. people are choosing water sports over oth- the events we organised in 2016 was the ers. One good thing is that there are no age RS:X Youth World Windsurfing Cham-Are water sports hard to do? Is the main restrictions if you want to start swimming, pionship and the exposure we receivedattraction that they test one’s physical rowing or sailing and another is that you abroad was unheard of for such an eventlimits or is there something else to them? can do these on your own or with friends. but, in Cyprus, it received very limitedWater sports are hard, especially when you media coverage.start taking part in competitions and cham- What do your colleagues and friendspionships, which certainly test your physical think of your hobby? Do you ever wish you’d become aand psychological limits. In some sports like In the beginning they thought it was a professional sailor like Pavlos Kontidessailing, there are other elements to take into really bold move to start sailing at the age rather than an accountant?consideration too: the proper set-up of the of 50! Most of my colleagues and friends That’s a difficult question! I get greatboat, changing weather conditions, currents, don’t understand my fascination with satisfaction from my profession and, inwaves and so on. It becomes more like a my youth, I never had the opportunitychess game because tactics also play a very to explore the possibility of becoming aimportant role in the final outcome of a race. professional athlete. I would encourage any young athlete, who has the talent,What is it about the sea that you love? the passion, the will and the opportunityWhat is there not to love! When you are to follow his/her dream, otherwise theyat sea, there is so much tranquillity; all you will spend the rest of their life with a bighear is the boat cutting through the water “What if?” on their mind.

Global experience, localexpertise in the FundsIndustryKPMG provides comprehensive audit, risk advisory, tax and regulatory services tofund managers in setting up and operating through Cyprus. Our clients look to usfor leadership and guidance in areas such as: fund set-up and structuring; regulatoryinterpretation and support; proactive tax advice; investment acquisitions and duediligence; fund liquidation, re-domiciliation and/or restructuring.Our local practice is at the forefront of industry issues, working closely with theindustry and its representatives and actively participating in the firm’s global productdevelopment programmes.The combination of a strong local practice, with significant professional and industryexperience, along with the global reach of KPMG International fund services networkplaces us in an optimal position to provide added value service to our clients as theyaddress the industry challenges, and guide them in grasping opportunities.For more information please contact:Christos VasiliouDeputy Managing DirectorPrimary ContactT: +357 22 209 113E: [email protected] AngelidesSenior AssociateRegulatory & ComplianceT: + 357 22 209 227E: [email protected] ©2017 KPMG Limited, a Cyprus limited liability company and member of the KPMG network of independent member firms affiliated with KPMG International Cooperative (”KPMG International”), a Swiss entity. All rights reserved.