Cyprus Mail: News Articles in English, 00-04-28

Cyprus Mail: News Articles in English Directory - Previous Article - Next Article

From: The Cyprus Mail at <http://www.cyprus-mail.com/>

Friday, April 28, 2000

CONTENTS

[01] Strong debut for Demetra

[02] Government and hoteliers agree compromise tax deal

[03] Cypriots flock to Athens as airlines maintain cheap flights

[04] Former ambassador to Cyprus named State Department spokesman

[05] Committee ponders fate of oil refinery

[06] Pound 'parity' a boost for Brits, but Cypriots count the cost

[01] Strong debut for Demetra

DEMETRA made its entrance on the stock market at a premium of 16 per cent yesterday as one of the largest listings to date opened at the top end of analysts' predictions.

The co-op investment firm, which allotted shares at £1.00 in its February IPO, opened at £1.16 yesterday and hit a high of £1.20 before falling back to a close of £1.15. Turnover in the company was the highest on the market with more than 1.9 million shares changing hands.

High turnover in the stock is expected since some 200 million shares have been floated on the market, with 40 million warrants.

"For the size of the firm the opening price is unprecedented," said Adonis Yiangou of Expresstock.

However, he said investors should not start expecting that the stock would start advancing in leaps and bounds.

"This is an option for conservative investors – people taking their deposits out of an account with steady interest to something which offers slightly more in the way of yields," he said.

Demetra executives said they were pleased with the opening price. "It is at a level which satisfies us, and investors, I think. It opened above par," said spokesman Andreas Erakleous.

Earlier in the session, Demetra announced its net asset value of £1.01, and that also helped the stock.

Other investment firms have not been so lucky, with some of them still trading below their par or issue value as the shine of seemingly lucrative IPOs and private placements is beginning to wear thin.

Other executives of Demetra were loathe yesterday to talk to journalists about future plans of the company, which was rumoured to be sitting on the sidelines for weeks waiting for the market to start ascending again before floating its shares.

"We are trying to talk less and do more. We will work within our rights as a private company," another said blandly.

It was not immediately clear if the same answer would apply to shareholders.

In the broader market, the Cyprus Stock Exchange benchmark indexbarely budged. It closed 0.05 per cent lower to a close of 549.51, registering considerable swings on intraday speculation throughout the 90 minutes.

Traded value was £31.7 million on a turnover of 16.6 million shares.

Declining stocks outpaced advancers 61 to 34 and 14were unchanged on 109 issues traded. Six sectors of the market ended flat. Tourism shares ended 0.4 per cent down despite a surge in Cyprus Tourism Company, which led net gainers across the board with a4.8per cent jump to£8.39. Astarti andLibra nil-paid rights were down 18 cents each, while Agros Proodos lost 25 cents. Companies in the "other" categoryclimbed 0.7 per cent, prodded up by a 33 cent jump for ShareLink to £22.50 and by newcomer L.K.Globalsoft.Com which rose 13 cents to close at £5.82 on a turnover of 520,445 shares.

* Businessman, Paris Lenas has been appointed as Chairman of the new Cyprus Stock Exchange (CSE) Board, while Andreas Charalambous is the new Chairman of the Securities Exchange Commission (SEC).

The appointments, approved on Wednesday by the Cabinet, were announced yesterday.

Renos Christodoulides has been appointed CSE Vice-Chairman, and Symeon Kassianides, Akis Cleanthous, Zinon Pofaides, Pieris Hadjipieris and Eleni Marangou as members.

The new Chairman of the SEC, which is the stock market's watchdog, is a senior Finance Ministry official.

Andreas Charitou, Haris Potamaris and Doros Loizides have been appointed as new SEC members while Yiangos Demetriou is the new representative of the Central Bank in the SEC.

Friday, April 28, 2000

[02] Government and hoteliers agree compromise tax deal

BOTH Commerce Minister Nicos Rolandis and Zacharias Ioannides, Director- general of the Cyprus Hotel Association said they were satisfied with yesterday's "consensus" over re-imposing two old taxes on hotels.

The compromise concerned a plan to re-introduce the three per cent beverage tax, plus a sliding overnight fee on Cyprus hotels in order to help fund the Cyprus Tourism Organisation (CTO), which markets Cyprus as a tourist destination.

Rolandis and Ioannides agreed yesterday that the VAT charged to hotels would drop to five per cent - instead of rising to the 10 per cent everyone else will have to pay if the VAT bill passes Parliament, on its way to EU norms of 15 per cent.

This VAT drop, Rolandis said, would "offset the three-per cent levy" re- imposed on hotels in addition to the overnight fee, which starts at £1 for a five-star hotel guest and drops on a sliding scale according to a hotel's star rating.

Rolandis reluctantly re-introduced the old fees when in February the House of Representatives rejected the state's £12 million budget to fund the CTO - which the state usually supplements with an extra £7-8 million a year.

The three per cent levy was abolished years ago and replaced by annual budget allocations. However, for the last three years in a row, the communist Akel and centre-right Diko parties have wanted it re-introduced, since the tourism industry has grown each year and they felt no need to subsidise profitable hotels.

Their stance got some support from Rolandis' own 1999 report that last year's tourism revenue had passed the £1 billion mark for the first time, a 16.4 per cent increase over 1998.

"I think we worked out a plan which appears to be OK. And we shall submit this to the Council of Ministers," Rolandis told the Cyprus Mail.

"The disputes and the question marks were about that three per cent levy: to which services it should apply, in which way, to what extent, and whether it should apply in winter as well as summer," he said.

"These were the main questions... (and) to quite some extent they were sorted out," Rolandis said, adding: "Personally, I'm satisfied" at the compromise.

He said the tentative deal would first go to the Council of Ministers, "which has already decided in principle" in favour of it, and then on to the House.

While cautious as to the prognosis, Rolandis said, "normally I would say yes" - that it will pass the House - "because what the hoteliers are giving is equal to what they are taking advantage of."

"What we have considered today," Ioannides said, "is a compromise in order to facilitate the government and the political parties to reach an agreement for the VAT (bill) to go through (Parliament)", where it has stalled over political interests unrelated to the hotel industry's tax situation.

Ioannides said the compromise to drop the hotel industry's VAT to five per cent "had improved its competitiveness."

Rolandis' reluctance to re-introduce the three per cent hotel levy was based on his claim that, while tourism numbers were up, "profits are very slim," especially because "surrounding countries are offering dirt-cheap (tourism) packages."

He said passing on another three per cent in hotel charges to tourists would be disastrous to the island's already poor competitiveness.

"We cannot be unsatisfied (with the deal)," Ioannides said. But he noted Cyprus was "unique in Europe" in that "there is not a single (EU) country that calls for the hotel industry to contribute to sustain the national tourism institute."

While he said the industry would go along with the compromise, he said he believed "it is the obligation of the state, from its budget, to supply the means to fund the national tourism organisation," not the hotel industry.

Friday, April 28, 2000

[03] Cypriots flock to Athens as airlines maintain cheap flights

GOOD money for Olympic and Cyprus Airways and bad luck for those who want to travel to Athens for Easter, as all flights to the Greek capital are fully booked for the holiday weekend.

For the first time, the winter season and its cheaper fares have been extended from May to July, so travellers can still fly to Greece and back for just £80, Michalis Kythreotis, sales manager at Amathus, Olympic Airways’ representative in Cyprus, told the Cyprus Mail.

Olympic Airways this year had an increase 15 per cent increase in Easter bookings, compared to other years, he added.

"The result of the cheap fares is that airlines are booking a lot of flights and issuing a lot of tickets, and now with the Easter holidays, more and more people are going to Greece," Kythreotis said.

About 530 passengers are being flown to Greece every day by Olympic Airways, on flights that are fully booked. More would fly if more aircraft were available, Kythreotis added.

He said a lot of people would not make it to Greece this Easter, because everything had been fully booked from last Monday until Easter Sunday.

Cyprus Airways says it has laid on extra aircrafts to satisfy customer demand. The airline has scheduled six flights a day, rather than the usual three or four, to carry travellers to Greece during Holy Week, including 600 children going on school trips.

"People prefer travelling to Athens rather than spending their holidays at a Cyprus resort where they would spend about the same amount of money to stay at a hotel," said Olympic’s Kythreotis.

"A lot of people are still trying in vain to book tickets, and others are on the waiting list, but most of them have given up hope," he added.

Friday, April 28, 2000

[04] Former ambassador to Cyprus named State Department spokesman

Boucher takes over from James P. Rubin, who was previously Albright's adviser and spokesman at the United Nations. Boucher's current title is ‘spokesman’ whereas Rubin's was assistant secretary for public affairs. In order to earn the same rank, Boucher will need to be nominated by the President and have it ratified by the Senate.

He joined the US Foreign Service in 1977. Among his previous posts were jobs as State Department co-ordinator for the Asia Pacific Economic Co-operation forum and US consul general in Hong Kong during the British handover of power to Beijing. His experience spans 23 years and covers issues as wide as the fall of the Berlin wall and the Gulf War.

It was while he was ambassador in Cyprus that he met Albright for the first time, then US ambassador to the UN. He also worked alongside her in Hong Kong. He was her choice when Rubin made clear his intention to leave.Albright will be the fourth secretary of state that he has worked for. He has previously been department spokesman under Lawrence S. Eagleburger and Warren M. Christopher.His track record as spokesman has been impressive. Current White House spokesman Mike McCurry learnt how to give press briefings by studying how Boucher handled the job as State Department spokesman first time round.

Rubin resigned in order to spend more time with his wife and newborn son.

Friday, April 28, 2000

[05] Committee ponders fate of oil refinery

COMMERCE Minister Nicos Rolandis yesterday said the question of whether or not to upgrade or close the Larnaca petroleum refinery had been deliberated by a special ministerial committee and would go before the Council of Ministers "sometime in May."

"Views were heard," at yesterday's ministerial committee meeting, he said, declining to elaborate, "and the whole matter will be before the Council of Ministers some time in May.""Of course," he added, "the main objective is to make sure that, whatever the decision regarding the upgrading of the refinery or not, Cyprus will not be left without petroleum products, because it is the backbone of the economy, of life generally.""So the decision has to be such that we will secure the smooth continuity of the supplies, of the availability of petroleum in Cyprus. This is the main criterion," Rolandis said.

One option facing the Cabinet includes a $40-million refinery upgrade to bring its products up to EU standards by 2003, when Cyprus hopes to join the European Union.Other options include moving the refinery to another site - which the government has long promised the Municipality of Larnaca - or closing it altogether and ending oil refining on the island.

All these choices involve spending hundreds of millions of pounds to construct extra crude oil and refined product storage tanks to comply with EU requirements. EU rules require Cyprus to triple its 100,000-ton crude oil storage capacity to about 320, 000 tons. Building these tanks could cost over $300 million, Rolandis has said.EU rules also require Cyprus to have a storage capacity for a minimum of 90 days worth of refined petroleum products, adding millions more to the equation.

Whether Cyprus builds the new storage tanks in Larnaca, or moves the refinery to another Cyprus site and builds them there, or even ceases refining oil and simply imports refined petroleum products, it will have to pay to build storage tanks somewhere. Under EU rules, that "somewhere" could be in any other EU country, Rolandis said - which would include Greece.

But ceasing to refine crude oil and buying refined products overseas - whether or not they are stored on or off the island - would make Cyprus import- dependent for all its commercial and military fuel needs.The minister sees the oil problem as probably "the biggest single issue when it comes to our EU accession."

Friday, April 28, 2000

[06] Pound 'parity' a boost for Brits, but Cypriots count the cost

IT'S a godsend for British tourists and expat pensioners, and a nightmare for Cypriots with children studying in the UK.

Pegged to the plummeting euro, the Cyprus pound is hovering a whisker away from parity with sterling, with the local currency hitting a 30-year low against the British pound on Wednesday.

The strength of sterling means that expats receiving UK pensions will have plenty to smile about this Easter, while British holidaymakers see their spending power boosted. But parents sending their children to study in the UK need to fork out more and more Cyprus pounds to pay their children's fees and living expenses.

And with no sign of sterling losing ground in the near future, many parents are now wondering whether Britain is a viable option for their children's education.

Wednesday's spot rates showed the Cyprus pound at a 30-year low of 1.015/1.019 for every pound sterling.

"This is the highest I can recall for almost thirty years, when Cyprus broke the link with sterling," a Central Bank official said. Yesterday the Cyprus pound clawed back a fraction of a cent to 1.0186/1.0226 against sterling.

Since the beginning of the year, sterling has enjoyed an 11-year high against the European currencies locked into the falling euro, to which the Cyprus pound is pegged.

For Britons living and working in Cyprus, it's excellent news. Not only is UK income worth more, but Cyprus now boasts more favourable interest rates than the UK and the cost of running a British offshore company on the island has fallen.

One British pensioner living in Cyprus yesterday told the Cyprus Mail, "I think it's great. It's like a bonus and that bit extra really helps to make life more comfortable."

Foreign exchange experts at Thomas Cook travel agents said British visitors to Cyprus were getting over ,65 sterling extra worth of currency for every , 500 sterling of Cyprus pounds they purchased, in comparison with early 1999.

Tourist bookings from the UK for Easter were up 90 per cent over the holiday period last year, due to a combination of poor British weather and the stronger pound. The CTO says 47.5 per cent of 1999's tourists to Cyprus were British.

Commenting on the tourist figures last week, senior CTO marketing representative Lefkos Phylactides said that UK statistics showed an increase in the overall British market of seven per cent for summer 2000. He said British arrivals to Cyprus were expected to be 31 per cent up on last year, already a record year.

But what's good news for the British is very bad news for Cypriot parents. Christina Papazachariou, board member of the Cyprus association of fee- paying overseas students, yesterday told the Cyprus Mail, "Definitely this causes great expense to Cypriot students and we will definitely think twice about sending our children overseas from now on."

Papazachariou, who is currently paying about C,32,000 a year to send two of her children to British universities, said the association had already taken steps to convince the government to increase its student subsidy.

"Currently they give us ,500 more than is given to students studying in Cyprus. They give them ,1,000 and they give us ,1,500, which is nothing compared to the damage we are suffering from the strength of sterling."

She said the association would be taking further action, including making it known through the British High Commission that "from now on, we will avoid sending children to Great Britain because the situation is unacceptable".

She said the currency fluctuation made an already expensive endeavour even more costly: "It's not only the tuition, the cost of living is also very high. Rents are very high in England. Here you can find a two-bedroom flat for ,150. There you need ,500, which means that from now on there will be many fewer students going to England."

Papazachariou said most families would make the necessary sacrifices to let their children complete their studies, but "if we'd known this would happen we would not have sent them to England... I believe that from now on since there are the Greek universities, the Cyprus University and the local colleges that have been accredited, we will definitely avoid England."

Last year, 62 per cent of Cypriot overseas students were studying in the UK B Cyprus is Britain's 13th biggest market for foreign students.

© Copyright Cyprus Mail 2000

Cyprus Mail: News Articles in English Directory - Previous Article - Next Article