Dubai hosting the 2020 World Expo is expected to have both benefits and challenges for Dubai's economy and residents. The major benefits include a projected $23 billion boost to GDP, over 250,000 new jobs created, and increased tourism and investment. However, major infrastructure projects to prepare for the Expo will cause short-term disruptions through traffic and noise. There are also concerns over potential housing bubbles and environmental impacts if developments are not sustainable long-term. While residents may face difficulties during construction, hosting the Expo is assessed to have a largely positive impact on Dubai's economy and global profile in the long-run.

1. Review
USIS
• Apple: A trillion dollar company?
• Dubai Expo 2020: beneficial or nightmare?
• Transitioning to renewable energy
• New hope for Greece?
• Tough regulations for payday loan companies
• ECB faces backlash and credibility issues
• The decline and fall of the Tesco empire?
• Is now a good time to invest?
• Sheffield to Goldman Sachs: Robert Pulford
March 2015 UoSInvestment.com

2. Contents
Contents USIS Review March 2015
Editor’s Letter 3
Special Report
Apple: A trillion dollar company? 4
Economics & Global Affairs
Dubai Expo 2020: beneficial or nightmare 6
Transition to renewable energy 8
New hope for Greece 9
Banking & Finance
Tough regulations for payday loan companies 10
ECB faces backlash and credibility issues 12
Investments & Strategy
The decline and fall of the Tesco empire? 13
Is now a good time to invest? 14
Spotlight
Sheffield to Goldman Sachs: Robert Pulford 15
2
Our Partners

3. Editors,Contributors & Sources
A Word from the Editor
It is my absolute pleasure to be able to welcome you to the third edition of the USIS Review. The
USISReviewwasdesignedtocultivateanenvironmentthatinspiresnewstudentstoengagewith
Finance and our global economy. After a hiatus in publishing, the USIS Review team decided to
re-launchwiththisedition,thatwehopetoinspiremorepeopletojoinourteam.Iambeyondim-
pressed with the editors and contributors to this publication, being able to put it together within
such a small timeframe.This issue is a credit to them and their hard work.Without the effort that
each of our contributors put in,a publication on this scale simply wouldn’t be possible.
This month’s Special Report looks at Apple Inc.to see if a trillion dollar valuation is possible.With
the upcoming launch of the Apple Watch (9th March 2015) and rumours of an Apple Car in devel-
opment, this may not be out of the question. The Economics & Global Affairs team focuses this
month on Dubai and the upcoming Dubai Expo 2020. They also look at the transition to renewa-
ble energy and if there is any hope for Greece,given their four month bail out extention.
The Banking & Finance team have looked at payday loan companies and new regulation that
threatens the business as well as the backlash the European Central Bank faces. Our Investment
& Strategy team have looked at the decline and fall of the Tesco empire and if now is a good time
to invest. We cap this edition off with a bio on Robert Pulford, a University of Sheffield alumni,
who is now a partner at Goldman Sachs.
We hope that you enjoy this edition of the USIS Review.
James Carne
Editor
Editor’s Letter USIS Review March 2015 3
Editor: James Carne
Deputy Editors: Mehr Hussain,Ross McWhir and Thomas Wilson.
Contributors: Aida Akhmetova,James Burton,Simon Cummins, Mehr Hussain,
Tireni Ladega,Stephen Li,Ross McWhir, Matthew Smith,Andrew
Quarmby and Thomas Wilson.
Layout & Design: Ryan Bassindale
Sources: Bloomberg,Bloomberg Businessweek,Thomson Reuters,
Financial Times,Economist,Investors Chronicle,Wall Street
Journal,Investopedia,Mergermarket,Yahoo Finance,Company
Press Releases,Company Annual Reports

4. 4 USIS Review March 2015Special Report
Technology
Apple: A trillion dollar company?
Analysts believe Apple Inc.(NASDAQ: APPL) are set to eclipse Google (NASDAQ:GOOG),Microsoft (NASDAQ:MSFT),Cisco (NAS-
DAQ:CSCO) and Alibaba (NYSE:BABA) in terms of Market Valuation.
Recently, the tech giant’s share price has
begun to ascend to lofty heights. Apple
are well on their way to an unprecedented
trillion dollar valuation. Individual share
prices have accelerated to $133 per share.
This has allowed Apple to push towards a
market cap of $770 Billion. With the recent
announcement of the Apple Car, the Apple
Watch and the latest iPhone sales statistics,
many analysts have come to the general
consensus that this can allow the company
to expand rapidly in order to achieve this
coveted trillion dollar valuation.
There have been compelling movements
in Apple share prices over recent months
which is indicative of a firm that is perform-
ing strongly. Apple's current share price at
the time of writing, stands at US$130.40.
In order for Apple to have a trillion dollar
market capitalisation, its share price must
rise to just over $170 per share.This remains
within the realms of possibility. To achieve
a trillion dollar valuation requires share
prices to rise by 28%. With the advent of
the Apple Watch, the rumours circulating
in Silicon Valley of the iCar and investments
being made in Europe and in the US this is
realistic.
‘Apple emitsanauraofexclusivity’
Putting the size of this market cap into per-
spective,$1trillionamountstoasinglecom-
pany being larger than major economies,
such as Indonesia, Turkey, Saudi Arabia and
the Netherlands.
To analyse whether Apple can achieve this
requires analysis and evaluation of Apple’s
rapid and meteoric rise from a $13 billion
company in 2004 to a $770 billion company
in 2015, a staggering percentage increase of
5823%. To assess this requires one to look
beyond the headlines, by looking at the
trend lines.
Apple’s growth is driven by consumer
spending and investment in order to main-
tain growth and sustain longevity. Further-
more, their sheer financial strength and
strong balance sheets have allowed the
company to amass a $150 billion cash for-
tune. This is plunged into developing new
products and ensuring they retain the best
engineers, the best marketers and, most re-
cently, the growing importance of the best
lawyers, particularly, with the $533 million
fine it is legally obliged to pay.
However, Apple is not the only company
that is close to a trillion dollar valuation.
Hedge fund analysts believe that Google,
CiscoandMicrosoftarealsoextremelyclose
to this target. Despite its lack of longevi-
ty, Jack Ma’s Alibaba has seen exponential
growth figures since its Initial Public Offer-
ing (IPO) in September 2014.
Surging iPhone sales, robust earnings, a
vast buyback and dividend programme,
and continuous innovation has led to a
strong performance in the company’s share
prices. The graph clearly indicates that the
share price of Apple over the past quarter
has soared from an initial $110 per share in
January 2015 to $133 per share in February,a
percentage increase of 20.9%.
Since reports surfaced concerning Apple's
plans to invest in the auto industry, Wall
Street firms have reacted strongly and ag-
gressively by buying large blocks of shares.
This has contributed to a surge in demand,
which has consequently increased their
share price.
TheAppleCar–Realisticorasteptofar?
Elon Musk’s, Tesla (NYSE: TSLA) has shown
the world the revolutionary concepts that

5. Special Report
Technology
USIS Review March 2015
can be achieved in the electric car market.
Apple has viewed this as a tremendous and
potentiallylucrativemarket.Ithastherefore
reacted accordingly, by aggressively pursu-
ing Tesla engineers for many months, offer-
ing lucrative contracts and large bonuses to
jump ship. However, despite Apple’s strong
and robust performance in terms of share
prices over the past year, there remain sev-
eral serious constraints to pursuing this
objective. Despite Tesla’s emergence as a
major player in the electric car market, it
remains highly illiquid, as most car manu-
facturers are. With the objective of offering
electric cars affordable to the average con-
sumer,Teslahasalongwaytogo.Pricingfor
the Tesla 3 is around $35,000, without any
Government subsidy. Despite the attrac-
tiveness of this market, data could be mis-
leading for Apple. Tesla has halted produc-
tion and this has meant that demand now
appears to be stronger than it actually is.
Additionally, Apple’s issue is less to do with
financing this endeavour, but it is much
more about production and logistical is-
sues that may emerge. For a company that
outsources a vast part of its manufacturing
base to Asia, it would take a radical restruc-
turing and evaluation of both Apple's in-
novative, design-oriented, liquid business
model. The question is then posed: Why
would Apple want to become illiquid and
less highly valued?
If current trends persist than Apple’s strong
growth and sales is expected to drive
growth and share prices towards the $1 tril-
lion mark.
Matt hew Smith
BA Economics
5

6. Economics & Global Affairs USIS Review March 2015
Dubai Expo 2020: benifical or a nightmare?
Hosting the World Expo 2020 might be the thing for Dubai to make it one of the world’s fastest growing cities in the next 10 years.
6
The World Expo is a key meeting point for
the global community to share innovations
and attempt to address issues that are vi-
tal to the modern world. Moreover it pro-
vides a platform for countries to promote
prosperity and encourages international
cooperation, improvements in education,
and a vision of future innovation and col-
laboration and improve standard of living.
It allows people to glimpse into the coming
decadesandthepotentialtechnologicalde-
velopments that can be achieved. One can
evensaythatthechangesintechnologycan
bring about dynamic changes in efficien-
cy in both secondary and tertiary sector of
Dubai. The Expo is a catalyst that happens
every five years for economic, cultural and
social transformation and generates impor-
tant legacies for the host city and nation. It
attracts millions of people from all around
the world and what makes Dubai so special
isthat‘TheWorldExpo’hasneverbeenheld
in the Middle East, Africa and South East
Asia in the history of the event.
Personally speaking, living in Dubai for
nearly all my life, getting a chance to host
the Expo 2020 is a step forward for Dubai in
trulybecomingaglobalcity.Goingbackthis
summer I saw vast amounts of construction
in order to be ready for this amazing Expo
2020. This made me think of whether the
World Expo is really beneficial not only for
Dubai but the whole of the UAE. Moreover
whetherthejourneytowardstheExpo2020
is a nightmare for the residents of Dubai.
And how much pressures will the econo-
my face in order to live up to expectations?
These are just some points at issue that will
be analysed in this report
The first major benefit is that the Expo
will bring large amounts of money into
the country which will help the economy
grow further and have a great effect on the
country’s current balance of payments. The
reason the Expo has become such a big deal
in Dubai is because analysts believe it will
boost tourism and other parts of the econ-
omy. The Government has forecasts which
show that it intends to spend a predicted $7
billion on infrastructure. This may provide
many growing industries to benefit from
the ‘trickle-down effect’. Moreover, this
spending of large amounts of money will
equate to a 0.5 percentage point increase
in GDP in the years 2016-2019, according
to Bank of America Merrill Lynch. As for the
whole of the UAE, there will be a 4.5 per-
centage point GDP growth in the UAE and
an extra $10 billion of private sector cash
will be injected into the Gulf Coast Coun-
tries (GCC).
In the end, Dubai authorities say the Expo
2020 will bring in around $23bn (£14bn,
€17bn),whichwillfurtherboostGDP.Dueto
therelativelysmallsizeofDubai’seconomy,
theeconomicimpactwillbequitelargeand
significant in comparison. This will cause
hotels and logistics to become the biggest
beneficiary sectors as the tertiary sector will
benefit the most, as a result of hosting the
World Expo which is truly,a global event.
Furthermore, the Expo is creating job op-
portunities, further improving living stand-
ards and boosting the economy further.
Dubai authorities predict that 277,000 jobs
will be created as a result of the Expo; a big
number given it equates to 20% of the cur-
rent workforce of 1.3 million, according to
Capital Economics. Many of these jobs are
anticipated to be turned into permanent
positions, creating further demand on the
emirate’s housing supply and pushing up
prices even more. However, one might fear
due to an increase in housing supply, Du-
bai might be in danger of a housing bubble
burst and in the end might face an eco-
nomic recession, with high unemployment
in the construction sector. This will be dev-
astating on its economy as Dubai is highly
dependent on tourism through the help of
real estate.
The increase in housing construction in or-
Middle East

7. 7
der to meet the rising demand will lead to
increase in noise pollution. This will also
be at the expense of further inflation as
house prices gather increasing momentum
going forward over the next decade. The
government will therefore need to consider
various policies which aim to reduce these
fluctuations in order to stabilise the econo-
my. Moreover, it will create congestion due
to increase in vehicle circulation, which will
be a huge problem for current Dubai resi-
dents and so there are vast environmental
concerns as a result of the World Expo over
thelongterm.Thisisbecausethediversions
created will further slow down traffic and
increase stress levels in the current popu-
lation as they wait for longer to reach their
destination.
In addition, some preparations are already
underway in the form of a series of expan-
sions and upgrades. Dubai International
Airport is currently undergoing US$7.8bn
[Dhs28.6bn] of renovation which will even-
tually allow the facility to cope with 90 mil-
lion passengers per year.Some of the major
infrastructure projects expected over the
next few years include the expansion of the
Dubai Metro Red line; new concourses at
the recently opened Maktoum Internation-
al Airport; interchanges on the Sheikh Mo-
hammed bin Zayed road; and the construc-
tion of the main Expo 2020 centre close to
the Maktoum International Airport.
These are major changes to Dubai’s land-
scape and all of this will cause quite a big
disturbance in people’s daily routine. For
example, changes to the interchanges on
Sheikh Mohammed bin Zayed road will
cause the most dramatic change as it is the
mainroadinDubaiforallresidentstoreach
theirdestinations.Constructiononthisroad
means that there will be huge diversions
causing the stream of traffic to slow down
andhinderpeople’sdailylife.Thismightset
back the economy in terms of efficiency in
the short term, until all the construction is
completed for the Expo 2020.
Another problem the government needs to
address is that any infrastructure they are
building needs to have a purpose beyond
the event. A significant column in Dubai’s
Expos 2020 bid is the site in Jebel Ali itself,
which will be spread over 438 hectares and
developed with a raft of new hospitality
and tourism facilities. Dubai needs to plan
everything in a sustainable manner so that
nothing in the end goes to waste and caus-
es more environment pollution. One of the
backup plans is that after the fair, the expo
sitewillbereusedforresearchcentresanda
university, but it is still not confirmed what
directionthegovernmentwilltake.Sustain-
able development should be a number one
problem the government need to tackle in
order to present Dubai in a good light not
only during the Expo 2020 but also after
that.
Every development and event such as the
Olympics or the FIFA World Cup has a posi-
tive and negative effect on the host country.
Sometimes the merits overweigh the draw-
backsandviceversa.IntermsofDubaihost-
ing the Expo 2020, the general consensus
amongst analysts is that the Expo will have
moreofapositiveimpactonthepeopleand
the economy. In the short term, residents
will face difficulties. On the other hand, in
thelongrun,theamountofexposureDubai
will get, not only culturally but economi-
cally, will be tremendous and worthwhile.
Dubai will move on to be one of the main
financial hubs of the world. In addition, not
only Dubai will benefit but an increase in
activity in the UAE will lead to a spill over of
economic benefits to the rest of the region,
sustainingjobsandeconomicgrowthinthe
GCC.
Mehr Hussain
BA Economics and Politics
Economics & Global AffairsUSIS Review March 2015
Middle East

8. Economics & Global Affairs USIS Review March 2015
Transitioning to renewable energy
Countries’obstacles with transitioning from conventional to alternative energy production and the current solutions
8
The atmospheric concentration and various
industrial gases are constantly increasing,
causing an upward shift in the surface tem-
perature as well as changes in precipita-
tion, cloud cover and wind patterns. Global
warming is one strong driving force behind
theincreaseduseofrenewableenergytech-
nologies worldwide. The production of the
clean energy using renewables seems an
ecological solution, which might further
result in a positive economic growth, how-
ever the results of such transition provoke a
heated debate regarding the analysis of the
social and economic consequences.
Renewable energy constantly relies on
the weather for its source of power. Hydro
generators need rain to fill dams to sup-
ply flowing water as well as wind turbines
need wind to turn the blades and solar
collectors need clear skies and sunshine to
collect heat and make electricity. So, it is
difficult to generate the quantities of elec-
tricitythatareaslargeasthoseproducedby
traditional fossil fuel generators. This may
mean that we need to reduce the amount
of energy we use or simply build more ener-
gy facilities. According to UK National Stat
Agency, 45 billion pounds were invested in
the past 4 years, with an annual investment
of 8 billion pounds in the energy facilities
that now generates 15% of the country’s
electricity. One of the greatest solutions for
this problem came with an invention of the
energy storage technologies, where Cali-
fornia and New York have already adopted
energy policies that will make it possible to
economically deploy storage systems,while
technology advancements have boosted
performance and trimmed costs. For the
firsttimeinhistoryitwillbecomefeasibleto
storeelectricenergy.IEAestimatesthatChi-
na, EU, US should invest $380 billion in new
electricity storage capacity by 2050 to sup-
port decarbonisation. In addition, pumped
storage hydropower (PSH) currently repre-
sents the vast majority (99%) of installed
electricity storage capacity. Therefore, PHS,
compressed air energy storage and some
battery technologies are the most mature
technologies with flow batteries, whereas
superconducting magnetic energy storage
and other advanced battery technologies
are at much earlier stages of development.
Energy storage will change the world.It will
have a big effect in Europe and the U.S., but
its impact in Africa, Asia and Latin America
will even be greater. Over 1.4 billion people
don’t have access to the grid due to ineffi-
cient and expensive infrastructure. Storage
will finally make electrification a global
phenomenon in the truest sense of the
word. The changes we see coming will have
the same sort of impact as computers, tele-
phones and antibiotics.
Anotherstumblingblocktheworldisfacing
today is the current cost of renewable en-
ergy technologies that is also far in excess
of traditional fossil fuel generation. This is
because it is a new technology and as such
has extremely large capital cost. Further-
more, initial investments are quite high in
case of building renewable energy plants.
Theseplantsrequireupfrontinvestmentsto
build,havehighmaintenanceexpensesand
require careful planning and implementa-
tion. To meet up with the large quantities
of electricity produced by fossil fuels, large
amount of solar panels and wind farms
need to be set up. For this, large tracts of
land is required to produce energy quanti-
tiescompetitivewithfossilfuelburning.For
example, Germany is the leading country,
which produces 30% of their energy sup-
ply using renewables, however, despite the
fact that transition has been successfully
implemented, energy consumers’ electric-
ity bill is going to increase to 5.3 cents to
6.5 cents per kilowatt hour, which is almost
20% rise.According to government sources,
the surcharge to finance the power grids
will increase by 0.2 to 0.4 cents per kilowatt
hour next year. On top of that, consumers
pay a host of taxes, surcharges and fees
thatwouldmakeanyconsumer'sheadspin.
This year, German consumers will be forced
to pay €20 billion for electricity from solar,
wind and biogas plant.
Despite uneasy transition from conven-
tional to modern energy solutions, coun-
tries around the world are trying to find
ways to smoothen the process by offering
investment support and organizing inter-
national events in order to raise the clean
energy awareness. For example, World Fu-
ture Energy Summit 2015 will take place
in Abu Dhabi, hosted by the world leading
energy developer and investor Masdar, Abu
Dhabi's multi-faceted renewable energy
company. In 2014, Abu Dhabi Fund has pro-
vided loans to support new projects in Sier-
ra Leone, Mauritius, Ecuador and Maldives
with an estimated $41 million. Moreover,
in October 2014, Masdar has signed a deal
to build a $125m large-scale wind farm in
Oman. Finally, one of the biggest upcom-
ing events that might help to accelerate
the renewable energy development is the
Energy Expo 2017, which will take place in
Kazakhstan. The main goal of this Expo is
to promote and discover sustainable,global
energy solutions,result of which we will see
in the near future.
Aida Akhmetova
BSc Economics with Finance
Energy

9. Economics & Global AffairsUSIS Review March 2015 9
New hope for Greece?
Bailout for Greece extended to June,still leaving fears of an EU exit
Greece's economic revival has taken small
steps forward this week as reports have
emerged that the Eurozone finance minis-
ters have approved reform proposals sub-
mitted by Greece, a condition which was
essential for extending the bailout package
by four months. Greece's bailout package
was due to expire at the end of February
and with their financial situation still very
much unstable, fears of Greece leaving the
euro would have been revived had the deal
collapsed.
Greece's financial problems stretch back
to the late 2000s during the time of the
infamous credit crunch, where high pub-
lic spending and widespread tax evasion
forced Greece into a financial crisis where
they entered and remained in recession for
a staggering six years. Record high unem-
ployment figures and an economy which
has shrunk by a quarter of its previous size
has only emphasised the consequence of
such a catastrophe. However, new hope
began to emerge for the Greek population
when the anti-austerity, left-wing Syriza
coalition won the European election in May
2014.ThiswasfollowedbyAlexisTsiprasbe-
ing elected prime minister in January 2015,
his aims being to persuade the European
Union and the IMF to ease the terms of the
bailout and even possibly achieve a portion
of the major debt to be written off despite
the reluctance of the European Union to do
so.
One of the first challenges Alexis Tsipras
faced was to try and extend the bailout
package that Greece had currently been
receiving. Despite reaching an agreement
with the European Union over a four month
extension, a reform proposal was required
subject to approval by international credi-
tors. Concerns began to arise when Greece
requested to delay the announcement of
their reform proposals. Despite officials
claiming 'Greece had given no good reason',
the European Union agreed to the delay.Af-
termuchanticipation,thereformproposals
had reportedly been accepted, a step in the
right direction for Greece as they continue
to launch their financial recovery.
Such proposals involve fighting corruption
and collecting overdue taxes, a result of the
reluctanceofpreviousgovernmentstoclose
loopholes regarding tax evasion. Greece
also aim to save costs by reducing the num-
ber of ministries from 16 to 10 and lowering
the fringe benefits of ministers in addition
to other officials. The humanitarian crisis
within Greece has also been targeted with
proposals to provide housing guarantees
and medical care for the unemployed free
of charge, all without increasing overall
public spending. Reforms also include la-
bour market changes which lower the in-
centive for early retirement.Greece plans to
increase the minimum wage level over time
in an attempt to maintain employment
prospects; however, such a policy is costly
and could also lead to an adverse effect on
unemployment.
With the current revelations regarding
Greece's bailout extension, it seems that
the country has achieved only a short-term
solution rather than a long-term answer.
In four months time when the country is
in a similar, albeit slightly better situation,
Greece will be at the centre of attention yet
again. Greece have 'won the battle, but not
the war'. The acceptance of their reform
proposals is a small victory for Greece but
there is a long road ahead of them. Only
time can tell what is next for Greece.
James Burton
BSc Economics
Stephen Li
BSc Economics
Europe

10. 10
Tough regulations for payday loans companies
The payday loan landscape has drastically changed due to the FCA implementing regulations that inform and protect consumers.
The high-cost short-term credit market has
grown significantly in recent years,with
the latest figures from the past 12 months
showing that the industry generates reve-
nue of over £2 billion,with approximately
10 million loans issued annually.Despite
vast growth within the industry,there have
been many critics suggesting the payday
loan corporate model simply consists of
expensive credit–at an APR of around
5000%–to people who are unable to get
money through conventional,cheaper
avenues.
Calculations suggest that if an individual
borrowed £400 from Wonga, the market
leader, at their standard rate for 12 months,
it would lead the individual owing close to
£20,000. Given this, it is unsurprising that
the coalition government has ordered the
Financial Conduct Authority (FCA) to se-
cureanappropriatedegreeofprotectionfor
borrowers against excessive charges in this
market.
TheNewRegulations
Following a significant amount of research,
detailed in consultation paper CP14/10 re-
leased in the summer of last year, the FCA
found that excessive charges for high-cost
short-term credit were harming a signifi-
cant number of consumers. Because of this,
the FCA will, as of January 2015, have intro-
duced a cap on payday lending meaning
that interest and fees must not exceed 0.8
per cent per day of the amount borrowed.
The introduction of such a cap will mean
that someone taking out a typical loan over
30 days and repaying on time will not pay
more than £24 per £100 borrowed.
As well as a cap on daily interest charges,
newregulationsonmaximumchargeshave
also been introduced in a bid to protect bor-
rowers from escalating fees and charges on
longer loans.The total cost cap of 100% will
be introduced, meaning that even if a bor-
rower defaults, they will never have to pay
back more than twice the amount they bor-
rowed.
In addition to the FCA caps, new Competi-
tion and Markets Authority (CMA) propos-
als, due to be finalised later this month,
suggest that payday loan companies will be
mandatorily required to provide full details
of their products on price comparison sites.
The reasoning behind this move for greater
transparency being that it will help in as-
sisting prospective borrowers to purchase
the best product for their circumstances.
Speaking on behalf of the Payday Lending
Investigation Group, Chair Simon Polito
said,“Greater price competition will make a
realdifferencetothe1.8millionpaydaycus-
tomers in the UK. At the moment there is
little transparency on the cost of loans and
partly as a result, borrowers don’t generally
shop around and competition on price is
weak.”
Implicationsforpaydaylending
The significance of the new regulations for
both established companies and potential
new entrants to the market is clearly lower
profits and increased competition within
the market. Along with other research into
the effects that the introduction of daily in-
terest caps will have on the market, the FCA
stated it believed that the expected cost to
industry revenue would be £420 million a
year.
Furthermore,FCApredictionswouldappear
tosuggestthatalikelyresultoftheevolving
market conditions would be a quarter of
current firms ceasing to operate. In con-
trast, The Consumer Finance Association,
which represents 12 payday lenders making
up 60% of the £2 billion industry, said the
new regulations could encourage up to half
of firms to leave the market.
The uncertainty surrounding market con-
ditions and lower revenues comes at a time
when the industry has seen its largest play-
er, Wonga, post profits significantly lower
than previous years because of mounting
negative publicity and numerous scandals.
Banking & Finance USIS Review March 2015
Payday Loans

11. 11
Payday Loans
USIS Review March 2015
Only 6 months ago, in June of last year, the
FCA found Wonga guilty of sending fiction-
al letters from fake law firms to customers
in an attempt to unfairly panic them into
repaying debts. The scandal involved Won-
ga having to pay compensation to 45,000
customers, amounting to a total payout of
£2.6m. This was in addition to the company
having to compensate 200,000 customers
who had been overcharged due to a ‘tech-
nical issue’.
Such issues cost Wonga a reported £18.8m
and were included in the 2013 financial
statements due to the fact that some
wrongdoing dated back to early 2008.
Although the number of loans may drop
significantly, it is hard to guarantee that
demand will reduce at the same rate. If this
is the case, the question of where this de-
mand is redistributed to becomes an issue.
Commentatorsonthenewregulationshave
suggested that while the FCA’s caps are wel-
come, there must be greater action to help
lower income individuals simultaneously.
Failure to do this, and allowing unmet de-
mand to persist, is likely to result in an in-
crease of undesirable consequences such as
criminal loan sharking.
Across-countrycomparison
The introduction of caps on payday loan
interest rates are not uncommon in a vari-
ety of overseas consumer finance markets.
The majority of Australian states, including
New South Wales and Victoria, have im-
posed a 48% APR cap on payday loans, and
as a result, firms within the market have
been shown to reduce their lending to low-
er income families that are likely to default.
At the beginning of the 21st century, the
Japanese government implemented a cap
of 20% APR on the payday loan industry,
commenting that the regulation made pay-
day loans an affordable short-term solution
for nearly all the country’s residents. De-
spite experiencing a sharp increase in loan-
sharking and relation crime, Japan seem-
ingly controlled the growth in the payday
loan industry to promote better financial
management.
While the new FCA regulations are a wel-
come step in managing the growth of the
UK’s payday lending market, the ramifica-
tions are likely to conflict with the CMA’s
proposals. With the number of payday loan
companies expected to reduce, the effects
this will have on competition within the
market seem rather undesirable. In light
of this, it may be a perfect time for a more
benevolent and customer focussed firm to
offer payday loan services, and it could po-
tentially encourage the banking industry
to offer more short-term loans in a bid to
attract new customers.
Ross McWhir
BA Economics and Philosophy
Banking & Finance

12. 12 Banking & Finance USIS Review March 2015
ECB faces backlash and credibility issues
“Againstthebackdropofanunstableglobaleconomicrecovery,theECBhasbeendeterminedlypursuingitsmandateofmaintainingprice
stabilityoverthemediumtermfortheeuroarea.”–Mario Draghi
Tumultuous times lie ahead for The Euro-
pean Central Bank (ECB). The Bank’s focus
is to maintain price stability across the Eu-
rozone, in order to ensure complete trans-
parency in the product and labour markets.
The ECB also acts to administer and imple-
ment monetary policy in order to keep the
financial system regulated. This allows the
various financial regulatory bodies of each
individual nation to be adequately super-
vised, to ensure that they have strong Cap-
ital Adequacy Ratios (CAR).
In recent years, the ECB has been attempt-
ing to rehabilitate an ailing currency bloc,
using various instruments of monetary pol-
icy. A shortage of credit and exceptionally
low inflation, indicate a threat of deflation
in a locked up financial system.
The European Central Bank president,
Mario Draghi, stated his intentions during
the annual meetings of the IMF and the
World Bank in Washington D.C. The ECB in-
tends to purchase Asset-Backed Securities
(ABS) and securities which are backed by
mortgages,also known as‘Covered Bonds’.
A strong and robust response is required
to the Liquidity Trap in the Eurozone. Any
further development in monetary policy
may prove to be ineffective in stimulating
consumer spending, due to fears of defla-
tion and a preference for saving. Additional
injections into the financial system are ab-
sorbed as idle balances, due to the fact that
interest rates cannot, realistically, fall lower
than 0.5%. This causes a fall in the velocity
of circulation of money and means that an
expansionary monetary policy appears to
become impotent.
If monetary policy is ineffective in stimu-
lating demand, the solution may be to use
more structural remedies such as fiscal pol-
icy or further unconventional methods, to
stimulate demand and output in an econo-
my rife with deflationary pressures and low
expectations.
The bank is looking to add sufficient li-
quidity to the financial system, by boosting
lending and lift flagging economic growth
across the Eurozone. The recovery is likely
to continue to be dampened by high un-
employment, sizeable unutilised capacity,
spending cuts and continued negative bank
loangrowthtotheprivatesector,particular-
ly in Greece.
The ECB are aiming to address the esca-
lating issue of tumbling prices. It makes it
harder for Eurozone countries to reduce
huge public debt and become more com-
petitive in the global economy –thus it is
more difficult to maintain price stability.
The Bank needs to continue to remain vig-
ilant,especially with the threat of deflation.
The risks to the inflation outlook will re-
quire close monitoring, which include pos-
sible repercussions of dampened growth
dynamics.
The Eurozone is currently in a cardiac arrest
and hemorrhaging economically and po-
litically. This is in no small part due to the
Ebola epidemic, the conflict in Syria and
Ukraine and the terrorist threat from ISIS.
TherecentdeclineintheEuroarea’sgrowth,
in addition to heightened geopolitical risk,
could restrict private investment with con-
fidence following suit.The ECB needs to get
thebloodpumpingabitmoreenergetically,
using economic steroids and vast stimulus
to rebound.
Draghi’sdiagnosisfortheEurozoneisbleak,
at best, he does not envisage a resurgence
in the Eurozone, even with his armory of
monetary policy instruments. The Presi-
dent of the ECB has received a strong vote
of confidence from Christine Lagarde, man-
aging director of the IMF. In a statement,
Miss. Lagarde made it clear that she backs
the ECB’s decision, ‘We strongly welcome
the measures taken by the ECB, which will
help to counteract the dangers posed by an
extended period of low inflation.’
Critics, especially in Germany, say it was
complex financial derivatives such as ABS
which were the root of the US sub-prime
crisis in 2008, and the Bank’s decision to
increase its exposure to such assets is ex-
tremely dangerous.
The current decline in economic momen-
tum may postpone the resumption in pri-
vate sector investment. Resilient and con-
sistent implementation of fiscal policy in an
increasingly expansionist manner, should
contribute to supporting confidence in the
near future.
It deserves to be underlined that the down-
ward trend in inflation has to a large extent
been driven by the weak level of aggregate
demand, which suggests Draghi’s policies
need to focus on the demand side of the
economy, instead of using fiscal policy to
alter the supply-side of the economy. One
must remain extremely careful in assessing
these risks.
Matthew Smith
BA Economics
European Central Bank

13. 13USIS Review March 2015 Investments & Strategy
Retail
The decline and fall of the Tesco empire?
What does 2015 hold for Britain’s largest private sector employer?
TheDecline
Pulling out of the US, via their firm “Fresh
and Easy”, in September 2013 began a neg-
ativetrendthatcametocharacteriseTesco’s
experience of 2014. On its own, this move
cost £1.2bn and ended a 20-year profit in-
crease streak. This continued with the reve-
lationofa£250million"blackhole"inTesco's
expected half-year profits; currently being
investigated by the Serious Fraud Office,
which city lawyers warn could take as long
as seven years to resolve. In the wake of this
revelation, Tesco's share value dropped to
its lowest level since 2003.
TheFall?
Predicting the end of a company of Tesco’s
size is always problematic. Michael Clark of
Fidelity Enhanced Income Fund, points out
that even a loss of “£250million is not going
to sink a company…[with profits of]..£2bn”.
Behemoths die slowly and their large re-
serves provide significant opportunity for a
turnaround.
Many,includingMr.Clark,havedrawnanin-
teresting comparison between Tesco’s cur-
rent predicament and that of Sainsbury's a
decade ago. In the early 1990’s, Sainsburys
steadily lost market share to both Tesco
and ASDA. At the end of the 1996 fiscal year
Sainsburysreporteditsfirstprofitdeclinein
22 years. The company’s fortunes improved
significantly after they hired five thousand
more staff and improved customer services.
Today, Sainsburys is a healthy company in
the top ten of the YouGov’s General Brand-
Index for the first half of 2014.
Can Tesco follow a similar trend? Their re-
sponse has been to fire, rather than hire,
and cut, rather than expand. Dave Lewis,
CEO, has announced that plans for 49 new
stores are being shelved, head office costs
will be reduced by 30%, and £250m will be
shaved off annual running costs. Job loss-
es are expected to be substantial. “Drastic
Dave” Lewis is applying to Tesco the same
overhaul model that worked for him as
Chairman of Unilever UK, based around
strategic cuts and a reduction in product
range.
However, Lewis’ approach does not direct-
ly challenge the fundamental reasons for
Tesco’s decline. Top fund manager Richard
Buxton argues that: ‘"there is still a lot of
footfall, but its customers are just not buy-
ing as much as they used to. If Tesco can
improve the company will start regaining
market share and profitability”. The central
issue is public image and marketing, not
structural inefficiency. Tesco should have
appointedArchieNorman,ratherthanJohn
Allen, as Chairman as Allen’s strength is in
logistics rather than brand rehabilitation.
A recent increase in sales (0.3%) which has
been publicised as a return to “business as
usual” under new management is more
attributable to shoppers generally taking
advantage of both lower fuel prices and the
ongoing price war among supermarkets.
Figures from Kantar Worldpanel show that
in the 12 weeks ending 1st February 2015
the grocery market, in general, grew 1.1%.
In addition, although discounters, like Aldi,
seem to be slowing their overall growth
theyarestilltakingmarketshareawayfrom
the “big four”, including Tesco. Aldi’s share
rose 0.8% in the 12 weeks leading up to the
1st of February 2015.
Consequently investors are divided in opin-
ion. Some, such as Richard Buxton, are
beginning to invest again in the hope of a
return to profitability as sharp as Tesco’s de-
cline.Some,suchasanalystsatEspiritoSan-
to, believe that all that is left to do is write
a multi-volume book attempting to clari-
fy which long or short-term factor finally
humbled the mighty Tesco Empire.
Simon Cummins
BA History and Philosophy

14. USIS Review March 201514
Stock Market
Investments & Strategy
Is now a good time to invest?
With welcoming signs of a strong recovery in the UK,is now a good time to invest in UK equites?
With the news that the FTSE 100 reached
its highest closing figure since the dot com
boom of 1999 this week, hitting 6949.63, it
is worth considering whether now is a good
time to invest in UK equities.
This news has generally been welcomed
by many as a sign that the UK is experienc-
ing a strong recovery at last. Following the
2008 crash, the FTSE fell to a low of 3926,
following recent favourable macroeco-
nomic conditions for the UK, it has recov-
ered strongly to above pre-crisis levels. The
FTSE has recently benefited from positive
unemployment data; capital outflow from
the Eurozone following negative news and
an appreciating pound (particularly good
for a net importer). Furthermore, the sus-
tained expansionary monetary policy has
encouraged savers to invest in riskier assets
such as UK equities than low return bonds
and current accounts.The oil price decrease
since the summer has acted as a huge tax
cut to UK firms and consumers,allowing for
greater profits and confidence in UK equi-
ties.
Whilst this is positive news for the UK econ-
omy, as an investor this occurrence should
be treated with caution. Although the herd
mentality would suggest that while asset
prices are still rising there is a temptation to
investinthemfurther;lessonslearnedfrom
previous bubbles should encourage a more
measured approach. Warren Buffet fa-
mously professed that investors should be
“greedy when others are fearful and fearful
when others are greedy”. Should investors
therefore be fearful of assets falling follow-
ing the positive FTSE news to avoid a repeat
of the‘dotcom’crash of 1999?
A good starting place here is PE (price/earn-
ings)ratios,whichshowthemultipleshares
are trading at relative to their earnings per
share. High PE ratios are indicative of over-
priced stocks that are due a correction in
their price. What qualifies as high depends
on an equity’s value relative to its industry
competitors. For instance, emerging indus-
tries that currently make low profits but are
expected to make high future returns could
have high PE ratios across the industry.
Thus, what is considered a reasonable ratio
in this industry may be considered too high
in a more established sector which has less
capacity for profit growth. PE ratios across
UK companies are currently at 16, which
is similar to the long run average of 15 and
far below the 1999 pre-crash figure of 30.
Meanwhile, when comparing to Shiller’s
PE ratio (a measure of US stocks’ PE ratios),
which is above average at 27 and similar to
pre-2008 levels, UK stocks look more rea-
sonably priced.
While a record high FTSE could imply over-
hyped stocks,the PE ratios don’t seem to re-
flect this. It appears that the increase in UK
equity prices is a justified increase based on
increased profits (partly caused by the oil
price fall) and prosperity of UK firms.None-
theless, it is important to be wary of market
corrections and accept that further growth
from here is likely to be slower than that
experienced in recent weeks. Thus, I would
recommend holding current UK equities
but approaching further investment with
caution.
Thomas Wilson
BA Economics

15. USIS Review March 2015
Alumni
15Spotlight
Sheffield to Goldman Sachs : Robert Pulford
The University of Sheffield graduate who got to the top in an unconvential way
Robert Pulford graduated from the Univer-
sity of Sheffield in 1994 with a Bachelor of
Arts in Business Studies. Pulford contem-
plated a variety of career paths after Univer-
sity including accountancy and managing a
Safeway branch.However,after graduation,
Pulford began working for Midland Bank
(now HSBC) which was his first job within
the financial services industry.
Through hard work and dedication, in Feb-
ruary 1997 Pulford joined Merrill Lynch
Wealth Management (now a division of
Bank of America) and was appointed to be-
come a managing director. After 10 years
with the firm, Pulford left to join Goldman
Sachs in July 2007. Robert joined just be-
fore the financial crisis of 2008,and when it
occurred, it brought about a variety of chal-
lenges. This was not made any easier being
a new employee in a position of significant
responsibility, but he was able to weather
the storm and be promoted to Partner last
year.
Pulford first worked in the Leveraged Fi-
nance Group, where he structured and ex-
ecuted leveraged loan and high yield and
mezzaninefinancingsforcorporateandpri-
vate equity clients across EMEA.In 2008,he
became the industry captain for Leveraged
Finance across the consumer, retail, health-
care and natural resources industries. Pul-
ford moved to his current role in the Finan-
cial Sponsors Group in 2010.
In this role, Pulford manages the firm’s re-
lationships with a number of private equity
and related portfolio company clients such
as Blackstone, Apollo and Advent. In 2014,
Pulford was made partner at Goldman
Sachs, joining a select group of 380 and
attaining one of the most prestigious titles
within the Investment Banking Industry.
The University of Sheffield were luckily
enough to be able to have a talk by Robert
Pulford, courtesy of Sheffield Management
School, and it became clear how much he
treasured his time at Sheffield. Through-
out the evening Robert gave great pieces
of advice regarding how to enter and suc-
ceed within the banking industry. He said
“the most common mistake of applicants
is that they do not prepare thoroughly, and
this becomes apparent to interviewers, so
whenever you have an interview prepare
thoroughly”.
Robert outlined the fact that you need to
come across as excited, enthusiastic and
interested in your interview. Furthermore,
you need to know why you want to work
in banking, and if you can’t come up with
a good answer to that question, then the
industry probably isn’t for you. He also said
“It’s important to be honest with yourself,
if you’re going into banking purely for the
financial benefits you’re not likely to enjoy
it,banking is hard work but when you enjoy
your job it makes it easier”.
Pulford explained that he was inspired by
entrepreneurship at the University of Shef-
field, and it drove him to reach the levels
that he has today. Despite his incredibly
successful career, Pulford still has his own
ambitions for entrepreneurship saying “I
will run a company one day”. He urged stu-
dents to develop an entrepreneurial nature
and to be innovative in their careers. Robert
emphasised the need to take risks,“without
taking risks you won’t go as far as you can, I
took a risk and with good fortune and some
wheeling and dealing and I landed a job at
Midland Bank, and it led me to get where I
am today”.
Robert shed some light into the working
culture of Goldman Sachs. Pulford de-
scribed Goldman Sachs as a collegiate and
respectful environment, it is a difficult,
competitive and demanding but there is a
great desire to give back at Goldman Sachs,
and if you don’t have a good team ethic it
is unlikely you will last there long. Pulford
has enjoyed his time at Goldman so much
so, that his only regret with the firm is that
he didn’t join sooner than he did. He cites
working with some of the most talented
and smartest people in the industry as one
of the best aspects of his job.
Working in banking especially since the
financial crisis has brought a series of chal-
lenges, particularly in terms of public per-
ception of the industry. In the immediate
aftermath of the crisis, not many people
would admit to working in the industry due
to the stigma attached to Investment Bank-
ers,however most of the stigma has gone.
Outside of his career Robert has a huge pas-
sion for football, supporting his hometown
team Nottingham Forest, and lists Stuart
Pearce as one of his role models. He even
has a photo of Pearce, celebrating wildly af-
ter scoring a penalty on his office wall as a
sourceofmotivation.Robertalsohasadeep
involvement in education, and sits on the
Board of Governors of the William Davies
School in Eastham.
Tireni Ladega
BA Economics
Andrew Quarmby
MEng Electronic Engineering

16. Review
USIS
Editor
James Carne
Deputy Editors
Mehr Hussain| Ross McWhir| Thomas Wilson
Copyright © 2015 The University of Sheffield Investment Society
Any unauthorised reprint or use of this material is prohibited.No part of this publication may be reproduced or
transmitted in any form or by any means,electronic or mechanical,including photocopying,recording,or by any
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Society,the USIS Review or our Partners.