UNIT 7 Finance
Fl NANCIAL RESULTS
Before you read
List 10 expressions that you might find in an article about a company's financial results.
Reading
Read this article from the Financial Times by Rose Jacobs and do the exercises that follow.
FT
Al-Fayed goes out in style as Harrods
leaps 40 per cent
Rose Jacobs
1 Mohamed Al-Fayed's swansong
financial results at Harrods revealed
that the department store saw
strong growth in profits in the final
year under its colourful owner.
Mr Al-Fayed and his top directors -
who resigned in May following
the sale of the group to Qatar's
sovereign wealth fund - pointed to
a customer loyalty scheme and
refurbishments of the group's
Knightsbridge store as a few of the
forces behind a 12-per-cent rise
in sales and 40-per-cent surge
in profit.
2 The £78m ($123m) in pre-tax
profits reported for the year to
January 31 are two-and-a-half times
the £30m Harrods earned in 1985,
when Mr Al-Fayed outbid rival
businessman Tiny Rowland for the
group, prompting a political furore.
When Qatar Holding, a direct inves-
ment vehicle for the Gulf state,
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bought Harrods in May for £1 .5bn,
Ahmad Al-Sayed, the fund's Chief
Executive, said the move was part
of a strategy of adding "prestigious,
top-performing businesses" to its
portfolio at low points in the
economic cycle.
3 Last year's results show Qatar
took on a group in the midst of a
significant investment programme:
Harrods put £35 .6m into refurbish-
ment of its Knightsbridge store,
including the addition of two restau-
rants, and the opening of a shop and
boutique in Heathrow's Terminal 4.
The former management team
promised "a similar level of capital
investment in 2010".
4 That sort of capital expenditure
may increase under the Qataris: Mr
AI-Sayed this spring launched a
three-month strategic review of the
business, which included consider-
ation of a makeover of the store.
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The review also focused on possible
overseas expansion, development of
an online offering and extending the
sale of Harrods-branded souvenirs
for the mass market.
5 Mr Al-Sayed has not spoken about
the conclusions drawn from the
review, but the company is develop-
ing its fashion portal, aiming to
create a serious rival to online mar-
ket leader Net-a-Porter. Meanwhile,
while managers have said they
would like to open a Harrods venue
in Shanghai - a move that would
capitalise on growing demand for
luxury goods from Chinese shoppers
- no plans have been announced. In
2009, £515.5m of the company's
£519 .Sm revenue was derived from
Harrods' UI( operations, with Japan
as the next biggest contributor, at
£2.5m.
 TEXT BANK .... UNIT 7

1 Look through the whole article to match the 4 Find nouns in Exercise 3 to match each of
figures (1-9) to the things that they refer to these definitions.
in Harrods' accounts (a-i). a) something that is available for sale
1 £2.5m a) increase in sales over the b) when you improve the look of something (two
2 £30m previous year expressions)
3 £35.6m b) increase in profit over the c) when you make something bigger
previous year
4 £515.5m d) when you offer new products using the prestige,
c) price paid by Qatar Holding to etc. of your existing products
5 £519.Bm
buy the company
6 £78m e) when you put money into something for profit
d) revenue worldwide
7 £1.5bn f) when you spend money on something
e) profits before tax
8 12 per cent
f) revenue in Japan 5 Choose the best alternative (a, b or c) to
9 40 per cent
g) money put into improving the replace each of the expressions in italic from
store paragraph 5, keeping the closest meaning.
h) profit made in 1985 1 Mr Al-Sayed has not spoken about the
i) revenue in the UK conclusions drawn from the review, ...
a) endings of b) results of c) effects of
2 Decide whether these statements about 2 ... but the company is developing its fashion
expressions in paragraphs 1 and 2 are true portal, aiming to create a serious rival to online
or false. market leader Net-a-Porter.
a) If something is your swansong, it's the last time a) website b) service provider c) doorway
that you do it. 3 Meanwhile, while managers have said they would
b) If you describe someone as colourful, you mean like to open a Harrods venue in Shanghai ...
that they are boring. a) meeting place b) concert hall c) store
c) If xis described as a force behind y, x is the 4 ... - a move that would capitalise on growing
cause ofy. demand for luxury goods from Chinese shoppers
d) A surge is a large increase. - no plans have been announced.
e) If you outbid someone when buying something, a) invest in b) amortise c) exploit
you offer more for it. 5 In 2009, £515.5m of the company's £519.Bm
f) A furore is a mild disagreement. revenue was derived from Harrods' UK operations, ...
g) Something prestigious is of high quality and is a) resulted in b) drew out from c) came from
famous. 6 •.. with Japan as the next biggest contributor, at
h) A portfolio is a collection of different investments. £2.5m.
i) The economic cycle is a means of transport. a) second highest source of profits
b) second most important source of revenue
3 Complete this table with words from c) second greatest profit centre.
paragraphs 3 and 4, and related words.
noun verb Over to you 1
investment ..........1 Go back to Before you read, and the list of financial
2 expressions that you made. How many of them actually
refurbish
expenditure ) occurred in the article?
makeover ....................4
expansion ..........5 Over to you 2
I ..........1 Think of another retailer that you are interested in •
• • •• •• ••••6 offer
8
Research its financial results for the latest year and
extend
compare them with those for Harrods.

PHOTOCOPIABLE © Pearson Education Limited 2011 143

 7
UNIT
Finance
Fl NANCIAL MATHEMATICS-
Before you read
How important is mathematics in the area of business that you work in or would like to join?
Explain your ideas.
Reading
Read the article from the Financial Times by Gillian Tett and do the exercises that follow.
FT
What happens to markets when numbers
don't add up
Gillian Tett
1 A few years ago, Tim Johnson, a
British academic at Heriot Watt
University, was appointed to act as
an official public "champion" for
financial mathematics. It initially
seemed an easy job. After all, before
2007, politicians were not very
interested in things such as probabil-
ity theory. So Dr Johnson mostly
used his huge grant to conduct his
research in peace.
2 No longer. In the years since the
financial crisis exploded, financial
mathematics has come in the line of
fire, with "quants" - analysts with
qualifications in advanced mathe-
matics - and their models blamed
for fuelling the banking woes. Hence
Dr Johnson now has his work cut
out, as he tries to defend the world of
maths. Or as he told a conference
this week: "There is a sense of
bewilderment amongst mathemati-
cians about the view that
mathematics was responsible for
the crisis."
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-
:.
3 Is this sense of indignation fair?
Up to a point, yes. During the past
couple of decades, the world of
finance has certainly borrowed
heavily from disciplines such as
maths and science, and some of this
plagiarism has produced disastrous
results. Just look at all those crazy
investment decisions inspired
by ultra-complex - and flawed -
models to assess risk.
4 But if you peer closely at all this
plagiarism, it is dogged by a bitter
irony. In public, banks like to boast
of their ability to buy the "brightest
and best"; in practice, though, the
specific ideas that banks have been
importing from disciplines such as
maths or economics in recent years
have not always been "cutting
edge". On the contrary, many of the
imports that have been widely used
- or abused - were distinctly out
of date.
s For example, when finance has
borrowed ideas from physics, it has
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been an old-fashioned Newtonian
branch of physics, not the Theory of
Relativity. And insofar as bankers
have used maths in the past two
decades, they - like 18th-century
scientists - have typically treated
maths as a "mere" tool.
6 Most academic mathematicians,
however, prefer to view their disci-
pline as a form of intellectual
inquiry. Many also feel uncomfort-
able about assuming that maths
offers crude "absolutes". So, just as
the Theory of Relativity has forced
scientists to recognise that space and
time can expand or shrink in a rela-
tivist manner, so too men such as Dr
Johnson tend to think that calcula-
tions of "probability" can shift
according to context. Money and
statistics, in other words, are not
crude, fixed entities (as bankers have
tended to assume); instead,
Dr Johnson's vision of "maths"
sounds more akin to the financial
version of quantum mechanics.
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1 What or who from paragraphs 1 and 2 do the
words in italic refer to?
a) Until the crash of 2007, he led a relatively quiet life.
b) It was a job that seemed easy.
c) They were not interested in the mathematical
theories behind finance.
d) It is being increasingly criticised.
e) It is where Tim Johnson spoke this week.
f) Mathematicians feel this because they have been
accused of responsibility for the crash.
2 Look at paragraphs 3 and 4 and find •••
a) a noun referring to a feeling connected to another
feeling in paragraph 2.
b) a noun, used twice, meaning 'subjects'.
c) an expression meaning 'to a certain extent'.
d) a noun referring to the copying of ideas.
e) an expression referring to very difficult
mathematical ideas that were mistaken.
f) a verb meaning 'to look closely'.
g) a form ending in -ed used to refer to something
that has been subject to problems.
h) a noun for the feeling that something odd has
happened, the opposite of what was expected.
i) an expression referring to the most intelligent
people.
j) an expression referring to the most up-to-date
ideas.
3 Choose the best summary (a, b or c) of the
main point of paragraphs 3 and 4.
Financial mathematicians ..•
a) are entirely to blame for the financial crash of
2007 because of the flawed and risky models
they used at the banks.
b) are entirely blameless, as they were not
responsible for the out-of-date ideas that were
being used by the banks.
c) contributed to the crisis, but the ideas used
by the banks were not as advanced as the
theories developed by these people would have
suggested.
PHOTOCOPIABLE © Pearson Education Limited 2011
TEXT BANK ...... UNIT7
4 Find 'linking' expressions from paragraphs 5
and 6 used to •••
a) give an illustration (two words).
b) say that something is true up to a point but not
completely (two words - can also be spelled as
four words).
c) contrast two ideas (one word).
d) add an idea (one word).
e) introduce a consequence of an argument (one
word).
f) add an idea similar to the one just stated (two
words).
g) re-express an idea that has already been stated
(three words).
h) say that one idea is true, rather than another just
stated (one word).
5 Choose the best summary (a, b or c) for the
article as a whole.
a) Financial mathematicians played a role in the
crash, but ironically banks were not using their
most advanced ideas and might not have failed if
they had been using them.
b) Bankers do not understand financial mathematics
and misunderstood the models that they were ,,,-f
using, intimidated by the brilliance of their ><
-f
'brightest and best' financial recruits. tXJ
c) Financial mathematics as practised in universities )>
z
has nothing to do with the maths used by
financial institutions. "
Over to you 1
How is working in the finance industry viewed in your
country? What are the best qualifications to have if you
want to work in it?
Over to you 2
Think about your own area of business, or one that you
would like to work In. Is there a close link between it
and universities? For example, is university research
relevant to the business area? Why? /Why not?
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