The Economic Update July 2014

June 2014

COVER STORY

FINANCING TRADE ENABLING OPPORTUNITIES Interview Margrith Lutschg-Emmenegger, international speaker, famed Forfaiting author and President of FIMBank p.04

InsIde ›› Gozo Feature: Making A Broad Impact

A frank and wide ranging interview with Minister for Gozo Dr Anton Refalo, in a curtain-raiser to our Gozo special feature, p.10

›› Gaming: Malta’s Growing Gaming Frontier

The Economic Update sits down with Mr Joseph Cuschieri, Execuive Chairman for the Lotteries and Gaming Authority, p.16

›› FInAnCe: PRIMe MOVeRs In BROKeRAGe: eXAnTe

Alexey Kirienko CEO, EXANTE, speaks with The Economic Update on the challenges faced each time a new entity was set up for proprietary trading, p.28

June 2014

COVER STORY

FINANCING TRADE ENABLING OPPORTUNITIES Interview Margrith Lutschg-Emmenegger, international speaker, famed Forfaiting author and President of FIMBank p.04

CONTENTS Feature stories

04

04 cover story: Financing trade

InsIde ›› Gozo Feature: Making A Broad Impact

A frank and wide ranging interview with Minister for Gozo Dr Anton Refalo, in a curtain-raiser to our Gozo special feature, p.10

›› Gaming: Malta’s Growing Gaming Frontier

The Economic Update sits down with Mr Joseph Cuschieri, Execuive Chairman for the Lotteries and Gaming Authority, p.16

›› FInAnCe: PRIMe MOVeRs In BROKeRAGe: eXAnTe

Alexey Kirienko CEO, EXANTE, speaks with The Economic Update on the challenges faced each time a new entity was set up for proprietary trading, p.28

Publisher John Formosa editor Martin Vella Journalist George Carol sales & Publication Manager Margaret Brincat graPhic designer Jessica Camilleri cover PhotograPhy Fimbank Printing PRINT IT

enabling oPPortunities Margrith Lutschg-Emmenegger, international speaker, famed Forfaiting author and President of FIMBank goes through the latest developments at FIMBank 10 gozo Feature: MaKing a broad

iMPact A frank and wide ranging interview with Minister for Gozo Dr Anton Refalo, in a curtain-raiser to our Gozo special feature 16 gaMing: Malta’s growing gaMing Frontier the Economic Update sits down with Mr Joseph Cuschieri, Execuive Chairman for the Lotteries and Gaming Authority 18 FaMily business: transFers

continue to be a MaJor challenge in euroPe and even More so in Malta Mario Duca and Tony Pace gives us their piece of mind regarding family owned businesses as they analyse the EFBKPMG Tax Monitor report

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Quote of the month: “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing” - Theodore Roosevelt

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For magazine and website advertising enquiries please contact: margaret@networkpublications.com.mt or call on (+356) 9940 6743 For editorial enquiries please contact: martin.vella@networkpublications.com.mt The Economic Update is published by: Network Publications Ltd., Angelica Court, Giuseppi Cali Str., Ta’ Xbiex, XBX1425, Malta Tel: +356 2131 6326/7/8 Fax: +356 2132 3432

Contributors: George Carol, Duncan Dimech, Mario Duca, Lorna Diep, Gina-Roberts Grey, Noel Grima, Kenneth Micallef, Louis Naudi, Toni Pace, Peter James Sant.

20 sMes: eu’s growth agenda For

sMes and start-uPs Peter James Sant, Head of Research and EU Affairs with the Bank of Valletta explains current regulatory structural changes within EU institutions 24 it: sshhh! big brother is watching and 5 tiPs to iMProve your Privacy Following Edward Snowden’s revelations, Duncan Dimech, MD of EXOR Group, sheds more light the involvement of service providers monitoring on behalf of Governments 29 Finance: PriMe Movers in

Special Thanks: BOV, Exante, Exor Group, Fimbank, Minister for Gozo, IIG Bank, Michael Attard Ltd., TMID, Valleta Fund Management Ltd.

broKerage: eXante During a recent visit to Malta, Alexey Kirienko CEO, EXANTE, speaks with The Economic Update on the challenges faced each time a new entity was set up for proprietary trading

Please feel free to email us with your viewpoint, whether you agree or disagree with the standpoint of the personalities we interview or the topics we focus on.

Your opinion, contribution, concern and feedback on our articles and interviews are welcome. Please include full name, contact details

40 sMes: how well do we understand the relevance and role oF MarKeting behaviour in sMes in Malta?

Profs Louis Naudi’s Case Study on SMEs

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48 ManageMent: Managing your

business Proactively Kenneth B Micallef , Head CEO’s Office, Bank of Valletta, assess strategic capabilities as a basis of competitive advantage

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Editor’s NotE Hi everyone, hope you all had a great and productive month!

Undoubtedly the most noteworthy news these past two weeks is that of the World Cup in Brazil. Not sure if you are a football enthusiasts, but here in Malta we go crazy when it comes to football competitions like the Brazilians do. Beyond any doubt, Germany deserved the title of The World Champions. The obvious aside (LOL), which country do you think will win the cup? Are you a World Cup or football fan? Did you know that many are saying that FIFA Fanatics will make the world cup the most social sporting event ever? Well, I let you find out all about this then...

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Do you use the excuse of “I don’t have time” when faced with the opportunity to learn best practices or current trends for effectively managing your business? I appreciated reading an article I recently read about how employees sometimes struggle with getting their job done on time. It seems they are “too busy” to get even some of the basic things done. When it comes to participating in training and educational courses on how to better run their firms, they perhaps remark, “I have to get my hours in on management topics.

To many partners, running a growing, efficient, profitable, progressive firm comes under the “soft skills” category. Management education is important perhaps….. that is why managers have the reputation for scoring very low when it comes to Emotional Intelligence! My challenge to managers (those who usually DO get some management education), is to invite other colleagues – those who are focused almost entirely on client service – to accompany them to their firm’s management meeting, business networking events, other management focused conferences and workshops that we regularly are organising. The more knowledgeable the entire organisation is the faster the firm moves forward. As former Harvard Business School professor, American writer and expert on business management practices David Maister maintains, “What you do with your billable time determines your current income. What you do with your non-billable time determines your future.”

This month as FIMBank have determined the outcome of our cover story, we have dedicated our billable time to feature a special take on Gozo, test driving the fabulous Citroen Picasso, focused our spotlight on EXANTE, commemorated the WWI anniversary, and showcase an article of the highest calibre courtesy of Honary Profs Louis Naudi about the role of marketing in SMEs. Read ‘N’ Enjoy!

Martin Vella

52 HoW to EsCAPE A LoNG-tErM CoNtrACt

Our intern-based Journalist Lorna Diep deals on nthe importance of reading carefully contracts before signing agreements 53 sHoULd YoU LEt YoUr LiFE-iNsUrANCE LAPsE?

An article by Gina-Roberts Grey, Courtesy of The Frankling Property Report on Life Insurance 54 trAVEL: CoMPANY sUCCEssFULY tEsts sPACE-toUrsiM BALLooN

An Arizona company has successfully completed the first small-scale test flight of a high-altitude balloon and capsule being

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All rights reserved. Reproduction in whole or in part is strictly prohibited without written permission. Opinions expressed in The Economic Update are not necessarily those of the editor or publishers. All reasonable care is taken to ensure truth and accuracy, but the editor and publishers cannot be held responsible for errors or omissions in articles, advertising, photographs or illustrations. The Economic Update is printed by Print IT and distributed free with The Business Weekly.

Cover Story interview

FINANCING TRADE-ENABLING OPPORTUNITIES

By Martin Vella

She has written numerous articles on Forfaiting including a book, published in 1998 by Euromoney, titled “A Guide to Forfaiting”. She has also been a regular speaker on the subject for many years travelling around the World teaching audiences the benefits of Forfaiting and Factoring. Margrith Lütschg-Emmenegger, President of FIMBank, gives us an overview of the latest developments at FIMBank, discusses Rights issue and tells us why she anticipates significantly improved prospects to take on new business opportunities.

TEU: How has the entry of new institutional shareholders, which took place in 2013, affected FIMBank to date?

MLE: Earlier this year, Burgan Bank and the United Gulf Bank (both members of the KIPCO Group), jointly increased their stake in FIMBank to just over 80% as a result of a voluntary bid announced towards the end of 2013. Following a difficult 2013 characterised by some fairly significant impairment events in the main component entities of FIMBank plc and London Forfaiting Company Limited we have been concentrating to get a better insight and understanding of the KIPCO Group, the largest diversified holding company in the Middle East with consolidated assets exceeding USD 30 billion. As a result, we are now working towards establishing new intragroup business relationships and securing better funding opportunities from our new shareholders.

TEU: How would you describe the FIMBank Group’s performance in the first half of 2014?

MLE: We are seeing good operating results in the main component entities with slightly improved revenue levels when compared with the same period last year, both in terms of interest spread and fee income. On the other hand, we have been receiving mixed signals from our associated factoring entities. Impairments continue to impact the performance of Factorrus in Russia, while Egypt Factor’s outlook remains cautious due to the situation in the country.

Meanwhile, we have persisted in our recovery efforts with regard to 2013 impairments across the Group. However, these have yet to yield the desired results.

TEU: Are there any developments regarding the Bank’s international factoring joint ventures?

MLE: Our international factoring strategy is being adjusted to take into consideration the fact that we now form part of a premiere Middle Eastern conglomerate, have better access to less expensive funding, and have the opportunity to gain control in the affiliate companies by taking a 04 |

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COvEr STOry INTErvIEw

majority shareholding which will give us better controls over activities including risk management. Consequently, FIMBank has increased its shareholding in India Factoring to 79%, while acquiring the shareholding of our Russian partner in FactorRus, taking us to 80 % shareholding with IFC (part of the World Bank Group) holding 20%.

TEU: Can you tell us something about what FIMBank has in the pipeline for the near future?

MLE: We are working on a number of new projects and initiatives to grow our footprint in line with our strategic objectives. We have entered the Greek market through our Passport rights and will shortly be announcing the official opening of our Greek branch. We hope to start testing a new Leasing product later on this year, where pilot testing will take place in our 100 % subsidiary MENAfactors in Dubai. Late last year we signed a shareholders’ agreement with PRVI Faktor, a Slovenian factoring and finance company with operations in Central Europe.

Discussions are still underway in this regard.

South America remains an important market for us, and here we are in negotiations with the owners of a family owned company in Chile, where negotiations are going well.

TEU: What are your plans for your new branch in Greece?

MLE: In our Athens branch we will be providing a comprehensive range of trade finance and banking solutions, targeting corporate clients, particularly traders, importers and exporters. Our presence in Greece will enable us to provide forfaiting, factoring and other alternative trade finance solutions in support of Greek companies.

We are confident that the comprehensive technical know-how and business acumen of the team we are building in Greece, led by Demetris Zouzoukis, will translate into a very positive experience for FIMBank.

TEU: Can you provide further information regarding the Rights Issue that was announced this month?

MLE: The Annual General Meeting held on the 8th May, approved a resolution to make two rights issues over two years to raise in aggregate a minimum of USD 100 million.

A first Rights Issue of USD50 million has been announced for June 2014 and another Issue of a similar size shall follow, potentially as early as 2015. These developments will allow us to grow safely and maintain strong ratios under the new Basle III rules. We are

also very pleased that we remain listed on the Malta Stock Exchange despite having slightly less than 25 % of our shares in the public domain now.

Nobody can surpass our reputation in providing tailor-made Trade Finance solutions to customers from all over the world

TEU: Can you provide further information on these rights issues for the benefit of existing FIMBank shareholders?

MLE: At the beginning of the month we had announced that FIMBank’s prospectus had been approved by the Listing Authority.

We also received authorization for the admissibility to the listing of an additional 77,009,494 new ordinary shares with a nominal value of USD 0.50. FIMBank shareholders as at 21 May 2014 are entitled to subscribe to 16 new ordinary shares for every 41 shares in their possession at a subscription price of USD 0.65. The acceptance period opened on the 11th June and will end on the 25th June. If subscribed in full, the Rights Issue will raise gross proceeds of USD 50 million. Full details are available in our prospectus dated 3 June 2014 which is available for download from our website www.fimbank.com TEU: What will happen with any lapsed rights from this first Rights Issue?

MLE: Any lapsed rights from this first Rights Issue will be offered to financial intermediaries during an Intermediaries Offer. There is also an underwriting agreement undertaken by Tunis International Bank (TIB) in favour of FIMBank to subscribe to such number of new ordinary shares under the Rights Issue not subscribed to during the Intermediaries Offer. The obligation of TIB under the underwriting agreement is limited to a maximum value of USD 5,000,000.

TEU: Will FIMBank remain listed on the Malta Stock Exchange if the percentage of shares in public hands falls any further?

MLE: The proportion of ordinary shares that is in the hands of the public is currently circa 20%. We have considered a possible scenario, whereas as a result of the Rights Issue, this would actually decrease to below 17%, and we therefore approached the Listing Authority.

The authority confirmed that in this case

the Bank’s listing on the MSE will not be prejudiced, subject to a number of conditions with which the Bank is very comfortable. Our institutional investors’ wish is for FIMBank to remain listed on the Malta Stock Exchange, thus allowing long-standing shareholders as well as new investors to continue to participate in FIMBank’s success story.

TEU: How do you see the future for the FIMBank Group?

MLE: I see a very bright future for FIMBank.

Our strength has always been our ability to re-invent ourselves to adapt to the new realities and challenges with which we are faced from time to time. The Group can now boast a strong reference shareholder with a good rating, which has already started facilitating access to funding and has led to a stronger equity base. Moreover, maintaining strong capital ratios and enhancing our credit rating shall be critical to the future development of the FIMBank Group. Our focus shall remain on Trade Finance, where we shall strive towards further strengthening the Group’s operating performance. Trade Finance, which is a banking business servicing the real economy, remains fundamental for the efficient functioning of global trade. And nobody can surpass our reputation in providing tailor-made Trade Finance solutions to customers from all over the world.

TEU

All rights reserved | Copyrighted

Editor’s Note Margrith Lütschg-Emmenegger has worked in Trade Finance, with a special focus on Forfaiting and Factoring, for most of her professional life, first with Barclays Bank, and then with Midland Bank Aval in London. She then went on to join West Merchant Bank (now WestLB AG) where she had global responsibility for Forfaiting/Factoring within WestLB AG,which was then an international market leader in these products. Margrith joined FIMBank in 2003 as Executive Vice President, responsible for Business Development, and was appointed President a year later. In 1999, Ms LütschgEmmenegger co-founded the International Forfaiting Association, where she served as Deputy Chairman until September 2003.

She occupies several board positions in companies in emerging markets which focus on offering Factoring and Forfaiting services.

She has been a regular speaker on the subject for many years, travelling around the world explaining to audiences the benefits of Forfaiting and Factoring. In 2014 she was awarded the national order of merit in recognition of her ‘exceptional contribution’ towards the common good of the Maltese and the development of Malta as a financial services centre.

June 2014 | THE ECONOMIC UPDATE

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Business Appointments

InstItute of DIrectors Malta Branch enlarge natIonal councIl wIth key appoIntMent The Institute of Directors Malta Branch (IoD) governing body, the IoD national council has elected Reuben Buttigieg to the council announced James Satariano, IoD chairman.

IoD Malta Chairman James Satariano (right) welcomes new IoD national council member Reuben Buttigieg

“I am pleased to welcome this high-calibre council appointee and look forward to Mr. Buttigieg’s contributions to IoD’s steering group. This appointment is intended to reinforce the leadership of our national council. I also wish to recognise the valuable contribution made by existing council members and to thank them for their unflagging service over the years,” Mr. Satariano says.

Reuben Buttigieg joins IoD’s council as the managing director and founder of Erremme Business Advisors, a business and management consultancy firm. Reuben is President of the Malta Institute of Management (MIM), a role he has occupied for three consecutive terms and brings this invaluable experience to IoD’s council. MIM represents amongst others Edinburgh Business School, the Chartered Institute of Taxation and is member of the European Management Association. Reuben was also an Hon Treasurer of the Malta Employers Association and Council member for technical issues on the Chamber of Small enterprises (GRTU). He was previously a member of the sub-committee for financial services at the Chamber of Commerce.

IoD Malta was founded almost 50 years ago and represents directors from every corner of industry in Malta. IoD Malta’s 06 |

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key role is helping the government, all local stakeholders and society to improve corporate governance standards, and to improve the foundations for economic growth and development in Malta. IoD Malta has worked closely with the Malta Financial Services authority on a number of events and initiatives in the governance area as well with the Central Bank, the Ministry of Finance and key institutional stakeholders, including the Malta Stock Exchange.

Mr. Satariano said, “For many years IoD Malta has hosted a number of seminars and events for members and their guests, including policy and business events. We are now planning a major initiative starting in October and we are delighted to have Reuben in the fold to assist with the upcoming initiatives, I am convinced that his presence will be invaluable.”

IoD’s current council comprises Mr. Satariano as Chairman, Mr. Anthony Guillaumier, Deputy Chairman, Mr. James Arrigo who holds the post of Honorary Secretary and Mr. Edwin Ward, Communications Director.

TEU

To find out more about becoming an IoD member kindly contact Honorary Secretary James Arrigo on (+356) 21 247 400 Ext 1 or email: jamesarrigo@marinamilling.com

Company FoCus

Poor acoustics affect PeoPle’s health and well-being Many of us simply consider the ceiling as that area above our head. We don’t really give it much thought, apart from looking up towards it in moments when we need inspiration, or have been given a particularly difficult request by the boss.

However, the ceiling has a considerable effect on our working environment. It acts as a giant reflective barrier, bouncing sound throughout the workspace. It also acts as a sound buffer from the floors above, preventing us from having to listen to every footstep, or chair scrape.

One man who has made it his mission to bring quality to ceilings is Riccardo Andreozzi, Director at Rockfon. “Rockfon is part of the Danish company Rockwool, the world’s largest producer of stone wool and today Rockwool employs around 9,000 people around the globe, has over 70 years experience in stone wool production giving Rockfon a considerable edge in the market,” he adds.

“False ceilings were originally installed simply to hide cables and to neaten up 08 |

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the installation of items such as airconditioners. However, they do much more than that. They have a considerable effect on room acoustics and can result in a room developing a constant murmur of noise that forces people to raise their voices to be heard. Of course, raised voices only make matters worse,” Riccardo says.

In fact, the issue of acoustics is often overlooked. “When the acoustics in a room are not right it decreases the attention span of those working in that room. Employees will find it harder to focus and concentrate on tasks at hand.

Productivity drops as a result and a business does not run as efficiently as it could” he explains.

In addition to acoustic performance, ceilings can also be a fire hazard as heat and flame travels upwards.

“Our partnership with Dex has allowed us to bring these products to the qualityconscious Maltese market, and we are working on a variety of projects that bring good acoustics - and good aesthetics - to

ceilings around the islands,” Riccardo concludes with a smile.

Dex Workspaces, the specialized outlet of the Vivendo Group focuses on complete workspace solutions across various industries. At Dex we view ourselves as potential partners of your company directly assisting to increase productivity and efficiency of your workforce by providing quality furnishing and finishing solutions that are functional, comfortable and designed for your workspace. Dex Workspaces is offering a one off opportunity to install 20 sq.m. of free acoustic ceiling with a trial period of 60 days at absolutely no cost and no infrastructural changes on your part.

Experience the added benefits of quality acoustics and noise absorption at your workspace. This offer is valid for spaces of minimum 200 sq.m. and sample soffits tiles will be placed on top of current ceiling soffit structure without any alterations to alarm systems, lighting. Contact us today for your free trail on info@dex.com.mt Dex Mdina Road Qormi.

TEU

Long lasting retail experience in Malta in furniture & finishes.

Largest home & office embellishment partner in Malta.

Longstanding relations with the most important European specialists offering flexible & personalized solutions.

Worldwide procurement & installation possibilities with 15 years experience.

MALTA’S NO.1 FURNISHING PARTNER.

Huge logistical capability with an annual average of: 18,000cbm unloading of furniture.

7200 deliveries.

6350 installations.

gozo feature

interview with the hon. minister for gozo dr. anton refalo

Making a Broad iMpact

By Martin Vella

New job creations in Gozo. Minister Refalo at the signing of the RS2 in Gozo

TEU: How does Gozo provide not only an excellent business opportunity but also a vibrant new destination for the mainstream cruise-liner industry and how significant is the development of a new cruise liner terminal in Gozo?

AR: Malta’s importance as a cruise shipping destination has been established successfully in the past few years with important developments in the sector (mainly the Valletta Cruise Terminal). The Government is seeing that Gozo can both complement Malta, and also act as a distinct destination, especially for small and boutique liners.

The concept of turn-around home porting is one which the private sector in Malta is working on, encouraged by the fact that the Malta International Airport is considered as one of the best airports in Europe, with a number of airlines already flying to and from the main airports and other hubs around the continent.

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Following a long wait, The Economic Update is granted an interview with the Minister for Gozo Dr Anton Refalo. We ask the Minister on what benefits and collateral will Gozo enjoy through the investment by the government in the industry in line with its policy for economic growth. Minister Refalo bequeaths a lot of importance to the Cruise tourism, which he maintains, links very well to an array of services that contribute positively towards the diversification of economic activity on the Island. Dr Refalo says the government wants to promote the regeneration of indigenous products, namely artisanal ones and creates awareness and appreciation of the unique characteristics and cultural heritage of Gozo.

The short distance between the two islands offers great scenery and is an experience in itself for travellers. Gozo’s rurality, its history and its scenery, complements the Malta destination perfectly.

competitive and quality renowned destination for the shipping business.

Gozo will provide the possibilities to create further synergies in this sector, due to its considerable business potential.

TEU: How will Gozo latch importance to a safe, secure and sustainable cruise-liner industry “in view of the application of the Guidelines on State Aid to Maritime Transport and the carriage of passengers by sea”?

TEU: What significance does the €14.5 million restoration project proposed by the Ministry for Gozo for the restoration and rehabilitation of the interior of the Citadel hold for you and what value does it hold in terms of heritage, culture and tourism?

AR: With the adoption of the maritime guidelines in 2004, a number of European nations have become viable locations for the head offices and centres of management of international ship operating companies and for the ownership of their ships through a reduction of the costs associated with the operation of a vessel while resident in that country.

In this context Gozo will benefit in line with Malta’s ability to remain an attractive,

AR: The Cittadella is one of the prime touristic sites of Gozo. This is due to its architectural, historical and cultural aspects.

Although several restoration interventions were carried out over the last century, the Cittadella was never viewed holistically as a site with varied interests including, military, architectural, historical, natural, cultural and social. Its overall state of conservation left much to be desired. Moreover, the

gOzO fEATUrE

visitors are faced with a site which is difficult to access and with limited availability of information to understand the significance of the site. The Ministry for Gozo views the Cittadella as a unique icon which reflects the historical course of the island and how this help to forge the resilience of its population. Therefore it embarked on this major project which is aimed at conserving and rehabilitating the Cittadella, thus exploiting its full potential as one on the most important touristic sites on the island.

TEU: Among the interventions planned in this project is the restoration and conversion of a historical unused reservoir into a state-of-the-art visitors’ centre.

Will this provide the much required interpretation and ancillary facilities for visitors, including the upgrading of the access road leading to it?

AR: One of the largest and most important components of this project is the restoration of two unused water reservoirs built in 1877, and their conversion into a Visitors’ Centre. These reservoirs were constructed in the ditch, immediately in front of the entrance to the Cittadella. Nothing is visible today of these impressive structures except their roof and since they are underground they are inconspicuous. Their architecture is however impressive, resembling an underground cathedral with high arches.

One would not expect such structures at the entrance to the Cittadella. These reservoirs will be made accessible, professionally restored and equipped with technological equipment which would provide the much needed interpretation facilities and other related amenities for visitors to the Cittadella. As part of the wider project, the square in front of the Cathedral will be levelled and paved to enable the holding events of a cultural and religious nature. The access roads leading to the Cittadella will also be upgraded.

TEU: This project was launched by the previous Government, involves extensive landscaping and rehabilitation works in the ditch, installation of floodlighting, restoration of facades of important public buildings within the Citadel, including the Gozo Law Courts, Governor’s Palace and Old Prisons and the trenching works for services inside the Cittadella which include the repaving of all the streets and walkways. Will this increase accessibility for all to most parts of the site?

AR: Before the launch of this project a significant part of the Cittadella was mostly inaccessible for persons with special needs. From its inception, this project was designed to increase accessibility for persons with special needs and all MEPA applications related to this project were endorsed by the KNPD. During a previous restoration campaign carried out by the Gozo Civic Council between the 1950’s and 1960’s all streets within Cittadella were paved with globigerina flagstones.

Unfortunately most of the streets were stepped, thus limiting access to a substantial part of Cittadella. All the services are being diverted underground, streets will be paved with hardstone and these steps will be eliminated. This would re-create the original layout of the streets within Cittadella as well as increase accessibility. Moreover, a number of lifts, lifting platforms and chair lifts will be installed at various strategic parts of the Cittadella thus making previously inaccessible points accessible to all.

Financial services and ICT companies are dependent upon the provision of a second underwater fibre optic data cable between Malta and Gozo ..... This will provide a digital lifeline to the Gozitan economy due to the fact that digital accessibility is as much as important as physical accessibility TEU: The proposed project’s purpose is to improve vehicular accessibility to the Citadel by means of slope stabilisation which would carry the traffic loads while enhancing the stability of the fortifications.

Do you believe that this can be accomplished without affecting negatively the environmental, archaeological or landscape value of this small part of the slope surrounding the Citadel?

AR: The project being implemented by the Ministry for Gozo aims at rehabilitating the Cittadella and making it attractive for visitors. This will entail the removal of vehicular parking along the access road leading to Cittadella and from the Piazza and main gate environs. Thus alternative parking facilities had to be sought to enable easy access for parishioners of the Cathedral Church as well as persons frequenting the Law Courts. The ministry for Gozo is evaluating the feasability of various

alternatives which ensure the continuity accessibility of the Cittadella to the public including persons who attend court session and the Gozo cathedral parishioners. These new facilities are planned to be within the built up area near the Cittadella thus minimising as much as possible any visual or environmental impacts on Cittadella.

Once the project is completed, there would be a number of possibilities for the holding of cultural events at Cittadella. The ditch area which was previously abandoned and inaccessible will be converted into a leisure area where cultural events may be held.

Reference has already been made to the potential the Piazza in front of the cathedral will have once levelled and paved. These together with increased accessibility and visitor facilities would make Cittadella a cultural hub providing spectacular venues for the holding of cultural events. In these last years the Ministry for Gozo carried out a number of projects aimed at giving a new life to the Cittadella. In 2010 a Masterplan, funded by the European Economic Area (EEA) Financial Mechanisms,for the Cittadella was completed. On the basis of this Masterplan, an application was submitted for EU Co-financing of a project for the implementation of the Cittadella Masterplan recommendations. The project being implemented today is the result of such application with a total project value of €14.5 million. Another EU Funded project of around €7 million has just been completed. This entailed the consolidation and restoration of the bastion walls of Cittadella as well as the stabilization of the underlying bedrock. Being one of Gozo’s prime sites, the rehabilitation of Cittadella would be of benefit to Gozo as a whole.

TEU: What is the status on the yacht marina and casino to be situated here in Gozo?

AR: With regards to a yacht marina and the cruise liner terminal an expression of interest has been issued and various enterprises submitted their interest. A request for proposal has been issued which period will close on the 18th July, 2014. Those that chose to continue with their interest have to submit a number of technical studies, upon which the government will be in a position to choose the best proposer. Submission deadline is 17th October, 2014. Regarding the casino, negotations with the private sector are still ongoing.

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GOZO feature

landscaping gozo’s future The Xerri’s Garden Centre, Nursery and Landscape Designers’s story continues.

After years of activity in the landscaping business one cannot talk anymore of our company establishing itself in the sector; rather the talk revolves about how elaborate our projects have become.

Converting existing gardens, restoring dilapidated ones, creating new areas from scratch; there is no limit to our landscaping activity. It is very interesting, and also of great satisfaction to us, to experience first hand how people in general have become so conscious and appreciative of natural relax areas in their homes. We tend to find out more

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and more, through our constant contact with our clients, how they look not only to enhance the beauty of their properties but also to enjoy it themselves, to have this new experience of direct contact with their gardens, green areas, indoors or outside, to go through the experience of caring for it themselves, and even getting this sense of fulfillment out of maintaining their own plants and trees.

Through all this Xerri’s Garden Centre has not lost sight of it original family based set-up. A core of dedicated staff who try to cater for all the requests put in by our clients. Clients are taken care of

at our shop with due care and diligence, paying attention to accommodate their every request, however small or big it may be. Although landscaping has become a business mainstay, the Xerri’s Garden Centre shop is still a very important part of our activity; bouquets, flowers, plants, wedding flowers, decorative pots and vases, garden needs; all these are very important aspects of our general activity.

One has to mention also the pet needs section which is another important activity. A visit to our shop is enough to show that Xerri’s Garden Centre is the best stocked garden and pet needs shop on Gozo.

TEU

INTErvIEw wITH THE HON. MINIsTEr fOr gOzO Dr. ANTON rEfAlO

gOzO fEATUrE IT

Minister vetting ongoing projects

TEU: Can you briefly outline the ERDF Scheme for Gozitan businesses announced by Minister for Finance, Profs Edward Scicluna in the budget speech?

AR: 181 Gozitan SME’s benefited from the Micro Invest in 2013. It should be noted that the Micro Invest in 2013 covered 60% of the tax credit since the 65% tax credit announced in the budget 2014 by Profs. Edward Scicluna commences in 2014. Malta Enterprise will start receiving the applications for the year 2014 from eligible participants as of 1st January 2015 up to the end of March 2015.

TEU: Have the incentive guidelines for hoteliers been reviewed and a revision of licences related to property in Gozo made?

AR: In 2013 a new fees structure was established for short-let licences. The short-let licences fees for the self-catering accommodation sector have been reduced, on average, by 40%, whilst the previously nominal licencee fee for domestic rental was removed. The highest reduction was of 50%, in the farmhouses category. Today all operators pay the same fees and there is no distinction between short-lets for domestic tourists and short-lets for foreign tourists.

This has put everyone on a more level playing field and has helped to curb abuse.

Operators having three or more properties are given a further discount on their total

amount of licence fees. Whilst operations in both Malta and Gozo are eligible for these discounts, the Gozitans operators are given a further discount(25%) to help mitigate the disadvantages suffered by our double insularity. This reduction in fees has helped the operators to invest more in the upgrading of their product.

The Ministry for Gozo views the Cittadella as a unique icon which reflects the historical course of the island TEU: Do you have any news regarding the development of business centre for financial services and ICT companies?

AR: The development of a business centre for financial services and ICT companies is dependent upon the provision of a second underwater fibre optic data cable between Malta and Gozo. For this purpose the Gozo Ministy has compiled the relevant technical and financial data for a feasibility study in coordination with Malta Enterprise and Malta Communications Authority since this forms part of a EU co-funded Malta Enterprise call for tenders (study) for a digital hub in Malta/Gozo. The Maltese Government has allocated funds to Malta Enterprise which funds will be utilised in order to initiate a feasilbility study concerning the second fibre optic cable to be placed

between Malta and Gozo. This will provide a digital lifeline to the Gozitan economy due to the fact that digital accessibility is as much as important as physical accessibility.

TEU: When do you envisage the reconstruction of Marsalforn breakwater, works on Marsalforn Waterfront and Xlendi Waterfront?

AR: Studies have been carried out for the reconstruction of the Marsalforn breakwater and designs have been prepared in relation to the Marsalforn Waterfront Project and relevant permits obtained. These two projects are currently on hold pending a decision on the expression of interest for the setting up of a Yacht marina in Gozo.

Regarding the Xlendi Waterfront Project , designs have been prepared and permits for the project have also been obtained.

TEU

All rights reserved | Copyrighted

Editor’s Note Anton Refalo is the Minister for Gozo.

Anton was born on the 25th July,1956. He graduated as a lawyer in 1980 at the age of 24. Married to Michelina (Lina) and father of two Andre’ and Simona. Anton first ran a general election in 1987. He was the youngest candidate within the the Labour Party and was successfully elected. From than onwards, Anton Refalo has always garnered the highest amount of Labour first preference votes within the 13th district.

June 2014 | THE ECONOMIC UPDATE

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gozo feature

Gozo workshoP on ProMotinG the efficient use of water: swMed Project The SWMED project (Sustainable Domestic water use technologies in Mediterranean Regions) is co-financed by the European Union under the ENPI CBC MED Programme.

The Ministry for Gozo is one of the seven Mediterranean partners in the project hailing from other European regions, the Middle East and North Africa.

The second Local Workshop was held in Gozo on Monday, as part of this project, promoting efficient water use in Malta and Gozo.

It is a fact that the majority of the countries around the Mediterranean, especially those forming the Southern part, have a problem of water shortage.

This very problem is increasing with the passage of time hence the importance to plan projects that tackle this issue. The Ministry for Gozo said that currently, there is an ongoing process of national consultation by the current Government.

“This consultation will eventually lead the Government,” the Ministry said, “to devise a strategy of water conservation and there is no doubt that this SWMED workshop will contribute towards this strategy.”

The SWMED project is a pilot project and will serve to provide the necessary experience in the field of water use efficiency.

The Ministry for Gozo said that “the effects of such an experience will subsequently be enjoyed by Gozitan families and the country in general as the increase in water use efficiency will ultimately lead to decreased water tariffs.”

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Further to this, the SWMED project will also be the stepping stone to a nationwide educational campaign on the efficient use of water.

Gozitan MP defends ferry ‘Priority boardinG’ ProPosal

“This project is also part of the eco-Gozo vision and is in line with the Government’s policy to have the country’s resources, especially natural ones (which are very scarce!), used aptly and intelligently,” the Ministry for Gozo said.

Former Parliamentary Secretary for the Elderly Franco Mercieca has defended the proposed Gozo Channel priority boarding scheme which, according to unconfirmed reports has been scrapped on orders from Castille.

It added, that “this project is also part of the Government’s electoral promise to increase initiatives that help conserve water at household level.”

Dr Christian Zammit, in the absence of the Minister for Gozo, Anton Refalo, emphasised that the main objective of this workshop was to convene all stakeholders who are, in one way or another, linked with our water resources.

“The combined ideas of the stakeholders involved should help improve the country’s water use efficiency.” Dr Zammit reiterated that all stakeholders should work together in a bid to improve our current water situation so that the current generation, as well as future ones, enjoy better water conditions.

Present for this workshop were several mayors, representatives of local councils, representatives of the Water Corporation, representatives of the Ministry of Energy and Health and several members of environmental organisations. Eco-Gozo Regional Development Director Anthony Zammit, Ing. Joe Portelli, Ing. Marco Cremona and Mr. Manuel Sapiano from the Ministry of Energy and Health also addressed the workshop.

Speaking during the adjournment this evening, Dr Mercieca said the proposed system was not really priority boarding but more of a means for passengers to have a guaranteed place on a particular ship.

“This will lessen the hardships of Gozitans, at least until the permanent link is in place. I beleive in the need for a permanent link but until then we need to improve the transport service between the two islands as much as possible.”

Dr Mercieca said the current system is sometimes unpredictable and people spend up to three hours a day crossing between Malta and Gozo - even longer if one uses public transport. The priority system would at least allow one to board the ferry immediately on arrival at the terminals.

“With pre-booking passengers can be sure that, at least they will not have to spend more than three hours on the crossing.

We are not reinventing the wheel.”

On the permanent link, Dr Mercieca said this would be invaluable to Gozitans who work in Malta and who spend lots of time and money every day to cross from Gozo to Malta and back.

TEU

Source: TMID

GaminG

Malta’s GrowinG GaMinG Frontier

By Martin Vella

The Economic Update spoke with Joseph Cuschieri, Executive Chairman of the Lotteries and Gaming Authority about why both remote gaming and the land based gaming are of equal importance.

Mr Cuschieri strongly believes that both areas have rapid growth potential. We discuss the very bright future for iGaming and how LGA is positioned to build on its already solid foundations.

TEU: How has 2013 been for LGA? JC: 2013 has been a relatively good year for the LGA. We grew our licensee portfolio by 8% year on year and maintained the same revenue as the previous year. We also laid the foundations for our change programme which we are executing this year. In 2014, I am expecting the same rate of growth as 2013 but with a higher revenue stream.

TEU: Why is it important for Lotteries and Gaming Authority (LGA) to participate in the first ever East meets West Regulators Summit in Manila and what opportunities does it offer for Malta?

JC: It provided an insight into the potential of emerging markets and the opportunities for collaboration it could present for Malta.

Our aim is to strategically develop stronger ties with our Asian counterparts so that all available opportunities are explored.

TEU: The LGA will be setting up new offices at Smart-City Malta. Do you view this as a step in LGA’s repositioning strategy intended to further strengthen the regulatory authority?

JC: Our move to Smart City Malta is part of the current overhaul taking place at the LGA which is in line with our expansion plans and the need to have better facilities from which we operate. We believe in the Smart City Malta concept and are confident that this move will attract remote gaming companies and service providers towards the area. Smart City Malta will surely become a top ICT and digital entertainment hub in the coming years.

TEU: Could you please share some of the most significant milestones related to LGA’s focus on the local Gaming ecosystem?

JC: Our focus is on modernising our regulatory policy to take account of technological developments and changing 16 |

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consumer trends. For example, we are currently developing a new policy framework relating to consumer protection which we will then publish for consultation.

In the coming weeks, we will be starting the process of reviewing our legal framework to ensure that our regulatory regime future proofs us for the next decade. After several consultations, we have recently launched a number of policy changes which have been well received by the industry. These mainly related to outdated practices and simplification of processes amongst others.

Other initiatives include the investment we are making in bilateral relationships, in promoting Malta as a jurisdiction and a stronger consultation process with all relevant stakeholders both local and international. Furthermore, we will soon be launching new regulations for digital games of skill with prize. Malta will in fact become one of the first jurisdictions to start regulating this segment of gaming. We are also exploring new geographical markets so that Malta’s gaming industry maintains a steady rate of growth. Only a few months ago, the Responsible Gaming Foundation was launched. I am confident that this industry will keep growing and Malta will become the leader globally.

TEU: How do you nurture this industry in Malta?

J.C: For the LGA both remote gaming and the land based gaming are of equal importance and we strongly believe that both areas have growth potential. To nurture this industry it is of critical importance that the LGA is agile, proactive, fair and innovative and that we lead by example in everything that we do. The Regulator is an important stakeholder in the whole ecosystem and it’s important that policy and decision making is sound and based on evidence and relevant consultations. Long

term strategic thinking within the broader global trends in the industry is important to ensure that our approach is in sync with industry trends and challenges. It is also of critical importance that the regulatory framework is constantly updated to reflect the rapid changes in technology and consumer trends. For example, player protection is very high on our agenda.

TEU: What are the events that the LGA participates and/or supports in Malta and Internationally?

JC: LGA participates in various important events across the world. Some of them include the annual ICE EXPO in London, iGaming Asia in Macau, EIG, IAGRA (International Association of Gaming Regulators) and GREF (Gaming Regulators European Forum) amongst others which happen throughout the year. Furthermore, we are also sponsoring and taking part in two major gaming events in Malta later this year; namely SiGMA and MiGS. Both events are extremely important for our country as they strengthen our position as a top gaming jurisdiction.

TEU

All rights reserved | Copyrighted

Editor’s Note Joseph Cuschieri, is a certified public accountant and a fellow member of the Malta Institute of Accountants of Malta, specialising in management accounting and finance and holds a Masters Degree in Business Administration from Henley Management College, UK. Throughout his professional career, he held various senior executive positions within the private sector mainly in the construction, services and hospitality sectors amongst others. Mr Cuschieri was Chief Commercial Officer at Vodafone, and a senior consultant with Ernst & Young.

Furthermore, Joseph spent a period of eighteen months enrolled on the Vodafone Group’s global leadership development programme. He has vast experience in economic regulation particularly in the electronic communications sector where he spent five years as Chief Operating Officer at the Malta Communications Authority.

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Family Business

Family Business TransFers conTinue To Be a major challenge in europe and even more so in malTa

By Mario Duca and Tony Pace

The objective of the European Family Business Tax Monitor compares the tax treatment of intergenerational family business transfers in 23 European countries including Malta.

As can be expected tax treatment varies significantly across Europe with different levels of complexity and obligations. Also as can be expected the tax burden on business transfers within the family in business could hinder future growth and investment within business families. From this report unfortunately it is very evident that Malta’s family businesses are facing the brunt of these tax burdens when compared to the other 23 countries tracked in this report

Tax due on succession on reTiremenT: Out of the 23 surveyed countries, 6 impose no taxes whatsoever. Once again assuming no reliefs, the potential tax burden can be significant, with the top 4 countries levying between €2.8m and €4.2m upon a transfer of the business.

When we look at the tax landscape with reliefs major changes occur. Now 13 countries apply no tax, but the top 6 still levy a comparatively high amount of between €0.3m and €1.5m. In this case Malta is the second hardest hit country after Denmark as can be seen in below graph. (See Figure 2)

The result of the EFB-KPMG Tax Monitor shows that in many European countries, governments still impose a tax on intergenerational family business transfers.

Many European countries apply reliefs; however, if one is not prepared, the tax obligations can be severe. The Tax Monitor studies an example of a small family business valued at €10 million with a potential tax burden on succession through inheritance or succession on retirement. It is important to note that exemptions and reliefs apply to family situations in some countries, but in others are available to businesses regardless of family ownership.

how does malTa compare?

Malta does not impose inheritance and gift taxes, and does not impose tax on capital gain upon the donation of shares in a Maltese family-run business company where the recipient of the shares is the spouse, descendants or ascendants in the

Tax due on succession Through inheriTance: Out of the 23 surveyed countries, 7 impose no taxes whatsoever. Assuming that no reliefs are applied, the potential tax burden varies from €0 to €4m. The figures highlight the importance of early preparation because the tax landscape changes dramatically when tax exemptions are taken into account. Now the number of countries which impose no tax goes from 7 to 13. But even with exemptions certain countries impose comparatively high levels of tax, with the maximum being €1.5m.

In this case Malta is the third hardest hit country after Denmark and France as can be seen in below graph. (See Figure 1) 18 |

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direct line and their relative spouses, or in the absence of descendants, brothers or sisters and their descendants.

However, duty on documents and transfers, both in the case of a transfer inter vivos such as in the case of a donation of shares referred to above, and on succession through inheritance, is payable by the recipient at 2% or 5%.

The 5% rate applies if it is a transfer of immovable property or a transfer of shares held in a company 75% or more of the assets (as defined in the Duty on Documents and Transfers Act) of which are immovable property or rights over immovable property situated in Malta.

No further exemptions or reliefs apply to these rates of tax and thus the reason for having an identical tax burden on succession through inheritance and on retirement, either with or without exemptions and reliefs.

Figure 1

Figure 2

FAMIly BUsINEss

Transfer of family business in europe sTill a major challenge: What is clear from the study is that family businesses can face an uphill struggle if they want to keep running the business within the family. Taxes are charged in many countries, but no cash has been generated by the individuals or the business as a result of the business transfer. In the case of Malta the funds to meet the stamp duty levied must be found from other sources. This reality can severely hinder the future growth and investment capacity of a business. Finally, the differing tax treatment of inheritance and retirement in other countries is interesting, and such policy differences can often result in changes to the families’ behaviours. For example, the leaders of family businesses may hold on to control of the business for tax reasons, which can be frustrating for the next generation and act as a constraint on business growth.

TEU

This article has been prepared by Mario Duca MAFE President and Tony Pace Tax Partner at KPMG Malta and is a synopsis of the full European Family Business and KPMG International report on the European Family Business Tax Monitor. The report can be accessed at http://www.kpmg.com/MT/en/ IssuesAndInsights/ArticlesPublications/Pages/FamilyBusiness-Transfers.aspx or www.europeanfamilybusinesses. eu. MAFE can be contacted on info@mafe.org.mt and KPMG can be contacted on anthonypace@kpmg.com.mt

Editor’s Note Tony Pace, KPMG Tax Partner for Family Business stated that: “Succession is one of the most long-term challenges facing family businesses. Transitioning the family business from one generation to the next is seldom an easy and straightforward process. There are a number of inherent complexities and obstacles that need to be tackled, or overcome, to try to ensure the future success of the business. One must also not forget the tax implications. Getting expert tax advice is key, as some solutions are only tax efficient if implemented over many years. We have seen a growing number of family business owners seeking our assistance with respect to succession planning issues and we expect this trend to continue going forward”.

Editor’s Note On his part Mario Duca President of MAFE stated that: “This study has cleared the wrong perception that because we do not have tax implications on retirement or succession but only stamp duty(with the highest charge of 5%) on the transmission of ownership, family businesses in Malta are one of the hardest hit in Europe. Hopefully this report in conjunction with the proposed Family Business Act which the Government is working on, will rectify this injustice and provide a more balanced scenario through which Maltese family businesses can have less financial obstacles during their most stressful phase of successions. Thus being in a better position to continue focusing on their growth and expansion preferably outside Malta”.

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Business intelligence

EU’s Growth AGEndA for sMEs And stArt-Ups

by Peter James Sant

In the following article, Mr Sant Head of Research and EU Affairs within the Bank of Valletta explains the current regulatory structural changes that the EU institutions have established. These were implemented through a multipronged approach with the objectives of further enhancing financial stability and investor protection within the euro area and beyond. Mr Sant further explains how access to finance targeted at Small and Medium Sized Enterprises and Start-ups is being increased namely through: (a) The European Central monetary policy easing;

Bank

(b) Increase in the European Investment Bank Capital Base by EU Member States; and (c) The redirection of the European Structural and Investment Funds towards financial engineering instruments.

Since September 2008, following the collapse of Lehman Brothers, the European Union economy passed through a very challenging period as a result of the financial and sovereign crisis. During the recent Brussels Economic Forum 2014 held on 10th June 2014, the President of the European Council, Mr Herman Van Rompuy said “Unlike the United States, which can build on a shared intellectual heritage and, even more, on a common economic history, Europe’s historic self20 |

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understanding is diverse and remains largely national. Our Union, its institutions and the Euro are young. There was for instance no real collective response to the crisis of the 1930s in Europe, but rather a series of national policies, while in the United States the collective and institutional memory of the 1930s has been at the heart of the policy response in 2008/2009.”

The European Union institutions with Member States have adopted a multipronged approach to tackle the financial crisis that cascaded into a sovereign crisis in a number of EU Member States. The EU strategy involved strengthening the regulatory framework through drafting of new directives and regulations that are going to impact all financial services operators.

Following the recent political accord between EU Member States, the European Commission, Council and European Parliament, the European Central Bank has taken up an additional regulatory role as part of the Banking Union / the Single Supervisory Mechanism. Furthermore, the EU Member States and the EU institutions established the European Stability Mechanism as the EU’s firewall against new sovereign and banking bail-outs. The ECB has recently taken some important monetary policy decisions to increase the liquidity and access to finance for the real economy particularly Small and Medium

Sized Enterprises and Start-ups by the lowering of the base rate and Targeted Long Term Refinancing Operations.

Strengthening environment

the

regulatory

• The three European Supervisory Authorities, namely: the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority, working within a network of national competent authorities, (the Joint Committee of the ESAs) and the European Systemic Risk Board, constitute the new European System of Financial Supervision. In light of the failures in financial supervision exposed by the financial crisis, President Barroso in 2008 requested a group of high level experts, chaired by Mr Jacques de Larosiere, to make proposals to strengthen European supervisory arrangements, with the objective of establishing a more efficient, integrated and sustainable European system of supervision.

• The strengthening of the legislative framework through the establishment of the Single Rulebook. The Single Rulebook sets out to provide a single set of harmonised prudential rules which institutions throughout the EU must respect. The term Single Rulebook was coined in 2009 by the European Council in order to refer to the aim of

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a unified regulatory framework for the EU financial sector that would complete the single market in financial services.

This will ensure uniform application of Basel III in all Member States. It will close regulatory loopholes and will thus contribute to a more effective functioning of the Single Market.

• The strengthening of the fiscal policy measures implemented by each Member States particularly through the fiscal compact... Nowadays, as a result of the fiscal compact, EU Member States national draft budgets are scrutinised by the European Commission prior to being presented to national parliaments for discussion and approval.

Increase in the European Investment Bank Share Capital of 10 billion euros • The increase in share capital of 10 billion euros of the European Investment Bank by EU Member States will result in the leverage of billions of euros earmarked for new lending in the areas of national infrastructural projects, climate change mitigation and improving the access to finance for Small and Medium Sized Enterprises in Europe.

It is calculated that the increase in the European Investment Bank’s share capital of EUR 10 billion will result to EUR 60 billion of additional lending generating a multiplier effect of EUR 180 billion over three years. During 2013, the European Investment Bank mobilised at least around EUR 53 billion to assist 230,000 Small and Medium Sized Enterprises in conjunction with local / national financial institutions.

The European Stability Mechanism Furthermore, the European institutions and the EU Member States have created the European Stability Mechanism that is serving as a fire-wall in case of other sovereign and banking ‘bail-ins.’ The European Stability Mechanism (ESM) is the permanent crisis resolution mechanism for the countries within the euro area. The ESM issues debt instruments in order to finance loans and other forms of financial assistance to euro area Members States. The decision leading to the creation of the ESM was taken by the European Council in December 2010.

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European Central Bank’s Monetary Policy On the 5th June 2014, Mr Mario Draghi, President of the European Central Bank announced that the Governing Council had lowered the cost of borrowing and through Targeted Long Term Financing Operations is injecting EUR 400 billion into the real economy. The objectives of these two measures were that of increasing the amount of funding available to increase the access to finance for SMEs. Mr Draghi said ‘In pursuing our price stability mandate, today we decided on a combination of measures to provide additional monetary policy accommodation and to support lending to the real economy. This package includes further reductions in the key ECB interest rates, targeted longer-term refinancing operations, preparatory work related to outright purchases of asset-backed securities and a prolongation of fixed rate, full allotment tender procedures.

The BOV Start Plus Financing Package finances up to EUR 25,000 of initial working capital

Financial Perspectives 2014 – 2020 The European Commission and EU Member States have reached a political agreement to the 2014 – 2020 Financial Perspectives (that is the budget allocation that will be spent by the EU Commission, agencies and EU Members States as part of the Structural and Cohesion Funds).

Traditionally, SMEs were assisted through grants. However, nowadays, the EU institutions mostly through the European Investment Funds that forms part of the European Investment Bank Group are promoting further financial engineering instruments. Most financial engineering instruments are used to support traditional loan guarantee scheme for SME soft loans and mezzanine financing in the form of debt and equity financial instruments. The first pan European financial instrument that we expect to come online in the next six to nine months is the ‘SME Initiative’.

The Maltese authorities already have ‘ring fenced’ EUR 15 million. Malta is one of the three EU Member States that has signed up for the SME Initiative.

The BOV Start Plus Initiative Bank of Valletta, has over the last five years established a niche specialisation in tapping into EU financing opportunities to improve the access to finance for Small and Medium Sized Enterprises.

This has been attained through the development of ‘pre-financing packages’ linked to traditional grant schemes and soft loans that are created from financial engineering instruments through the offering of guarantees.

Over the last three years, Bank of Valletta in close collaboration with the European Investment Fund has managed three financial engineering instruments, namely: two JEREMIE initiatives being partly financed through the European Regional Development Fund and an SME Micro Credit Initiative. The JEREMIE initiative has been fully taken up with a total investment of EUR 100 million resulting with over 640 SMEs beneficiaries.

Furthermore, Bank of Valletta has tapped into EU centralised financing opportunities through the Competitiveness Innovation Programme under the SME Micro Credit Window.

As from January 2014, the Bank started to promote the BOV Start Plus Financing Package intended to encourage Start-Up projects. The BOV Start Plus Financing Package finances up to EUR 25,000 of initial working capital and capital investment of Start-ups that can be repaid over a five year period.

During the first quarter of 2014, the Bank has sanctioned 21 facilities which involved capital investment of EUR 464K under the BOV Start Plus initiative. The BOV Start Plus offers advantageous interest rates and enhanced collateral requirements earmarked for start-ups and micro-enterprises as part of the EU’s 2020 Strategy. If not taken up before hand, the BOV Start Plus scheme will remain available up to 16th December 2016.

TEU

For more information on the BOV Start Plus, please visit https://www.bov.com/content/eufinancial-engineering-instruments or call on 2275 3303 or 2275 5779.

This article has been researched by Peter James Sant who is Head of Research and EU Affairs within the Bank of Valletta Group.

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ICT

SShhh! –

Big Brother is Watching and 5 tips to improve your privacy

By Duncan Dimech

Vodafone, one of the largest mobile phone operators in the world, has released reports about the monitoring activities it has been conducting for a number of Governments around the globe. Many were surprised of much monitoring Vodafone was conducting and hailed Vodafone for releasing such information and asked other operators to follow suite.

The announcement released by Vodafone comes to no surprise following Snowden’s claims. It is simply shedding more light on these claims and that some like Vodafone, Google, Microsoft and Facebook are coming clean about their involvement in monitoring on behalf of the Governments.

Governments claim that they are watching for patterns and not really listening into your communications meaning that they are looking for specific actions, text or anything else that follows a particular agenda and then linking them together to form a blueprint of you, your actions, your relationships and all what they consider is relevant for them to get a better insight about you. To give an example, if you post a picture of you and your sister and you tag this picture and me and sis at the beach in Malta while she tags another picture of her and a cousin in a similar way in which picture you are not featured than through pattern matching we can claim that the person in your sister’s photograph is your cousin as well and not only this but we also have pictures that can be used to perform some facial recognition.

This monitoring will not go away any time soon. The prediction is that it will become more subtle in case another Snowden is just around the corner. The question is one of how can we protect ourselves from such monitor. The bad news is simply you cannot as although there are technologies that can be implemented, it requires a global effort to implement such technologies and unfortunately, the Governments will not be complaisant to allow these technologies to be applied any time soon. The good news is that you can apply some common sense wisdom to protect yourself against monitoring such as:

1. Keep your social network posting to the bare minimum necessary to conduct your activity;

2. Try to obtain secure and encrypted point to point email services;

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3. Rather than chatting using technology such as social networks, meet people in person whenever possible;

4. When using phones, keep private matters out of your conversation and ask for a personal meeting to discuss any sensitive agenda;

5. Enlist the help of a professional information security expert to guide you and help you protect your assets;

In collaboration with THE ECONOMIC UPDATE, Mr. Duncan Dimech is offering 1 hour of FREE Advisory Services on Information Security because we value your security. To schedule your appointment, send an email on duncan.dimech@exorgroup. com or call on 99829840. This exclusive offer is reserved for the first 3 entities contacting Mr. Duncan Dimech.

TEU

Editor’s Note Mr. Duncan Dimech, the Managing Director of EXOR Group Ltd, earned his Masters Degree with the University of Liverpool, home of 9 noble prize winners, and specialised in Information Security. Over the past 15 years, Mr. Dimech has been involved on a number of projects for local and international business entities and is leading a number of IT research projects funded by the European Union. Mr. Dimech is a Member of the British Computer Society and information security advisor to local entities.

FINANCIAl JOUrNAlIsM

Reflections on financial JouRnalism

Even before the economic crisis hit Europe, financial journalism was subject to unprecedented circumstances. Economic and business stories now move at a digitally driven speed that does not allow as much time for comprehension, let alone reflection. Much of the movement of financial data is automatic and unmediated by journalism. Going back to the Big Bang of the 1980s this event coincided with the beginnings of cable and satellite TV , digitalising news gathering thus creating a 24/7 live reporting environment.

Public relations is spreading throughout all news but it is particularly powerful and prevalent in financial business.

Most firms have noted to be successful you need high quality communicators to maximize your brand and bring value to your firm. Then there are the ethical challenges for journalists who have access to information and an ability to either influence markets or gain personally. Financial journalism has not been immune from the pressure on resources. The key resource is time. Time to get context, diverse views, and context and background facts. New technologies have made journalism more efficient but the business model for mainstream media is under strain. So the temptation for hard-pressed editorial management has been to spread those resources more thinly and prioritise productivity over quality.

Patrick J O’ Brien is the Communication Director at EXANTE, recently the winner of the International Trade Media award in Malta which was presented by PBS Chairperson at The MSV Entrepreneur awards

There were individual journalists who warned the world about aspects of the current crisis. Although, I cannot name a single economist or journalist who actually predicted what has happened in its totality.

So the question is whether the failure to listen to critical voices and explore their critiques was a failing of journalism? Perhaps it is simply an expression of the limits of the news media. How can you expect journalists to be so brave, independent, fearless and intelligent when most of the people running our banks and treasuries appear to have ignored the warnings as well? The only surprise I feel about the economic crisis was that it came as a surprise to so many. Or perhaps as journalist we have lessons to learn, that we play in a pivotal world in making sure we inform and promote financial accuracies. Moving forward financial businesses and the media need to work together in promoting stability of one’s territory.

TEU

June 2014 | THE ECONOMIC UPDATE

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CITRoëN DS5 CHIC SpECIfICATIoN INCluDES: • ABS with Electronic Breakforce Distribution (EBD) • Emergency Braking Assistance (EBA) • Electronic Stabilisation Programme (ESP) with traction control and Hill Start Assist function • Driver’s, front passenger’s and Front lateral airbags • Front and rear curtain airbags • Keyless Access & Start • Electrically adjustable, foldable and heated door mirrors with integrated kerb side LED • Cruise control with speed limiter and memory settings • Front and rear electric windows with ‘one-touch’ operation and anti-pinch • Front fog lights with cornering function • Automatic digital air conditioning with dual-zone temperature setting

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• Perimetric and volumetric anti-theft alarm • Automatic electric parking brake • Automatic rain-sensitive windscreen wipers, automatic illumination of headlamps and electrochrome rear view mirror • Daytime-running LEDs • Lumbar adjustment on driver’s seat • Leather steering wheel with chrome insert • Connecting Box - Bluetooth® system with USB socket.

• Direct tyre pressure monitor system.

So CHIC THE fuTuRE of flAIR As the name suggests, So Chic specification brings aesthetic flourishes both inside and out, but it also adds advanced equipment to transform each journey CITRoëN DS5 So CHIC SpECIfICATIoN IN ADDITIoN To THE CHIC INCluDES: • Analog clock • Cockpit roof toggle switches and 3-part glass roof with electric sunblinds • Mistral ‘Claudia’ leather and ‘Dinamica’ cloth upholstery

• eMyWay with DAB digital radio - - colour satellite navigation, live traf@c information, European mapping, reversing camera and rear parking sensors with RDS stereo radio & MP3 compatible CD player (Expect Hybrid without DAB) • Cup holder in rear centre armrest • Two sunglasses holders in cockpit roof

SpoRT CHIC ulTIMATE INNoVATIoN At the apex of the range, Sport Chic is a thrilling ultimate expression of the ds lineage. Here, cutting edge creative technologies converge CITRoëN DS5 SpoRT CHIC SpECIfICATIoN IN ADDITIoN To So CHIC INCluDES: • Citroën eTouch Emergency & Assistance system • Driver’s seat with electric lumbar adjustment, massage function and memory settings, Front electric & heated sports seats • Mistral ‘Claudia’ leather • Xenon Dual-Function Directional headlamps with washer jets • Front parking sensors • Colour Head-Up display • Carpet mats TEU For more information contact Micheal Attard Ltd Tel: 2144 2005

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EXCLUSIVE INTERVIEW

Prime movers in Brokerage: EXANTE

By George Carol

EXANTE is a unique integrated trading and fund platform offering, whose genesis grew out of a challenge faced by its directors. All of them came from a trading background and shared a similar evolutionary path when working with different brokers and banks globally, developing algorithms and trading strategies.

As Alexey Kirienko CEO, tells The Economic Update on a recent visit to Malta, once they started to launch their own hedge funds, they encountered a challenge: each time a new entity was set up for proprietary trading it involved having to set up new

“Setting the standard and constantly raising the bar,” Forbes wrote about this Portomaso based brokerage firm .With offices now in Singapore, Russia, Amsterdam, Latvia the company has seen rapid expansion.’ EXANTE’s fund platform is a potential game changer for the industry as it gives investors the opportunity to invest directly in hedge funds,” stated Gatis Eglitis, one of EXANTE’s co-founders. “The critical factor is the ability to generate meaningful alpha – EXANTE is not too concerned about the types of strategies on the platform but rather their quality. What counts when assessing a manager is audited historical performance, as this shows past volatility. If performance is exceptional, we first ensure that there is nothing hidden beneath the tip of the iceberg. When confirmed, we are happy to work with the hedge fund managers to list their fund.”

The well- established Bitcoin Fund which Anatoliy Knyazev was in many ways the architect of was designed to institutionalize

relationships with counterparties. Actually getting everything set up and structured was a timely, inefficient process; something that EXANTE’s managing partners observed was also proving to be a problem for fellow friends running asset management businesses.

To meet this challenge, EXANTE was established in March 2011.

It received its license from the Malta Financial Services Authority end-June 2011. Unlike other fund platforms, EXANTE is an organic institution, blending multi-asset fund support with first-class trade execution services using a sophisticated technology infrastructure.

one of the most successful electronic currencies, Bitcoin. The purpose of the fund was to give an opportunity for professional investors and eligible counterparties to take an advantage of appreciation of the digital currency Bitcoin, which otherwise would not be possible. It went on to the most successful hedge fund in financial history as sourced by Bloomberg.

“Professor Edward Scicluna has done remarkable work in maintaining Malta’s stability as a financial hub. As EXANTE’s foundation, We are delighted that the latest European Commission figures shows Malta’s economy forecast to grow by over 2 percent in 2014, while its debt-to-GDP ratio is seen at 72 percent” states EXANTE .

Dr Jose’ Herrera, Parliamentary Secretary for Competativeness and Economic Growth Ministry for the Economy Investment of Small Businesses, will attend EXANTE Corporate Business Breakfast At Villa Arrigo, Naxxar, 25th July, 2014.

June 2014 | THE ECONOMIC UPDATE

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best banks

Established in 1974, Bank of Valletta p.l.c. has roots dating back to the 19th century with founding of the Anglo-Maltese Bank.

The BOV Group is the leading financial services provider in Malta, offering a full spectrum of financial services. Domestic operations include 37 branches, a Corporate Centre, 6 Business Centres, a Wealth Management arm and Investment Centres offering tailor-made investment solutions.

IIG Bank (Malta) Ltd has been established in Malta in March 2010 and has quickly earned a reputation of a trustworthy financial institution offering best-in-class rates of return to its customers.

BOV issues bank cards under the VISA and MasterCard brands and distributes American Express cards. In addition to its Customer Service Centre, Bank of Valletta’s services are available on a 24/7 basis via internet, mobile and telephone.

The bank is an affiliate of the International Investment Group LLC, an established global trade finance manager based in New York specialising in the global commodity export sector with a focus on the emerging markets. IIG Bank is a fully licensed credit institution regulated by the Malta Financial Services Authority and is a participant in the Depositor Compensation scheme.

Customer Service Centre Tel: 2131 2020 email address: customercare@bov.com

Contact details Tel: 2248 4513 email address: enquiries@iigbank-malta.com

FIMBank is an international trade finance specialist offering a comprehensive range of trade finance and banking services.

The Bank has an established reputation as a dynamic and customer-driven provider of trade finance solutions and is at the forefront of introducing and developing receivable finance techniques in emerging markets.

FIMBank is headquartered in Malta and benefits from a physical presence in more than ten financial centres worldwide serving clients located in over 50 countries. The Bank forms part of the KIPCO Group, one of the largest diversified holding companies in the Middle East with consolidated assets exceeding USD 30 billion.

For further information please visit www.fimbank.com 30 |

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Valletta Fund Management Limited was the first Fund Management company in Malta to take up the opportunities that were created as a result of the 1994 Financial Services legislation in 1995, the company is jointly owned by Bank of Valletta p.l.c. and Insight Investment Management (Global) Limited, one of UK’s largest asset managers and fully owned subsidiary of the Bank of New York Mellon Corporation.

Recognising the needs of investors, Valletta Fund Management Limited has throughout the years launched a wide range of domestic and international investment funds which are classified according to their investment objective under five distinct categories. These investment solutions invest in the main asset classes across different markets to meet the various risk profiles and investment requirements of all types of investors.

Valletta Fund Management is licensed to provide Investment Services Business for Collective Investment Schemes in Malta and to operate as a ‘Maltese Management Company’ pursuant to the Undertaking for Collective Investment in Transferable Securities Regulations (‘UCITS’) by the MFSA. Freephone 80072344, email: infovfm@bov.com

bEsT bANks

Another record yeAr for IIG BAnk (MAltA) ltd

The year ended 31 December 2013 was another very positive year for IIG Bank.

Not only did the Bank’s balance sheet grow by over 40%, from $78.5 million to $111 million, but during the year, the Bank managed to expand its business of trade finance into new geographical areas and new industries. During the second half of 2013 the Bank started to develop its operational capabilities and correspondent banking network to support this new business which focuses more on financing the cycle of commodity trade flows in a structured manner.

During 2013, the Bank generated total revenues before tax of $1,827,462 up from $1,449,174 in 2012, made up of $1,005,910 in operating profit before tax and $821,552 in net gains on financial assets. In the initial months of 2014, the Bank’s loan portfolio increased by 65% to $50 million and customer deposits reached $95 million. All the 2012 revenues attributable to the shareholder were reinvested in the Bank in the form of Tier I capital while the Board has recommended that the same policy is adopted in respect of the 2013 revenues.

IIG Bank is successfully building a client base with a global reach.

As an international trade finance bank specialising in export finance of commodities, it is acquiring a client base of traders that typically trade in consumer consumables, construction materials and energy products all over the world,including the emerging markets.

commodity trade. This consists in handling primary or participation deals including pre-export financing; warehouse financing and asset-based lending with a global reach.

Mr. Theuma began his career 34 years ago and has a wealth of experience in structuring trade finance deals, corporate business, operations and trade services. In his role as Deputy CEO, Mr. Theuma is responsible for the development of business globally and for the operational unit that supports the origination and operations of commodity trade finance transactions.

I take this opportunity to thank my colleagues for their dedication to deliver an excellent service and to our customers for their loyalty and support.

Reporting on the performance of the Bank, Raymond Busuttil, Managing Director and Chief Executive Officer of IIG Bank (Malta) Ltd, said: “The Bank is well on its way to establish a name for itself as a niche international trade finance bank. We are very excited by the response we have generated so far in these new markets. We promote a relationship-based customer service and receive excellent feedback from our customers in appreciation of our approach to service delivery.”

Mr. Farrugia’s banking career spans over 25 years and has included various roles in Commercial, Risk Management, Compliance, Trade Services and Commodities. Mr. Farrugia will work closely with Renald Theuma, the Bank’s Head of Business Development, to structure complex trade deals that concentrate mainly on the supply chain financing of basic commodities, including softs, such as foodstuffs, hard commodities, essential construction materials and energy products.

“Looking forward we believe that trade finance continues to be resilient despite the crises that crop up around the world from time to time. These tend to cause some disruption of a temporary nature, but on the whole, demand for commodities continues to grow consistently, especially as the leading economies of the world continue to show clear signs of recovery. We certainly believe that despite our size, we have a role to play by taking advantage of select opportunities”

Raymond Busuttil, commenting on these appointments, said, “With these senior executive appointments, the Bank is effectively activating its second phase of its business development plan. Renald’s and Vincent’s commercial and technical banking experience in the specialist field of our core business ensures business growth and builds the Bank’s profile on the international scene of international trade and commodity finance.”

“I take this opportunity to thank my colleagues for their dedication to deliver an excellent service and to our customers for their loyalty and support.”

As part of its vision to sustain and enhance this success in the long term, IIG Bank Malta has recently appointed Mr. Renald Theuma as Deputy CEO and Mr. Vincent Farrugia as Chief Officer Operations to focus on the development of Trade Finance, which focuses on structured finance for international

TEU

Vince Farrugia Renald Theuma

June 2014 | THE ECONOMIC UPDATE

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AnniversAry

By Noel Grima

On the 28th June the world celebrated the centenary of a tragic event and all because of wrong turning with dreadful consequences, as this report by Michael Shackelford states.

thE Black hand

Bosnia and Herzegovina were provinces just south of Austria which had, until 1878, been governed by the Turks. The 1878 Treaty of Berlin settled the disposition of lands lost by the Turks following their disastrous war with Russia and Austria was granted the power to administer the two provinces indefinitely.

A secret society called Ujedinjenje ili Smrt, (Union or Death) was founded in Belgrade, an outgrowth of an older Serb nationalist group: Narodna Odbrana. The Black Hand took over the older group’s work of anti-Austrian propaganda within Serbia and sabotage, espionage and political murders abroad, especially in provinces Serbia wished to annex. The group included many government officials, professionals and army officers.

Bosnia was populated primarily by three groups: Croats (Roman Catholic), ethnic Serbs (Serb-Orthodox) and Muslims (left from the days of Turkish rule). There is no such ethnic group as ‘Bosnians’. Many Bosnian Serbs felt a strong nationalist desire to have their province joined with that of their Serb brothers across the river in Serbia and many in Serbia openly shared that desire. thE annExation On 6 October 1908, Austria annexed Bosnia and Herzegovina directly into the Austro-Hungarian Empire. The reasons were complex: annexation would remove any hopes Turkey might have for reclaiming the provinces. Full inclusion into the empire would give Bosnians full rights and privileges.

It may have been an act of will by the Austrians, just to show that they were still an active, sovereign power.

Whatever the reason, the annexation caused quite a stir in Europe. The move was not exactly legal. Russia, in particular, was upset, even though the Russians had earlier given their consent to the annexation (Austria was supposed to help Russia in the Dardanelles, first). After Austria paid Turkey a cash settlement, most of Europe calmed down.

The Serbs, however, did not. They coveted the provinces for their own Serb empire.

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When it was learned that the Heir-Apparent to the Austrian throne, Franz Ferdinand, was scheduled to visit Sarajevo in June of 1914, the Black Hand decided to assassinate him.

Three young Bosnians were subsequently recruited, trained and equipped: Gavrilo Princip, Nedjelko Cabrinovic and Trifko Grabez. thE sErBian govErnmEnt Because of its many government and army members, the activities of the Black Hand were fairly well known to the Serbian government. When Prime Minister Pasic learned of the assassination plot, he had a difficult problem on his hands. If he did nothing, and the plot succeeded, the Black Hand’s involvement would surely come to light. The tangled connections between the Black Hand and the Serbian government would put Serbia in a very bad position: it could even precipitate war with Austria.

Paasic knew that if he warned the Austrians of the plot, he would be seen as a traitor by his countrymen. He would also be admitting to having a deeper knowledge of anti-Austrian actions in Serbia.

A weak attempt was made to intercept the assassins at the border. When that failed, Pasic decided that he would try to warn the

Austrians in carefully vague diplomatic ways that would not expose the Black Hand. thE Warning The Serbian Minister to Vienna, Jovan Jovanovic, was given the task of warning the Austrians. Because of his extremist, pan-Serb views, Jovanovich was not well received in Austrian Foreign Ministry offices. He did, however, get along better with the Finance Minister Leon von Bilinski. On 5 June, Jovanovic told Dr Bilinski that it might be a good and reasonable idea if Franz Ferdinand were to not go to Sarajevo. “Some young Serb might put a live rather than a blank cartridge in his gun and fire it.” Bilinski, unaccustomed to subtle diplomatic innuendo, completely missed the warning. “Let’s hope nothing does happen” he responded good-humouredly.

Jovanovic strongly suspected that Bilinski did not understand, but made no further effort to convey the warning. prEparations The three Black Hand trainees secretly made their way back to Sarajevo roughly a month before Franz Ferdinand. A fourth man, Danilo Ilic, had joined the group and on his own initiative recruited three others.

Vaso Cubrilovic and Cvijetko Popovic were 17-year-old high school students. Muhamed Mehmedbasic, a Bosnian Muslim, was added to give the group a less pan-Serb appearance.

Four Serbian army pistols and six bombs were supplied from Serbian army arsenals. thE visit Franz Ferdinand accepted the invitation of Bosnia’s governor, General Oskar Potoirek, to inspect the army manoeuvres being held outside Sarajevo. The Archduke’s role as Inspector-General of the Army made the

Continues on pg 34

EvEnts lEading up to murdEr

iGaminG EvEnt

MIGS 14 SET TO BE A RESOUNDING SUCCESS

by Martin Vella

The hon. Dr. ChrisTian CarDona MinisTer for The eConoMy, invesTMenT anD sMall Business To offiCially open The evenT. And…. They’re off! The iGaming industry welcomes great speakers, quality round table discussions and exclusive tight knit networking events. The Malta iGaming Seminar in its 6th edition is set to have a resounding success.

This event can hardly be confused with any other. MIGS was founded in 2008 and has been a key iGaming Calendar event in Malta for the last five years and has had recent success attracting several international partners and delegates over the last three years. Backed by several key sponsors including lead Government sponsor, the Lotteries and Gaming Authority Malta, Secure Trading, FortyTwo Telecom, Playson, Ezugi, NMI, Pentasia Group as well as Bit8 the event is taking shape.

MIGS is being promoted through several international key media partners including their Lead Media Partner iGaming Business as well as Calvin Ayre, Global Gaming Business, InterGaming, iGaming Calendar, RGA and Gambling Insider.

The Malta iGaming Seminar will be officially opened by The Hon. Dr. Christian Cardona Minister for the Economy, Investment and Small Business which will be followed a keynote speech entitled “Scale Up, Scale Out” by the Executive Chairman of the Lotteries and Gaming Malta, Joseph Cuschieri. The Maltese government spoke at MiGS ’13 last November and noted that there will be improvements that they anticipated making to their regulatory scheme. The conference will highlight what changes have been implemented, why and the overall impact this has had on the industry. We expect to learn what is more to come from the Lotteries and Gaming Authority Malta and more.

At the run up of this year’s edition, the MIGS organization recruited two new partners to their fold, namely, Sue Schneider of E-Gaming Brokerage and Andy Jones of Aliquantam Gaming. The two additions to the already dynamic resources of BMIT Ltd, RE/MAX Malta and Capstone Group has created a boost for the event. The combined wealth of experience has attracted an excellent line up of topics and speakers, which is still being finalized.

Topics included in this year’s agenda are; Innovations in Payment Options, featuring with moderator Joseph Borg, Senior Advisor,

WH Partners and panel speakers Ian Pelicano, Owner, Apco Ltd., Alan Alden, Director, Kyte Consultants and General Secretary, Malta Remote Gaming Council; Responsible Gaming with Moderator Andre Wilsenach, Executive Director, Alderney Gambling Control Commission, speakers Stella Dalton, Head of Education and Prevention, Gamcare; Silvio Schembri, Chairman of The Responsible Gaming Foundation and Julian Borg, Business Development Manager, NMi A presentation by Angelo Dalli, Bit8 CEO on Channel Agnostics follows, while guest speakers Warwick Bartlett, CEO, GBGC; Nicholas Levi, Board Member, RankingHero; David Jung, CEO, HeroPoker will discuss Poker and whether it is dead or is it meeting its full potential.

Cocktails sponsored by LGA, a poker tournament at the Portomaso Casino, a networking party hosted by AliQuantum-Gaming & PlusFive Gaming all feature on the first day’s jam-packed programme.

Moderators Graham White, Chairman, Jersey Gambling Commission and speakers Cristina Romera de Alba, Partner, Loyra Abrogados; Garron Whiteman, Whitesmans Attorneys will open the second day with a look on Exploring New Markets, followed by moderator Lee Richardson, CEO, Gaming Economics and speakers Khalid Ali, Secretary General of European Sports Security, Franz Tabone, Integrity Officer, Malta Football Association who tackle the subject of Match Fixing.

Wes Himes, Partner, Instinctif Partners. Moderates the last session with speakers Francesco Rodano, Head of Remote Gaming, AAMS Italy; Peter Naessens, Director, Belgian Gaming Commission; Stephen Ketteley, Partner, DLA Piper UK who wrestle the topic on Regulatory Changes and Emerging Jurisdictions.

A harbour cruise on the last day of the 12th November will close the 6th edition of the MiGS 2014 – Malta’s Premier iGaming event of the year.

TEU

Register here: www.maltagamingseminar.com – The Hilton Malta, 11-12th November, 2014 — and MIGS will make sure you get hooked up!

June 2014 | tHE ECOnOmiC UPDatE

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AnniversAry

The visit would also roughly coincide with his 14th wedding anniversary. While his wife Sophie, not being of royal blood, was not permitted to ride in the same car as her royal husband back in Vienna, such taboos did not apply to provincial cities like Sarajevo. During the visit, Sophie would be able to ride beside her husband – a thoughtful anniversary gift.

Security during the visit was not tight. Franz Ferdinand was a brave man and disliked the presence of secret service men. Nor did he like the idea of a cordon of soldiers between the crowd and himself. For the most part, Franz Ferdinand was welcomed warmly by the Bosnians. Sarajevo was not seen as hostile territory and arrangements were not based on the assumption that the streets were lined with assassins. As it was, only Sarajevo’s 120 policemen were at work.

28 June 1914 At around 10 am, the archducal party left Philipovic army camp, where Franz Ferdinand had performed a brief review of the troops. The motorcade, consisting of six automobiles, was headed for City Hall for a reception hosted by Sarajevo’s mayor. The chosen route was the wide avenue called Appel Quay, which followed the north bank of the River Miljacka.

In the first automobile rode the mayor, Fehim Effendi Curcic, and the city’s Commissioner of Police, Dr Gerde. In the second automobile, its top folded down and flying the Hapsburg pennant, rode Franz Ferdinand, Sophie and General Potoirek. The driver and the car’s owner, Count Harrach, rode in front. The third automobile in the procession carried the head of Franz Ferdinand’s military chancellery, Sophie’s lady-in-waiting, Potoirek’s chief adjutant, Lieutenant Colonel Merizzi, the car’s owner and his driver.

The fourth and fifth automobiles carried other members of Franz Ferdinand’s staff and assorted Bosnian officials. The sixth automobile was empty -- a spare should one of the others break down.

The morning was sunny and warm and many of the houses and buildings lining the route were decorated with flags and flowers.

Crowds lined the Appel Quay to cheer the imperial couple. And mingling with the festive crowd were the seven young assassins.

They took up their assigned positions, all but one along the river side of the Appel Quay. First in line was Mehmedbasic, to the west of the Cumurja Bridge. Near him was 34 |

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Cabrinovic. The others were strung out as far back as the Kaiser Bridge.

The BomB The motorcade approached and the crowds began to cheer. As Franz Ferdinand’s car passed Mehmedbasic, he did nothing. The next man in line, Cabrinovic, had more resolve. He took the bomb from his coat pocket, struck its percussion cap against a lamp post, took aim and threw it directly at Franz Ferdinand.

By the end of the mayor’s speech, Franz Ferdinand had regained his composure and thanked his host for his cordial welcome.

Activities at City Hall continued as planned.

ChAnged plAns Discussions were held as to whether or not to change the rest of Franz Ferdinand’s schedule.

The Archduke did not wish to cancel his visit to the museum and lunch at the Governor’s residence, but wished to alter his plans to include a visit to Merizzi in the hospital.

In the short time that it took the bomb to sail through the air, many small events took place. On hearing the bomb being struck against the lamp post, the car’s owner, Count Harrach, thought they had suffered a flat tyre.

“Bravo”, he said, Now we’ll have to stop”. The driver, who must have seen the black object flying through the air, did just the opposite – he stepped on the accelerator. As a result, the bomb would not land where intended.

Franz Ferdinand, also catching a glimpse of the hurtling package, raised his arm to deflect it away from Sophie. She sat to his right, and so was between Franz Ferdinand and Cabrinovic.

The same motorcade set out along the Appel Quay, but neither the mayor’s driver, nor Franz Ferdinand’s driver had been informed of the change in schedule. This would have been Merizzi’s job. The young assassins had counted on succeeding at the first attempt.

With no assurance that Franz Ferdinand would follow his original itinerary, the remaining assassins took up various other positions along the Appel Quay. Gavrilo Princip crossed the Appel Quay and strolled down Franz Joseph Street. He stepped into Moritz Schiller’s shop to buy a sandwich and as he emerged, he met a friend who inquired about a mutual friend.

The bomb glanced off Franz Ferdinand’s arm, bounced off the folded car top and into the street behind them. The explosion injured about a dozen spectators. The third car was hit with fragments and stalled. Merizzi received a bad cut to the back of the head, while others in the party suffered minor cuts. The first and second cars continued on for a few moments and then stopped while everyone assessed who was injured and who was not.

The wrong Turn

AfTer The BomB Cabrinovic swallowed his cyanide and jumped into the river. The trouble was, the poison was old and only made him vomit -and the river was only a few inches deep. He was quickly seized by the crowd and arrested.

The motorcade continued on to City Hall, passing the other assassins. Either because they thought Cabrinovic had succeeded or from a lack of resolve, they failed to act.

At City Hall, a furious Franz Ferdinand confronted the mayor. “Mr Mayor, one comes here for a visit and is received by bombs! It is outrageous!” After a pause to calm himself, he regained his composure and let the mayor speak. The Mayor, either completely unaware of what had happened, or personally ill-equipped for crises, launched into his prepared speech. “Your Royal and Imperial Highness! Our hearts are full of happiness...”

The mayor’s car, followed by that of Franz Ferdinand, turned off the Appel Quay and onto Franz Joseph Street, as originally planned, to travel to the museum. General Potoirek leaned forward: “What is this? This is the wrong way! We’re supposed to take the Appel Quay!” The driver braked and began to reverse. Franz Ferdinand’s car stopped directly in front of Schiller’s shop – five feet away from Princip.

The shoTs Princip was quick to realise what had happened. He pulled the pistol from his pocket, took a step towards the car and fired twice. General Potoirek happened to look directly at Princip as he fired and thought that the gun’s report was unusually soft. Both Franz Ferdinand and Sophie were still sitting upright. Potoirek thought the shots had missed, but given the assault, ordered the driver to drive directly to the Governor’s residence.

ArresT Princip then turned the gun on himself, but was mobbed by the crowd and the police had to rescue him from the crowd before they could arrest him. Princip had swallowed his poison, but it was from the same batch as Cabrinovic’s. He was violently ill, but did not die.

Continues on pg 42

visit logical. It had also been four years since a prominent Hapsburg had made a goodwill visit to Bosnia.

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DCAviation AviAtion- Business plAns further expAnsion in MAltA DC Jet Handling In the past six years DC Aviation has provided services to more than six thousand business aviation aircraft. Our customers operate anything from a small single engine aircraft to an Airbus Corporate Jet or Boeing Business Jet. Despite the world’s economic woes and a shaky recovery in the region, by providing a dedicated service to the business community DC Aviation has doubled its customers since its inception and continues to register growth.

One of the country’s major drawbacks is its isolation. Malta is relatively well connected to the major cities and this connectivity improves slightly in the summer periods, thanks also to the low cost airlines. Despite this from a business perspective, the country’s isolation becomes quickly very apparent when short business trips are required to/from Malta. It is a fair assumption that the country’s economic growth depends on foreign investment. Wealth creation for the population depends on individuals who can create significant substantial projects/investment in Malta. For these individuals time is money and when travelling to Malta a business jet is the only option.

Malta is slowly but surely becoming a hub for corporate aviation.

It is direct, and efficient, safe and in theislong run even more cost effective.

Corporate business aviation a recent development on the island of Malta.

There is almost one hundred and fifty on DC Aviation supports these individuals by providing theaircraft necessary the Maltese register, a third of which are business aircraft on a human resources and infrastructure to ensure that a trip to Malta Maltese Air Operator Certificates. Despite the world’s economic is as and efficient, securepessimistic and cost effective as corporate possible. Whether woes everyone’s outlook on aviation, it is transportation of the passengers in the airport, provision fuel for Eurocontrol statistics show that Malta continues to register of growth in business aviation aircraft movements.hour, In spite ofday theafact that Malta the aircraft or catering, a twenty-four seven week service is is still waiting for its General Aviation Terminal companies like DC provided to these aircraft.

Aviation Malta continue to thrive in this environment. DC Aviation

Malta was established in 2008, its main focus being to provide a high quality handling service to corporate aviation at Malta International Airport. On Friday, 14th Jun 2013, DC Aviation Malta celebrated its 5th anniversary at the Xara Lodge with the support of Attard and Co Foodstuffs Ltd. and under the patronage of Minister Karmenu Vella. One of the largest operators and management companies of business aircraft in Europe, its philosophy is, “What is not good for our own operation is not good for our customers”, says Stanley Bugeja Managing Director of DC Aviation in Malta. Five years down the line and in excess of one thousand seven hundred aircraft handled later, “Passion for Quality, is more than a catch phrase for us, it is our credo. It is this that motivates us when providing services at Malta International Airport. We are a dedicated corporate aviation handling provide indispensable crew facilities at the airport DC Aviationterminal” is still faced manyCassar bureaucratic challenges but departures sayswith Sandy Cardona Operations Director of DC Aviationpotential Malta. The has invested heavily we believe in Malta’s andcompany will continue to support its in its Maltese operation, it believes firmlymore in its than employees who are economic growth.

We already employ ten employees all specifically trained in the handling of business and corporate and we intend to expand our infrastructure at the airport with a aircraft. DC Aviation Malta is also a founding member of the Malta dedicated aircraft parking ramp by the end of 2014. As we are a Business Aviation Association, of which Mr. Bugeja is currently the subsidiary further of one of Europe’s largest jet operators we are president, demonstrating the business organisations commitment to also exploring further possible expansion in Malta with obtaining the industry’s growth in Malta. “Although our dream is to one day have Base Operation(FBO) at Malta Airport, both aa Fixed Maltese aircraft operator licence and International as well as develop TEU we have done all that is possible for our customers not to feel the some maintenance support services. lack thereof.” concludes Bugeja. www.dc-aviation.com.mt TEU

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www.maltaeconomicupdate.com

Founding members of the MBAA. Members of EBAA, NATA & NBAA DC Aviation Ltd. Malta International Airport PO Box 23, Gudja, LQA 5000, Malta Phone +356 21 37 5973 Fax +356 21 37 5958 dispatch@dc-aviation.com.mt www.dc-aviation.com.mt

June 2013 | THE ECONOMIC UPDATE

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arts & culture

Baroque Festival 2015 programme announced Teatru Manoel is pleased to announce the full programme of the forthcoming third edition of the Valletta International Baroque Festival 2015, for which booking is now open. The success of the Baroque Festival on the international cultural stage is evidenced by the growing interest from Tour Operators who are bringing in more overseas visitors specifically for this event. It is, therefore, advisable to book early for 2015 Festival.

With 21 events over 15 days in 7 venues the 2015 version builds on the success of the first two. The 2015 Festival is dedicated to the memory of Maltese composer Geronimo Abos as 2015 is the tercentennial anniversary of his birth. His music will be performed by Die Kölner Akademie, Passacaglia Ensemble (which features some of the UK’s leading period instrument players) and the Valletta International Baroque Ensemble.

The Orchestra of the Age of Enlightenment returns to perform the glorious Bach Passion according to St John in St. John’s Co-Cathedral which will be offset by Michelangelo Falvetti’s magnificent “Il Diluvio Universale”, performed by the Cappella Mediterranea under the baton of Leonardo Garcia Alarcon at St. Publius Church in Floriana, a new addition to the list of venues for 2015.

The Malta Philharmonic Orchestra, conducted by Peter Stark, will present an

innovative programme of 20th century works inspired by the baroque which includes a flute concerto by Lukas Foss performed by the Orchestra’s own flautist Rebecca Hall.

The Festival programme also includes music ranging from baroque piano transcriptions of music by Bach, Handel and Gluck performed

by Dmytro Sukhovienko to sacred and profane baroque music from the Americas performed by Ensemble Villancico and Handel concert arias presented by Robert King conducting The King’s Consort and countertenor Iestyn Davies. Bach features strongly in this Festival; his Cello suites are performed by the world-renowned Sigiswald Kuijken who will play on that rare instrument a violoncello da spalla and his Goldberg Variations by local pianist Joanne Camilleri.

The European Union Baroque Ensemble will perform music by Handel and his London friends and the Festival’s resident ensemble,

the Valletta International Baroque Ensemble (VIBE) will perform at two concerts.

The Festival also includes events specifically for children and culminates with the Baroque Festival Ball which will be held in spectacular Sacra Infermeria Hall at the Mediterranean Conference Centre.

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To book: www.vallettainternationalbaroque. com.mt or www.teatrumanoel.com.mt

2015 T E AT RU M A N O E L M A LTA Valletta, Malta’s Baroque Capital City and a UNESCO World Heritage Site, hosts the third edition of this unique baroque music festival in its Teatru Manoel, baroque churches and palaces

10th - 24th January 2015

www.vallettabaroquefestival.com.mt ONLINE BOOKING IS NOW OPEN

0825. Teatru - Baroque Festival Advert - HP Economic Update 2.indd 1

11/07/2014 11:07 June 2014 | tHe ecONOMIc uPDate | 37

TECHNOlOgy

Is your BusIness reADy? Technology has changed the way we live, work and communicate. ‘Technology is changing the way we do business’ Vittorio Colao, Chief Executive of Vodafone has remarked. Indeed, our world is continually changing and it is becoming impossible to predict the future.

Our businesses are constantly being challenged by this rapid change. Our business models can become outdated if we do not constantly seek to embrace this change and adapt to it. Whilst greater efficiency and a mobilised workforce together with selective investments are still a priority, businesses can find it hard to keep up with systems that are forever improving and changing the way we work. The truth is that continuous transformation is today the new normal.

With 50% of decision makers considering making a flexible workforce a high priority and 75% stating that data security will be a high priority within the next three years, 82% are already searching for solutions that prioritise data security for remote workers.

The reality is that whilst a flexible workforce is crucial for survival in today’s transforming business environment, security of company data is becoming an increasing concern.

Suffice it to note that 62% of all smartphone users do not password their phones. As a

smartphone user you are 33% more likely to be the victims of identity theft than nonsmart phone users. According to recent studies in the 21-32 age bracket 51% of employees would contravene company policies restricting the use of their own devices, cloud storage and wearable technologies for work.

Suffice it to note that 62% of all smartphone users do not password their phones The realisation of this transformation is a reality check that businesses today need to face in order to get their business ready for the challenges of today’s market place.

Those unforeseen changes that all those businesses face in a future impossible to predict is a question most businesses are asking today.

Vodafone has faced this transformation and has ensured its workforce is not only connected and flexible but also secure. The hot-desking, flexible arrangements as well as ensuring all employees can work from wherever and whenever have ensured the organisation brings the very best from its employees who are able to manage their family lives and work in an organisation that is demanding yet flexible.

By Heidi Jensen

The technologies that have been implemented company-wide have allowed for not only operational agility but better connected employees resulting in an overall better customer experience across the board.

The internet speeds reached on 4G together with the right security systems have allowed for such a flexible and secure working space.

Through its own experience, Vodafone has set up a new site www.readybusiness.com. mt that provides business the opportunity to transform their business into one that is ready to face the challenges that new technologies provide allowing for a flexible work force which is not only connected but also adaptable to change.

Our expertise in the area will guide your business in order to find the right solutions for your particular business ensuring the best technologies on the most secure and reliable network.

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For more information go to www.readybusiness.com.mt

Editor’s Note Heidi Jensen is Marketing Manager responsible for the EnterpriseclientsatVodafone Malta. Prior to joining the Telecommunication industry she has worked with marketing and strategy within Gambling and Higher Education in London.

June 2014 | THE ECONOMIC UPDATE

| 39

SMEs SMES

how well do we understand the relevance and role of Marketing behaviour in sMes in Malta? does it Matter and should governMent be concerned?

By Louis Naudi

Entrepreneurs not Government are society’s real wealth creators and as businesses become more efficient, they often require fewer employees, so any employment growth will come from a more entrepreneurial economy.

Government believes that developing an entrepreneurial culture, by supporting the growth of small and medium sized enterprises (SMEs), is an important part of its economic policy.

businesses as a single homogeneous grouping with common needs and problems ……….

Small businesses are represented in many sectors, vary in their needs and problems and approach growth differently….”

Whilst SMEs are the backbone of all economies and a key source of economic growth, dynamism and flexibility in advanced industrialised countries, what do we mean by an SME in Malta? For Government to play an effective supporting role, it must understand their behavioral characteristics which vary according to size. There are three broad categories:

“Growth is seen as the least important of their strategic objectives. There is nothing automatic about the growth of a business; it has to be willed and managed from the top against strong internal & external constraints requiring both motivation and leadership.”

In addition, growth means different things to different people such as turnover, profit, employees, productivity, value added, assets or net worth of the business.

Microenterprises: Employ up to 10 persons, about 95.3% of all businesses in Malta, 34% of all employment and 26% of GDP. sMall enterprises: Employ between10 and 49 employees, 3.9% of all firms in Malta, 20.9% of all employment and 15% of GDP MediuM-sized enterprises: Employ 50 to 249 employees, 0.8% of all firms, yet 20.9% of employment and 23.5% of GDP. • In Malta, some 30,000 SMEs constitute 99.8% of all types of enterprise employing almost 88,400 persons or 76.3% of the total and contributing 65% of GDP. However the term SME, the universal descriptor for the most vital sectors of business, is an unwieldy acronym for businesses ranging from sole traders to employers of several hundred.

Elsewhere, I have argued that “It is a fundamental mistake to view small 40 |

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Many micro business owners are motivated and interested in surviving; paying mortgages and earning a living for themselves, their families and increased leisure time.

Generally, the way a business is managed will be reflected in its growth rate over time and other accompanying changes that take place. However, growth always derives from success in the marketplace. so what role does Marketing play in an sMe? The Chartered Institute of Marketing uses the following definition of marketing: ‘Marketing is the management process responsible for identifying, anticipating and satisfying consumer requirements profitably.’

Therefore, successful businesses are those that: • Are clearly aware of customer needs

• Know which of those needs it is best suited to concentrate on • Understand how those needs are changing • Identify the customers that have those needs • Understand how its competitors meet those needs and where they do not • Consistently direct sales activity and manage the marketing mix to emphasize to clients that it meets their needs better than other businesses.

Conventional marketing wisdom holds that a market orientation provides a business with a better understanding of its customers, competitors, and environment, subsequently leading to superior performance. We also know that a marketing plan (a business’ marketing road map) helps a firm take a systematic, coordinated approach to its marketing and makes it more likely that its marketing activities will succeed. sMe Marketing characteristics It is in this context that definitions become important and why small SME businesses should not be grouped together by size or sector as they behave differently.

There is a perceived mismatch between the need for marketing activities (i.e. relevance of marketing) to sustain and grow SMEs in a competitive business environment) and the actual marketing efforts (i.e. role played by marketing) used by these organisations.

Considerable evidence exists that micro businesses in particular have characteristics

SMEs

SMES

that differentiate them from conventional marketing in larger businesses (those up to 50 employees and more) reflected by the inherent characteristics and behaviour of owner/ managers; and they may be determined by the inherent size and stage of development of the enterprise. Such documented limitations typically include limited resources (such as finance, time, marketing knowledge); lack of specialist expertise (owner/managers tend to be generalists rather than specialists); and limited impact in the marketplace.

A commonly held view is that micro/small business marketing is not strategic but haphazard, informal, loose and unstructured because of the way an owner/ manager does business; they make most decisions on their own, respond to current opportunities and circumstances and according to personal and business priorities at any given point in time.

Owner/managers of micro businesses behave and think differently from conventional marketing decision-making practices in larger SME businesses.

Consequently, such limitations will influence, indeed determine, the marketing characteristics of an SME and do not conform to the conventional marketing characteristics of marketing textbook theories; instead their marketing is characterised by the above limitations.

Ninety percent of owner/managers believe marketing is about selling and promotion and that promotion is the same as advertising, a common and extremely confused view.

Although these activities are part of the marketing mix, they are involved in only a fraction of this whole process.

Besides promotional activities or the extended marketing mix as they’re more commonly known, marketing includes a much broader strategic and tactical set of functions .It is argued that these are not commonly undertaken in micro or small businesses such as auditing & analysis, planning, product development, packaging, pricing, distribution, customer service and evaluation

marketing spend does not bring the results they want.

However, marketing is generally understood from too narrow a perspective. Larger firm models and support services applied to micro/smaller SMEs are inappropriate; they fail to understand the unique characteristics of smaller businesses which respond in different ways

Besides promotional activities or the extended marketing mix as they’re more commonly known, marketing includes a much broader strategic and tactical set of functions So how do micro and Small owner managed buSineSSeS engage in marketing?

Research by McGrath and O’Toole, (Networks Approach to Marketing for SMEs-2011) indicate that “ micro and small business owner/managers recognise that building relationships i.e. networks are vital to the success of their business; they invest considerable time and effort in both developing and maintaining these”. The concept of network is a natural inherent aspect of SME owner/manager decision making, particularly those relating to marketing decision making actions.

A behavioural approach gives us an understanding of an SME owner/managers’ way of doing business.

They further argue that each owner manager will have their own relatively small, often inexpensive networks which for example include personal contact networks, social networks, business networks and industry -Trade associations or institutes for technical advice, best practice or shared experiences-

and marketing networks. “Networking in reality is a tool for carrying out meaningful but largely unstructured and coincidental marketing but occurs as a natural and inherent entrepreneurial activity” Consequently, owner/managers go outside the businesses’ physical limitations to develop business and this is marketing-led activity.

They are in effect undertaking marketing through all their normal communication activities, such as the interaction and participation in social, business and trade activities, people-orientated activities.”

It is informal, often discreet, interactive, interchangeable, integrated, habitual, and can either be passive or proactive”.

For owner-managers, networking costs are not normally included in traditional marketing budgets because any explicit costs or expenses are often low. These include minor expenses such as a club or trade membership or dinner at trade functions.

These are less easy to measure compared to conventional marketing tools such as advertising or a mailshot.

Research by the Open University Business School-(OUBS)- February 2014- indicates that digital marketing is transforming the ways that SMEs network with other businesses, including new ways to interact, key benefits of engaging and reasons why some prefer to remain disconnected The survey of 1,109 business found that of the respondents, 66% of those involved in formal or informal networks believe that Digital Marketing has changed the way they engage with those networks. Almost one third of these firms ‘mainly’ engage with business and professional organisations online and 80% report using a combination

Continues on pg 46

Planning is equally important when it comes to small business marketing, yet many micro and small businesses make up their marketing as they go along with no real focus or rationale for their actions, much less any consistency and follow through. Too often in other words, their marketing is hit and miss and then owner/managers wonder why their June 2014 | THE ECONOMIC UPDATE

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AnniversAry

Mortal wounds As the car sped across the Lateiner Bridge, a stream of blood shot from Franz Ferdinand’s mouth. He had been shot in the neck. Sophie, seeing this, exclaimed: “For heaven’s sake! What happened to you?” She sank from her seat. Potoirek and Harrach thought she had fainted and were trying to help her up. Franz Ferdinand, knowing his wife better, suspected the truth. Sophie had been shot in the abdomen and was bleeding internally.

“Sopherl! Sopherl!” he pleaded. “Sterbe nicht!

Bleibe am leben für unsere kinder!” (Sophie dear! Sophie dear! Don’t die! Stay alive for our children!)

The cars rushed to the Governor’s residence.

Sophie may have died before they arrived; Franz Ferdinand died shortly afterwards. the July crisis The murders of Franz Ferdinand and Sophie brought Austro-Serbian tensions to a head.

Serbia had been fomenting trouble for Austria for a long time. For many in Vienna, the double murders acted as the ‘last straw’ for a get-tough showdown. The trail back to

42 |

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the Black Hand would not be unravelled for years to come but Vienna felt she could not wait for conclusive proof and acted based on the mass of circumstantial evidence.

As Vienna took a hard line against Serbia, the other powers in Europe took sides. The wheels of war gained speed. The stakes far outgrew the squabble between Austria and Serbia and the crisis of July turned into world war, just over 30 days after Franz Ferdinand and his wife Sophie were shot. learning curve “If there is a lesson we can learn from the wars that ravaged our continent, it is that there is never a winner. That what unites us is much stronger than what separates us.

Europe is more than a simple sum of States”, said the Chairman of the EPP Group, Joseph Daul, during the key debate on 100 years on from the First World War: lessons to learn and the future of Europe.”

Joseph Daul, MEP/EPP “The main lesson to be learned is to fight terrorist groups. The other is to nip in the bud the causes that lead to terrorist acts, but this is far from easy because what is a

terrorist act to one person may be an act of heroism to another. Unfortunately, what was agreed upon a few years after 1945 was based on what was agreed a few years after 1918 especially as far as Yugoslavia (incorporating Serbia, Bosnia Herzegovina, Croatia, Slovenia and Montenegro) was concerned.”

Drawing dividing lines on maps is one thing.

Making these acceptable to the people effected is another.

Evarist Bartolo, Minister for Education, Malta Editor’s Note

Noel Grima is the Editor with the malta Independent.

Source: N. Grima / TMID

INVESTMENT SOLUTIONS INVESTMENT SOLUTIONS incoMe & Growth INVESTMENT SOLUTIONS

Vilhena Global Balanced Vilhena Multi-Manager Fund Vilhena Global Global Balanced Balanced Multi-Manager Fund The Vilhena Global Balanced Multi-Manager Fund is designed to provide Multi-Manager Fund a diversified and well balanced global exposure across a broad range of Vilhena Balanced collective investmentGlobal schemes which invest in cash, bonds and/or equities.

The Vilhena Global Balanced Multi-Manager Fund is designed to provide This Fund, through a Multi-Manager approach, gives investors to access to The Vilhena Global Balanced Multi-Manager Fund is designed provide a diversified and well balanced global exposure across a broad range of a selection of leading fund managers and to a wide array of investments, Multi-Manager Fund a diversified and wellschemes balancedwhich global exposure across a and/or broad range of collective investment invest in cash, bonds equities. which are investment actively managed to provide a realistic prospect capitalequities. growth collective schemes which invest in cash, bondsofand/or This Fund, through a Multi-Manager approach, gives investors access to and income over thealonger term.

This Fund, through Multi-Manager approach, givesarray investors access to a selection leading fund managers and to a wide of investments, The Vilhenaof Global Balanced Multi-Manager Fund isarray designed to provide a selection of leading fund managers and to a wide investments, which are actively managed to provide a realistic prospect ofofcapital growth a diversified and well balanced globalaexposure across aofbroad of which are actively managed provide realistic prospect capitalrange growth and income over the longer to term. collective investment which invest in cash, bonds and/or equities. and income over the schemes longer term.

This Fund, through a Multi-Manager approach, gives investors access to vilhena Global balanced a selection of leading fund managers and to a wide array of investments, Multi-ManaGer Fund which are actively managed to provide a realistic prospect of capital growth and income Global over the longer term. vilhena balanced

vilhena Global balanced 80072344 i www.vfm.com.mt Multi-ManaGer Fund Multi-ManaGer Fund BOV Branches/Investment Centres & Licensed Financial Intermediaries

80072344 i www.vfm.com.mt 80072344 i www.vfm.com.mt BOV Branches/Investment Centres Financial Intermediaries vilhena balanced *The income thatGlobal the assets of the Fund generate&inLicensed relation to their value or market, and the frequency of payment may vary and are not guaranteed. The value of the investment BOV Branches/Investment Centres & Licensed Financial Intermediaries can go down as well as up and Fund any initial charges and exit fees may lower the amount invested and the amount received upon redemptions. Investments should be based on the Multi-ManaGer

full details of the Prospectus, Fund Supplement and the KIID which may be obtained from Valletta Fund Management Limited (“VFM”), Bank of Valletta plc Branches/Investment *The income that the assets Financial of the Fund generate in relation their value or market, and theServices frequency of payment varyThe andVilhena are notFunds guaranteed.

Theisvalue of thebyinvestment Centres and other Licensed Intermediaries.

VFM is to licensed to provide Investment in Malta by themay MFSA. SICAV plc licensed the MFSA *The income thewww.vfm.com.mt assets of the Fund generate inand relation to their value orthemarket, and the frequency payment may vary and are not guaranteed.

The should value ofbethe investment can down that as as upIssued and any exit fees lower amount invested andBKR the of amount received redemptions.

Investments based on the 80072344 and go qualifies as well aiUCITS. byinitial VFM,charges TG Complex, Suite 2,may Level 3, Brewery Street, Mriehel 3000, Malta.

Tel:upon 21227311, Fax: 22755661, Email: infovfm@bov.com, candetails go Branches/Investment down as well as up andFund any initial charges fees may lowerbethe amountfrom invested andFund the amount received upon(“VFM”), redemptions. should be based on the full of the Prospectus, and theexit KIID which may obtained Valletta Management Limited Bank Investments of Valletta plc Branches/Investment BOV Centres &and Licensed Financial Intermediaries Website: www.vfm.com.mt.

Source:Supplement VFM full details the Prospectus, Fund Supplement and the which may be obtained from Valletta Fund Management Limited Valletta Branches/Investment Centres andofother Licensed Financial Intermediaries.

VFMKIID is licensed to provide Investment Services in Malta by the MFSA. The(“VFM”), Vilhena Bank FundsofSICAV plcplc is licensed by the MFSA Centres and other Financial Intermediaries.

VFMSuite is licensed Investment Services in Malta the MFSA. The VilhenaFax: Funds SICAV plcEmail: is licensed by the MFSA and qualifies as a Licensed UCITS. Issued

by VFM, TG Complex, 2, Levelto3,provide Brewery Street, Mriehel BKR 3000,byMalta.

Tel: 21227311, 22755661, infovfm@bov.com, and qualifies as a UCITS. Issued by VFM, TG Complex, Suite 2, Level 3, Brewery Street, Mriehel BKR 3000, Malta.

Tel: 21227311, Fax: 22755661, Email: infovfm@bov.com, Website: www.vfm.com.mt.

Source: VFM *The income that the assets of the Fund generate in relation to their value or market, and the frequency of payment may vary and are not guaranteed. The value of the investment Website: www.vfm.com.mt. Source: VFM can go down as well as up and any initial charges and exit fees may lower the amount invested and the amount received upon redemptions. Investments should be based on the full details of the Prospectus, Fund Supplement and the KIID which may be obtained from Valletta Fund Management Limited (“VFM”), Bank of Valletta plc Branches/Investment

Business intelligence

Protecting your revenue and controlling your costs

Whilst a Business Intelligence Strategy contains obtaining information from as many data sources as possible in an organisation, most organisations use this information to measure performance, identify cost surplus and reduce the costs, whether these are operational or administrative. This only addresses a fraction of the full revenue potential.

Revenue leakage is the difference between the revenue an organisation is entitled to and the amount of revenue actually received, which could be significant. Inaccurate pricing, charging and recording of activities are usually the main culprits of this daily loss.

Typically internal revenue audits can identify revenue leakage; however manual audits are very expensive and can only be carried out on samples of the organisation’s activity. The data warehousing aspect of Business Intelligence can be used to support automated tools and processed to help you identify the issues that are causing revenue leakage and areas where revenue is being lost. This is normally caused by incorrect recording of information due to human error, whether due to complexity or accidental erroneous entry or fraudulent activity.

Once identified action can be taken to attempt to recover the lost revenue. The rules can then be applied daily to help you prevent future loss from happening and stopping the problem at source. It is not always possible to automatically identify the lost revenue; however at a minimum the solution can produce a targeted work list of activities that have a high probability of resulting in revenue loss. The manual audit can now be carried out on an identified subset of the data thus resulting in more focused auditing which will result in a higher return on investment of your spend on manual auditing.

Once the revenue loss is identified and secured you can then use Business Intelligence to help you identify the costs of obtaining that revenue. By obtaining as much data as you can 44 |

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from the variety of data sources you can build an accurate figure of the cost the organisation is absorbing, from HR costs to material costs and overheads, at every step of the cycle that is required to obtain the revenue. This will allow the organisation to compare the totals to industry benchmarks and identify areas where costs can be reduced and/or controlled in order to maximise the gross profitability. A properly structured Business Intelligence Strategy and Roadmap will allow you to not only identify particular areas that are causing cost problems, but once addressed, it will allow you via the use of management dashboards, to monitor the cost variance over time to prevent the cost from increasing again to uncontrolled levels.

Business Intelligence can help your organisation identify loss of revenue, prevent future loss, identify cost problem areas and monitor and control your costs, however this can only be achieved through a formulated Business Intelligence Strategy and Implementation Roadmap.

6PM has been conducting projects successfully in the Business Intelligence (BI) sphere for the last 10 years. Our projects range from BI reporting solutions for universities using Business Objects to full blown BI data warehouses for the NHS and telecoms industry. Besides the technical solutions 6PM also provides BI Strategy consultancy to help you define your BI Strategy and your BI Roadmap and Framework in order to enable you to achieve that strategy.

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For more information visit www.6pmsolutions.com

SMEs SMES

Figures from the Department for Business, Innovation and Skills (BIS) have revealed that nine out of ten businesses who had worked with a mentor believe it had a positive impact on their business

of face-to-face and online communication; only (12%) communicate ‘mainly’ through face-to-face methods such as meetings and social gatherings.

Face-to-face communication remains more important for informal networking, with only 14% do so ‘mainly online’. Some 47% adopt a clear strategy for events, combining online and offline networking methods so that they complement one another and avoid ‘event overload.’

Dr Richard Blundel, Editor of the report, said “Our research reveals the changing nature of networking amongst the UK’s small and medium-sized businesses. Faceto-face interaction will remain important, particularly in more informal and local networks, but online communication has become a core component, helping people to connect in ways that were inconceivable a few years ago.”

Other key findings on the special topic theme of recent SME networking trends: • The most commonly identified benefit from being a member of a business or professional organisation is to provide a source of advice and information (59%).

Other benefits include: providing shared experience and social contact (48%) and obtaining more specific advice on technology or best practices (41%).

• Sharing experience and social contact are seen as the main benefit of being a member of an informal network of business owners (65% of those who engaged with such networks). They are also seen as sources of useful business advice and information (58%), and for advice on technology or best practice (38%).

• The reasons why people don’t become involved in informal networks revolve around one or more of the following 46 |

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four issues: insufficient time for informal networking activity; lack of perceived benefits of engaging with informal networks; absence of suitable networks in the local area; and a personal lack of interest in networking/socialising.

Social media however was identified as a particular problem, often regarded as ‘a necessary evil’. While nearly 90% of owner managers use networks and social media to grow their businesses, over 35% didn’t believe their use of these to be effective due to insufficient time and associated costs.

Research by the Chartered Institute of Marketing shows that in the Uk, “a meagre 2 % of businesses have optimal skills and competencies in social media”.

While marketers see its potential, fewer than one in five businesses say social media is central to their marketing strategy.

They believe that social media is not a substitute for face-to-face networking, highly valued by SMEs. Face-to-face interaction will remain important, particularly in more informal and local networks, but online communication has become a core component, helping people to connect in ways that were inconceivable a few years ago Key findings of a members survey (2012) by the Malta Chamber of Commerce Marketing Committee, on members’ perceptions of marketing and how important it was is to their businesses, reinforce research on SMEs marketing behaviour.

1. Of the respondents, 73% in all sized sectors saw marketing as strategic but very surprisingly, less than a fifth saw it as a revenue opportunity.

2. Micro businesses (77%) viewed events organised by trade /Professional bodies as valuable marketing networking opportunities compared to 57% for small

and 72% for larger SMEs. The latter group saw conferences and special events as key networking opportunities as valuable besides trade/professional activities 3. In the micro SME, 70% owner/managers take care of marketing; in the small SME, it was only 39% and 43% by a marketing manager or agency. In the medium sized SME, 72% of the marketing function was assigned to specified marketing personnel and agencies.

4. As businesses grow in size, they become more professional with dedicated personnel and allocated budgets. In micro firms, 42% had a marketing budget; small SMEs, the figure increased to 54% and with medium SMEs, 89%.

5. Typical marketing tools by all included direct marketing, PR, advertising, events, and social media. It appears that with increasing size, traditional tools-advertising, PR, sponsorship- are still key elements of the mix but social media is becoming an increasingly used communication tool by sector and size.

The latest Sage Business Index, using figures from a recent survey of over 12000 SMEs, indicates that in the uk, “directionless businesses without a guide are being left behind in the race for growth; by closing the ‘mentoring gap’, this could help the UK’s SMEs double their chances of boosting turnover.”

Sage discovered that whilst 89% of UK businesses believe mentoring can help them succeed, less than a quarter (22%) are currently utilising the services of a business mentor. According to its study, nearly a quarter of UK businesses (23%) highlighted a shortage of information on mentoring as a barrier to its widespread adoption, while 22% said that a lack of proof that mentoring can help businesses to grow hindered its uptake.

SMEs

SMES

Figures from the Department for Business, Innovation and Skills (BIS) have revealed that nine out of ten businesses that had worked with a mentor believe it had a positive impact on their business. BIS also found that that nearly twice as many mentored businesses reported an increase in turnover (44%) than non-mentored counterparts (23%). Similarly, twice as many mentored businesses had hired more staff (10%) than non-mentored businesses (5%).

It has been estimated that twice as many SMEs are unlikely to survive in five years time than those who follow the advice of a mentor.

The top three problems facing businesses were effective marketing, reaching a broad enough customer base and controlling costs.

There are a number of observaTions which can be drawn from This review which can be applied To malTese smes • Marketing is acknowledged as being critical to success and sales growth, not a secondary function. It is a strategic contributor in an environment where greater focus needs to be placed on existing customers besides developing strategies to win new ones.

• SME businesses should not be grouped together by size or sector as they behave differently; they should be clearly segmented.

• There is danger in failing to identify the most vibrant part of the business community and the support they need to grow. Many micro and small businesses will indeed want to stay small, highlighting a widespread lack of ambition amongst this segment. The mid-market is the likely multiplier of growth • By understanding behaviour of micro, small and medium businesses, it is clear that each by and large have their own directions and performance. By understanding which strategic direction a firm belongs to, this provides a better insight into the firm’s competitive behaviour and likely outcome of the consequences of that behaviour.

Policy makers can target their support measures more accurately and with as greater likelihood of success. Focusing on businesses just because they are small is not a policy.

• Digital marketing is transforming the marketing landscape giving micro and small businesses the opportunity to connect with target audiences quickly,

•

effectively, inexpensively and with quantifiable ROI. The options are endless: social media, content marketing, blogging, email, SEO, paid research and so on. However, they face the skill and time challenges of keeping up with the rapid rate of change in the digital marketplace; many businesses however don’t know what they don’t know such is the pace at which digital marketing is evolving As Government has limited resources and growth is derived from success in the marketplace, its policy towards SMEs should focus primarily its business support policies by part funding specialised services in all aspects of marketing, on encouraging high growth businesses which can or want to expand their market share.

•

•

prioriTised businesses include: • •

Those managed for growth Those with growth potential but not managed as such • Assessing attitudes of management teams which are crucial in each case • High growth businesses have the potential to evolve into very large valuable businesses. If the government is going to spend policy effort trying to encourage certain kinds of companies, these are the ones that can create many specialised high value jobs that underpin the economy. Government should therefore actively support these businesses in their marketing efforts at home but particularly abroad.

• Businesses should get more targeted support from Government agencies rather than senior politicians turning up and lauding the importance of SMEs at business conferences and more precision to match the good intentions. Due to the different ways that small and mid-sized businesses fund their operations and fuel their growth plans, a one-size-fitsall policy for business support does not work • Government support agencies can make better use of the resources given to them and match these to quantifiable outputs over time. Agencies such as Malta Enterprise should actively seek out those businesses through a filtering process with the potential, capacity or and willingness to grow, to create really high growth companies and then spend time making sure that those sectors have

•

the right encouragement and structures to enable these to fulfill their potential A key feature of business support in Malta should include marketing mentoring as a major initiative to work alongside identified growth businesses with long term hands on relationships, with support when necessary, resulting in trust and empathy in a client driven process. Malta’s small size and number of small businesses lends itself naturally to face to face networking. Government has a key role as do others to educate SMEs in the benefits of business mentoring and those who actually make use of it.

In an article published in the Times of Malta and Economic Update (April 2014), I have argued that economic performance needs to be clearly defined, otherwise the provision of a pick n’ mix product driven enterprise service for SMEs by agencies is really a poor measure of money spent.

It was further argued that the key for Government Agencies was to identify those with potential which would benefit from support, stimulating enterprise by acting as a catalyst to a firm, strengthening the mechanisms of business experimentation and growth; it was not just about identifying potential winners but ensuring that winners emerged through market driven processes, supported at appropriate transitionary phases.

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Editor’s Note Louis Naudi is an Honorary Professor who spent over 30 years of his business life working in SMEs in the Uk., observing their behaviour and also in designing, developing and implementing customer led business support processes for the Department of Trade and Industry. He is also a Fellow of the Chartered institute of Marketing in Malta.

June 2014 | THE ECONOMIC UPDATE

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Business ManageMent

Managing your business… proactively J. Welch famously said: “If you don’t have a competitive advantage, don’t compete.” This notwithstanding, establishing a competitive advantage in a highly competitive world is not the easiest job around and does depend on a number of factors which are all the time changing. Indeed, some compare the setting of competitive advantage to shooting to a moving target.

Being proactive is, as such, the name of the game.

Retaining your competitive advantage over time is all down to having a good strategy. There are many definitions of ‘strategy’ but the one which, in my opinion, best suits and sets the pace for the answer to this question is probably that provided by Hitt et al (2003 p.9) who define it as “An integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage”.

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The process of deriving the competitive advantage/s cannot commence before the entity actually undertakes a careful analysis of its strengths and weaknesses including a comparison of how it fares in terms of competition and a careful understanding of the customers’ needs. It is at this stage, that it will be possible for the entity to identify those areas into which it excels – the “sweet spots” as Collis and Montgomery (Collis and Rukstad 2008 p.89) refer to them.

These two authors highlight that “the creative part of developing strategy is finding the sweet-spot that aligns the firm’s capabilities with customers’ needs in a way that competitors cannot match given the changing external context….”

The ‘VRIN’ model (Johnson et al 2011 p.89) is one of the latest ways to assess strategic capabilities as a basis of competitive

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advantage. The latter is based on the ‘Value’ that the capabilities add to the business in terms of bottom line, the ‘Rarity’ of its capabilities which bases itself on the capability uniqueness, the ‘Inimitability’ factor which rests on its potential not to be copied or imitated by competition and the ‘Non-substitutability’ power which makes it impossible for competition to come out with alternatives which have the potential of substituting the capability.

Hartmann defines strategic capability as the “business’ ability to successfully employ competitive strategies that allow it to survive and increase its value over time. It focuses on the orgaisation’s assets, resources and market position, projecting how well it will be able to employ strategies in the future.”

The strategic capabilities with the attributes highlighted above will be the ‘crown jewels’ of an entity. These capabilities will provide an entity with a cutting edge in its respective market through a sustained competitive advantage which will erode at a slower pace and which will increase the returns (or the rentearning potential) upon the investment made by the entity in its resources and capabilities.

Advantage is the most critical aspect of a strategy statement, Rukstad explains. This is the part of the strategic statement which articulates the manner in which the organisation will actually achieve the objectives set, that part which identifies those capabilities of the entity which are not available to anyone else and which will give it an edge over the competition.

This concept of ‘uniqueness’ is also brought up by Grant. In his analysis of the resource-based theory of competitive advantage, he highlights that the best resources and capabilities which will provide an entity with sustainable competitive advantage are those which are durable, difficult to identify and understand, imperfectly transferable, not easily replicated, and of which the entity possesses clear ownership and control.

values and behaviours of its founders/owners and the wider community values of its employees. As time passes, however, these become an integral part of the established way of ‘doing things’ and it is at this stage that, if not managed carefully, the organizational culture can become a problem. If culture is not carefully managed and initiatives are not taken to enable its continuous evolvement, then the entity will struggle to develop its capabilities.

the tendency for strategies to develop incrementally on the basis of historical and cultural influences, but fail to keep pace with a changing environment If this happens, progress will be limited and over the long term an entity may run the risk of experiencing a strategic drift which is defined as “the tendency for strategies to develop incrementally on the basis of historical and cultural influences, but fail to keep pace with a changing environment”. (Johnson et al 2011 p.158). A strategic drift may lead an entity to succumb and die.

Noting the strong correlation that there is between them, it is very clear that a successful business formula depends a lot on the time dedicated to managing and developing the factors that were mentioned above. It has never been, and success in business will never be compared to tranquility and inactivity.

One has to continuously identify aspects which will keep their enterprise alive and prone to change and development if they want their business to strive over the long term.

Indeed, being pro-active is the name of the game.

Editor’s Note

But strategic capabilities cannot remain static. The ability of an entity to change and renew its resources and capabilities will determine whether it is able to successfully maintain a sustainable competitive advantage over the long term.

In its initial stages, an enterprise will respond to and reflect the characteristics of the industry in which it operates, the

Kenneth B Micallef works for Bank of Valletta since 1993 and within this term he has carried out various roles within the Bank, the most recent being that of Head CEO’s Office where he is also responsible for the Bank’s public relations. Kenneth is the Secretary to the Bank’s Executive Management Committee.

He is a member on the Committee of the Institute of Financial Services Malta since 2003 and is currently the Education Director of the Institute.

The research work disclosed in this publication is partially funded by the Master it!

Scholarship Scheme (Malta). This Scholarship is part-financed by the European Union – European Social Fund (ESF) under Operational Programme II – Cohesion Policy 2007-2013, “Empowering People for More Jobs and a Better Quality Of Life.

Operational Programme II – Cohesion Policy 2007-2013 Empowering People for More Jobs and a Better Quality of Life Scholarship part-financed by the European Union European Social Fund (ESF) Co-financing rate: 85% EU Funds;15% National Funds Investing in your future

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consUmer affairs

Those fifteen extra pounds were bothering you, and the ad from your local gym promised to melt them away. So you signed a long term contract. But you don’t go that often and think you are wasting your money. Getting out of the contract isn’t that simple. In many cases, it’s downright difficult.

How to EscapE a Long-tErm contract

By Lorna Diep

It’s not just gym memberships. Folks trying to cancel longterm contracts for services like spas, dating sites, magazine subscriptions, pest control, music downloads, and cellphones find themselves equally frustrated.

warns. Don’t be tempted to just click “next” or “yes.” Read to the end. “Many people don’t even realize this is a contract, particularly online,” Richter says. “And then they can find themselves stuck in a contract for a year or more.”

Many states have laws that address gym memberships. One tip is to act quickly. Most states give you a few days to change your mind and cancel contracts such as those with gyms for health clubs. Contracts for vacation clubs or timeshares often have a short window of time to rescind.

Watch out for automatic renewals or “evergreen contracts,” Richter warns. You may think it’s easier to let the gym membership or magazine subscription expire because you think it’s just for one year, only to find you are being hit with a renewal fee charged to your credit card.

“Three days is typical. But they may have very specific provisions on how you get out of them,” says Kai Richter, an attorney with the Minneapolis-based law firm of Nicols Kaster. “If it says you need to give notice in writing, you need to give notice in writing.”

“It can be like a zombie that keeps going on and on unless you take affirmative steps to terminate the contract,” he says.

Consumers need to save the contract so they know when to contact the company and tell it not to renew automatically.

If you are signing a long-term contract – both on paper and online – you need to read it carefully. Many gym or spa contracts will say you can cancel if you move at least 25 miles from the club. But on closer inspection, you’ll find that only applies if the firm doesn’t have another facility in that area.

If you are unable to get out of your contract after contacting the company, Richter suggests reaching out to your state attorney general’s office because they may try to mediate the dispute as a courtesy, he says. When all else fails, consider contacting a class-action law firm.

“Consumers need to be particularly aware of online terms and conditions that may provide for long-term commitments,” Richter

Sources: Money.com; The Franklin Properity Report

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life insurance

Should You let Your life inSurance lapSe?

By Gina-Roberts Grey

Sources: Moneynews.com; The Franklin Prosperity Report

The primary purpose of life insurance is to protect against the risk of the loss of the breadwinner. In effect, you’re replacing the income you would otherwise provide for your family. But as time marches on, there may be some instances where it’s OK to stop making payments and let your life insurance lapse.

“The short answer is that you can lapse a policy when the need for insurance has ceased,” says Kevin Gahagan, a certified financial planner and principal at Mosaic Financial Partners in San Francisco.

However, there is an important exception: if the policy is written for cash value. “A cash value policy can be surrendered or sold so that policyholder gets value for the premiums that have accumulated over time,” he explains.

For all other types of policies, need is the major factor. Because the goal of life insurance is to fund funeral services as well as take care of loved ones, you need to plan for the annual income you believe will provide the standard of living you desire for your survivors. That income can come from many sources in addition to life insurance, including Social Security benefits, pension plans, and stocks.

Here’s the back-of-the-napkin math you should do to calculate whether you need a life insurance policy to provide part or all of that income: 1. Determine income need. Tally up all your anticipated monthly financial outlays, including mortgage, car loans,

credit card debt, college costs, personal loans, and other obligations. Multiply this number by 12 – that’s how much income your spouse or partner needs to earn annually to maintain his or her current standard of living.

2. Establish expected income. This is the annual income your partner can expect to receive between any salaries, interest and dividends, real estate investments, Social Security, and other sources. And don’t forget to factor in funeral costs because your loved one would need to have cash on hand to pay for services.

3. Crunch the numbers. Subtract the income need from the expected income. If the answer is in black, you might be able to let your insurance lapse. However, if there’s any shortfall or doubt, Gahagan says life insurance is necessary.

It’s wise to access your life insurance needs annually, Gahagan says, as well as after any major life event like the loss of a job, divorce, or major move. “Those can greatly impact the amount of life insurance needed.”

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Travel

Company suCCessfully tests spaCe-tourism balloon An Arizona company said Tuesday it has successfully completed the first small-scale test flight of a high-altitude balloon and capsule being developed to let tourists float 20 miles (32 kilometers) above the earth.

World View Enterprises of Tucson said it launched the flight last week from Roswell, New Mexico.

CEO Jane Poynter said the system broke the world record for highest parafoil flight, lifting a payload to 120,000 feet (36,576 meters).

“It went really, really, really well,” Poynter said. “Actually, the guys hit the ball out of the park. We’re thrilled.”

The system uses a balloon similar to that used in 2012 to lift Austrian daredevil Felix Baumgartner 128,000 feet (39,014 meters) to make a world-record breaking 24-mile (38.62-kilometer) sky dive. That flight also launched from the Roswell airport.

Poynter said that last week’s flight was the first testing all the components together. It used a balloon about third the size of that planned for passenger flight to lift a payload of about onetenth of what will be used to carry passengers.

The company is still planning to begin its $75,000 per-person flights in 2016, she said. The balloons will lift a capsule carrying six passengers and two crew members 20 miles (32 kilometers) 54 |

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up, where they will float under a parafoil for about two hours before floating back down to earth. The capsule will be big enough for the passengers to walk around.

The selling point is the view of the Earth and seeing its curve, the company says. Other space-tourism ventures under development will rocket passengers the full 62 miles (100 kilometers) into space but on much shorter flights.

In filings with the Federal Aviation Administration, World View said it planned to launch its flights from Spaceport America in New Mexico. But Poynter Tuesday said that no final decision has been made on where to base the flights.

Spaceport is where Virgin Galactic plans to launch its first space-tourism flights at a cost of $200,000 per person.

Development of Virgin’s spacecraft has taken longer than originally planned, and it is unclear when the company, founded

by British billionaire Richard Branson, will make its first flight.

The company’s newest target date is the end of this year, but it has said that for each of the last several years.

“I don’t think anyone considers us in a race,” Poynter said when asked if they might beat Virgin Galactic to passenger flight.

“We don’t consider us in competition because the experience is so completely different.”

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Source: Reuters/Malta Independent

gaming

Two MalTese firMs achieve global recogniTion for reMoTe gaMing Technology and experTise Source: Malta Business Weekly/Malta Independent

Two Maltese owned and based businesses have won the prestigious and acclaimed eGR awards for ‘Software Rising Star of the Year’ and ‘Corporate Services Provider of the Year ’ respectively.

Angela Dalli, leading Bit8 duirng the eGR awards for ‘Software Rising Star of the Year’

The announcement was made at a gala ceremony held at the Pavilion at the Tower of London last week.... This is the first time that two Maltese companies won these awards.

Bit8, a young, Malta-based iGaming platform software company received the award for ‘Software Rising Star’. The award certifies and seals years of hard work that went into the building of the Bit8 platform, and reinforces the vision of the founders and the team that they are indeed, a growing force in the industry.

Angelo Dalli, himself present at the Awards ceremony to collect the accolade, said “I am truly honoured to be the CEO of this great company. Receiving such an award, competing with some of the most renowned platform and software providers in our space, and winning, gives me great energy and drive.

Our disruptive Artificial Intelligence solutions have started to make a tangible impact on the industry that is slated to ignite a new wave of nimble operations using our platform to gain competitive advantage.”

Receiving such an award, competing with some of the most renowned platform and software providers in our space, and winning, gives me great energy and drive In fact 2014 has already proved to be a great year for Bit8, which has garnered a host of nominations namely as ‘Innovator of the Year’ at the IGA this January; Angelo Dalli himself winning the ‘Digital/IT Entrepreneur of the Year Award at the MSV Life Top Entrepreneur of the Year Award organised by The Economic Update, and now the eGR Software Rising Star of the Year.

WH Partners, a Maltese law firm, was awarded the eGR Corporate Services Provider of the Year award. Olga Finkel collected the award on the firm’s behalf. Olga Finkel and James Scicluna, the firm’s founding partners, commented that “this award is recognition of years of hard work and dedication that our whole team has put into providing a world class service to the remote

gaming and digital industries in Malta and abroad. It is thanks to them that our firm is today known to be a leader in these sectors.

Our commitment lies in our in-depth understanding of clients’ industries which enables us to provide a value added service. We will continue to strive to be best in class”.

As with Bit8, this is also not the first recognition which WH Partners has received. Only this year, Olga Finkel and James Scicluna have been ranked amongst the top 35 gaming & gambling lawyers globally by Chambers & Partners, the leading guide to the legal profession worldwide. They are also both recognised by Who’s Who Legal for their work in the Sports & Entertainment category and Olga Finkel is recognised in particular for her work in Information Technology. Legal 500 and the International Financial Law Review also recognise WH Partners as a leading firm. WH Partners was appointed as an expert by PwC Malta in connected with a report being prepared for the European Commission on iGaming and the role of regulators. Olga Finkel has been appointed as an external expert for a European Commission DG Connect study on the ePrivacy Directive.

Joseph Cuschieri, the Executive Chairman of the Lotteries and Gaming Authority, was present at the eGR B2B awards ceremony. He expressed his satisfaction at the success achieved at the awards by a number of businesses licensed by the LGA or otherwise with a very strong Maltese connection.

He also said: “I wish to congratulate both Bit8 and WH Partners for their achievement. Bit8 is one of the best examples of home grown innovation which I can think of. The ability of an operator to have good monitoring and reporting tools is not only a business advantage, but can also assist us regulators to have better and quicker oversight of and responsiveness from our licensees. WH Partners has demonstrated over the years that it has leading global legal expertise in the gaming industry combined with a technical understanding of the industry. I wish both of them well.”

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NEWSMAKERS

Air MAltA gets MAjor industry certificAte

the concept stAdiuM presents workshop At jci europeAn conference on BrAnd MArketing through csr

Picture shows Air Malta’s Chief Executive Officer, Louis Giordimaina, being presented with the IATA Operational Safety Audit (IOSA) registration by Captain Robin J. Zammit, Air Malta’s Head of Safety & Compliance.

Air Malta has recently renewed its IATA Operational Safety Audit (IOSA) registration following a comprehensive audit carried out by a foreign IATA-approved Audit Organisation. IOSA is an internationally recognised evaluation system designed to assess the operational management and control systems of an airline.

The audit covers all the airline’s operational departments namely: Organisation and Management System, Flight Operations, Operational Control and Flight Dispatch, Aircraft Engineering and Maintenance, Cabin Operations, Ground Handling Operations, Cargo Operations and Security Management. Each department is audited for the required documented policy and procedures, as well as the correct implementation.

IOSA is consequently the benchmark for global safety management in airlines. All IATA members are registered and must remain registered in order to maintain IATA membership.

On presentation of the registration certificate, Louis Giordimaina, Air Malta CEO and Accountable Manager said: “This registration renewal is testament to Air Malta’s relentless work and dedication and especially in its experienced human resources.”

“I thank all the staff for their unrelenting efforts, which clearly manifested itself during this year’s renewal audit. This audit is in line with the airline’s Safety, Security and Compliance Policy of ‘providing our customers and employees with the highest level of safety, security and compliance achievable within our working environment, whilst striving for continual improvement’. With our Safety Management System (SMS) which was introduced recently, the airline has updated and improved its proactive handling of airline safety related matters,” added Mr Giordimaina.

From the top three airlines operating to Malta International Airport in 2013, which collectively carried 80% of all passengers to Malta, Air Malta is the only airline on the IOSA registry.

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Charlotte Gregory - Conference Director, Jonathan Dalli - the Concept Stadium, Shine Bhaskaran - JCI World President

Following the spectacular Grand Opening of the 2014 JCI European Conference in Malta, the Concept Stadium as the official Conference Marketing Partner, took the stage to give a comprehensive workshop on how CSR can be the driver towards sustainable Brand Marketing.

Jonathan Dalli, Founder and Managing Director at the Concept Stadium, presented a well-researched and up-to-date presentation about Corporate Social Responsibility and how this can serve as the key tool towards long-term, high-impact branding.

“CSR has a great deal of meaning, yet companies must learn to understand it in their own way. Today, CSR is not merely a ‘notion’ up in the air, but a strategic component that should be considered as an investment”, emphasised Jonathan Dalli to the JCI European Conference Delegates.

In fact, Mr Dalli, who himself is passionate about CSR, suggests that ‘each company must respond in its own unique way, depending on its traditions, ideology, stakeholders’ interests, etc’. “This is also part of our own Corporate Social Responsibility as a Brand Marketing Consultancy, and we’re extremely proud that the Concept Stadium has supported Junior Chamber International (Malta) to bring 1,300 delegates to Malta.

Indeed, CSR goes beyond merely donating money to charity once in a while, it is an abiding philosophy. The task of organisations is to incorporate CSR into their strategy by: conducting organisational activities within the bounds of what is considered ethical and in the general public interest; responding positively to emerging societal priorities and expectations; balancing stockholder interests against the interests of society as a whole; and being a good citizen in the community.

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MenAfActors ‘Best fActoring house’ for second yeAr running For the second year running, MENAFactors, a member of the FIMBank Group, has been awarded the title of ‘Best Factoring House’ by international trade finance magazine Global Trade Review (GTR). Based in the Dubai International Financial Centre (DIFC) and fully regulated by the Dubai Financial Services Authority (DFSA), MENAFactors is the leading standalone provider of Factoring and Forfaiting services in the Middle East with the ability to support the Trade Finance needs of varied businesses in the region.

services from other major financial institutions in the market. At MENAFactors, we pride ourselves on our ability to structure our products around clients’ business needs, and during 2013, we managed to extend our operational footprint to their benefit. As part of the FIMBank Group, however, our global reach extends beyond the Middle East to facilitate our clients’ business, wherever it goes”.

This year’s award is particularly significant in view of the new criteria introduced

by GTR in the selection of successful candidates for its awards. As of this year, the magazine’s editorial board has been asked to run a vote across the award categories based on their professional and market experience in 2013. The institutions represented on the editorial board include the Encore Group, Barclays, Miller, RBS, Falcon, the DMCC, Citi, HSBC, NBAD, and ADCB.

For further information about MENAFactors please visit www.menafactors.com

Commenting on the award, MENAFactors CEO Anand Padmanaban said that “we are very proud to have received this prestigious acknowledgment of our

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Interesting times for M&A globally

$1 +16% trillion

+12%

Mergers and Acquisitions (M&A): Growth in the fast lane

increase in M&A appetite since 2012

anticipated increase in capacity for M&A deals by end-2014

and growing M&A Boom in 2014

Sources: KPMG M&A Predictor Tool, Bloomberg Businessweek (2014)

M&A in Malta: What’s the deal?

Growth motivates deals - local companies are typically sharing the following thoughts: “Our acquisition strategy enables us to derive quick added value through the exploitation of our core strengths in other, related fields.”

“We grow our business via acquisitions.

It gives us immediate access to expertise, products and a footprint in the market.”

…bu t

the

M&

A pr

oc e

Feedback from M&A professionals on the key deal success factors to focus on:

38% #1 Wellexecuted integration plan

“Our local market is mature. We are looking overseas for growth.”

“Through this acquisition we have extended our product portfolio so we are now able to offer a more complete solution to our clients.”

ss h as i t

29% #2 Correct valuation / deal price

s se

t of

chal

leng

es

20%

M&A @ KPMG

#3 Effective due diligence

Over a 5 year period, KPMG has been the

#1

mid-market financial advisor globally1.

Source: KPMG 2014 M&A Outlook Survey Report

Contact our Transactions and Restructuring team: Tonio Zarb Senior Partner E: toniozarb@kpmg.com.mt

David Caruana Partner E: davidcaruana@kpmg.com.mt

David Pace Director E: davidpace@kpmg.com.mt

Mario J Vella Director E: mariovella@kpmg.com.mt

Hermione Arciola Director E: hermionearciola@kpmg.com.mt

T: +356 2563 1000 www.kpmg.com.mt

KPMG’s Transactions and Restructuring team, which runs a portfolio of M&A transactions in various sectors, is the place to turn to for a broad range of advice on your M&A transaction. Building on our experience, we can support you with services that cover the full life cycle of a deal – and help you create the value you seek, while avoiding unnecessary surprises.

Source: Thomson Reuters

1

© 2014 KPMG, a Maltese Civil Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.