INtervIew
Issue 52
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June 2, 2016
Distributed with Times of Malta
NewS
Governance lacking in private placements Vanessa Macdonald Two of the eight companies which offered private placement bonds failed to file their annual reports on time, raising fears that investors may not be keeping up to date with developments that may affect them. Eight companies have offered private placement bonds since 2012, which are not listed and therefore do not fall under the same regulatory regime. Although the Malta Financial Services Authority approves the issue of the bond, there is then no supervisory mechanism in place. This means that there is no entity tasked with governance, which sources said was quite alarming. “This is a very risky model to start with and investors need to be aware that they should be following the progress of the issuers – especially when the bonds are unsecured. But that some of them did not even file their annual accounts on time – which they should be doing anyway under the Companies Act – certainly
In just three months since the Malta Stock Exchange launched its SME product, Prospects, eight corporate advisers are already in the pipeline – and 25 SMEs have shown interest. see page 3 >
Company
Amount
Bond Issued
2014 accounts due
2014 accounts filed
Delta1 Securities
€50m
November 2015
-
January 5, 2016
Zammit Finance
€6m
November 2015
-
n/a - company incorporated mid-2015
Mediterranean Investment Holdings
€11m
November 2015
-
September 25, 2015
42 Invest
€6.5m
March 2015
September 11, 2015
Granted 18 month extension in April 2015
Schembri Finance
€3
September 2014
September 11, 2015
July 22, 2015
Pendergardens Developments
€12m
February 2013
September 11, 2015
February 11, 2016
Cars International
€5m
September 2012
September 11, 2015
August 6, 2015
GAP Group Finance
€15.5m
March 2012
September 11, 2015
October 20, 2015, resubmitted April 27, 2016
highlights that governance is required,” the sources said. Companies that issue private placement bonds must present their audited accounts to an annual general meeting within seven months of the end of their financial year. They then have 42 days in which to file them with the Company Registrar.
Although there are penalties for all companies that file their accounts late, thousands do, something that the Registrar is hoping to tighten up. However, when private investors’ money is involved, there would usually be an entity to protect their interests through ongoing supervision. The private placement bonds
When Betsson CEO Ulrik Bengtsson says that Malta should be worried by other member states trying to block its gaming sector, then the island should sit up and take note. see page 5 & 6 >
are not always aimed at local investors. Delta1, for example, is a special purpose vehicle which was constituted for the purpose of issuing asset backed securities as permitted in terms of the Securitisation Act. About half of the private placements are not secured. Questions to the MFSA remained unanswered.
NewS e Malta Financial Services Authority has made ‘innovation’ its buzzword. How has the industry reacted to its latest product: the ‘notified alternative investment fund’? see page 11 >
StOCk MArket revIew ere is nothing magic about share splits and they do not immediately create value out of thin air. Stockbroker Edward Rizzo explains what actually happens. see page 18 & 19 >
e Business OBSERVER
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June 2, 2016
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NEWS
Prospects gets first corporate adviser The first corporate adviser has been approved by the Malta Stock Exchange for its new SME listing product, Prospects, with another four at various stages of the application procedure. Prospects was launched last February to offer a cost-effective alternative source of financing to SMEs who need between €1 million and €5 million. “The corporate adviser has a very critical role and is a make or break for this particular product,” Cliff Pace, the business development head at the MSE, explained. “They are the ones who will ensure we have the right companies coming on board, with the right levels of corporate governance and due diligence.” The MSE has received five applications, three of which have already been accepted, of which only the first – Medfinco – has completed the two-week gestation period. Grant Thornton has been accepted and should get final approval this week, while the third, Demetra, was accepted last week. Two other applications are being processed and a few more have already expressed interest in applying. Mr Pace is particularly encouraged about Demetra as it is an Italian corporate adviser, which is very well networked within Italy as well as in Romania, Hungary and Turkey. He has already travelled to Italy, Spain and Istanbul, speaking to various entities, mostly multipliers who might be interested in becoming corporate advisers. “They are very keen as they have a client base of SMEs who find it very difficult to get to market because of bureaucracy and cost. “To list on AIM – the closest thing to Prospects – in Milan, they would have to pay €400,000, which is not affordable when a company is only seeking to raise a
few million. In fact, AIM in Milan has been open for three to four years but has only 68 companies listed.” The MSE is suggesting that the cost to come to market should be around €50,000 to €60,000, keeping its own fees between €5,000 and €15,000. The idea is that each corporate adviser would have multiple clients to spread their costs. Although the corporate advisers are a crucial first step, the MSE is also seeking SMEs willing to take up the product and Mr Pace said that there were already 25 local companies interested and keen to take it forward. “Some of them are interested in equity but will not move on this until the tax position is clarified. As it stands, they would have to pay tax in the normal manner but we are talking to the Commissioner of Inland Revenue to clarify this issue and see if and how we
“e corporate adviser is duty-bound to inform the MSE when the [Prospects] company is doing something that it should not do or is not doing something it should do” could introduce fiscal benefits – which would make Prospects much more attractive. “But many of them are interested in bonds – which are not subject to capital gains tax, the same situation as on the main market.” As a domestic product, the MSE is not allowed to sell Prospects abroad. However, foreign companies could find investors, come to
Malta and list the bond, and make an agreement with a broker here who would then deal with the investors, he explained. Until now, the only option for local SMEs wishing to raise money outside the main market was through private placement bonds, whose issue are authorised by the Malta Financial Services Authority, but which are then sold privately (see story on page 1).
Mr Pace sees Prospects as an important alternative for investors, particularly because the corporate adviser would be there to ensure that the SME complies with requirements in terms of corporate governance, transparency, market information etc. “When a Prospects company comes to market, it does so on the basis of a business plan. The corporate adviser is duty-bound to inform the MSE when the company is doing something that it should not do or is not doing something that it should do. In that event, as the regulator, we would come in, look at the gravity of the situation and take the necessary action. “Investors always remain responsible for the decisions they have taken but the MSE as the regulator and the corporate adviser is there to ensure the necessary information to offer a level of protection for the investor,” he said. www.smeprospects.com
e Business OBSERVER
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June 2, 2016
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INTERVIEW
Open season on free movement Some red flags are more alarming than others. And when they are raised in the polite, understated tones of Betsson CEO Ulrik Bengtsson, well, it is perhaps all too easy to underestimate them. But make no mistake: when the head of a company that employs 900 people and which generates what he estimated to be, one per cent of Malta’s GDP, says that Malta and the Malta Gaming Authority should be a “little bit worried”, perhaps we should be very worried. The issue is not a new one. The concept of freedom of movement of services has simply been ignored in various member states which are determined that the gaming monopolies and local companies should not lose market share – often under the guise of protecting the public from the negative aspects of gaming. Many member states are creating barriers by insisting on local licences – and Betsson has taken these up in Denmark, the UK, Italy, Estonia, Ireland and Latvia. But it has decided not to do so in France, Bulgaria and Spain so players from these countries are blocked. End users from Portugal are also blocked. “This is the big issue right now. Number one on the agenda is what is going on in the EU, the power of the EU and how that power seems to be diminishing day by day. “Back in the day when we first came here, the EU very much supported the idea of free movement of goods and services, one of the fundamental pillars of the EU. Now you increasingly see member states going blatantly against the idea of the EU, creating hurdles for European companies to operate within the EU. And no one does anything about it. “It is very alarming for the EU, for the industry and for Malta. Let me give you an example. In Lithuania,
they have blatantly breached EU law by requiring physical establishments in order to operate in that country. “Portugal claims a jurisdiction over the internet, rather than just its own borders. And Germany has been reprimanded by the EU but still has a legislation that is clearly not in line with EU law. But no one really seems to do anything about this. It has become very alarming,” he said, deceptively calmly. Having to get local licences clearly reduces the impact of having a Maltese licence which should have given automatic access to all the member states. Couple this with the challenges to Malta’s imputed tax system, and it becomes less and less obvious why gaming companies would come to Malta – and why established ones would stay. “We know that Malta has been challenged on the income tax issue so the question is: how well can Malta defend its position over the coming 18 months, both when it comes to income tax set up and when it comes to making sure that the EU enforces the free flow of goods and services, because if that falls down, Malta would lose its whole reason for being. “Member states always had a prerogative over tax. We have no problems with that and we accept that our revenues should be taxed locally. But what we do have a problem with is when states build barriers against the free flow of services in the EU. That is clearly
“What we have a problem with is when states build barriers against the free flow of services in the EU” problematic. And I think it is very sad to see the EU’s fundamental principles being challenged.” Mr Bengtsson said during an interview with The Business Observer two years ago that the competitive tax and licence regimes had brought the company here but that these were – at least in 2014 – only two of many factors that kept it here. The question is therefore whether Malta would still be attractive if it lost the imputed tax system. He paused very briefly. “At the risk of tripping myself up, obviously we wanted to avail of the favourable income tax position in Malta. Do we realise that that the rate is going to go up over time? Yes, we think it is going to happen. “So will we still be in Malta after that? Yes, depending on where it ends up. Will it end up at 30 per cent? Probably not. If it did, we would probably just as well move everything to Sweden or the UK,
where we might have an even lower income tax. There are local licences in Sweden and we can run our businesses from there. “It is all about the scale. If there are small to medium increases on income tax we would still be here. We have 900 people here, doing everything from customer service to very advanced digital development, and it would be virtually impossible for us to move all those people from here. At least within a reasonable amount of time,” he pointed out. The implication that Malta should be fighting for free movement of services is all very well and good. But the open secret is that many of these deals in the EU end up as compromises, making concessions on one side to win on others. What could Malta offer as compensation? He shrugged. “It is really not up to me to say. But you are one of the biggest beneficiaries of the EU system and once the bigger member states start pulling in the reins, you have a lot to lose. Having said that, Malta has a great history of reinventing itself,” he said, a polite reminder of the possible consequences. Mr Bengtsson is now the president and CEO of Betsson Ab, the Swedish parent company, taking over from his predecessor who left last year to take up another job. He initially turned down the offer to replace him as his family did not want to move back to Sweden. But the parent company eventually came up with a structure which allows
him to spend just 10 per cent of his time there, dealing with investor relations of the listed company. He has taken over at an auspicious time: it was a record year for Betsson, which saw its share price increase by almost 60 per cent in 2015. Its 23 per cent revenue growth came mostly from additional players in its core markets, but it also grew “quite nicely” outside Western Europe. This is partly due to the acquisition of Europe-Bet in Tbilisi, Georgia. “The business in Georgia is operated under our local Georgian licence. The Georgian authorities, like many other countries, allow local licence holders to provide some of their gambling services from Malta. In Malta, the MGA vetted us and the Georgian licence and decided to put it on the socalled white list. And this enabled us to provide B2B services to our Georgia-licensed company. “I must say that for the Malta Gaming Authority and for the Malta licence, the acquisition has put it very much to the test. How are we as Malta and the community going to look at territories outside the EU? It has not really been a big question until now. But it is going to be on the agenda, forced there for everyone to consider. The MGA has sorted it out quite nicely and we are now able to operate under a Malta licence in Georgia. But this is going to be an ongoing discussion for other Continued on page 6
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e Business OBSERVER |
June 2, 2016
INTERVIEW
Lack of clarity over VAT rules a problem Continued from page 5 countries so we have to determine how Malta is going to look at that,” he pointed out. The successful acquisition clearly opens Betsson’s horizons, which has already said that it will continue to actively look for acquisition opportunities. “Europe-bet has a lot of potential to grow. You have a lot of exciting neighbours in that region which are potentially markets, Armenia and Azerbaijan being the obvious one as they are so close. So there could be more opportunities there.” The clampdown on tax avoidance and the non-tariff barriers are not the only clouds on the horizon. Gaming companies are also awaiting interpretation on the new VAT rules that apply since January 2015. A handful of European countries have local legislation which could possibly levy VAT on certain services provided by Betsson. “The EU has not been able to formulate a common position properly. What is the underlying guidance on VAT on digital services? Are the digital services subject to VAT or not? With the lack of
ULRIK BENGTSSON
clarity there are different interpretations made by the countries on how to apply VAT. It is another example of where there is not a cohesive policy across the union,” he said. Human resources are also a key factor in Betsson’s presence in Malta – and he calculates that the company pays €35 million in salaries in Malta – with employee taxes and contributions amounting
to €20 million. Add to that the corporate tax paid on profits, and he estimates that the direct contribution from Betsson to the Maltese economy is one per cent of GDP. Not to mention the indirect impact of what the foreign majority of those 900 employees spend on the island, from rent on accommodation to flights home and restaurants.
The gaming sector has grown so rapidly that skills could not keep up and Betsson decided to stop complaining and do something about it. It has now set up a data science programme at University, linked to internships with a promise of employment for five students at the end of each year. “It was very well received and we had 35 very keen people waiting at reception for interviews for the first internships. Does it cover all our needs? No! But it is a step in the right direction. It has worked surprisingly well. “I still have this idea that you need a more advanced computer science education in Malta. And this is beyond what we can do to help. You need to invest in computer science just as you did with doctors and lawyers. “We have spoken to the Prime Minister’s office and have offered to help in any way that we can. There is a lot of potential and not just for the gaming sector. It is good for the country in general to create digital skills as these will be applicable to other industries as well, including banking. That is more of a national economic discussion than a gaming discussion,” he said.
BETSSON: 2015 IN FIGURES
59%
Increase in pre-tax profit since 2011
23%
Increase in revenue
35%
Increase in active customers
27%
Return on equity
9
Registered customers – in millions
90%
Gaming which is still offline
8
Local licences
42
Nationalities among employees
8
e Business OBSERVER |
June 2, 2016
INDUSTRY FOCUS
Investors should balance risk and return Today’s extreme low rate environment might be pushing investors towards riskier securities trying to capture higher returns, Steve Ellul, a senior investment manager at Valletta Fund Management, has warned. “Ten years ago, relatively safe Malta government bonds used to yield close to 4.3 per cent for 10-year maturities. Today, those same bonds yield less than 1.5 per cent and investors wishing to maintain the level of return they used to get will have to invest in sub-investment grade bonds.
“These bonds carry a risk of default which is far higher than local sovereign bonds and that is also why they offer a relatively higher return. In reality, the return being offered on such risky assets is not high enough to make up for the higher risk. The main peril is that investors might be inadvertently taking up a level of risk which is higher than their personal risk tolerance,” he said. He stressed that this was the main benefit of allowing investment managers to have an element of discretion in asset class selection
“If you get professional guidance and buy at the right price, your investment should be profitable no matter what the market is at the time you decide to sell” “In this way, the investment portfolio will be continuously exposed to those assets which the manager believes offer the best risk/reward trade-off.
“The downside is that the actual exposure to a given asset class will change at the discretion of the fund manager. Having said that, such funds allow for specialised
decisions to be made by experts in the field,” he said. Christian Debono, HSBC Bank Malta’s network wealth director, said understanding your own risk appetite was important: “Financial planning advisers will take the time to understand you and your future ambitions and recommend tailor-made solutions to meet your goals, whether you are planning for your retirement, children’s education, managing your wealth and organising protection for your family’s future.” However, Jeff Buttigieg of Re/Max stressed that the Maltese are still enamoured of bricks and mortar: the company’s latest Insights survey showed that 91 per cent of locals preferred a property investment than stocks, shares or any types of bank deposits. He also believes that the soaring demand for buy-to-rent has added a whole new dimension to the boom. “Buy-to-rent is the result of the strategic work past and present administrations have done over the last few years to create an infrastructure to not only attract foreign investment and companies to relocate to Malta and set up shop, but to also create jobs for the local community. “The healthy scenario of foreigners moving to Malta – for either work assignments or other reasons – encourages investors to purchase buy-to-rent homes, and entrepreneurs to purchase and develop land in order to accommodate for the demand of foreigners that are looking to rent and those who wish to purchase a property.” However, it is not just foreigners that are boosting the property market. He pointed out that, according to national statistics, there was an increase of 24 per cent in local property sales, of which locals accounted for 94 per cent of the sales. “We are not financial advisers and investments have their ups and downs just as the property market has its cycles. But thankfully, with solid financial institu-
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June 2, 2016
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INDUSTRY FOCUS/NEWS
tions and a lack of dependency on foreign investment, we survived the last economic downturn,” he said. One of the problems with property is that it is not very liquid should people want to access their investments. “Property has never been very liquid unless the price is so attractive that it generates an immediate interest,” Adrian Friggieri, the branch manager of ThirtyFour Real Esate explained. “The point of investing in property is that at least your money appreciates in value and you can generate income via rentals rather then waiting for interest. “Buying to let can also be very tricky when it comes to truly calculating your percentage return on investment; that’s the real key to success for property portfolio growth.” In this low interest rate scenario, it is perhaps no surprise that real estate agents also consider property to be one of the safest investments. “When you are investing in the right kind of property, you are safe because no matter what, you are seeing, enjoying and making a profit straight away from the property you invested in,” Owen Muscat, managing director of Sky Estates, said.
“e demand for rental property is getting higher by the day”
He argued that with demand as it stands, should the investor need to liquidate, there would always be a buyer waiting to purchase the property at the right price. It is not without its pitfalls, however, as the return on the investment depends so heavily on the price the investor pays at the outset. “If you get professional guidance and buy at the right price, your investment should be profitable no matter what the market is at the time you decide to sell,” Mr Muscat said. “And the economy is bringing foreigners from all around the globe to Malta, therefore the demand for rental of property is getting higher by the day. This is resulting in many investors buying property to put on the rental market who are getting high returns for their investment.”
Fiscal council flags expenditure targets The Malta Fiscal Advisory Council has described the government’s deficit and debt projections as “quite ambitious” but within the “endorseable range”. However, while revenue projections were deemed “plausible”, it sniffed at the expenditure ones, saying they were vulnerable to “upside risk”. The council recently presented its assessment of the official fiscal forecasts to the Minister for Finance. The forecasts form part of the Update of Stability Programme 2016-2019 report, published last April. The government plans to keep up the momentum to consolidate its fiscal targets, aiming for a small surplus in the general government balance by 2019, equivalent to 0.1 per cent of GDP, whereas the public debt-to-GDP ratio would be scaled back to 55.5 per cent from 63.9 per cent in 2015. The council said that the revenue projections were plausible and that it was actually possible that some specific revenue items could actually surpass projections, as the underlying assumptions – particularly for taxes on production and imports and current taxes on income and wealth – were rather prudent. On the other hand, expenditure targets were rather ambitious, leaving the possibility for an element of upside risk particularly in the case of spending on compensation of employees and on intermediate consumption, it warned. “Very close monitoring and vigilance by the authorities will therefore be crucial to ensure that
these targets are met. Moreover, the government is invited to sustain the positive momentum regarding expenditure rationalisation, particularly the further implementation of the measures proposed through the Comprehensive Spending Review exercise,” he said. On balance, the MFAC said opposing revenue and expenditure upside risks balanced each other out as broadly neutral. “The track record in meeting the targets for the general government fiscal balance suggests that there appears to be sufficient flexibility within the budget to cope with an element of unplanned revenue shortfalls or expenditure overruns, provided these are not excessive,” it said. www.mfac.gov.mt
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e Business OBSERVER |
June 2, 2016
APPOINTMENTS
CEO and COO for Trident Developments Charles Xuereb, chief financial officer of the Farsons Group, has taken on the role of CEO designate of Trident Developments Ltd, a fully-owned subsidiary of the Farsons Group. The move comes in anticipation of the proposed spin-off of the Farsons Group’s non-operational property assets into a newly-listed public limited company, which is conditional to the shareholders’ approval at a general meeting to be held in 2017. To support Mr Xuereb in his new role, Christopher Ciantar has been appointed chief operations officer. The projects assumed by the new plc include the rehabilitation and conversion of the old brewery building into an office business park with an accompanying car park and ancillary services, a visitors’ attraction, as well as food and beverage outlets. Mr Xuereb joined the Farsons Group in July 1995 and was appointed chief financial officer of the group in 2005. He is also a member of the group executive board and sits on the boards of 10 companies within the group.
(FROM LEFT) CHRIS CIANTAR, LOUIS FARRUGIA AND CHARLES XUEREB
Dr Ciantar has over 15 years’ experience in the public sector from which he gained experience by leading multidisciplinary approaches to policymaking. He has had direct personal involvement in a number of projects involving clean technologies as well as energy and water conservation. Currently, Dr Ciantar chairs the executive committee of the Mrieħel Enterprise Zone Foundation, a public private partnership initiative for the improvement of Mrieħel.
Principal appointed at Deloitte Malta
ANGELA FLERI SOLER
Deloitte has appointed Angela Fleri Soler to the position of principal, heading its practice protection group. She joined Deloitte as part of the then “offshore” department of the firm, to later transition into the tax and corporate department. During her career at Deloitte, she previously held the role of money laundering reporting officer and has been highly involved in several corporate and tax advisory assignments for a number of the firm’s international clients.
(FROM LEFT) OMAR CASCUN, MALCOLM ST JOHN, PAULIANNE NWOKO, OMAR SCHEMBRI
Apex appoints executives Paulianne Nwoko, current operations manager, is to assume the role of managing director for Apex Malta while the current managing director, Anthony O’Driscoll, has been promoted to chief operating officer for the Apex Group. Ms Nwoko has been instrumental in the rapid growth of the Malta office, which she helped
O’Driscoll launch in 2008. Opening with just five employees, Apex Malta has grown exponentially, now boasting a team of 70 employees servicing over 124 funds. In addition, David Butler has been appointed chairman. Mr Butler is the founder of Green Day Advisors LLP and Kinetic Partners, bringing over 20 years
Senior manager for Grant Thornton Michael Mifsud has joined Grant Thornton Malta in a newlycreated position as senior manager of its People and Culture Division. This forms part of a strategy to create dynamic recruitment programmes and career opportunities in the local audit, corporate and advisory sector. Mr Mifsud has a proven record of success in developing and implementing human resources initiatives. His career developed in diverse disciplines and environments before he decided to focus entirely on human resources management and development 15 years ago.
MICHAEL MIFSUD
of industry experience with him to the role at Apex Malta. Three other long-standing internal staff members have also been promoted. Omar Cascun, Malcolm St John and Omar Schembri have been assigned the roles of head of business development, head of compliance and internal audit and head of operations respectively. www.apexfundservices.com
Watson resumes MedBank role Mark Watson has returned full time to his role as CEO of Mediterranean Bank following a temporary leave of absence to address a medical issue. Dominic Wallace, chief risk officer of the bank, was acting CEO during the Mr Watson’s absence and he will now retire, keeping his position as a nonexecutive director. The bank also announced the appointment of Alex Konewko as the new chief risk officer.
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June 2, 2016
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NEWS
Hedge fund structure goes head to head with Ireland and Luxembourg The Malta Financial Services Authority has launched a new structure for onshore hedge funds, the notified alternative investment fund (NAIF) which is being touted as a serious challenge to similar initiatives already introduced in Ireland, and soon to be introduced in Luxembourg. Malta, Ireland and Luxembourg already had structures to cope with hedge funds. But these were considered to be over-regulated, and the fund authorisation process was seen as being “frustrating”, in the words of various fund management opinion pieces. All jurisdictions are compared to the Cayman Islands, which is seen as being the best one for hedge fund vehicles, with over 1,000 funds launched there every year. Ireland responded last year with the Irish Collective Asset-management Vehicle, which has been an
“All jurisdictions are compared to the Cayman Islands” success with fund managers – with 150 funds already launched. Luxembourg is planning its alternative investment fund structure in the coming months, based on allowing alternative investment fund managers authorised in any EEA state to access the fund markets through passporting,. This would therefor bypass the costs and delays associated with having to get further local regulatory input. In this context, the Maltese structure has been described by an international legal advisory firm as “shrewd”: “The Maltese NAIF is definitely good news for
those considering a hedge fund structure there. It will without question be significantly easier to launch a hedge fund there and in light of the developments in Ireland and Luxembourg, creation of this new regime seems like a shrewd move by the regulator,” Simmons and Simmons said in a note to investors. “One of the biggest challenges for the Maltese structure will be mass market appeal. On paper it makes sense; the taxation regime is favourable; there is a growing service provider capability and the MFSA is widely viewed as being a business-friendly regulator.
THE MFSA’S NEW HEDGE FUND STRUCTURE IS A DIRECT CHALLENGE TO LUXEMBOURG’S.
“The NAIFs challenge, however, will be to make itself a mass market challenger, particularly for those with US allocators who may not be as familiar with Malta as a European jurisdiction, even when compared to Ireland and Luxembourg.” Another international organisation, Dechert, which encompasses limited liability partnerships in different jurisdictions, also praised it as a vehicle which would make it
quicker for new European funds to come to market. Under the new regime, the fund manager would make a notice filing with the MFSA but – rather than there being a separate regulation of both the fund and the manager – the MFSA will rely solely on the regulated status of the manager. The MFSA anticipates receiving requests for the List of Notified AIFs in the coming weeks.
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e Business OBSERVER |
June 2, 2016
CASE STUDY
An unlimited source of dreams James Zammit admits that he loves to sit and look at the Ferrari in his garage, comparing its sleek lines to a piece of art that deserves to be admired. It would not be that much of a problem, except for the fact that he is supposed to be selling it – along with some 450 used cars that his company Zammit Holdings now stocks. His love of cars dated back to the days when, still a teenager, he hung around in his father’s 14car showroom in Żebbuġ, a business he was entrusted with as soon as he was old enough so that his father could concentrate on his preferred property development business. The showroom was never going to be enough for either his passion or his ambition, and his father helped him by building a fivestorey showroom in Żebbuġ to give him a head start – just in time to benefit from the freedom of trade that EU membership would bring. But even this frustrated him. “I am well aware of the jokes about ‘used car salesmen’,” he grinned. “But this is why we always wanted to do something different. So, for example, we were the first to offer after-sales service and a warranty – and even a replacement car if there is a problem, all of which are unique in Malta. And the purpose-built showroom is on a par with those of new car importers.” This level of customer service made them stand apart from his peers, but Mr Zammit knew this would not be enough to fuel the growth he knew was possible, so he set about boosting the flow of cars by striking a deal with two leading new car importers, taking off their hands the used cars they were saddled with through partexchange deals. “I really believe in collaborating with other operators. I don’t see them as rivals but as businesses
JAMES ZAMMIT
which should seek win/win situations, as in this case,” Mr Zammit said. The stock of cars grew: instead of relying on local second-hand cars, he started importing used cars from the UK – and eventually from Japan. But he still felt that there was another big difference for customers between buying new cars and used ones: the financing. He wanted to offer financing over a period of time through bills of exchange. The banks greeted his idea with polite derision at first but he refused to give up and
“I really believe in collaborating with other operators. I don’t see them as rivals but as businesses which should seek win/ win situations”
eventually managed to raise several millions. “It was very difficult as when you deal in large volumes, the amount of financing is challenging – especially when you are young. But we proved ourselves, using retained profits until the banks sat up and took notice,” he said. And in line with his belief in collaboration, he now also offers financing options to eight other second-hand car sellers, through an MFSA licence he got in 2013. “My ultimate dream was the luxury and exotic cars – which do
not depreciate but actually gain value! I started off by buying the odd one here and there. But I was finding it hard to compete with Premier Cars in Burmarrad who had been in business selling sports and exotic cars since the 1960s. It made more sense to set up a joint venture and they were very interested by my ability to finance purchases,” he explained. The joint venture was set up three years ago, and rapidly extended its presence with more showrooms in Gżira, Żebbuġ and Naxxar – and more stock.
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CASE STUDY
As the business grew, so did the need for more storage space, as he believes in having a critical mass of cars to ensure that clients find what they need. They invested in 10,000 square metres of covered storage and are now able to stock around €7 million worth of cars – with more and more luxury cars, a niche that has always been his passion. And then came the next step: they rebranded the showrooms as Cars Unlimited, a name which aptly captures his childhood dream. “I wanted to dispel the image of a dealer with only a few cars!” he said. To sustain the spiralling financing needs, Zammit Holdings had a private placement bond of €6 million through Calamatta Cuschieri last November, which was fully subscribed. “It was very gratifying that so many Maltese understood our business model. We now need to grow again so the time will come when we need to consider more financing,” he admitted. “I’m sure that this will be a market changer, particularly vis-à-vis new car dealers and their franchised models. I am sure they will be working side by side with us.” At the luxury end of the market, there is admittedly a limited amount of buyers – but there is an
even more limited supply of cars, and the business grew as he managed to satisfy more and more clients, forging more and more contacts with suppliers. As more of these rare cars end up in his hands, Cars Unlimited started attracting attention from foreign buyers from all around the world – leading to the sale of cars abroad – and they now represent some 10 per cent of all his sales. “Some of the cars are so rare that as soon as I buy them – from either auctions, dealers or individuals – I get a call from a prospective buyer and sell it on without it even having the chance to bring it to Malta!” he smiled. This is how he ended up with the Ferrari 458 Speciale and Lamborghinis, which he describes as “exotic”, well beyond just being “luxury” cars. He is now excited by the idea of growing his international business for these rare cars, knowing that a good online presence effectively makes the world his oyster. But, in the meantime, it has to be said that he does not seem to be trying terribly hard to sell the Ferrari. “Erm,” he paused. “I’m waiting for the price to be right. But in the meantime, yes, I do love to be able to sit in it and start it up every now and then. It is 4,495cc of roar…”
Bringing competition to the new car market Zammit Holdings, one of the largest second-hand car dealers in Malta, believes that it could also sell new cars at very competitive prices, but the company feels irked that it is not able to challenge the status quo. “We have the possibility of buying new cars from abroad but are still unable to do so as to register a new car in Malta, you have to have the original manufacturer’s invoice. And you can only get that by buying from the manufacturer directly – which is impossible as they will only sell to their exclusive agents in Malta. “However, there are other dealerships around the world which buy stock to meet their quotas, ending up with excess which they are ready
“e government’s aim is to bring down the average age of the vehicle fleet in Malta from 14 years old to 10 years by 2020”
to sell to us. But we cannot register them as new! So we have to register the cars abroad, and bring them here as used – which distorts the statistics! “Smaller used car importers actually store the cars until they are old enough to bring in as ‘used’ – or they drive them around until the mileage qualifies them to be considered second-hand. But you cannot afford to tie up your capital for six months when you have a few hundred cars!” managing director James Zammit said. He was also dismissive of claims by the new car importers that the registration tax favours used cars. “They claim that we do not pay registration tax on the car’s extras – but this is a misconception. The reality is that new car importers prefer to sell extras separately, to boost their revenue, whereas used cars would already include extras as a package, so they tend to have more accessories than those sold by the local agents,” he insisted. He also said that the availability of affordable, relatively ‘new’ used cars was helping people who wanted to trade in their older cars. “The government’s aim is to bring down the average age of the vehicle fleet in Malta from 14 years old to 10 years by 2020. This is why the registration tax favours newer cars by incentivising lower emissions,” he said.
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e Business Observer is Malta’s leading business newspaper distributed with Times of Malta every fortnight. Editorial Vanessa Macdonald, Assistant editor, Times of Malta.
EDITORIAL
Feasibility of Electrogas questionable The delay in the arrival of the LNG tanker is yet another slap for Electrogas, forcing yet another recalculation of its questionable investment. For how much longer is it feasible, let alone attractive? How long will it before it makes more sense for Shanghai Electric to make it an offer it cannot refuse? It is all too easy to forget that Electrogas made its bid back in September 2013, when Enemalta was facing a shortfall in electricity generation once the Marsa power station was decommissioned. It was also looking for ways to reduce its dependence on oil and the winning bidder was expected to provide 200MW of electricity but also to supply gas to the existing 144MW diesel engines at Delimara, so they could be converted to run on natural gas. Out of 11 bidders at the ‘Request for Proposal’ stage, three bids were eventually received: Electrogas Malta Consortium; Yildrim Tecnicas Power and Gas Consortium; and Endeavor Energy, Exodus Crossing, BB Energy Consortium. A month later, Electrogas was named preferred bidder. In December 2013, Enemalta announced that Electrogas won the tender with a final price of €95.99 per MWh. The deal was seen as groundbreaking, a public/private partnership which encapsulated the perfect blend between capitalist investment and government foresight: taxpayers were spared the considerable capital expenditure on a power station (which was never possible anyway given Enemalta’s precarious financial situation) and yet the government was going to be able to buy its electricity for a guaranteed rate for years to come. It was the classic win/win situation. But since then, a number of factors have changed. For a start, the need for generating capacity is not as compelling once the Malta-Italy interconnector was inaugurated in April 2015, capable of providing 200MW of electricity.
Electrogas shareholder Gasol turned out to be a lame duck (how did no one pick that up at due diligence stage?), forcing the other shareholders to dig into their pockets to take up its considerable share. And Shanghai Electric Power bought a shareholding in Enemalta, rightfully expecting that Enemalta would first use its own electricity – and the interconnector’s – before paying to buy someone else’s. After all, doesn’t charity begin at home? Enemalta chairman Fredrick Azzopardi said Enemalta was free to buy whichever source of electricity suited it, but that claim has never been confirmed by government – and since it has defiantly ignored all calls for the agreement to be published, the public is none the wiser. In 2014,The Business Observer (October 23, 2014) had already questioned whether Malta needed Electrogas, and that was before all these delays, the pulling out of Gasol and the need to justify the security of supply agreement. Electrogas’s financial statements have a note saying that it was envisaged that the €90 million portion of the bridge loan guaranteed by the shareholders would be replaced by shareholding funding. Just how deep are the shareholders’ pockets? They are building a plant to generate electricity that is not required, intending to sell it at a price which is not competitive and providing gas which Enemalta would anyway need to provide for its own use – all on the basis of an agreement which may or may not protect the return on its investment. It is too late to turn back, but as costs and delays mount up and as the government faces “Buy mine! Buy mine!” pressure from all three sources, the feasibility of the project must look very different to what it did three years ago, when its shareholders first sat down to do their calculations.
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BUSINESS OPINION
Danger of insufficient indemnity insurance Judith Galea Professionals such as lawyers, accountants, notaries, architects, engineers and doctors owe a duty of care to their clients who might reasonably rely upon the service or advice the professional provides. Therefore, a professional can be held legally liable to provide compensation if a third party suffers a loss as a result of any professional negligence. The costs for the professional in such an eventuality can be very high. By way of example, whereas in the case of a car accident, motor vehicles claims can cost up to say, €5,000 maximum, professional indemnity insurance claims can run into hundreds of thousands or even millions of euro. Even locally, it has become more commonplace for clients to press charges against professionals and a number of hospitals have been ordered to pay up after being found guilty of medical malpractice. So how can professional indemnity insurance protect and provide peace of mind to a professional? A professional indemnity insurance policy protects insured professionals from claims made against them by third parties for injury, loss or damage as a result of any negligent act, error or omission while they were providing professional services. Apart from the compensation payable, the policy also covers claimants’ costs and legal expenses incurred in the investiga-
RISK HAS TO BE CAREFULLY ASSESSED: A CARDIAC SURGEON WOULD FACE HIGER RISKS THAN A RADIOGRAPHER.
“Even if the lawsuit is completely baseless, a professional could suffer large financial losses to defend against such claims” tion, defence and/or settlement of a claim. It is inevitable that sometimes mistakes occur at work, but some mistakes may have severe and very expensive consequences.
As a professional, it is of paramount importance to assess one’s risk and consider coverage. In particular, in the case of an independent practitioner, he/she would not have the
financial resources of a big company to pay for damages in the event of a client lawsuit. Professionals must keep in mind that whereas they may be satisfied with their work, their
business could face sizable claims for compensation and legal defence costs if it does not meet client expectations. Even if the lawsuit is completely baseless, a professional could suffer large financial losses to defend against such claims. Professional indemnity insurance that protects professionals from a potentially disastrous financial loss is in fact increasingly being considered imperative by professionals locally. Local insurance companies offer professionals guidance when they come to choose the coverage that works best for them. An important consideration is undoubtedly determining a limit of indemnity (which would be the maximum amount payable in the event of a cla im) that is commensurate to the risk carried by the profession one performs. For example, in the medical professional field, the risks faced by a cardiac surgeon could be far greater than the risks faced by a radiographer and, therefore, the financial losses caused by a negligent error or omission could potentially be greater. It is advisable for professionals interested in seeking coverage to discuss their individual requirements and potential risks with their insurance provider in a tailored approach. Judith Galea is the head of the Mapfre Middlesea Birkirkara Regional Office. www.middlesea.com
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NEWS
Government confident security of supply agreement will be approved The government has insisted that the European Commission will favourably view the security of supply agreement between the government and Electrogas, the company building the gas power station. “The reviewing of the project is still ongoing by the Commission services but the Maltese authorities remain positive that it will be concluded satisfactorily,” the Finance Ministry told The Business Observer. “The Maltese authorities have had a number of exchanges with the Commission services, which included a number of bilateral meetings. “All information and documentation requested by the Commission services in relation to this project under the State Aid Notification process have been provided by the Maltese authorities,” the ministry said, adding that the information and documentation related to all aspects of the project from an energy policy, competition, procurement, internal market, financing and economic point of view. However, the ministry said that it could not divulge any further information since the State Aid notification process, including the pre-notification exchanges between the
Maltese authorities and the European Commission services, “are governed by professional secrecy and confidentiality”. The government was last year forced to authorise a temporary €88 million bank guarantee for a €360 million loan taken out by private consortium Electrogas last year
pending the EU’s approval of the security of supply agreement. The agreement stipulates that the government would step in and buy the electricity if Enemalta reneged on the deal with Electrogas to purchase electricity produced by the new gas plant.
Electrogas insists the security of supply agreement is “part and parcel of the original competitive process” and that the guarantee was only temporary, to cover a bridge loan taken out with four major banks, including Bank of Valletta and HSBC. Electrogas has signed turnkey construction contracts worth €296 million and a €30 million contract with Enemalta for development fees and for “the right to supply gas and power”. It also confirmed a bridge loan of €110 million for partial financing of the construction works, which was replaced by full project interim financing of €450 million in the third quarter of 2015. The shareholders have guaranteed €90 million of the loan and the financial statements say that it was envisaged that this would be replaced by shareholder funding in due course. The ministry spokesman said that once the project is cleared by the European Commission for state aid purposes, the bridge financing could be refinanced through long-term financing and the government guarantee would be withdrawn. “As regards the long-term financing, this is the responsibility of the Electrogas – not the government of Malta,” it pointed out.
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STOCK MARKET REVIEW
When is a share split good for investors?
Edward Rizzo In my article two weeks ago, I mentioned that at a recent AGM, a representative of a number of shareholders asked a company to consider a share split since he argued that this would help the share price to continue rising. In my opinion, this was a rather irresponsible recommendation which could send the wrong signal to retail investors and, as such, I promised to write about share splits in one of my upcoming columns. Today’s article therefore deals with the concept of a share split,
the real rationale for adopting such a corporate action as well as the more important factors that should be taken into consideration by retail investors before contemplating an investment. Let me start off by explaining a share split. When a company performs a share split, the nominal value of each share decreases and, consequently, the number of shares in issue rises. However, the total monetary value of the issued share capital remains unchanged and, therefore, this corporate action does not entail any dilution for shareholders. This means that the percentage stake held by each
“e company’s valuation remains the same after a share split”
shareholder remains the same after a share split. Since the number of shares in issue changes as a result of the decrease in the nominal value, the price in the market is adjusted accordingly to reflect the increased number of shares in circulation. As an example, if a company performs a two-for-one share split, the nominal value drops by half, the number of shares doubles and, as a result, the share price should theoretically also decline by half. Since the number of shares in issue rises, the financial metrics used to calculate some key investor ratios also change accordingly. On the other hand, the
commonly used financial indicators remain unchanged. While the book value per share, the earnings per share and the dividend per share naturally all change as a result of the higher number of shares in issue, the financial indicators such as the price-to-bookvalue multiple, the price-toearnings multiple and the dividend yield remain unchanged if the share price correctly adjusts by the same percentage as the increase in the number of shares. In other words, in such a situation, the company’s valuation remains the same after a share split. Some investors may be confused at the rationale for
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STOCK MARKET REVIEW
performing share splits. The primary reason for such a corporate action is to increase the liquidity in an equity. If there are more shares in circulation at a lower price, the shares generally become much more liquid – which is an advantage for the market at large. One of the main objectives of listing a company on a stock exchange is to have a liquid market enabling a relatively quick entry point for new investors and a speedy exit route for shareholders. Psychologically, a share split is looked at more favourably by retail investors since they usually perceive a high absolute share price as too ‘expensive’. Since some investors may feel uncomfortable buying shares priced at a high absolute figure, a share split reduces the share price down to a more ‘acceptable’ level for such investors. However, retail investors should look at the various financial metrics and other ratios to gauge whether a share price is ‘expensive’ or ‘cheap’. But more on this topic later on. Across the local stock market, the first share splits took place in 1994 and these became more frequent over the last 11 years. While the ones conducted by HSBC Bank Malta plc, Lombard Bank Malta plc and Mapfre Middlesea plc (previously Middlesea Insurance plc) in 2005 and 2006 were aimed at achieving the objectives described above (that is of enhancing the liquidity aspect following the increase in the absolute price of their shares at the time), the few share splits conducted between 2008 and 2013 served a dual purpose. Apart from achieving a lower absolute figure in the share price to enhance liquidity, the share splits conducted post-2008 also served to adjust the nominal value of a company’s shares following the adoption of the euro in January 2008. In essence, all shares previously denominated in Malta lira had extended to beyond two decimal places after ‘euroisation’. By virtue of the recapitalisation of reserves, the nominal value of a number of equities increased again to two decimal places and, concurrently with this, companies also conducted a share split.
“While share splits, bonus issues and similar corporate actions may initially lead to a ‘feel-good factor’ among some investors, this should not automatically translate into an increased tendency to acquire these shares” Notably, there are three companies that have not yet carried out a corporate action to amend their nominal value as a result of the adoption of the euro more than eight years ago. These are GO plc (nominal value of €0.582343), GlobalCapital plc (nominal value of €0.291172) and Loqus Holdings plc (nominal value of €0.232937). The more recent share splits were conducted by Medserv plc in (December 2013), RS2 Software plc in (June 2015) and Grand Harbour Marina plc (July 2015). A few weeks ago, RS2 announced that it would be carrying out another share split in the coming weeks. The proposed 5:3 share split will result in the nominal value decreasing from €0.10 per share to €0.06 per share as the number of shares in issue will increase from just under 95 million shares (including the latest one for 18 bonus share issue) to over 158 million shares. As such, the share price should adjust to around
€2.088 assuming the price retains the current level of €3.48 at the time of the corporate action. Although shares normally tend to undershoot at times of weak investor sentiment and overshoot when bullish sentiment prevails, share prices generally converge towards their fundamental value over the medium to long term. As such, while share splits, bonus issues and similar corporate actions may initially lead to a ‘feel-good factor’ among some investors, this should not automatically translate into an increased tendency to acquire these shares. Retail investors need to ignore the overriding sentiment across the market and instead be guided by the fundamental value of a company and changes in business developments, profitability as well as future business strategy. In other words, retail investors need to understand the key indicators and metrics that portray whether an equity is cheap or expensive –
irrespective of the absolute price of an equity. When looking at the recent share splits, it is worth noting that although the share prices of Medserv and RS2 Software moved higher following their respective share splits, the upward movement was more a reflection of the higher profitability as well as expectations of further improvements going forward. On the other hand, the share price of Grand Harbour Marina initially moved higher after the split, but this trend was short-lived as the company’s profitability only increased marginally due to the continued lack of superyacht berth sales. By way of example, a potential investor looking at RS2 should be indifferent as to whether to invest at the current share price of €3.48 or acquire shares at an adjusted price of €2.088 in the weeks ahead. The factors to consider (as opposed to the share price in
Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the company/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent, and may also have other business relationships with the company/s. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report. © 2016 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved
isolation) are the current valuation compared to the profitability of the company and, more importantly, the potential of increasing profitability as a result of its business strategy. Hence, the recent announcement of the engagement of two new clients for its managed services business (namely a payment service provider in Germany and one of the largest acquirers in Europe) and its resultant benefits on profits, should be more important factors to consider. The value-investing approach is the most successful long-term strategy for equity investors. This is another topic which should be of interest to many Maltese investors and should never be overlooked before contemplating any equity investment. Edward Rizzo is a director at Rizzo, Farrugia & Co. (Stockbrokers) Ltd.
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BUSINESS UPDATES
Holistic reform of planning application procedures KPMG annual survey on business students KPMG International has conducted its third annual survey of business students studying at some of the world’s leading universities in 23 different countries. Ninety-three per cent of the students, all on the verge of entering the workforce, said that they were concerned about the impact of ongoing geopolitical risk and instability on their careers. Despite this finding, respondents maintained a global outlook, with 89 per cent saying they would be prepared to move regularly to a different country for the right job opportunity. Eighty per cent also said that they expected to work in three to six countries during their career. This year’s survey also revealed that 70 per cent of students would consider working for the same company for their entire career, with 20 per cent even saying it was likely or indeed very likely. The students also showed they have a focus on the future. In fact, 64 per cent already have a clear idea of what profession they want to work in. Finance (37 per cent) and professional services (27 per cent) were two industries that the students indicated as most desirable to them. Pierre Portelli, tax and HR partner at KPMG in Malta, remarked: “It is heartening to see that our sector appeals to, and is likely to attract, new graduates who want to work with us. We are always on the lookout for talented people who are passionate about what they do. Our recruitment efforts extend beyond our shores and today we have employees of many different nationalities. “The survey results indicate that new graduates are open to venture outside their home countries where they see bright prospects for their careers. We naturally welcome prospective employees with such ambitions.”
Introducing Cisk Pilsner Originally brewed by Farsons Brewery in the late 1940s and now set to be introduced once again, Cisk Pilsner is a premium Pilsner combining a tradition of brewing excellence and passion with the finest quality Pilsen malt and Noble hops of the Saaz variety. With an alcohol content of 5.5 per cent, Cisk Pilsner offers the discerning beer connoisseur a remarkably crisp and well-hopped flavour with a rich white head, a delicate bitterness and a superior aroma originating from the rich essential oils present in the Noble hops. Cisk Pilsner is the perfect accompaniment to light pasta dishes and seafood risottos, shellfish, smoked salmon and sweet and spicy, rich flavoured, poultry. Fresh cheeses such as goat’s cheese, fresh mozzarella and light cheddar also pair perfectly with Cisk Pilsner. “The beer market is getting exciting once again, following a period of flat or declining sales in a number of markets across the globe,” said Susan Weenink, head of marketing and communications at Farsons. “Cisk Pilsner is the result of many years of development and investment, and we are truly excited to have arrived at this point.” Eugenio Caruana, head brewer at Farsons, said: “We are very proud of our long-standing brew-
ing excellence and capabilities, and we are confident that the beer connoisseurs out there will appreciate and enjoy this speciality beer. Cisk Pilsner is truly a Pilsner of exceptional quality.” Karl Bondin, beer manager at Farsons, explained that: “Cisk Pilsner will be available in 33cl bottles in selected restaurants, bars and pubs across Malta and Gozo, as well as in major retail outlets. It will, of course, also be available at the Farsons Beer Festival which will be held at Ta’ Qali between July 22 and 31.” Cisk Pilsner is brewed, packaged and distributed by Simonds Farsons Cisk plc.
The new legislation rolled out by the Planning Authority is holistically reforming the planning application procedures with the purpose of ensuring better public participation in the planning process and achieving fairer and faster decisions. One of the major changes earmarked in the new legal notice includes the introduction of a new type of planning application which now sits along the familiar full development application and the Development Notification Order (DNO). This new planning application, which is known as the ‘Summary Procedures’ will incorporate a number of development types which have been removed from the DNO legislation. The ‘Summary Procedures’ will include development works which do not require external consultations and which are easily assessed by existing planning policies. The Summary Procedures has been categorised into 12 development types. More importantly, this new procedure ensures that a notice is affixed to a property where the intervention is proposed to be carried out while giving the public 15 days to submit an objection. A Summary Procedures application must be decided within 42 days. For a full development application, while the period for the public to submit objections has been increased to 30 days, the established time frame for these applications to be determined is a maximum of a 100-day window from the date of validation. To safeguard the rights of registered objectors to submit an appeal, all planning development permissions issued are automatically
temporarily suspended for a period of 30 days from the publication of the decision. The new legal notice has also introduced for the first time a ‘penalty’ on the authority when it does not honour the legal time frame in the processing of a planning application. An applicant now has the right to request a refund of the original fees paid from the authority. For major projects planning applications, the daily ‘penalty’ is of €500, whereas for full development applications and Summary Procedures, the daily rate is of €100 and €25 respectively, provided that the refund does not exceed 50 per cent of the Development Planning Fee. The applicant has a 30-day period for which to submit to the authority a request for a refund. All planning applications received and decisions taken by the authority will be published on a Wednesday in a special edition of the Government Gazette and on the Department of Information website.
“e new legal notice has also introduced a ‘penalty’ on the authority when it does not honour its legal time frame”
The authority has also reintroduced the provision for an applicant to apply for an outline development permit. This type of planning permission gives approval in principle to a proposed development for which a full development application will spell out the specific matters. The outline permit will state the time frame by when a full development permit must be submitted to the authority. To ensure better scrutiny and reduce the discretion of a case officer on which entity to consult on any given planning application, the new legal notice demands that irrespective of where or what development is being proposed, the authority must notify and consult with all 11 external consultees. The consultees include the Superintendent of Cultural Heritage, National Commission Persons with Disability (KNPD), Environment and Resources Authority, Occupational Health and Safety Authority, Transport Malta, Water Services Corporation, Malta Tourism Authority, Enemalta Corporation, Civil Protection Department, the Environmental Health Directorate and the local council within whose boundaries the application is located. When it comes to enforcement issues, the authority has also introduced a number of measures which will strengthen its purpose. The authority is placing greater emphasis on the need for an applicant to submit the commencement of work notice five days prior to the start of works on site. Failure to adhere to this requirement will render the development permission as never having been utilised.
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BUSINESS UPDATES
e new Porsche 718 Boxster is the royalty of sports cars It is 1957. The Treaty of Rome is signed, leading to the foundation of the European Economic Community. The Soviet Union launches the world’s first earth-orbiting satellite. Elvis Presley conquers the charts with Jailhouse Rock. And a legendary sports car is built in Zuffenhausen: the Porsche 718. Its mission: to conquer the race tracks of the world. With a performance level previously unknown, a trail-blazing four-cylinder Boxer engine and top speeds of up to 260 kilometres per hour – and 1,000 race victories later – we can say mission accomplished. But the Porsche 718 did not become a motorsport legend just because of its successes. For many, it remained one of the most beautiful sports cars ever built. Now, the time has come to update the legend with a sports car that reinterprets the technical and design characteristics of the original 718, the new 718 Boxster. As a mid-engine sports car, with its new four-cylinder turbo boxer engines, it combines the sporting spirit of the legendary Porsche 718 with that of the sports car of
tomorrow. It contains all of the most glorious racing experiences of Porsche. The new 718 Boxster is more powerful than ever and a quantum leap more advanced when it comes to performance. No matter which expansion stage you choose, none of the engines have less than 300hp. The new 718 Boxster combines consistently lightweight construction with effortless power development, resulting in unparalleled handling, whether on the race track or the road. Precise, direct and uncompromising, the 718 Boxster accelerates from 0 to 100 in just 5.2 seconds and in the Boxster S, with PDK and Sport Chrono Package, it takes a mere 4.2 seconds. As a thoroughbred roadster, the 718 Boxster offers an incomparable driving experience that makes you feel like you’re driving a race car. But it’s not just the driving performance that’s impressive. It also has everything that is expected of a modern sports car from Porsche, including assistance systems that make it safer than ever and, with Porsche Communication Management, it is also more plugged in than ever.
BOV HomeInvest launched BOV HomeInvest is the latest addition to the BOV Home Loan products suite. This type of home loan is intended for those applicants who wish to purchase a residential property for their own private use as part of their property asset portfolio. Requests for this type of loan can be considered for loans up to €500,000. Only applications for the purchase of a property which does not fall within the scope of the First Time Buyers’, Holiday Home, or Moving Home products may be considered under this product, subject that the property is not intended for rental purposes. The salient features of the BOV HomeInvest loan are the following: ■ a minimum upfront contribution of 20 per cent of the pur-
chase price of the property (and completion, where applicable) ■ attractive interest rates starting from 1.6 per cent over the Home Loans Bank Base Rate ■ a maximum loan to value of 80 per cent (including any furniture loan, where applicable) ■ a maximum term of 40 years but not exceeding applicant’s retirement age ■ advances processing fees of 0.3 per cent of loan amount (minimum €150) ■ legal fees as per bank’s tariff of charges ■ property may be located in the same locality as an already owned property ■ monthly repayment has to be affordable in full from customer’s income from employment and cannot include any form of rental income