The Malta Business Observer April 2018

NEWS

Issue 85

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April 26, 2018

Distributed with Times of Malta

“Local businesses cash-strapped as they seek to exploit Malta’s economic boom” – CreditInfo

NEWS

Marie-Claire Grima Malta’s economy may be flourishing and generating a lot of money at the moment, but paradoxically, many businesses are finding themselves cash-strapped as they seek to make the most of the current situation, according to CreditInfo CEO Simon Camilleri. “A lot of companies are cash-strapped at present due to the booming economy and are stretching – actually, over-stretching – their resources with credit to make the most of the current economic boom.

With such a strong economy, investors are prepared to extend credit agreements or loans. The trick is to make sure they are paid back.”

In comments to this newspaper Mr Camilleri stated that it is the availability of credit – not essentially cash – which enables and supports a booming economy; as long as credit is supported. He quoted an alarming statistic – 70 per cent of all companies in Europe fail in the first three years, mainly due to cash flow issues.

“Cash flow affects all companies of all sizes but especially smaller companies. Often you will find them trying to stay afloat by supporting late payments from larger companies, which generally pay later as they have the financial clout to enforce their demands on smaller suppliers. This has a trickle-down effect, resulting in late payments and causing companies to over-stretch, use their credit cards, and their overdrafts in the short term to bridge payment gaps, incurring interest. Needless to say, this is a very dangerous situation to be in.”

Payment terms have improved over the last few years, Mr Camilleri said, but Malta will struggle to match payment terms of other European economies, while there is an over-reliance on cheques and cash. “The movement towards a registry and sharing certain types of negative data such as bounced cheques and defaulted payments have helped facilitate an improvement in payment days, as companies and individuals can no longer go to new creditors if they

e provisions of the new law that legalises the production of medicinal cannabis could pose a new set of challenges for the regulator. see page 5, 6 >

e new commercial section of the Civil Court aims to boost Malta’s ease of doing business ranking and improve its credibility as a global jurisdiction. see page 9, 13 >

ANALYSIS Malta’s efforts to become ‘the Blockchain island’ seem to be reaping fulsome results, attracting companies and press attention from all around the world. see page 14 >

“70 per cent of all companies in Europe fail in the first three years, mainly due to cash flow issues.” – Simon Camilleri, CEO, CreditInfo

have bad debts outstanding. Malta already has in place what it needs to move to a cashless society, including direct debit, telephone banking, electronic payments and touchcard (contactless) payments. The issue is that there seems to be a mistrust of these types of payments. All one has to do is look at a bank in the morning on your way to work and see the queues outside, when the modern ATM will handle most requests electronically with no human interaction needed. Interestingly there is a glimmer of hope in those same queues mentioned – very few belong to the younger generation.”

Continued on page 3

STOCK MARKET REVIEW Reading a company’s prospectus can help an investor understand the company, its business model and the main risks attached to the business. see page 22, 23 >

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“e cliché is that cash is king, but it’s true” Continued from page 1 Josef Busuttil, the Director General of the Malta Association for Credit Management (MACM), believes that undercapitalised businesses, a lack of adequate education on proper credit management, and the blurring of the lines between cash flow and profit are other underlying causes behind Malta’s above-average day sales outstanding (DSO) – the time it takes a business to collect payment from other business clients after a sale has been made.

A survey carried out in December 2017 by the MACM found that Maltese businesses take an average of 82.3 days to collect payment from clients after a sale has been made – a figure which Mr Busuttil described as ‘an improvement’. “We carry out this exercise annually with all our members, and we’ve found an improvement of six days over last year, which is very good. However, when you compare 82 days with the DSO of other European countries, which is between 40 and 45 days, Malta is still very far behind.” Indeed, his comments echoed a statement the MACM issued to its members this month, which stated, “the economic boom that Malta is currently experiencing is not having the expected and desired effect on the payment behaviour in businessto-business transactions.”

“Granting credit is both a risk and an expense. In every single industry you can think of, if a business doesn’t grant credit, it won’t make any sales. If a business does not grant credit, the client will turn to one of its competitors,

which will be willing to oblige them, and the sale will be lost. The risk is either that the payment comes in late – and every day costs the business money, because the owner either needs to use their own cash, or get a loan from the bank – or that the business owner doesn’t receive payment at all,” Mr Busuttil said.

Mr Busuttil stated that, sometimes, people in Malta struggle to understand why late payments have a negative effect on business.

“A business can spend a few years without turning a profit, but without cash, you cannot pay your day-to-day expenses. On your balance sheet, you’ll look very strong, but if you don’t have adequate cash flow, you can’t keep the lights on. You can’t pay people’s salaries.

The company ends up closing down. I’ve seen this happen to companies both in Malta and abroad. Liquidity is extremely important. The cliché is that cash is king, but it’s true.”

However, he believes that late payments are just one symptom stemming from a number of problems plaguing businesses.

“The first of these is undercapitalisation. Nowadays, with €1,200, anyone can open a company, no questions asked. They can start trading right away, with no knowledge, and no adequate capital, and they start buying on credit. If you were the supplier, would you sell to a company worth €1,500, €30,000 worth of credit? Well, it happens.”

Furthermore, Mr Busuttil believes that not enough companies distinguish between profits and cash flow, and spend the money that makes up the com-

“e economic boom that Malta is currently experiencing is not having the expected and desired effect on the payment behaviour in business-to-business transactions.”

– Josef Busuttil, Director General, MACM pany’s cash flow wantonly. “In truth, a very small fraction of the cash flow of the company is money you will get to keep. Most of it has to go towards payments.

But most businesses – from large to small – don’t seem to realise that, and keep making purchases with the company’s cash flow… which of course, results in late payments.”

Another issue is that many are still lacking the proper skills and competencies to grant and manage credit properly. “Before you give credit, are you analysing the creditworthiness of your customers? You need to go into our database and collect information about the client – see if they have a history of dishonoured cheques

or late payments. The database should be used much more than it currently is. Very little due diligence is carried out, although the culture is changing slowly, gradually, through education.”

And that’s not enough. “Even if you do due diligence and deem the client creditworthy, something may change down the line. You have to monitor your customers on a daily basis. The business community in general does not invest heavily in its credit departments. How many times have I heard ‘Oh, the receptionist just calls to chase clients for payments whenever she has a bit of time!’

That’s not credit management.

You’re selling for the sake of selling and expecting to collect

money in time. Forget it. You have to get your own house in order first,” he cautioned.

Back in the day, Mr Busuttil said, it used to be said that credit is a chain and that the link at the top affected liquidity all the way down. “But who is starting the chain? Government used to get the blame for late payments, but ever since the Late Payments Directive was introduced – which states that if Government doesn’t pay you within 30 days, eight per cent interest plus the ECB intervention rate has to be paid on the sum owed – its speed of payment has improved in a lot of sectors.

Has this had any effect on the business community in general?

Not enough.”

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Medicinal cannabis might pose challenge for regulators, industry operator says Rebecca Anastasi Pharmaceutical industry operator Pharmaconsulta Ltd has expressed concern that the production of medicinal cannabis might be “a challenge for the regulators” when it comes to ensuring that the provisions of the new law that legalises the production of medicinal cannabis, are adhered to.

Andrew Corrieri, Regulatory Consultant and Chief Executive Officer of Pharmaconsulta Ltd, an independent consultancy firm based in Malta specialising in pharmaceutical regulatory affairs, stressed that monitoring activity in the industry – and determining that there are no breaches – is essential; each unit must be accounted for, in the same way that other controlled substances are.

The Ministry of the Economy, Investment and Small Businesses seems to be aware of the necessity for stringent controls since in a recent statement it declared that – contrary to suggestions made in the local media – such processing of medicinal cannabis “will be allocated within a closed and secure space in existing industrial areas of Malta Industrial Parks.” Moreover, the Ministry underlined that “the activities will be carried out under GMP conditions and in line with the requirements of international institutions regulating this sector, as required by new Maltese legislation.”

Indeed, Mr Corrieri emphasised that the Medicines Authority inspectors’ high standards of professional conduct are worldrenowned, with local inspectors even having the authorisation to grant US Food and Drug Administration (FDA) approval as well as EU General Manufacturing Practice (GMP) certification. “The in-

spectors are known to be some of the strictest in Europe,” Mr Corrieri stated.

This is just as well since the new legislation authorises the Medicines Authority to review and monitor “relevant operations within premises” and decrees that it shall “have the right at all reasonable times to enter and inspect any premises.”

Moreover, a Licensing Appeals Board, consisting of a Chairperson and three members appointed by the Ministry of Health will be set up.

The Medicines Authority, in comments to this newspaper, expressed dedication to adhere to stringent regulations when asked about its role as regulatory body, emphasising that it is “building capacity to be able to carry out its responsibilities according to the Bill and to support the Superintendent of Public Health in providing scientific, technical and regulatory expertise in the field”.

“Monitoring activity in the industry – and determining that there are no breaches – is essential; each unit must be accounted for, in the same way that other controlled substances are.”

Moreover, in a separate press release issued by the Ministry for the Economy, Investment and Small Businesses, the government expressed its optimism in the future of this industry, stating that the introduction of the production of medicinal cannabis “will further strengthen the manufacturing sector of pharmaceuticals in Malta whilst making it simpler for Maltese patients to have easier and safer access to medication.” This falls in line with a separate Bill authorising Maltese doctors to dispense prescriptions for medicinal cannabis “if it is considered that there is no viable alternative to such prescription,” according to a circular distributed by the Ministry of Health following amendments to the Drug Dependence (Treatment not Imprisonment) Act of 2018.

Moreover, strict controls are in place, with a licensed pharmacist only being able to dispense the drug

upon presentation of the Superintendent of Public Health’s approved application form (submitted by the prescribing doctor), the prescription, as well as a control card. No details on the form the drug will take have been forthcoming.

This drive towards increased investment – and options for the patient – is positive, according to Mr Corrieri, but he believes there is a need for quotas when it comes to supply on the local market. This would be based on calculations involving the number of patients who would require the medication, as well as an estimation of how much they would require.

In the meantime, six projects have already been approved – according to a press release issued by the Ministry for the Economy, Investment and Small Business – with investors hailing from Canada, AusContinued on page 6

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April 26, 2018

NEWS

Medicines Authority “building capacity” to be able to carry out its responsibilities Continued from page 5 tralia and Israel, and a total capital investment of €40 million. The creation of more than 200 new jobs is also expected. The press release also stated that “interest from other countries continues to grow” following the approval of the legislation.

When asked to provide more specific details on how many companies have recently expressed interest, and their provenance, following the approval of the Bill, a spokesperson for Malta Enterprise stated that it “is in discussions with key foreign players engaged in the production of medicinal cannabis” but that the “names and status of enquiries cannot be divulged due to confidentiality provisions.”

The growing number of work opportunities within the sector has also come as a welcome development by the pharmaceutical industry. Indeed, Mr Corrieri believes that Malta’s expertise in this area helped to attract this new business to the island. This was corroborated by the Medicines Authority which, while highlighting that “the medic-

inal cannabis industry is an industry with specific needs and facilities,” expressed “full confidence that the capabilities of Maltese personnel” will once again prove of immense value, as they did “during the establishment of the pharmaceutical industry in Malta.”

When asked about the diversity of jobs which the production of medicinal cannabis could generate, Mr Corrieri went on to assert that the industry would require an increased laboratory workforce – due to the necessity of providing companies with European batch release certification. There will also be a need for medical reps and pharmacy personnel, such as pharmacy technicians, though Mr Corrieri pointed out that the latter were being catered for, especially thanks to the undergraduate Bachelor of Science in Pharmaceutical Technology (Honours) provided by the University of Malta.

Yet, he noted the shortage of qualified personnel (QPs) who are responsible for signing off on the EU certification, which would allow these companies to operate

on the continent and in markets which traditionally do business with Europe, such as the Middle East. He emphasised that the industry is already suffering from a lack of QPs since “this also depends a lot on experience” and stressed that the system needs to provide for this by, perhaps, subcontracting QPs and making the training process faster. However,

he emphasised that “the lack of QPs should not stop investment.”

Indeed, in a move which seems to be working to address this, the Medicines Authority is currently “working closely with the Department of Pharmacy at the University of Malta and the Ministry for Education and Employment to support the requirements of the pharmaceutical industry” in terms of train-

ing and education. In its statement, it pointed to the myriad courses offered by the University of Malta, further emphasising that stakeholders themselves are “invited to support these courses.”

As an example of the way the education and industry are linked, it also referred to a recent Doctorate in Pharmacy graduate, with vast experience in the regulatory sciences, who recently joined the pharmaceutical industry as a QP for Pharmacovigilance. It also referred to the successful fellowship programme, established by the Medicines Authority, which encourages students to obtain qualifications in much-needed areas, and noted that the Department of Pharmacy is also supporting Mater Dei Hospital to expand the clinical pharmacy services which require immediate expansion in order to provide the relevant training. The professionals who emerge from these initiatives “will be an important contribution to making Malta a centre of excellence for cannabis research,” the Medicines Authority concluded.

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Commercial Court launch aims to boost Malta’s competitiveness ranking Jo Caruana PHOTO: SHUTTERSTOCK

The new commercial section of the Civil Court will boost Malta’s ease of doing business ranking, increase efficiency, and potentially make it more appealing to foreign investors, according to a number of stakeholders interviewed by this newspaper.

This section of Court, which came into force on 9th April, will now be competent to hear and adjudicate cases relating to matters governed by the Companies Act, such as bankruptcy, insolvency proceedings, and winding-up proceedings, striving to better address the various issues that businesses face on a commercial level.

“When carrying out the judicial control function, well-functioning courts are an indirect determinant of economic performance,” said Minister for Justice, Culture and Local Government Owen Bonnici.

“In fact, the enforcement of contracts is one of the criteria on which countries are judged by the World Bank (WB) in the ‘Ease of Doing Business’ report.”

“This indicator measures the time and cost involved in resolving a commercial dispute through a first instance court, as well as the quality of the judicial processes index. It evaluates whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. Pleasingly, it is an area that Malta has fared quite well in – we are in 37th place, which is comparable to the average.”

According to the WB, it takes 505 days to resolve a case of this kind in Malta, whereas it can take 578 in some high-income OECD countries. Singapore, on the other hand, is way ahead, with cases

taking an average of 164 days to wrap up. “So, even though we aren’t doing badly, Government is cognisant of the benefits of having a dedicated commercial court and, since we always strive for improvement, we are very pleased that this decision has been taken.”

“This is a matter of listening to the industry’s needs and implementing them,” Dr Bonnici said.

“In the business world there’s the famous phrase ‘time is money’. The main issue with not having a commercial court was that companies willing to invest were encountering unnecessary bureaucratic procedures, consequently affecting the

pace of the companies’ operations.

Now that is being addressed.”

Welcoming the move, the Malta Chamber of Commerce, Enterprise and Industry said it believes the Civil Court will better address the various issues which citizens involved in business structures encounter on a commercial level, adding that the Chamber had been promoting the idea for a number of years.

“In our Economic Vision document, we argued that the present judicial system in Malta is one of the least efficient in the EU, especially when it comes to the duration of cases,” explained the

Chamber’s Director General, Kevin J. Borg. “This is naturally detrimental to both local and foreign investors who need a justice system which is efficient.”

“The Chamber is hopeful that this court will bring about an elevated level of efficiency for all parties involved, contributing directly to the competitiveness of the country.

Given that, like any other system, the Commercial Court will need to take its time to start operating to its full potential, the Malta Chamber believes this is a step in the right direction, as it will continue to monitor its developments

“e main issue with not having a commercial court was that companies willing to invest were encountering unnecessary bureaucratic procedures, consequently affecting the pace of the companies’ operations. Now that is being addressed.”

– Owen Bonnici, Minister for Justice, Culture and Local Government for the benefit of our members,” Mr Borg continued.

Finance Malta Chairman Kenneth Farrugia also believes it will strengthen Malta’s competitiveness in general. “I have no doubt that it will,” he said. “International financial and non-financial operContinued on page 13

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e Malta Business Observer is Malta’s leading business newspaper distributed with Times of Malta every month.

Managing Editor Marie-Claire Grima

EDITORIAL

Publishers Allied Newspapers Ltd. Content House Group Ltd.

e case for cashless There are few places where the saying ‘cash is king’ applies more than in Malta. Not just in the proverbial ‘money can get you anywhere’ sense – although that’s not untrue either – but in the actual use of notes, coins and also cheques. In a study carried out by the European Central Bank last year, which investigated the use of cash and other payment methods among the members of the eurozone, it was found that 92 per cent of all transactions in Malta involve coins and notes, with the majority stating clearly that they prefer using cash over other methods of payment. Even though the proportion of people in Malta who receive their income in cash was lower than the eurozone average, the use of cash for payments still reigns supreme.

Although the facility of internet banking means that most of the time, you don’t even need to step anywhere near a bank, and an ATM can take care of the rest, the long queues outside the bank every morning tell a different story. Granted, this may also simply be a generational thing. Perhaps for those people, who are more removed from the digital age than others, making an electronic payment without having the reassurance of physical money can be difficult to process. But there are older people in other parts of Europe as well, so the argument doesn’t hold. In Malta, is it really that difficult to teach an old dog new tricks?

It would be one thing if it were only an issue for personal transactions, but it’s the same story at a business level. Josef Busuttil, Director General of the Malta Association for Credit Management (MACM), who spoke to us for our cover story on credit, explained how the MACM has spent nearly two decades promoting cashless payments, but Malta still insists on using cash or cheques. “In an ideal world, cheques would end. In most countries in the EU, you would be laughed at if you tried paying by cheque. However, in Malta, trying to change this culture overnight would create huge problems.” Cashless measures help businesses reduce costs and improve efficiency, as well as respond more promptly to consumer expectations. It

would certainly help Malta reduce its day sales outstanding (DSO) – the time it takes a business to collect payment from other business clients after a sale has been made — which currently stands at over 82 days. Furthermore, with the overall economic cost of counting, storing, transporting, as well as maintaining the cash infrastructure estimated at around 0.5 to one per cent of GDP, the benefits that cashless business-to-business payments can provide can’t be under-estimated. So why do businesses in Malta keep on dragging their heels this way?

During a joint event on the cashless economy organised by the Malta Chamber of Commerce, Enterprise and Industry, and EY Malta, keynote speaker Emanuele Vignoli, HSBC’s Managing Director and Head of Global Liquidity and Cash Management (GLCM), highlighted the measures that Malta needed to take in order to reach the other end of the European league when it comes to use of cash. “First of all, keep developing the infrastructure which will allow the digital economy to thrive and, secondly, educate, educate, and educate. Make sure that people understand the value of moving towards a society with less cash payments and more digital ones. We need to make sure that the consumer doesn’t feel threatened or embarrassed to use their card or their phone application to pay 99 cents for their coffee.”

The move to a cashless society should not be a difficult one for Malta. It’s not as if the wheel has to be re-invented – from direct debit and phone banking to electronic payments and contactless card options, the infrastructure is already in place. But there needs to be a substantial cultural shift, and a change in the way we think about money. Although we’re moving into the era of Blockchain and Bitcoin, where money is a digital asset, there are still many people who find the very act of making a digital payment hard to swallow. Progress can happen rapidly, and perhaps it won’t even be an issue in five years’ time. But at the speed with which business moves, and at which cash is becoming obsolete everywhere else, we can’t afford to wait that long.

We need to act faster.

Advertising Enquiries Tel: 2132 0713 Email: info@contenthouse.com.mt Advertising Sales Matthew Spiteri Head of Advertising Sales Paul Azzopardi Jean-Mark Meli Brand Sales Executives Advertising Sales Coordinators Lindsey Napier Elena Dimech

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BUSINESS OPINION

Why it pays the European tourism business to cater to China

Joe Tanti 2018 is a special year marking the occasion of the EU-China Tourism Year (ECTY), which coincides very nicely with the European Year of Cultural Heritage. This is indeed a very exciting year for European tourism businesses, which will be given a greater chance to showcase a full range of the latest products and services to cater for the flourishing Chinese outbound travel sector.

But why the focus on China?

Well, China has managed to maintain its rate of economic expansion for a while now. Its fast-growing wealth has enabled broad sections of Chinese society to travel and invest internationally. Furthermore, the rise of Chinese outbound tourism is steadfast and has been so for over a decade. It is the number one headspring market, with just over 12 million Chinese tourists visiting Europe last year alone.

Figures prove that there is unwavering potential waiting to be tapped, as long as Europe continues to develop a more strategic approach, deepening and rebalancing relations with the red dragon.

The European Commission has taken the lead to organise the full EU-China Tourism Year from the EU’s side. It has mandated the European Travel Commission, of which the Malta Tourism Authority is a full member, to play a central role in cooperative marketing campaigns and activities targeting China during this special year. European tourism SMEs that are choosing to participate in Chinese market events this year should also bear in mind that Europe must be promoted holistically as a continent since, interestingly enough, Chinese tourists first tend to select which continent to visit, not which country.

The success of doing business in China or attracting Chinese

buyers and visitors to Europe heavily depends on how well connected we are. Having the right policies set in place to support optimum airline transport connectivity, as well as facilitating visa travel, are an absolute must to enhance sustainable travel and tourism experiences.

A deeper analysis of Chinese traveller digital behaviour can also help us appreciate exactly what Chinese travellers wish to experience when visiting Europe, thus making it easier to form a targeted approach when marketing our European destinations.

Luckily, with celebrations for the European Year of Cultural Heritage kicking off this year, it’s the perfect time to use culture – a powerful tool – as a way of strengthening synergies with China. There is considerable value in the development of this relationship which requires a clear definition of the EU’s common interests and how to

pursue them, as well as a mutual understanding of the various shared aspects of cultural heritage between the two continents. Given the right promotion, culture can play a leading role in the flourishing of an economic symbiosis, whilst providing a fresh impetus to a bilateral partnership that has global impact.

Although Europe’s largest cities remain the main touristic attractions for Chinese group tour travellers, niche travel such as cultural and lifestyle tourism is now also trending, meaning that Chinese tourism is beginning to discover the lesser-known destinations that Europe has to offer. For this reason, European destinations are preparing themselves by creating innovative market approaches towards local tourism facilities to enable them to better receive Chinese tourists.

An example is the use of the Welcome Chinese Certification programme, a new type of

“Having the right policies set in place to support optimum airline transport connectivity, as well as facilitating visa travel, are an absolute must to enhance sustainable travel and tourism experiences.”

hospitality standard which caters specifically for Chinese visitors and provides promotion and visibility for European businesses within the B2C and B2B Chinese outbound tourism markets.

As a result, the Malta Business Bureau is linking its actions with its Enterprise Europe Network Tourism and Cultural Heritage Sector Group partners to bring tourism SMEs to the forefront of EU-China cooperation platforms.

Thanks to a round of pioneering EU initiatives such as the Partnerships in European Tourism, and the World Bridge Tourism, several incentives aimed at supporting EU tourism businesses and operators wishing to expand their businesses into the Chinese (and US) markets are currently on offer.

I anticipate that these incentives, particularly informative workshops to better understand market entry modes to China, partnership facilitation services for transEuropean tourist products, and business matchmaking, alongside international promotion activities, will encourage the successful participation of European SMEs in EU-China events lined up for 2018.

This is our time to ‘wow’ China!

Joe Tanti is the CEO of the Malta Business Bureau (MBB) and a member of the Tourism and Cultural Heritage Sector Group within the Enterprise Europe Network (EEN).

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Reflecting Malta’s credibility as a jurisdiction on a global level Continued from page 9 ators often undertake a review of the way litigations are managed in any jurisdiction before extending their footprint there. So, the fact that a jurisdiction has a dedicated court to address commercial matters will be a comfort. Of course, it is very early to predict or forecast the long-term changes that the establishment of this court will induce but I certainly expect the incidence of protracted commercial court cases to be markedly reduced, especially as this is neither in the interest of the litigant or the defendant. The ultimate service level metric will be the actual timeline within which court cases are now adjudicated.”

Meanwhile, when asked about whether this new commercial court will help to boost Malta’s appeal to digital businesses, including those in the blockchain sector and beyond, Silvio Schembri, the Parliamentary Secretary for Finan-

cial Services, Digital Economy and Innovation, said he believes the establishment of this court will reflect the seriousness and credibility of Malta as a jurisdiction on a global level and above all will make Malta a natural choice for investors. “It will deal with purely commercial matters, so its establishment is certainly sustaining Malta’s ecosystem by making it more attractive to investors willing to invest in the new emergent sector driven by distributed ledger technology (DLT). Thus, we’re ensuring that the ideal tools for business flourish and increasing efficiency to help businesses in their daily operations. It will also have all the latest digital innovations available to the other courts.”

On the other hand, certain stakeholders have argued that the launch of the Commercial Court will only have any significant relevance to members of the legal profession. “At this stage there is absolutely no benefit, nor disad-

“is will undoubtedly result in the clearer and, hopefully faster, resolution of cases by the members of the judiciary assigned to the commercial section, who will undoubtedly gain deeper knowledge and experience in this field.”

– Paul Abela, President, GRTU

vantage, to the business community, other than clarification of what type of cases a particular section of the Civil Court has the competence ratione materiae to hear,” said GRTU President Paul Abela. “We have to first distin-

guish efficiency from accessibility.

The new amendments will not make the courts any less or more accessible. The fees remain the same, so, in principle, the Commercial Section of the Civil Court remained as accessible as the First

Hall of the Civil Court used to be (and still is).

However, Mr Abela also added that in the long-term, the judges assigned to the commercial section will mainly hear and decide matters pertaining solely to company law, resulting in a more learned and focused case law.

“This will undoubtedly result in the clearer and, hopefully faster, resolution of cases by the members of the judiciary assigned to the commercial section, who will undoubtedly gain deeper knowledge and experience in this field.

Beyond that, it will also be interesting to see whether this new section of the Civil Court will eventually be broadened to include other ordinary commercial matters, such as debt collection, contractual disputes and other non-corporate matters, or whether it will also find application to disputes of a commercial nature which fall within the competence of the Court of Magistrates.”

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ANALYSIS

e ‘Blockchain island’ gains global momentum, press attention Malta’s efforts to become ‘the Blockchain island’ seem to be reaping fulsome results, with a spate of announcements from various international companies, which, attracted

by Malta’s innovative Distributed Ledger Technology (DLT) proposed regulation, have announced their intentions to set up business here.

The DLT policy document – which runs contrary to the cautious stance being taken by most governments worldwide – seeks to set up the Malta Digital Innovation Authority alongside other legislation to provide legal certainty in the sphere of Blockchain technology and cryptocurrencies. So far, few, if any, attempts have been made to regulate this technology by any institution or body around the world. Less than two months after the announcement was made locally, the companies have already started flocking, and causing a stir.

Binance, which as of January 2018 was the largest crypto-exchange in the world, with a market capitalisation for its BNB coin of $1.3 billion, announced late in March that it was planning to open an office in Malta. “We are very confident we can announce a banking partnership there soon,” CEO Zhao Chengpeng said, adding, “Malta is very progressive when it comes to crypto and fintech.” Its announcement was quickly followed by the news that OKex, another large digital asset exchange with a daily transaction volume of over $1 billion, plans to open up offices in Malta. OKex’s CEO Chris Lee said that the Maltese government shared the same values as OKex, and that this was one of the aspects that attracted the exchange to the island.

Berlin’s Blockchain-based equity fundraising platform Neufund also announced its intention to open a satellite office in Malta, with its CEO Zoe Adamovicz stating that “Malta should serve as a model for other countries and regulators.” Meanwhile, DQR Group – a conglomerate of DQR, DQR-X, DQR-GIVE, and DQR-Services, whose partners include Genesis Mining, Blockchain Consulting, Logos Fund, and Draglet – announced just last week its decision to establish its headquarters in Malta, with CEO Kristian Haehndal stating that Malta will undoubtedly

PHOTO: SHUTTERSTOCK

“Malta is not the first European nation to promote itself as a Blockchain haven […] but the fact that it is a member of the EU could make it more appealing than, for example, Switzerland’s ‘Crypto Valley’. ” – Bitcoin Magazine become “the worldwide epicentre of the Blockchain ecosystem in the near future.”

And just yesterday, non-profit organisation Poseidon, which uses Blockchain technology to help individuals, governments and companies address their carbon footprint through financial transactions, announced that it would be domiciled in Malta.

The number of companies flocking to Malta has attracted the attention of the international press, with many commenting on Malta’s intention to become ‘the Blockchain island’. “Malta is an EU member state which recently announced that they will be supporting Blockchain industry and will provide the technical infrastructure and regulatory sup-

port. Ever since the announcement, the country has grasped a lot of attention in the crypto-space,” an article on AMBCrypto read.

“Malta has recently turned into a hot destination for business in the cryptocurrency and Blockchain space for its crypto-friendly rules. With growing regulations from around the globe, fintech companies are considering to shift their operations to Malta that provides a conducive environment to operate,” according to Coinspeaker, a widely-read fintech news source.

“There are a few different reasons why Malta is so appealing to Bitcoin companies.

The region is rather open-minded when it comes to regulating this industry. Its focus on

Blockchain and cryptocurrency is positive overall and allows for innovation. Several firms are actively looking to move to Malta due to regulatory pressure in their home country,” NewsBTC said. “It now seems dozens of cryptocurrency companies are looking to set up shop in Malta. Doing so is rather simple, compared to dealing with requirements in other countries. Making it more accessible for companies to set up an office in Malta is an example other countries should pay attention to as well.”

Bitcoin Magazine remarked that “Malta is not the first European nation to promote itself as a Blockchain haven and try to attract capital and talent with crypto-friendly regulations, but the fact that it is a member of the EU could make it more appealing than, for example, Switzerland’s ‘Crypto Valley’.”

However, Malta’s recent spate of high-profile scandals threatens to overshadow its trailblazing success in this sector. Bloomberg Businessweek commented, “transparency and legal certainty should be a positive for an industry that’s suffered from fraud, hacks and sudden regulatory crackdowns. But Malta’s recent economic success has been overshadowed by corruption and money-laundering scandals, including the death of a journalist who wrote about alleged graft in the highest ranks of the government. Some European Union lawmakers have raised doubts about Malta’s rule of law, a point strongly challenged by Muscat.”

Blockchain in Malta will no doubt continue to make headlines throughout the year. Besides the new operations setting up here, more of which are sure to follow, Malta’s first Blockchain Summit is set to take place in November, with no fewer than 4,000 delegates, 100 speakers and 150 sponsors and exhibitors from prominent players in the emerging Blockchain and DLT sector expected. As for Malta’s ambitions to become ‘the Blockchain island’, the momentum and drive to stay at the forefront of global innovation will surely serve it well, but it has to be coupled with responsibility, accountability and good governance if it wants to keep punching above its weight in this emerging sector.

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e Malta Business OBSERVER |

April 26, 2018

CASE STUDY

E&V Sara Grech up the real estate sales game with virtual reality tours Martina Said Engel & Völkers Sara Grech is the first real estate agency in Malta to introduce the use of virtual reality for the sale of exclusive properties; that is, properties which are listed solely with Engel & Völkers Sara Grech. The move will help raise the standard across the board in the local real estate industry, according to Benjamin Tabone Grech, E&V Sara Grech’s Managing Director.

“Using VR in real estate sales is a new concept locally, and has only been available to the global market for the past 12 months or so. The big question is whether people will catch on. If you’ve had 200 views on one property it translates into 200 full viewings because people have gone in, seen the property and explored it,” said Mr Tabone Grech.

“By getting a virtual tour, prospective clients get a very good and detailed look at the property, so if they ask to see it in person, a vendor or agent is one step closer to selling and the buyer is one step closer to buying, because the client has already had a good look around, and just wants to confirm what they’ve seen and potentially buy it. It certainly speeds up the process for buyers, saving precious time.”

The agency uses specialised Matterport cameras to take 360-degree images of a property at intervals, which are then merged together using dedicated software to create a virtual reality tour. “The equipment is expensive but the process of taking the images is quite straightforward,” he explained. The camera is hooked to an iPad and using a push-button through the app, images are taken every two and a half metres until the whole property is scanned.

The final result is the recreation of a property in three different digital viewing for-

mats: a 3D floor plan, a doll house visual, and a photorealistic walkthrough.

The service of a VR tour is offered for exclusive listings only – which are then viewable through the Exclusive Properties section on the agency’s website – adding an extra level of commitment between the agency and the vendor, Mr Tabone Grech said. “For the VR tour, we are targeting properties of over €500,000, but if there’s something really special about a property that’s valued at €300,000, we won’t exclude it. Today, information travels very quickly, therefore transparency is extremely important. Using VR in real estate sales is an additional way to keep things transparent and open, enabling people to see the property for what it is and as it is.”

Before establishing an exclusive contract, the agency does the necessary background checks to ensure that all information about the property is clear, although the ultimate determinant for signing a contract of exclusivity is the price. “If the property was valuated at €1 million and the vendor wants to place his property on the market for €2 million, we cannot take that property exclusively,” said Mr Tabone Grech. “The client will go to other agencies, ask for that amount and it will end up sitting there; either until the market reaches that value, or until the vendor decides to reduce the price.

We do not take on overpriced properties, which is an assurance to our buyers that we are doing our job right.”

Mr Tabone Grech believes that the worst thing one can do when selling their house is give it to lots of different agencies. “Data and information about your property are of utmost importance, and the more you give out that information, the more chance there is of error. We see it very often when a property is listed with multiple agencies – prices, square metres and even the number of

BENJAMIN TABONE GRECH, MANAGING DIRECTOR, ENGEL & VÖLKERS SARA GRECH. PHOTO: ALAN CARVILLE

“Personally, if I’m given exclusivity from a seller, I’d treat it with utmost importance, as the vendor is believing in the agency to deliver the job in a period of time.”

rooms can vary significantly,” he asserted.

“Working exclusively means that there is one set of information, and that is what’s being presented to the market. When you have one agency representing the property, the vendor is giving the agent the space to focus to achieve the sale. On the other hand, if it’s a general listing, it’s a free for all, so the motives for the agency aren’t 100 per cent.”

Working exclusively also guarantees a greater degree of control over the sales process, especially for those selling their house, which is more often than not their most important investment. “Clients want to deal with people who they know they can trust information with and who will give them feedback. If there was a viewing at

your property yesterday, we would know about it, whereas if it’s listed with multiple agencies, we wouldn’t know there was a viewing, what the feedback was and why the client didn’t like it,” he maintained. “Personally, if I’m given exclusivity from a seller, I’d treat it with utmost importance, as the vendor is believing in the agency to deliver the job in a period of time. If the price is wrong, it will be apparent within two months.”

He added that exclusivity would be the best way to work going forward. “I would rather have 1,000 listings that are all exclusive, where I am able to provide the best possible service to every vendor and sell the 1,000 properties, as opposed to having 10,000 listings and selling only a fraction of

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CASE STUDY

them. Trying to provide a great service to every vendor when you have thousands of listings is simply impossible unless you have the number of agents to match that.”

Exclusivity, and therefore a virtual reality tour of a property, offers various benefits for the vendor – an activity report is issued on a regular basis which offers insight into the level of interaction with the listing on the website; a professional shoot of the property is commissioned; and a VR scan is prepared, together with a specific marketing plan for that listing with all the relevant marketing material. It’s a service that no other real estate agency in Malta currently offers.

“To do hundreds of viewings in person takes up a lot of time, but it’s effortless online. So we want to speed up and save time for both the buyer and the seller, making the whole process swifter and more transparent. One of the best parts of exclusivity is that there is one point of contact, so the vendor gets a regular report, can discuss the performance of the listing and compare it to other listings in its range to figure out why it’s not performing as well – is it the style, the location, is the price too high? Its performance in the market can be gauged, and this will help attract the right buyer.”

Mr Tabone Grech maintained that using technology such as VR to the industry’s advantage will help steer it in a better, more professional direction. “The local real estate industry is heading in a direction that is placing more and more emphasis on quality, and this tool could be seen as a nudge to get people to think about better quality all around, even when building to sell,” he said.

“Let’s add that insulation to new properties,

AN EXCLUSIVE ENGEL & VÖLKERS SARA GRECH PROPERTY.

“e local real estate industry is heading in a direction that is placing more and more emphasis on quality.”

let’s make the floors thick enough so that people aren’t heard walking around their apartment, let’s make an effort to build better homes. We’re using quality products to engage with our market, so the same should apply to those creating the product.”

With ever-changing developments in the tech world, the Managing Director anticipates that the next bit of tech to hit the local real estate market will be aimed at making public data more transparent, including information pertaining to home owners, agents, architects, notaries, lawyers and developers. “The data is there, and it can be used specifically to make the whole process of the transfer of title more transparent,” he said. “Another development I hope to see is better collaboration among agencies, and with an increasing number of exclusive properties, better attitudes in the industry which could lead to greater opportunities.”

BUYERS CAN VIEW THE WHOLE PROPERTY USING VR TECHNOLOGY.

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e Malta Business OBSERVER |

April 26, 2018

CASE STUDY

Partnership model way forward for Steward Healthcare in Europe Steward Healthcare, the largest private hospital operator in the USA, which took over the running of St Luke’s, Karin Grech and Gozo hospitals in February, is adopting the partnership model in healthcare, stating that it is the way forward for its operations in Malta, as well as its hopes for European expansion.

“We believe that what we are doing in Malta could also work in a number of other similar jurisdictions, and are currently exploring the possibility of similar projects in Europe,” said Dr Armin Ernst, President of Steward Healthcare International, referring to the cooperative arrangement between the government and the private sector in delivering goods or services to members of the public.

“Malta has many competitive advantages that influenced our decision to invest here. The fact that the workforce is English-speaking, hard-working and well-educated was an important consideration for us. The fact that Malta is a member of the European Union ensures certain high standards and allows us to enter a significant new market. On the other hand, we are aware that Malta and the USA are two different countries, and so for us, the challenge is to adapt to the local population whilst remaining true to what has helped us succeed in the past.”

The company took over the running of three of Malta’s hospitals – which had previously been handed to Vitals Healthcare almost two years ago – in February.

“We saw the opportunity of partnering with the Maltese government as an excellent chance for us to extend our delivery model internationally,” said Dr Ernst.

“Malta has a long-standing reputation as a healthcare provider –

DR ARMIN ERNST, PRESIDENT, STEWARD HEALTHCARE INTERNATIONAL.

it was formerly referred to as the Nurse of the Mediterranean. It is a member of the EU, and is stable both economically and politically, so there was really no place better for us to launch our European ambitions.”

The company’s current focus in Malta is on improving the infrastructure in the three hospitals it took over, where, Dr Ernst

“Malta has a long-standing reputation as a healthcare provider – it was formerly referred to as the Nurse of the Mediterranean.”

insisted, “services will remain free for all patients across Malta and Gozo – they will simply receive a better service, in a far better environment. We are currently working on a master plan that takes everything into account and looks at the bigger picture. Once this is complete, we will really start with the infrastructural works.”

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CASE STUDY

Throughout the past months, Steward Malta has held numerous meetings and discussions with unions, NGOs and stakeholders, which, Dr Ernst stated, ensure that the company is as transparent and open as possible. “These meetings have so far been very positive, and we are committed to continuously work at those relationships to ensure the best outcomes for our employees and patients. Collaborating with all these different stakeholders allows us to consider their needs and concerns. We understand that only by working together can we provide an exceptional level of healthcare in Malta and Gozo, and so it is crucial for everyone to work well together for the good of the patient population.”

“Steward so far has been based in the United States, where the way healthcare is administered is different to the European model.

For this reason,” he explained, “our leadership team in Malta is predominantly made up of Maltese and Gozitan nationals who know the system here inside out.

Our team in Malta is working closely with its counterparts in Boston, with both sides sharing knowledge and experience to symbiotically progress and grow.”

The completion of the Barts Medical School campus in Gozo is also a top priority – the company is in advanced discussions with Barts to finish off the project as

“Once the infrastructure has been modernised, we will also be looking at opportunities in the medical tourism space.”

DR NADINE DELICATA, HEAD OF STEWARD HEALTHCARE MALTA’S EXECUTIVE TEAM WITH JOSEPH FENECH, CEO OF GOZO HOSPITAL.

soon as possible, although no fixed timeframe has been confirmed. “Our first priority is having the Barts Anatomy Centre completed, together with the actual University campus. These projects will allow us to ensure that the level of healthcare we are providing in Malta and Gozo is truly world-class. Once the infrastructure has been modernised, we will

also be looking at opportunities in the medical tourism space. We believe that attracting patients from abroad to Malta is a worthy revenue opportunity which will also benefit other local businesses and help diversify the local tourism industry,” Dr Ernst said.

As part of Steward’s efforts to develop the infrastructure, the company plans to recruit heavily in

various fields. “This will not only allow us to improve the quality of care provided, but it will also allow us to eventually increase the number of services that we offer. The team in Malta will be focused on developing and growing the three hospitals under its management.”

Dr Ernst believes that the opening of the Barts Medical School will help attract not just medical

tourists to Malta and Gozo, but also nurture a crop of talented medical staff. “The response for the first year has been promising, and we are sure that this will continue to grow. Medical students across the world typically develop an affinity with the hospitals in which they practice during their learning years, so we are hopeful that many will stay and work here once completing their studies.”

“We have also teamed up with Northumbria and MCAST to support an additional nursing degree in Malta; similarly we hope that by attracting more students to the nursing profession, there will be a growth in the year on year supply of nursing graduates to work across the local healthcare system.”

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e Malta Business OBSERVER |

April 26, 2018

NEWS

MaltaCEOs 2019 to launch in coming months Malta’s high-end business sector is set to welcome a dynamic new publication in the months to come, with the launch of MaltaCEOs 2019.

This annual business glossy, which will be published by Content House Group in collaboration with the Malta Chamber of Commerce, Enterprise and Industry, and edited by Jo Caruana, will focus on in-depth interviews with some of the island’s most success-

ful CEOs – from industries as wideranging as logistics, hospitality, manufacturing, finance, real estate and retail.

“This will be an opportunity for us to really get to know some of the people shaping the Maltese business landscape,” said Ms Caruana, who also edits the popular lifestyle publication Style on Sunday. “Like CEOs all over the world, Malta’s CEOs are the very beating heart of the island’s

thriving economy. This publication will give readers the chance to hear their captivating stories, as well as learn the motivation behind their exciting careers and what serves as their own inspiration.”

“Our interviewees are certainly incredible people,” Ms Caruana continued. “They have demonstrated optimal standards through their company’s work and contributed to their sector’s develop-

ment. In some cases they have also made inroads into the international arena.”

With this in mind, MaltaCEOs 2019 will provide a valuable platform to discuss the advances behind a selection of the island’s most influential organisations, while highlighting their agenda and key milestones for the year ahead. The magazine will also serve as a marketing vehicle to facilitate the interface between foreign parties that are potentially interested in collaborating with Maltese entrepreneurs, and will doubtlessly connect both, providing a platform for local or international joint projects.

Beyond that, the magazine will also look at the salient ingredients needed for local CEOs to thrive, and highlight the leadership role that they need to play in order to shape their organisations. As a result, the publication will feature the very latest business and social trends, and emphasise what it is that makes a great CEO in the current financial and economic climate.

Bernard Schranz, the Brand Sales Executive leading the commercial strategy on MaltaCEOs 2019, commented on the overwhelming feedback by the business community. “I can say without hesitation that the positive response has exceeded our projections and expectations. Specifically, feedback on our native content offering has been very good and the same can be said for the takeup of the advertising and sponsorships. To me it is clear that MaltaCEOs 2019 is filling a void and a business gap in the market. This publication is effectively serving as a virtual forum for leading CEOs to share their insight on their work, challenges and opportunities.”

Mr Schranz also reflected on the strategic alliance with the Malta Chamber of Commerce, Enterprise and Industry. “As most people in the industry know, Content House is the exclusive media partner of the Malta Chamber. The alliance on this project with the Malta Chamber of Commerce is fundamental. As a company we always give a lot of importance to such strategic partnerships. For us, credibility in whatever we do is core to the success of the project.”

As a reflection of this high-end approach, the magazine will enjoy an unparalleled distribution chan-

nel and will be printed according to top-quality specifications.

“We are proud to be distributing MaltaCEOs 2019 to all businesses and business people who are members of the Malta Chamber of Commerce, as well as other leading businesses across the sectors of gaming, finance, manufacturing and beyond,” continued the editor.

“It will also be sold at leading newsagents across Malta and Gozo, and will have a shelf-life of a year.

On top of that, all the content will be displayed on the Malta Chamber of Commerce portal, promising valuable additional exposure to all of the interviewees featured.”

“is will be an opportunity for us to really get to know some of the people shaping the Maltese business landscape.”

– Jo Caruana, Editor, MaltaCEOs 2019 Ms Caruana said she was confident about the rich portfolio of content that is being created. “By combining these fascinating CEO stories with the very latest C-level insight and trends, I have no doubt that we will engage and inspire our audience of business decision makers, as well as those with an interest in entrepreneurship and the future of Malta’s business environment. This is an exciting project to be part of and one I believe will educate, motivate and engage specifically the people who stand to develop the very future of Malta’s success,” she concluded.

For more information and visibility opportunities on MaltaCEOs 2019, email info@contenthouse.com.mt or call 2132 0713.

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e Malta Business OBSERVER |

April 26, 2018

STOCK MARKET REVIEW

Decoding the contents of a prospectus

Doreanne Caruana

into one flowing document, while other companies issue the three parts as identifiable documents within one publication.

The contents of each document may vary if the securities being offered are equity (i.e. shares) or debt (i.e. bonds). Nonetheless, certain sections and information are identical in both instances. Since most companies in Malta generally publish a three-part document, today’s article will provide an explanation of the contents within the various parts of a prospectus.

REGISTRATION DOCUMENT Most investors should be accustomed to the general disclaimer that accompanies investments, to read the prospectus, and the risk factors that are contained therein.

However, it’s likely that very few investors read the entire prospectus, or even the most important sections, which can help them gain a good understanding of the company, its business model and the main risks attached to the business.

A prospectus is an offer document which a company is required to publish whenever there are offers of its securities being made to the public. A prospectus is also a requirement when securities are simply listed on the regulated main market of the Malta Stock Exchange, even when there is no offer to the public, such as the recent listing of the shares of Trident Estates plc following the spin-off from Simonds Farsons Cisk plc.

The contents of a prospectus are governed by a set of rules, policies, regulations and directives, both at European level and also locally via the Malta Financial Services Authority (MFSA), which dictate the type of information that needs to be included. As such, the format is somewhat standard among most bond or equity issuers.

A prospectus is typically made up of three parts – the summary note, the registration document and the securities note. Some companies opt to publish a combined document where the three parts are included

The registration document provides an introduction to the company. The section on risk factors aims to identify those risks that apply or could potentially apply to the company and its operations. This section is normally rather lengthy since a comprehensive list of risk factors is documented. Various promotional adverts normally make specific reference to the risk factors section since it is important that a prospective investor is made aware of all the risk factors that can affect the issuer and its business.

Nonetheless, this does not mean that only those risk factors mentioned in this section can affect the issuer, since there may be factors, unknown at the time of the issue of the prospectus, or which are beyond the control of the company, which may affect the company and its business activities. It also lists those persons responsible for the contents and statements in the prospectus. The names of the various advisers to the company who would have assisted the company to prepare the prospectus are also included in the registration document. Typically, an offer to the public requires assistance from the legal counsel of the company, the auditors and financial advisers, as well as a sponsor, manager and registrar.

Detailed information on the company and its financials comprises the main part of the registration document, including information on the group and any sub-

sidiaries, its business operations and current and future trends. Any statements made by the directors regarding competition and financial prospects have to be supported by facts and statistics, otherwise the information may be misleading to potential investors. The prospectus also includes a review of the company’s historic financial statements, namely the income statement, the statement of financial position and the cash flow statement. In the case of bond issues, companies generally provide historic financial statements for the previous two years, while an equity issuer generally publishes three-year historical financials. Governance matters and structures are also given prominence within the registration

“Detailed information on the company and its financials comprises the main part of the registration document, including information on the group and any subsidiaries, its business operations and current and future trends.”

document, explaining and providing details on how the company is managed, the identities of the executive management and the requirements to organise meetings of shareholders and bondholders. Details are also provided on the management of conflicts of interest of directors for the benefit of transparency and good governance.

Other information that is also presented in the registration document include information on any legal proceedings which the company is party to and which are material, any contracts entered by the company which are not in the ordinary course of business, and information on the share capital structure of the company (including details of the majority shareholder/s) and main details emanating from the memorandum and articles of association of the company.

SECURITIES NOTE The securities note, which forms the second part of the prospectus, provides all details on the securities being offered. As such, one can expect to find information about the securities, such as term, coupon, yield, interest payment dates and any guarantee in place for bond issues. In the case of equity securities, apart from the information on the number of shares being issued and the offer price, the securities note also details the rights and obligations of a shareholder.

This part of the prospectus also includes a section on risk factors, which aims to identify those risk factors that can apply to the securities themselves.

The securities note also includes a section detailing the use of the funds being raised via the debt or equity offering. In the case of debt securities, the funds being raised pursuant to the offer would typically be used by the company to fund particular new investment opportunities, extensions of existing business, or to repay existing borrowings. The securities note also includes the terms and conditions applicable

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STOCK MARKET REVIEW

“e contents of a prospectus are governed by a set of rules, policies, regulations and directives, both at European level and also locally via the Malta Financial Services Authority (MFSA), which dictate the typ of information that needs to be included.”

SUMMARY NOTE to applications, such as the minimum application amount and the procedure for the lodging of applications.

The securities note of debt instruments also includes details as to what constitutes an event of default and the negative pledge, which is a pledge by the company that it will not go beyond a certain level of indebtedness that would otherwise possibly jeopardise the bondholders’ right to capital and interest payments.

Finally, the summary note, as the name implies, sums up the registration document and the securities note. Such a document cannot be more than 7 per cent of the overall length of the prospectus, or 15 pages, whichever is the lengthier. Some companies publish this document as a stand-alone document, although this does not mean that a prospective investor should read solely this document for a comprehensive review of the company and the securities on offer.

Most prospectuses also include a number of annexes, typically containing a specimen of the application form and the instructions to complete the form, a copy of the valuation report when the company is a property company, a report by the accountants on any forecasts that are included within the registration document (typically for an equity issue) and the financial analysis summary (when there is a bond issue which is offered to retail investors). A prospectus is widely available online or via financial intermediaries during an offer period. Investors should start dedicating time to reading the

Rizzo, Farrugia & Co. (Stockbrokers) Ltd, “Rizzo Farrugia”, 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. Rizzo Farrugia, its directors, the author of this report, other employees or Rizzo Farrugia 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 Rizzo Farrugia, 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. © 2017 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

salient details of a prospectus in order to gather the required information necessary to make informed investment decisions.

Doreanne Caruana is a Corporate Advisory Executive at Rizzo, Farrugia & Co (Stockbrokers) Ltd.

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e Malta Business OBSERVER |

April 26, 2018

BUSINESS UPDATES

Virtu Ferries takes action Virtu Ferries was invited to submit an offer to Gozo Channel to provide and operate the fast ferry service between Malta and Gozo. According to Gozo Channel’s document of request, the successful ‘partner’ was obliged to have “the necessary experience, expertise or resources to provide a fast ferry service” and expected “to meet the applicable specifications, requirements and criteria applicable for the fast ferry service as required by the tender.”

The tender also required the operator to have five years’ experience in ferry operation, and a minimum of €10 million in turnover and to provide audited financial statements for 2016. Thus, the successful candidate had to be an existing and wellestablished local or foreign high speed ferry operator. The successful bidder was required to comply with strict technical, operational and financial requirements of the Public Service Concession (PSC) issued by the Ministry for Transport, Infrastructure and Capital Projects.

Virtu Ferries Ltd submitted an offer to Gozo Channel, in full compliance with both the requirements dictated by Gozo Channel, and more importantly, the requirements of the main EU-wide tender also as dictated by Gozo Channel’s re-

“Virtu Ferries believes that it is hugely regrettable that Gozo Channel will allow the operation of a 350-to-400 passenger high speed ferry to an operator with no prior experience at all in the shipping sector.” quest for a partner. Disappointingly, at 7.26pm on Friday 13th April, Virtu Ferries was informed by Gozo Channel that its offer had been rejected.

It shortly transpired that Gozo Channel had chosen as a ‘partner’ a new company that was set up on the 10th April 2018, not even one week prior, with shareholders having no previous ferry owning experience and certainly no experience in high speed ferry operations as specifically dictated by the tender.

Virtu Ferries has stated that it is highly irresponsible of Gozo Channel to award a contract of this magnitude, both in terms of its fundamental importance as a life line to the peripheral island of Gozo with the Maltese mainland, as well as in terms

of its substantial value which will be partly financed by public funds, to a new company that as yet does not even have the basic required International and Flag State certification to operate high speed ferries, let alone the five years’ experience to do so as required under the tender.

Virtu Ferries believes that it is hugely regrettable that Gozo Channel will allow the operation of a 350-to-400 passenger high speed ferry to an operator with no prior experience at all in the shipping sector. This leads to the question as to why a seasoned ferry operator such as Gozo Channel would require a partner at all, if not for the required experience in high speed ferry operations, with the necessary certification and financial standing

as required under the PSC and as stated in Gozo Channel’s own request for a partner, and which the successful bidder’s new company cannot provide.

With 30 years’ experience in high speed ferry ownership, operating on routes between six European countries, Virtu Ferries remains committed to high speed passenger and vehicle transportation by sea. It has been operating routes in the Adriatic Sea to Venice for the last 15 years and routes between Morocco and Spain for the last six years. The company was also recently given the go ahead by the Italian authorities to operate sea passenger domestic routes from La Spezia to the renowned historic sea cliff villages of Cinque Terre, in Northern Italy.

Virtu Ferries has commenced legal action and submitted a request to the Public Contracts Review Board, asking it to order Gozo Channel not to proceed with the fast ferry tender process on the grounds that the preferred bidder is ineligible.

Virtu Ferries has also informed the Director of Contracts that Gozo Channel has not followed the procedure regulating public procurement. As a result, the public contract review board has suspended the process.

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e Malta Business OBSERVER |

April 26, 2018

BUSINESS UPDATES

Cursor designs text message system for hospital appointments Mater Dei Hospital has implemented CPASms, a text message (SMS) system designed by Cursor Ltd, where reminders are sent to people with outpatient appointments by SMS. People are sent reminders of their appointments 10 days and two days respectively prior to their hospital visitation.

CPASms’s dynamic system allows the user to customise their messages depending on the type of outpatient clinic and patient status. The system allows users to set as many appointment reminders as necessary. It is a versatile and user-friendly tool that will ultimately keep improving the health care system at Mater Dei Hospital.

One of the biggest advantages of this system is the reduction of missed appointments. One-third of no-shows are a result of people forgetting about their appointments. In the first month of the system’s inception, the total number of missed appointments was reduced by 11 per cent. As a result of CPASms, waiting lists are being cut down drastically in certain outpatient clinics.

CPASms is being implemented within all hospitals and clinics that fall under the remit of the Ministry of Health.

Besides CPASms, Cursor Ltd have designed and developed a wide range of other innovative healthcare solutions. “We can’t make healthcare fun – but we can make it easier!”

For more information email info@cursor.com.mt

“In the first month of the system’s inception, the total number of missed appointments was reduced by 11 per cent.”

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BUSINESS UPDATES

An optimised player journey is the ultimate retention tool iGaming companies are constantly battling each other for a share of the market, so it is imperative that they use every possible tool in their arsenal to up their game. One of these tools is player journey optimisation. The concept is to divide a pool of players into smaller and more targetable groups based on their overall betting behaviour, then deliver specific messaging to them based on their preferences.

within iGaming is critical, as it is generally recognised to be less expensive to invest in retaining existing players rather than attracting new ones.

Creating an optimised player journey which engages before the point of churn is the key to increasing player retention.

NOT ALL PLAYERS ARE CREATED EQUAL

Two of the most recurrent issues in iGaming is that of registering without depositing or depositing without playing, which basically means that a player never follows through with placing a bet. There are various factors that attribute to this, such as poor website design, bad messaging, or a cumbersome process to bet. However, by segmenting players and understanding why certain individuals are abandoning their bets, marketers can target them more specifically with the right message at the right time, and to the right player.

It is important for iGaming companies to realise that players bet in many different ways, and as such they each should be targeted in a unique manner. This is one of the many ways in which data segmentation can become a useful tool. For example, most iGaming brands will find that they have a blend of onetime players, others who are more frequent players, and others that have a higher betting pattern such as VIPs. These groups then need to be broken into micro-segments based on player personas, as everyone has their own personal approach towards placing a bet. This is generally translated in the bet amount, bet type, and bet frequency.

REDUCE PLAYER CHURN iGaming companies are used to the ever-changing faces of their customer base, with new players steadily coming and going. The technical term for this process is called player churn, where players cease their relationship with a company or brand.

Being able to understand how this indicator works

MAKE SURE YOUR PLAYERS FOLLOW THROUGH WITH THEIR BETS

AXON GAMING TO THE RESCUE Player journey optimisation should be regarded as a vital component to any iGaming company’s marketing strategy. Learn how AXON Gaming enables you to automate and optimise your player journeys by tracking and reporting on critical player data in real-time.

Visit www.computimesoftware.com/axon-gaming or email info@computimesoftware.com

e Malta Business OBSERVER

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April 26, 2018

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BUSINESS UPDATES

Diamond-studded venue for award-winning Asset Management portfolio HSBC Global Asset Management shared its global investment strategy for 2018 and provided an update on the changing global economy at an exclusive customer event, held at GABA in Iklin.

The event featured keynote speeches by Stéphane Mesnard, the SECOND FROM RIGHT: DANIEL ROBINSON, HEAD Fund Manager for HSBC RETAIL BANKING AND WEALTH MANAGEMENT, Select Funds, and Wayne HSBC MALTA TOGETHER WITH HSBC MALTA COLSpiteri, the Managing Di- LEAGUES (FROM LEFT) GILBERT GRECH, CHRISTIAN DEBONO AND WAYNE SPITERI. rector of HSBC Global Asset Management Malta.

When welcoming the guests, HSBC Malta’s Head of Retail Banking and Wealth Management Daniel Robinson said: “We pride ourselves in offering our customers high-quality financial advice, and with the help of HSBC Global Asset Management Malta, we are able to share knowledge and market insight that our clients value.” HSBC Global Asset Management Malta is part of the HSBC Global Asset Management Group, one of the largest asset managers in the world. It specialises in investment products for retail and institutional clients and forms part of a group that manages over €400 billion in assets and is present in over 26 countries.

Over the past 20 years, HSBC Global Asset Management Malta has grown and is now entrusted with over €1 billion of assets. Customers are able to invest in locally-managed funds or group-managed funds, which include the HSBC Select range. More information may be obtained by setting up an appointment with the financial advisers at one of the branches.

Fondazzjoni Pippo celebrates launch with sports day at Valletta FC A new non-profit organisation which seeks to unite the Corporate Social Responsibility (CSR) goals of Maltese businesses with the needs of the local community has launched with a major CSR event.

Set up as the social wing of corporate services firm NM Group, Fondazzjoni Pippo is named to honour the memory of the late Pippo Muscat. To mark the official launch of the foundation, its first CSR event was held on 7th April 2018.

Working in partnership with the Karl Vella Foundation (KVF), the group of children from KVF was taken to the Valletta FC Nursery Grounds for a fun sports day.

Fondazzjoni Pippo Founder Beppe Muscat said: “We’re thrilled to kick off our first Pippo event with a sports day for the children from the Karl Vella Foundation – sport is a fantastic way to encourage physical and mental wellbeing.”

“This kind of event is exactly what Fondazzjoni Pippo hopes to achieve, where we can bring businesses together to make strategic and relevant contribu-

THE OFFICIAL LAUNCH OF FONDAZZJONI PIPPO.

tions to the local community, right when and where it matters most. The smiles on the children’s faces today are testament to that.”

While NM Group staff ran the sports day, which included a variety of games such as football and catch, Pippo Ambassador Ben Camille made a special ap-

pearance and took part in some of the day’s activities. The Fondazzjoni Pippo sports day will be featured as part of the ‘Benjamin’ series on TVM on Wednesday 25th April at 8pm.

For more information, please visit www.pippofoundation.org or visit www.facebook.com/ fondazzjonipippo

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e Malta Business OBSERVER |

April 26, 2018

BUSINESS UPDATES

Preserving, promoting and sharing Malta’s culture through technology Dhalia’s 3D imaging technology is a smart t h r e e- d i m e n s i o n a l camera which maps out its surroundings into an interactive dollhouse. It captures stunning detail, stitching together separate shots into one complete structure to present the big picture as an interactive walkthrough environment.

Dhalia’s unique 3D imaging technology gave the company the perfect opportunity to provide a portal into Malta’s breath-taking cultural heritage. Although this technology is primarily used to create virtual tours of properties, the technology is ideal for providing the same interactive experience of Malta’s cultural heritage. “With the help of Heritage Malta we were given access to some of Malta’s most awe-inspiring locations,” the company stated.

Dhalia’s 3D tours are a treasure-trove of what is unique to the Maltese islands. Many will agree that Malta is so loved by foreigners and residents alike because of its incredible history. Through the project, Dhalia is making history and culture ultra-convenient and accessible. Museums and historical sites are just a click away, and students, history buffs and anyone interested can experience Malta’s awe-inspiring heritage from anywhere. Because the 3D virtual tour is always accessible, viewers can study their favourite painting for as long as they like.

For more information or to get in touch, T: 2149 0681; E: info@dhalia.com; Fb: dhaliamt; www.dhalia.com

Simplifying wealth management from its core With an abundance of wealth management offerings available, the task for financial advisors to find a single product which incorporates all the crucial aspects in one is far from easy. From an investor’s perspective, using mundane platforms and face-to-face procedures to invest can be off-putting, whilst also wasting time and potentially money. Thus, wealth managers are counting on new online and mobile offerings in order to attract and retain clients in the digital era.

With all this in mind, Thynk has partnered with industry experts to

“Tonic is capable of exposing all data to investors so that they can review their portfolio online”

build Tonic; an all-in-one financial platform which automates and consolidates all back office operations. Whether it’s client onboarding, KYC or providing investors with online dashboards, Tonic makes it easy.

Tonic is a platform that consolidates the functionality needed for a financial services firm to operate day-to-day. It enables firms to have one tool which centralises all data in one place. It simplifies the administration by leveraging the cen-

tralised data and automating most of the corporate actions and payment distributions. Tonic is capable of exposing all data to investors so that they can review their portfolio online, eliminating the need to call the broker every time they need to know anything about their respective portfolio.

For more information or to book a demo, please visit www.thynksoftware.com/finance or email at info@thynksoftware.com