NEWS
Issue 90
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Distributed with Times of Malta
September 27, 2018
Luke Chetcuti – “e buck stops with me now”
Local wine producers are facing major challenges within their industry, including an ageing farmer population and a lack of agricultural land. see pages 5, 6 >
Marie-Claire Grima NEWS The murder of one of Malta’s most renowned entrepreneurs, Hugo Chetcuti, last July, shocked the entire nation. It wasn’t just because the attack was so cold-blooded and vicious, but also because Hugo himself was so visible – his name emblazoned across numerous Paceville properties owned by the company, his stylised visage surveying the customers placing orders at Hugo’s Burger Bar. Many wondered what would become of Hugo’s Group without Hugo. But Luke Chetcuti, Hugo’s only son and heir, appears to have inherited not just the entertainment empire, but also his father’s dedication to the business and his relentless work ethic. Despite – or perhaps because of – the devastating event that led to his succession, he’s raring to go. “Emotionally, it’s been very, very difficult. But when it all happened, the company was and is, thankfully, in the midst of a very successful and eventful period,” he told this newspaper, in his first ever interview as the new head of Hugo’s Group. “The fact that we were so busy forced me to immediately focus my undivided attention to our operations and the numerous projects which we’re currently engaged in. Immersing myself in the business helps me take my mind off the fact that I have just lost my father in a very cruel and untimely fashion.” Although Luke is still only 26, he has been groomed for succession from a very young age. “I grew up with the company – even though I
Stakeholders believe that the manufacturing sector in Malta is set to be transformed by 3D printing, a technology that is rapidly gaining ground locally. see pages 9, 13 >
CASE STUDY LUKE CHETCUTI. PHOTOS: INIGO TAYLOR
“Immersing myself in the business helps me take my mind off the fact that I have just lost my father in a very cruel and untimely fashion.” was very young at the time, I can still remember when Hugo purchased his first property, where Havana now stands.” “My first summer job was actually working in a warehouse for one of our beverage suppliers in my
mid-teens, where I spent most of my time carrying boxes. In fact – unknown to me at the time – I later found out that my father had actually been supplementing my wage as compensation to them for my lack of experience! He wanted me
to learn the value of money and to understand how hard one has to work in order to make ends meet. I first started working with Dad the following year at Hugo’s Lounge, where I started out as a barman. I was always by my father’s side, so a lot of his knowledge was passed down to me just by being with him. It helped me to mould an understanding of the business, how it operates and how it works.” But while he was his father’s right-hand man, consulted on important decisions and asked for his opinion wherever it mattered, Continued on page 3
How Carmelo Caruana Company, now celebrating its 95th year in business, grew from a pioneering family business to a full logistics operator. see pages 14, 15 >
STOCK MARKET REVIEW Understanding the important role the audit committee plays within a public limited liability company. see pages 23, 24 >
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INTERVIEW
“Hugo never truly realised how big he was” Continued from page 1 the final call was always Hugo’s. “The buck stops with me now. The final decision is mine. That’s the responsibility I have.” For Luke, consolidating the company is now his utmost priority. “I want to restructure and make sure that we safeguard our foundations. Like most local selfmade entrepreneurs, Hugo micromanaged everything.” “Everything went through him. Being completely hands-on and involved in everything, he found it very difficult to leave most decisions to others. He eventually began to change his strategy and operate in a more structured manner, but it is imperative that we fortify what he started. Once we’ve made sure that the foundations are solid, we can move forward and continue to build on them.” Luke expects the consolidation phase to take up to two years, after which he plans to turn his attention to Hugo’s Burger Bar. “There were plans to go international when my father was with us – in fact, we spent most of last year preparing ourselves to franchise this extremely popular and thriving brand. That’s next in line, burger bars. The model is great, it’s easy to multiply, and it’s been a huge success – people love it.” Hugo’s Group operates around 12 outlets under its founder’s name, all located in the Paceville and St George’s Bay area. The Group’s two latest ventures are HSixty6, an upscale, fine-dining restaurant, and a 167-room ultra-luxury hotel that’s due to open this month. And if it seems that the entertainment hub has slowly become dominated by Hugo’s branded establishments, it’s not by chance – Hugo had a oneman masterplan in mind for the party city. “When he started out, he wanted to upgrade the whole area, bring in more people, attract more visitors,” said Luke. “He did so by always developing new concepts – in fact, our portfolio is very diverse.
Hugo’s Lounge, which offers an array of Asian cuisine and sushi, was the first venue and eatery to open under the Hugo’s Group brand. This was followed by numerous other restaurants, bars, night clubs and now, hotels.” Consequently, Hugo’s Group is one of the biggest private-sector employers in Malta. “More than 500 people work with us and with the opening of our new hotel, the numbers will increase by much more,” said Luke. He added that his father was often imitated, and this fuelled the growth of the local entertainment industry. “The entertainment business in Malta grew because others kept trying to follow Hugo’s lead. He was planting the seeds of growth for others too.” Hugo’s contributions to the Maltese business landscape have now been recognised officially – he has just been awarded Best Male Entrepreneur of the Year, as well as Malta’s Best Entrepreneur for Good, at Malta’s Best Entrepreneur of the Year Awards. Luke says Hugo never truly realised how big he was, and never sought out accolades for this work. “He was so humble. He would speak to everyone and treat them all the
“e entertainment business in Malta grew because others kept trying to follow Hugo’s lead. He was planting the seeds of growth for others too.”
same way, from a celebrity to a road sweeper. There was no ‘I’m the boss’ attitude with him. He was incredibly approachable. It’s one of the reasons why people loved him so much.” Luke also spoke about his father’s kindness. “He was a philanthropist. The media seems to have become aware of this only in the past few years, but from the very beginning, people would simply contact him directly with their struggles and he’d just give freely. When he saw people struggling, whether it was a financial issue or a medical one, he always wanted to help. As an employer, he would
give people countless chances. In Maltese, we say kellu qalbu zghira. He was very tender-hearted. He would become deeply emotional at the drop of a hat. And he was a fantastic grandfather. For instance, because my children are still young, he’d never let me get on a plane with him, even if we were going to the same destination, as he’d always worry about them being deprived of us both should anything happen. He wanted one of us to always be there for them.” Besides genuine passion for the company, family is a motivating force for Luke to carry on with the work which Hugo initially master-
minded. “What my father left for me, I want to leave for my kids. He worked very hard for 35 years and left me this empire, so now I need to soldier on and continue where he left off. I have the full backing of the company, and even though it was a massive tragedy for everyone, the enthusiasm to go forward is there. I’ll continue working hard to keep his name out there and keep the brand going strong.” Are any future establishments going to emerge under Luke’s name, instead of Hugo’s? He shakes his head in disbelief at the very suggestion. “I wouldn’t even go there.”
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Shortage of land and ageing population among Maltese wine producers’ major concerns Martina Said Despite experiencing a positive surge in demand for locally-produced wines, Maltese wine producers are facing major challenges within their industry. Such challenges predominantly relate to the agricultural side of their operations, including securing a supply of highquality grapes, a shortage of available land for growing vines, and a lack of incentives for local farmers. “The current challenges within the local viticulture industry are similar to those within the agriculture industry,” said George Delicata, Managing Director at Emmanuel Delicata Winemaker Ltd. “Both industries contribute a fraction to Malta’s GDP, when compared to other sectors like tourism and financial services, so policy-making for this sector is not the country’s top priority, but it needs to be taken seriously. Mr Delicata said that in order for farmers to operate with modernday farming technology, they need to invest in machinery and equipment to replace a lot of the manual labour done in fields, which is no longer sustainable. “But economies of scale dictate that you need fields of a certain size for this to apply and traditionally, fields in Malta get split up among the farmer’s children, fragmenting the land time and again. Policymakers need to review the social implications of land fragmentation and work towards consolidating the land,” he stated. Within the walls of his own winery, he said, he is in full control, but beyond that – especially when it comes to assistance provided to farmers and the provision of land for growing vines – there is little that he can do. “Many older farmers no longer want to work in the industry, but there are young farmers out there
A TYPICAL MALTESE VINEYARD. PHOTOS: EMMANUEL DELICATA WINEMAKER
who want to enter the trade but don’t have land, and this is an issue that needs discussing at the highest levels. At Delicata, we would also like to invest in land, but buying private land for agricultural purposes is simply not an option anymore, as it is too expensive.” However, the company has invested heavily in new equipment and technology over the last few years, which helped it prepare for the boom it is currently experiencing. “2018 has been a very good year for the industry in terms of visitor numbers and the country’s growing population, both of which help the wine industry. Malta’s tourism product has changed considerably from a sun and sea destination to one that is attracting higher-quality tourists who are after a cultural and gastronomic experience, much to the advantage of the local wine industry.”
Mr Delicata said that the industry has undergone quite a transformation since the winery’s earliest days. “Before 1995, only indigenous grapes – Gellewza and Girgentina – were grown locally and used for producing wine, which have been around for centuries. But we’ve since started growing many international varieties which Delicata fought tremendously to introduce to Malta, namely vines for Chardonnay, Cabernet Sauvignon and Sauvignon Blanc. Today, Malta’s home-grown wines are still incredibly sought-after, by visitors and locals, as they offer a unique flavour that cannot be found anywhere else in the world.” Karl Chetcuti, Estate Manager at Meridiana Wine Estate, asserted that the popularity and demand for local quality wines (DOK) is in fact growing, but unfortunately it is growing at a time when the winery is already experiencing difficulties
“ere is quite a demand for our wines, but we are finding it difficult to produce more bottles due to the lack of grapes available.” – Karl Chetcuti, Estate Manager, Meridiana Wine Estate
coping with the current demand. “It is becoming increasingly difficult to find a supply of high-quality grapes, especially white grapes. Farmers are not encouraged enough to grow grapes for wine – as a matter of fact, an alarming number are uprooting their vines completely in order to use their land for other kinds of fruits or crops, or just stopping altogether,” said Mr Chetcuti. “Thankfully, there is quite a demand for our wines, but we are finding it difficult to produce more bottles due to the lack of grapes available. One must also mention the ridiculously high prices for agricultural land that makes it almost impossible for anyone to invest in new vineyards. It is also becoming increasingly difficult to find people who are interested in working in our sector – skilled or unskilled.” “We believe that even though an effort is being made through the current ongoing promotion of DOK wines, a lot of people are still not aware of what this means and the hard work there is behind every bottle of quality wine. Malta’s DOK product is of high level, made to exacting standards following all DOK wine producing protocols, in the same way other PDO (DOK) wines are made in more renowned winemaking countries such as Italy, France, Spain, Germany and others,” he added. At least, after two years of lowyielding harvests, mainly due to very dry winters, Mr Chetcuti is optimistic about this year’s harvest. “This year, we had more rainfall and this harvest was expected to be a good one, but the first part, for white grapes, turned out to not be as easy as initially thought, as the rainfall we had in August slowed down the grape maturity process. On the whole, however, all went well. Now that the rosé Continued on page 6
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NEWS
Grape yields often fail to meet demand Continued from page 5 wine is also ready, we wait patiently for the red grape varieties to mature and be ready for harvesting. Red grapes this year are very healthy and look beautiful – it all seems to be very promising.” Mr Chetcuti added that the winery works closely with local farmers to help them produce more highquality grapes, by supplying them with whatever materials and vines they need for their vineyards, but it’s not enough. “There must be some sort of help from the Government to the wine industry to plant more vines, perhaps by assigning more agricultural land on lease for as long as the land in question is purposely used for grape-growing. It not only helps us grow more grapes and produce more wine, but it helps the environment look much better too. If we can somehow manage to overcome these challenges, the next step would be to start looking at the various opportunities there could be out there.” Jeremy Cassar, CEO at Marsovin Winery, said that year on year, the Maltese are becoming more loyal to their home product. “We are also noticing increases in the demand for wines falling under our premium category. This shows us that consumers are also willing to spend more on each bottle purchased, which gives us confidence as producers to keep on investing in the wines we produce and in the industry. The annual increase in the number of tourists visiting the Maltese islands has played a contributing role to the demand increase. Most tourists tend to specifically ask for Maltese wines when dining out as this enhances their overall experience of the country.” Despite the notable benefits delivered by DOK and IGT protocol, Mr Cassar added, “in recent years, a common struggle within the industry has been the lack of grape yield available to meet the increasing demand for Maltese wines. This is a result of long periods of drought affecting our islands, and also a general lack of grape supply.” Mr Cassar also highlighted one of the industry’s greatest plights: the ageing farming population, with the average age leaning towards the mid-50s, which is threatening the local farming industry. “Malta risks being in a desperate situation unless the right incentives are given to
“Malta risks being in a desperate situation unless the right incentives are given to support the vinegrowing sector.” – Jeremy Cassar, CEO, Marsovin Winery support the vine-growing sector. Malta needs to invest in its local farmers to protect its self-sufficiency as a country. If steps are not taken, Malta could face a very serious situation within the next five to 10 years,” he asserted. “Consumers as well as Government need to understand that the wine sector in Malta supports the well-being of our environment. With approximately 450 hectares in Malta and Gozo under vine, this helps sustain the viability for a land owner to use their land for agricultural purposes. Vineyards are also an idyllic site, especially in summer when the rest of the island is mostly dried up.” On the brink of its 100th anniversary next year, Marsovin has witnessed many changes within the industry since its early days, most notably since Malta became an EU member. “As a result of Malta’s accession to the European Union, levies on imported wines were removed, and the local market was inundated with wines from all corners of the world. Maltese wines now had to compete head to head with a multitude of imported brands, which made it easier for the local consumer to start comparing Maltese wines to the wines of Chile, Lebanon and the US to name a few,” said Mr Cassar. “Although some might have seen it as an adverse situation, in the end it instigated the local sector to up its game when it came to the end product being offered, and also resulted in a consumer with a more educated wine palate.”
"Malta's home-grown wines are still incredibly sought-after, by visitors and locals, as they offer a unique flavour that cannot be found anywhere else in the world." – George Delicata, Managing Director, Emmanuel Delicata Winemaker
THE START OF THE NIGHT HARVEST.
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3D printing poised to revolutionise manufacturing in Malta Rebecca Anastasi The manufacturing sector in Malta is set to be transformed by 3D printing, according to stakeholders, who have stated that the digital technology is gaining ground locally. This is due to its capability to decrease time, cost and logistical requirements, reduce waste, and ensure more flexible working methods, resulting in a more varied output, they said. “With 3D printing, you are working in a digital world, in which each and every product can be unique, customisable and created on demand,” James Attard Kingswell, Innovation Manager at manufacturing giant Toly, told this newspaper. In his view, these advantages have enabled the technology to grow from strength to strength on the island, with “more and more companies purchasing both lowercost machines to provide their engineers with quick ways to prototype, and larger-scale machines for higher-end applications.” He stated that the uptake increased drastically recently. “Both our intelligent workforce and our economy, which is focused on digital industries and services, make 3D printing very attractive as we move further away from traditional manufacturing,” he noted. These upward trends are set to continue, according to Ing. Attard Kingswell, who said that “once a company experiments with small investments in the technology,” they begin to see the potential and “become less risk-averse in terms of applying it to larger problems.” Toly seems to be a case in point. It was one of the first companies in Malta to invest heavily in the technology, including the adoption of the 3D Systems ProJet machine – a
high-end, ultra-precise 3D printer – for its corporate offices. It has gone on to establish partnerships with leading suppliers, such as Ultimaker and 3DZ, and is also currently rolling out a worldwide programme which will see several small Ultimaker 3D printers setting up in their manufacturing, trading and even sales offices, as well as those of their clients, allowing for time and cost savings. “One interesting case study we experienced recently is that our Maltese design team can design something, start printing it on our US sales office printer remotely, and owing to the time difference, by the time the US team arrives in the office in the morning, the part will be ready to be removed and shown to a client on the same day,” he said. This allows for shipping savings since “3D files can be sent over and products manufactured locally with 3D print farms,” thus allowing “for a
“Both our intelligent workforce and our economy, which is focused on digital industries and services, make 3D printing very attractive as we move further away from traditional manufacturing.” – James Attard Kingswell, Innovation Manager, Toly reduction in carbon emissions along the supply chain.” Moreover, this eliminates many of the other hurdles currently facing the manufacturing sector, such as the necessity to have a “minimum order quantity” and “capital investments” which, the Innovation Manager stated, “are often a barrier for the manufacturing of new products.”
Design limitations, associated with machining and injection moulding, will also become a thing of the past, according to Ing. Attard Kingswell. Indeed, 3D printing has “transformed the way we prototype designs before they even make it to a manufacturing stage,” with designers and engineers able to print out designs, for minimal cost, mul-
tiple times a day. This allows them to “quickly iterate and improve faster and more cheaply than having to outsource prototypes to an external manufacturer at a considerable cost,” he said. But the advantages of the technology are even more wide-ranging, according to Ing. Attard Kingswell, since companies can “merge traditional processes with 3D printing,” creating hybrid systems. Furthermore, the technology allows for a more efficient use of human and automation resources. “With 3D printing you can create a multi-part product with moving features in one instance, whereas with traditional manufacturing you would need an operator or an automaton to assemble different parts together to make your final product, which is a slow process.” This means that the new technology will require a new and more advanced skillset, according to Toly’s Innovation Manager. “Local educational institutions are adapting to the change: we get requests from schools to demonstrate the technology as part of their STEM initiatives. Higher educational institutions, such as the University, not only have their own equipment, but generally co-share capabilities with us and other local manufacturers. In this way, students have a greater range of different 3D printing equipment to work and learn with. All of this gives them a much better grasp of the technology for when they enter the workforce,” he stressed. These views were echoed by Carla Aguirre, Sales Account Manager at 3DZ, a global retailer of 3D printing equipment and supplies, who also highlighted the increasing popularity of the technology in Continued 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
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Fanning the flames In a recent interview, Finance Minister Edward Scicluna said that he did not believe that Malta’s economy is overheating, stating instead that “what we have is a high growth that we weren’t used to before.” He stated that the 2019 Budget would “avoid fanning that growth”, and that incentives which create greater growth would be missing this time round, because they should be kept for when they are needed, “not when you’re going that fast.” He also stated that in some cases, Malta’s infrastructure simply hadn’t coped with demand – a matter which will be addressed in the Budget for next year, and that the “cranes mushrooming” all over the place were simply a response to demand which supply had failed to fulfil in previous years. That appears to be a dubious claim. The “cranes mushrooming” seem far more like a symptom of overdevelopment allowed to run rampant, in a way that will eventually end up causing far more damage to Malta’s economy than benefits, rather than a way to address the weaknesses in Malta’s infrastructure. The “cranes mushrooming” are usually the precursors to ever more severe infrastructural problems, as structures and buildings that are totally unsuitable for where they’re being constructed end up choking the neighbourhoods unlucky enough to fall under their shadow. The economy may not be overheating – yet – but it certainly feels every morning as if the island is about to collapse under its own weight, and the negligence of the governing bodies which are supposed to be doing something about it all, but instead seem to be blithely running with scissors. Malta’s unique selling point has never been becoming a miniature Dubai. Although it is rapidly becoming over-urbanised, that’s not what we’re most proud of, and certainly not what makes the island a desirable place to be, neither for the short-term, nor the long-term. In our tourist brochures and magazines, what’s highlighted is the beauty of Malta’s beaches, the rugged charm of the countryside, the integrity of
its well-built and preserved village cores, its historical and architectural heritage that has withstood the test of time, because it was built with longevity in mind, and not making a quick buck for the narrowest possible strata of people. And in our pitches to expats who come here to work, what we harp upon is not the gleaming anonymous chrome, or wall-to-floor glass of the towers that are popping up all over the place, but what a sense of conviviality and community there is in Malta, how much people enjoy socialising, and how it’s still a largely safe and family-friendly place to raise children. It’s pretty telling that Gozo has become such a popular year-round destination with both locals and tourists – it’s a stark reminder of the kind of place that Malta once was, one that’s disappearing so rapidly, yielding short-term profit only to the very few, and leaving the rest in the dust – literally. Who wants to live in this permanent, never-ending, all-consuming building site? With the Budget coming up, the Government has a golden opportunity to rein in the unchecked development that’s threatening our quality of life, and posing a multitude of economic threats for short-term gain. Let’s be clear – the construction and development industry isn’t the bogeyman here, because their entire raison d’être is to build. But those in power should be able to put the brakes on where necessary, instead of joining in the orgy. The Budget can and should be used as a tool to incentivise responsible and sustainable development, rebuilding and repairing, repurposing disused sites, protecting palazzos, town houses and historical buildings, and preventing them from being demolished or diluted within large, faceless building complexes. It should also introduce measures to make it difficult for those who want to develop in core village areas and the much-abused ODZs. It’s admirable that the 2019 Budget will avoid fanning excess growth, but at this stage, this is hardly enough. In fact, it’s probably time to bring in the fire brigade.
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BUSINESS OPINION
Celebrating family businesses, examining their future
Frank V. Farrugia Family businesses have often been described as the backbone of the economy. On both a European as well a local level, the importance of family businesses is well-documented, especially when examined within the context of statistical data, which shows that more than 60 per cent of all enterprises in the EU are familyowned. Apart from being present in every sector of the economy, family businesses contribute greatly to the employment of the country, as they are responsible for nearly half of all employment in Malta. Throughout history we have seen family businesses developing from humble operations, becoming household names, and in some cases, even establishing themselves well beyond our shores. These success stories are only made possible through the grit and determination of the individuals behind such ventures. As a Chamber of Commerce, we are honoured to share some of this satisfaction, as we exist to make a difference on this journey. We are there to facilitate the
necessary communication channels between our entrepreneurs and our authorities – we are there to offer assistance, to help our businesses grow. On the special occasion of the Chamber’s 170th anniversary, we are organising a national conference titled ‘A Family Affair – Safeguarding Malta and Europe’s Beating Heart’, which will be a tribute to the families that have given us some of Malta’s foremost entrepreneurs, and some of the country’s leading business names. This conference aims to celebrate family businesses and their achievements, but also to examine their future. We look forward to discussing topical themes such as shareholding, structure, governance, procedure, finance and succession. With more than 30 per cent of family businesses preferring to keep their business within the family, employing three to four family members within their ranks, the conference is a perfect
opportunity to examine whether this is healthy, or if other business models ought to be tried out. Issues of succession will certainly take centre-stage too, as we know that nearly 70 per cent of family businesses are still in their first generation and only 16.9 per cent are inherited. Planning ahead is central to the survival of any venture, but in the case of family businesses, this becomes even more important. Moreover, with this conference, the Malta Chamber is celebrating the core of its being, the members which represent businesses from all of Malta’s economic sectors, ranging from manufacturing and importation, to financial services and information technology, to tourism. It is these members’ views and expert opinions that the Chamber’s positions and policies are based on. They are the centre of the Chamber’s being. Our co-organising partners, the Family Business Office, will pro-
vide the delegates present with a complete view of family businesses in Malta today, the challenges they are facing, and the tools they have at their disposal, which they can offer to them. Certainly, the attraction of the conference shall be our exceptional list of international speakers. In fact, we are proud to have secured the participation of speakers from global players such as Ferrero SpA, Grimaldi Lines SpA and Buffa srl. Ferrero Chief of Research and Development Briano Olivares, Grimaldi Lines Executive Manager Eugenio Grimaldi, and Buffa srl founder Paolo Buffa, will no doubt share their experiences running some of the world’s most recognisable business brands, and how they managed to reinvent themselves to maintain and consolidate their market share. I am also grateful for the kind participation of members of leading family businesses from Malta, namely Joseph Zammit Tabona
“roughout history we have seen family businesses developing from humble operations, becoming household names, and in some cases, even establishing themselves well beyond our shores. ese success stories are only made possible through the grit and determination of the individuals behind such ventures.”
of Infinitely Xara, Denise Xuereb of AX Holdings Ltd and Benjamin Tabone Grech from Engel & Völkers Sara Grech Malta. The event shall also feature the participation of Christian Cardona, Minister of the Economy, Investment and Small Businesses; Elena Grech, Head of the European Commission Representation in Malta; Etienne Borg Cardona, Director at Capital Advisory Ltd; Albert Frendo, Chief Business Development Officer (Credit) at BOV; Maria Micallef, Managing Partner at RSM Malta; David Galea, CEO at BEAT Consulting; Ariadne Massa, Director at Media Insiders, and Sam Borg, Director at Bortex Group. As a Chamber, we look forward to continuing to be there for our family businesses, supporting them and helping them grow within the context of a healthy and competitive economy. Frank V. Farrugia is the President of the Malta Chamber of Commerce, Enterprise and Industry.
‘A FAMILY AFFAIR – SAFEGUARDING MALTA AND EUROPE’S BEATING HEART’ Date: 1st October 2018 Time: 8.30am – 4.30pm Venue: The Exchange Buildings, Republic Street, Valletta Bookings on bernice.chircop@ maltachamber.org.mt
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Merging traditional processes with innovative technology Continued from page 9 Malta. “It is getting more and more popular. In 2018, we had five companies that purchased a professional 3D printer for their products and the take-up of 3D scanning is also on the rise.” She also attributed this rise to the fact that “it is indeed a revolution for the manufacturing industry” since “you can print basically anything, anytime and in the quantity required.” She also stressed its capability to allow the “manufacture of something that was not possible with traditional methods,” giving an incredible “design freedom” to engineers and designers. The company, which has offices on the island, sees Malta as instrumental to its operations. “3DZ is present in several countries and Malta, being so central, has been the perfect choice to operate from. The financial support available and the access to international professionals is unparalleled,” Ms Aguirre stated. Indeed, the company has invested in educational initiatives designed to further enhance knowledge and awareness
“ere will be huge opportunities for 3D designers, engineers trained to handle the technology and sales people ready to sell customised products.” – Carla Aguirre, Sales Account Manager, 3DZ of 3D printing and scanning capabilities, including two workshops on how the technology is used in architecture and in R&D, though
the manufacturing sector also stands to make continued substantial gains. “There is a tsunami of opportunity within the manufacturing industry, even when it comes to jobs. We do not expect job losses, but the jobs created will be different. There will be huge opportunities for 3D designers, engineers trained to handle the technology and sales people ready to sell customised products – not only those categorised as ‘off the shelf’.” Issam Bahloul, Director of Full Circle 3D, and Amber Keurntjes, the company’s Coordinator and 3D Modeller, corroborated many of these sentiments. The SME, which provides 3D printing services to a variety of local professionals, including within the manufacturing sector, stated that while 3D technology is still “quite costly”, prices are expected to go down, resulting in increased profitability within the industry. “3D printing is a great step towards the future. It has opened new doors and its technology has shown to be beneficial for human-
ity at large, making our lives easier. We have seen that ourselves. A recent project we completed a few months ago involved the creation of over a thousand prototypes of the same design.” This is something which would not have been possible before the advent of the technology, according to the two entrepreneurs, who stated that “its wide applicational uses and few restrictions allow it to be of benefit to many industries, especially in a small country such as Malta, allowing for larger possibilities regarding product design, manufacturing and range of products.”
Both expressed belief in the future of the technology, stating that while “new technologies take time to root within a society,” especially if “that society contains less resources than larger countries,” they expect the use of 3D capabilities to “continue to ascend drastically.” “It won’t be long till other businesses will start to specialise in the provision of such services or commence to make use of the technology,” they said, voicing a high-degree of confidence in the technology and its ability to change the way manufacturing procedures are currently carried out.
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CASE STUDY
Carmelo Caruana Company marks 95 years in business Carmelo Caruana Company, a leading name in Malta’s logistics sector, is celebrating 95 years in business this year. Established in 1923, the company has grown from a pioneering family business to a full logistics house, supporting numerous businesses in Malta and around the Mediterranean to pursue their own growth by providing consistent, reliable service levels. Alongside its longevity and evolution, Carmelo Caruana Company prides itself on a legacy of commercial success and deeprooted entrepreneurship that has spawned a multi-disciplinary group spread across nine countries in Europe and North Africa. It now forms part of 1923 Investments plc, the investment arm of Hili Ventures, a group of businesses engaged in engineering, technology and property, as well as logistics, whose key partners include multinational giants such as McDonald’s and Apple. Carmelo Caruana founded his eponymous firm in the early 1920s and was mainly engaged in the importation of grain. By the 1970s, the company ventured into shipping to support its grain importation, and within a decade or so, it was representing companies like Shell and moving a range of commodities, including cement, petroleum, gas and grain from the Eastern bloc. A liner service soon joined its portfolio of activities, and by the 1970, it established a bunkering operation, turning around more than 40 tankers a month. The company’s growth continued into the 1980s. Under a joint venture with Shell, it became one of the pioneers of ship-to-ship oil transfer on the island and was soon handling two million tonnes a year. Internally, the business, by then trading as Carmelo Caruana Shipping Agency, embraced a different kind of growth. “Carmelo Caruana was married to my grandmother’s sister,” Beppe Hili, the company’s Managing Director for more than 25
“Established in 1923, the company has grown from a pioneering family business to a full logistics house, supporting numerous businesses in Malta and around the Mediterranean to pursue their own growth by providing consistent, reliable service levels.” CARMELO CARUANA WITH ROSE HILI, WHOSE CHILDREN TOOK OVER THE BUSINESS IN THE 1970S.
years, explained. “My mother Rose, his niece by marriage, lived with them at their house in Hamrun even after she married my father Joseph Hili. Carmelo Caruana was originally on the staff of the Mifsud family’s shipping business and later branched out on his own. He was a meticulous man, and he liked to handle everything personally.” “He passed away in 1972. My late sister Marika, my brothers Marin and Paul, and I took over the business. Our first office was at Number 12, Barriera Wharf in Valletta, and we later moved to Number 16.” The Hili siblings were as industrious as their great-uncle and soon the company
was handling more than 70 ships a month – a remarkable level of activity by European standards at the time. A satellite office opened in Greece, business relationships were established with companies in the Soviet Union and the Eastern bloc, tramper services became a specialisation, and fruit importation was added to its portfolio. By the 1990s, CMA CGM, the French shipping group, was looking to use the Malta Freeport as a distribution hub for container transshipment in the Mediterranean and the company entered into an agreement to act as the brand’s agency. Within a few years, Carmelo Caruana was handling 2,000 ships a year.
In a major two-year project in the early 2000s, Carmelo Caruana Company was entrusted with the logistics for the gas pipeline between Libya and Sicily. More than 80,000 tonnes of casing joints were imported from Malaysia, transported to a 100-tumoli site by the Malta Freeport to be cleaned and treated for load-out on supply boats. By this time, the company had moved into a corner townhouse in Floriana, previously the home of Herbert Ganado, the politician and author. Later renamed Transport House, it was extended twice following the acquisition of adjacent buildings to be able to accommodate a team of 60 people.
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Mr Hili’s fondest memories of his tenure at Carmelo Caruana Company relate to the relationships the family were able to forge in the course of everyday business. “Before technology set in, we personally called at the berth office or the port workers’ office,” he says. “We were not officebound. We had good relationships with the stevedores, the police, Customs. It was all hands on. We would socialise at the Lantern restaurant on Saturdays. It was a collaborative community. We set up companies with other families to venture into specific businesses.” Along the years, the Hili brothers pursued other activities like port management and engineering, invested in companies in Belarus and the Baltics, and introduced the McDonald’s brand to Malta. In 1995, Hili Company was established to act as the group’s investment arm and the family continued to pursue diversification. Now part of Hili Ventures, the group, led by the youngest brother Melo Hili and which he jointly owns with Beppe Hili and their immediate families, Carmelo Caruana Company is now a trusted partner in Malta to sea freight agencies around the world. It handles incoming and outgoing shipments by any transportation. As a sister company to CMA CGM Malta Agency (now a joint venture between Carmelo Caruana and the brand), it provides unrivalled efficiency on any CMA CGM-routed booking. The company has also earned an impeccable reputation for its round-theclock agency team, handling operations
in Malta’s major ports at Valletta and Marsaxlokk, and ship-to-ship activities outside ports. Carmelo Caruana Company has worked tirelessly to position itself as an efficient, competitive business partner and is currently operating weekly groupage services from Turkey, Spain and China, all routed on direct services to Malta. Groupage cargo is unloaded at Carmelo Caruana’s own warehouse operation and centralised for rapid collection or delivery. A faster road freight and ro-ro solution has been designed for groupage and full trailer load shipments from anywhere in Europe, made possible through networking to the company’s consolidation points in Italy, Germany, the UK and Poland, routed from Genoa with a transit time to Valletta of just two days. Operating amid the rapidly growing economy in Malta, Carmelo Caruana Company is geared to support local and international businesses with transporting project cargo to and from Malta, on charter, out-of-gauge containers or breakbulk arrangements. It has been particularly receptive to the requirements of the pharmaceutical and electronics community with interests in the region, providing tailored air freight solutions and GLS courier services as the local agents for GLS since 2015. Thanks to its warehouse within Malta Freeport, Carmelo Caruana Company provides a range of services inside the free trade zone, allowing customers to cut costs on handling and clearance fees for cargo in transit.
CARMELO CARUANA COMPANY MANAGING DIRECTOR BEPPE HILI AND ROSE AND JOSEPH HILI AT THE COMPANY’S 75TH ANNIVERSARY CELEBRATIONS WITH PRESIDENT EMERITUS UGO MIFSUD BONNICI AND GEMMA MIFSUD BONNICI (LEFT).
“Carmelo Caruana Company has worked tirelessly to position itself as an efficient, competitive business partner and is currently operating weekly groupage services from Turkey, Spain and China, all routed on direct services to Malta.”
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e Malta Business OBSERVER
| September 27, 2018
TECHNOLOGY
Digital technologies, blockchain and cryptocurrency take centre stage at DELTA Summit The DELTA Summit, a three-day conference discussing digital technologies, blockchain, and the cryptocurrency industry, is being held at the InterContinental Hotel, St Julian’s next month from the 3rd to the 5th October. DELTA Summit is where the world’s first DLT/blockchain regulator will be launched, and where Malta’s new blockchain and virtual financial assets laws will come into effect. This summit is being held in partnership with the Government of Malta, as well as Bloomberg as the official media partner. For over 18 months, the Maltese Government has been working on the first-ever regulatory framework for DLT platforms and virtual assets. The DELTA Summit will be the first international event that gathers not only business representatives and investors but also all the main regulatory bodies such as the Malta Digital Innovation Authority, the Malta Financial Services Authority, the Malta Gaming Authority, the Malta Communications Authority, and the Malta Information and Technology Agency. As the laws will officially come into effect from 1st October, delegates will have an opportunity to schedule an appointment with the relevant authorities and submit their business proposal for the regulators to consider. During these two days, DELTA will have a huge exhibition floor boasting the biggest names in the blockchain and cryptocurrency world including companies such as OKex, Binance, Evercoin, Neufund, Malta Stock Exchange and many others. Furthermore, the two days have a packed agenda full of keynote speeches and debates by international speakers, including renowned Silicon Valley investor
Tim Draper; Binance CEO Changpeng Zhao; Wikipedia co-founder Larry Sanger; DELTA CEO Dr Abdalla Kablan, as well as Government officials including the Prime Minister of Malta, Joseph Muscat. DELTA will also be jointly hosting the ‘ZEST – DELTA Edition’ conference, a parallel track within the summit, exclusively dedicated to all things technology, communications and innovation. Topics will include the future of connectivity, starting out and scaling up, investment and emerging technologies. DELTA Summit is the brain-child of Dr Abdalla Kablan, a serial entrepreneur and award-winning fintech expert. He specialises in the use of artificial intelligence and machine learning in the design of complex financial systems. Throughout his career, he founded several start-ups and companies, specialising in deep learning, professional matchmaking, and fintech. Dr Kablan is also an academic at the University of Malta where
he lectures and researches topics related to computational intelligence, financial engineering, and financial data science. During his PhD studies between 2007 and 2011, Dr Kablan researched the cryptographic block algorithms behind bitcoin, now known as blockchain, and is a renowned expert in the field of distributed ledgers. As a long-time academic, Dr Kablan has spent years lecturing and researching topics in the aforementioned areas. In this time, he had the opportunity to read the Satoshi Nakamoto Bitcoin whitepaper just three weeks after its publication, and has since been exploring the use of blockchain technology in different respects. Dr Kablan shared his thoughts on his experience. “I remember being completely blown away by Satoshi’s whitepaper. I kept repeating the rhetoric that this technology is going to change finance in the same way that the Internet
changed information.” Even though the word ‘blockchain’ was not mentioned once in Satoshi’s famous whitepaper, Dr Kablan’s interest in cryptographic hashes being used to process transactions in the form of a chain was piqued, encouraging him to look seriously at blockchain technology. A question often asked to Dr Kablan is, when will the ‘browser moment’ happen with blockchain? In other words, when will blockchain become a mainstream product? “I think it will happen once we start tokenising assets. As soon as we manage to tokenise value in general, we will have blockchain-based marketplaces where tokenised physical or digital assets will be listed for transacting value. The immutable ledger of blockchain will allow a person to own certain things and to exchange value on the blockchain, and cryptocurrency will become legal tender. How-
“I see a future where, through tokenisation, we will be able to redefine capital, not only in financial terms, but in a social and cultural sense as well. With our current monetary system we are simply unable to capture social capital, meaning so much value is wasted and unusable.”
ever, we are still in the early stages and first, we need to concentrate on solving other problems such as how to verify identity on the blockchain.” “Having blockchain-based or DLT marketplaces where we can store value is the evolution of bartering we sought prior to the ultimate necessity of creating money as no alternative existed.” “Cryptocurrency offers another alternative, yet many cryptocurrencies will disappear as fast as they arrived. I haven’t been involved in initial coin offerings (ICO) before, simply because many projects are often just about raising money and the coins themselves are not actually needed. I see a future where, through tokenisation, we will be able to redefine capital, not only in financial terms, but in a social and cultural sense as well. With our current monetary system we are simply unable to capture social capital, meaning so much value is wasted and unusable.” “Throughout history, in order for a civilisation to thrive, two components were necessary - a system of trade and a store of value. A system of trade could be bartering, exchanging or payment. A store of value could be anything from assets, commodities, gold or silver to cryptocurrencies. Fiat versus crypto has become such a philosophical argument, but if we look at fiat as the world’s largest currency, we see that the USD is based on a promise from a government mired in debt. No one in their right mind should actually put trust in this system because there is so much debt underpinning it. However, it’s become the de facto
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DR ABDALLA KABLAN, CEO, DELTA.
“We are now at a stage where we are the only country in the world that has decided to regulate this space from a technology-first perspective, starting with DLT.”
store of value, which properly-designed cryptocurrencies could be set to disrupt in a major way.” Dr Kablan believes we need to look at blockchain technology from both a technical as well as a legal standpoint if we want to move forward. He believes we need brilliant lawyers to help us come up with regulations, but we first need these lawyers to understand the technology. “The Maltese Government was really attentive to this notion and assigned a brilliant team of experts in law, technology and finance to help develop the new regulation,” he stated.
He strongly believes that this new sector will thrive in Malta. “Extremely talented people are now relocating here, along with more and more venture capitalists that have finally taken the decision to move into this space having been wary of touching an unregulated market. Venture capitalists don’t want to invest in an ‘onion coin’ initial coin offering (ICO) that will be a currency only to buy and sell onions, while owning nothing of a company. Venture capitalists want equity, which is why we are now seeing the rise of Equity Token Offerings (ETOs), where shares of a company are to-
kenised and ownership is registered by a smart contract on blockchain.” “In this case, if a company pivots and venture capitalists decide not just to own shares of onions anymore, they still own equity in that company. And even though in Malta we are creating a framework for ICOs to thrive, equity token offerings and tokenised assets will thrive as well since we decided to look at this industry from a technology-first standpoint.” “What this means is that we first look at the technology behind a project to see if its scalable, secure and able to handle the volume of
transactions it claims to. Then, if we have a financial product on top of that, it needs to be looked at it by financial regulators. The interesting thing about this is that other regulators have to come up with their own procedures, which is why we have passed three laws in Malta. We are now at a stage where we are the only country in the world that has decided to regulate this space from a technology-first perspective, starting with DLT. But the idea is to move into artificial intelligence (AI) and the Internet of Things (IoT) from a regulatory standpoint. Furthermore, as an AI expert, I do think that AI is the biggest threat to
humanity. Once AI achieves high cognitive capacity, it will become a threat, which is why this technology needs to be regulated and updated continuously.” For those interested in hearing more about blockchain, cryptocurrencies, what is happening in the industry and even the opportunity to meet Dr Kablan himself, DELTA Summit is the place to be. Tickets are selling fast but if you act fast you may still be able to find tickets from the official website, delta-summit.com/tickets. You can also keep up to date with the latest news on DELTA’s social media channels.
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| September 27, 2018
CASE STUDY
THE SHEER BASTION, SENGLEA PHOTO: ALAN CARVILLE
Hammett’s restaurants launch new season of bespoke corporate private dining and events Rebecca Anastasi Hammett’s collection of restaurants and event venues – Hammett’s Gastro Bar in Sliema, Hammett’s Macina Restaurant, and The Sheer Bastion in Senglea – are cultivating their focus on corporate private dining and events with a new season of bespoke offerings designed with the business community in mind. All three venues have, since opening, provided enterprises with the opportunity to shape business meetings, staff parties, and corporate celebrations and are now set to further strengthen this area of the business through their Autumn/Winter 2018 catalogues. “It’s all about the quality of the product and the respect for classic service,” explained Chris Hammett, Chef-Patron of the three venues, which have collectively garnered 24 awards. “We’re always trying to be one step ahead of the game, so we can provide an experience which is new and different.” The entrepreneur has a wealth of knowledge on his side. He graduated from the world’s leading culinary arts school, Le Cordon Bleu, and represented Malta in one of Le Cordon Bleu’s culinary demonstrations with chef Eric Bediat, famed for his experience in Michelin star restaurants. After working in London for five years, in some of the city’s most highly-regarded restaurants, he came back to his home island to take over The Villa Brasserie at Le Méridien. Mr Hammett later ventured out on his own and opened Hammett’s Gastro Bar, on the Tigné seafront. Then, towards the end of 2017, he expanded operations to include the Sheer Bastion and, in 2018, Hammett’s Macina on the Senglea waterfront. The latter two are part of a multi-million-euro investment spent on the restoration of the Senglea Macina, the location of an iconic crane used during the period of the Knights of St John. It has been transformed into the designer Cugó Gran Macina Grand Harbour hotel, owned by Von der Heyden (VDH) Group’s IBB hotels, which comprise 14 hotels in four countries around Europe. “In early 2017, I met Sven Von der Heyden, who told me about this new venture and about transforming these ancient walls in Senglea. I came up here and fell in love with the place! We had already started working on Hammett’s Gastro Bar – which opened that
year, on 19th September – but we started putting everything together for this venue and restaurant. We then soft-launched Sheer Bastion in December, with Hammett’s Macina launching at the end of February this year.” Since then, an array of corporate and private events has been catered for, with the Chef-Patron himself taking an active role in the experience. “People are really enjoying themselves at our venues and we’re lucky enough to be part of people’s memories. We do a lot of corporate events and people remember great staff parties, so that gives us a lot of satisfaction,” Mr Hammett said. The three venues have been designed to offer a different flavour to each experience, with Hammett’s Gastro Bar focusing on laidback events, the Sheer Bastion on larger corporate and private gatherings, and Hammett’s Macina Restaurant on a sense of intimacy. This is translated into each aspect of the eateries, from the food and drinks, to the décor and service. “The venues were a blank canvas. We stripped down and rebuilt everything; every detail in the design and the menu was thought out. In the case of the Gastro Bar, we decided to go with the concept of sharing dishes of high-quality food, and setting this experience in a chic, city-inspired environment. The concept worked and, just a few months after opening, the Gastro Bar ranked first in its category for food, service, drinks and ambience by the 2017 Definitive(ly) Good Guide to Restaurants. The layout of the bar-restaurant lends itself to a seated reception – in the form of a long table - or a more informal stand-up do. “It’s a relaxed atmosphere, offering a strictly seasonal menu, an extensive wine list, and gourmet cocktails made with premium spirits from all around the world,” Mr Hammett stated. Moreover, the menu at Hammett’s Gastro Bar is also infused with a sense of detail, combining Asian and South American influences, with a definite Mediterranean spirit. “The concept is one of sharing – so people order smaller dishes to share – and it’s been quite a joy to see that a dining experience can be a taste of the world, and people like it. Seeing it come to life and seeing it successful has been an immense pleasure,” Mr Hammett explained. Across the harbour, on the Senglea waterfront, the Sheer Bastion, sitting atop VDH Group’s hotel, commands spectacular views of the historical dock nestled in the heart of
HAMMETT’S GASTRO BAR.
“It’s been quite a joy to see that a dining experience can be a taste of the world.” – Chris Hammett, Chef-Patron, Hammett’s
the Three Cities. This is what attracted the entrepreneur to embrace the site as the location of his next ventures. “Over here you can look across the water and imagine what it was like 600 years ago. Even the building is in keeping with the character,” Mr Hammett explained. The location is also a boon thanks to its accessibility, he continued, stating that parking was freely available, and the distance is set to become shorter when the Marsa restructuring project is complete. “People think we’re far, but this place is so central. It’s also only five minutes from Valletta by boat and 15 minutes by car from the centre of Malta.’’ But it was also the possibility of leaving his mark which convinced him that this was the right investment. The Hammett’s collection of restaurants in Senglea is now offering “something different to the whole area” with the Sheer Bastion, specifically, able to cater to myriad styles of private and public events “from a fashion show to the launch of a car, conferences or staff parties.” Indeed, there are several set-up options available at this large outdoor rooftop which is split up into six distinct, but related, areas, which could all be rented for large events or split up for more intimate gatherings. This almost-infinite customisability of the space,
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food and drink means that niche tastes can be catered for. “Nowadays people know what they want and it’s all quite bespoke. We can have speciality bars, such as gin or champagne and oyster bars, as well as paella food stations, and Indian-themed events, just to give a few examples,” Mr Hammett said. This flexibility is in no small part down to the experience of the team leading the kitchens, with chefs having worked in some of the world’s most high-profile kitchens, including Michelin star restaurants from all around Europe and even South America. “A good kitchen needs to be creative, in a culinary sense, consisting of a strong-willed team that creates gastronomical works of art, whether these are special seasonal dishes or bite-sized canapés,” Mr Hammett said. The food is also the cornerstone of a memorable experience at Hammett’s Macina, according to the Chef-Patron. “The venue is situated on the marina, at sea level. The décor is inspired by 1920s Paris and we are able to host an intimate 35 covers for a unique experience. It’s for smaller parties, or for a business meal, where you want to have a bit of privacy and during which you can enjoy your surroundings. It’s a bit more formal than the other two venues.” The intimacy of the space provides a different take on the tasting experience launched at the Gastro Bar in Sliema. Hammett’s Macina, which was a nominee for the World Luxury Restaurant Awards, also offers starter-sized portions and a suggested tasting menu, allowing a bite of a little bit of everything. Moreover, the menu also breaks from Gastro Bar in tone and influence. “With the
HAMMETT’S MACINA. PHOTO: ALAN CARVILLE
Macina Restaurant, we’re trying to be influenced from what is around us, from this sense of history. It’s Mediterranean-inspired, but this is a Maltese Mediterranean, a mix of Italian, Spanish, Greek, Lebanese, and Moroccan, with dishes using local ingredients. We’ve tried to create menus which are fitting to the place,” he said. Indeed, the menu – which changes every two to three months – includes an eclectic
mix of dishes, from seabream ceviche with compressed mango, cucumber, yoghurt mousse, and mint, to scallops served with asparagus, lumpfish roe, and black garlic. Furthermore, Mr Hammett explained, a wine cellar will be opening in the first week of October, introducing standout wines from around the globe and varying in vintage from a well-regarded Sancerre to a 2005 SaintÉmilion Grand Cru.
Although Hammett’s collection of restaurants offers various packages to suit differentsized events, companies, themes and budgets, with prices ranging from €35 to €55 euros per head, the sky’s the limit when ordering exclusive quality dishes or wines. “The most sought-after and exclusive champagnes, wines and caviar are available, making any event that more special,” Mr Hammett said. Once an enquiry has been made, the process that follows includes an on-site meeting and, if requested, a personal tasting of the items on the selected menu. Logistics are usually “done and dusted” a couple of months before the event, though the ChefPatron did not exclude the availability of lastminute slots, emphasising that every effort is made to do “what’s best for our guests.” Hammett’s collection of venues is also attempting to make its mark by prioritising environmental sustainability: the outlets have banned plastic straws and are using bamboo or sugar cane ones instead. They also recently announced their partnership in coordinating a seabin for the Senglea marina harbour, filtering and cleaning 25,000 litres of sea water a day. “A memorable experience is reliant on attention to detail and this starts form the very beginning. We try to do things differently; we try to keep a consistent supply of local produce and to be self-aware in how we conduct ourselves. At the end of the day, it’s all about quality. And that’s what we want to be known for.” For bookings, email events@hammetts.com.mt, outlining the details of your request or call on 7945 1510.
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e Malta Business OBSERVER
| September 27, 2018
CASE STUDY
Grimaldi Group prepares the next generation of youngsters for the seafaring life The Grimaldi Group is a private, family-owned Italian shipping company, which operates a large fleet of ro-ro vessels. The family’s link to the shipping industry goes back a long way – according to the company’s own history, the oldest written records linking the family to shipping date back to the 14th century, when three Grimaldi forebears received a precious artefact as a guarantee for the chartering of three ships. However, the current Grimaldi companies were founded in the middle of the 20th century, when Achille Lauro, the head of one of the largest shipping companies in the world, took his nephew, Guido Grimaldi, under his wings, and this brought the family back into the shipping business. “In 1947, Guido and his brothers Luigi, Mario, Aldo and Ugo Grimaldi set up their own business by purchasing a Liberty vessel, a type of cargo ship used by the US fleet during the Second World War that gave rise to the most important, privately-owned European fleets,” said Dr Eugenio Grimaldi, Director of the Grimaldi Group. “Post-war immigration was at its peak and Grimaldi’s shipping services focused on the Mediterranean and South American route. In the years that followed, as the passengers’ demands for comfort and quality increased, the fleet was upgraded to include new, modern liners.” Dr Grimaldi explained that in the 1960s, the Group began to strengthen its freight operations with bulk freighters and tankers. “The expansion in the ro-ro sector and, more specifically, in the transport of vehicles came in 1969, when the Group started operating regular liner services linking Italy and the United Kingdom. The Grimaldi Group’s car carrier services rapidly won the trust of
the major vehicle manufacturers, which needed to ship their vehicles between Northern Europe and the Mediterranean. This development marks the beginning of the Group’s modern period: over the last 40 years, the focus on the ro-ro sector has in fact been the driving factor for growth.” At the same time, the Group expanded its service network to serve not only the Mediterranean and Northern Europe trade routes, but also the routes between Northern Europe and West Africa, and between Northern Europe and South America. In the mid-1990s, the second generation of Grimaldi brothers decided to part ways when it came to business, and set up two separate entities. Grimaldi Genova is owned and managed by Mario and Aldo, while Grimaldi Napoli, which corresponds to today’s Grimaldi Group, is owned and headed by Gianluca and Emanuele, and their brother-inlaw Diego Pacella. “Now we are the third generation of Grimaldis who are participating in the company. We are six cousins even though, in truth, we feel like brothers, having grown up together,” said Dr Grimaldi, who is Emanuele’s son. Dr Grimaldi affirmed that being part of a family with such a multigenerational history of entrepreneurship certainly influenced his growth path. “From an early age, my brother Guido and I used to listen to my grandfather and father talking about business. To us, it was quite natural to be involved in family activities.” In fact, his first work experience as a teenager happened on board a Grimaldi vessel, with the added twist that nobody knew who he was. Even though he was tasked with carrying out some of the most menial and humble tasks on board the
“e Grimaldi Group’s longstanding commitment to Malta has been uninterrupted and consistent for more than 60 years, and is set to continue.”
DR EUGENIO GRIMALDI, DIRECTOR, GRIMALDI GROUP.
ship, it left an indelible and profound mark on him. “It was the most beautiful and formative work experience of my life,” Dr Grimaldi stated. “As a result of that, I deeply understood the sacrifices that our seafarers make every day. My grandfather and my father transmitted important values to my brother and I, such as respect for
all the people who work at Grimaldi; the spirit of sacrifice – always being in the front line to face the struggles of labour; as well as humility and simplicity. These are the values I can always count on and trust.” The company takes the ‘family’ aspect of ‘family business’ very seriously, and uses its members’
close bond effectively to strategise, make advantageous decisions, and deepen their already strong familial ties. “Sharing in our family is everything. I share my office with my brother Guido, and my father still shares his office with my uncle Gianluca. Every day we have lunch together, discussing and sharing business strategies. This daily rit-
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ual is a source of great personal and professional enrichment, as well as consolidating our family union even more. At the same time, it gives us the opportunity to take important decisions quickly, putting Grimaldi at a competitive advantage position on the market. All of this can only be positively reflected in the company’s activity. Facing the challenges of the market with my family has made us even more of a cohesive unit over time.” Since its establishment, the Grimaldi Group has always continued to work on its strategy of expanding its maritime services, as part of a wider long-term plan to provide global logistics companies with a strong maritime base. And Malta, with its proximity to Italy, and advantageous location in the middle of the Mediterranean, has ensured that the Grimaldi Group’s interest and investment in it has never waned. “The Grimaldi Group’s longstanding commitment to Malta has been uninterrupted and consistent for more than 60 years, and is set to continue,” Dr Grimaldi said. “There is no doubting Grimaldi’s contribution and support to Malta’s industrial and commercial development through the provision of regular maritime connections, and through the operation
“Facing the challenges of the market with my family has made us even more of a cohesive unit over time.”
of a Maltese company – Malta Motorways of the Sea Limited.” Set up at the end of 2005, Malta Motorways of the Sea (MMOS) – which started operations to guarantee service continuity in the wake of the liquidation of Sea Malta, the state-owned shipping line – quickly established itself as an indispensable tool to support the industrial and commercial development of Malta and the growth of its economy. “Malta Motorways of the Sea offers multiweekly links from Malta to Italian ports, and, through Grimaldi’s extensive EuroMed Network, to all
the main ports in the EuroMediterranean area,” Dr Grimaldi explained. “MMOS is a member of the Malta International Shipping Council, and one of the sponsoring partners of the Malta Federation of Industry. It is also a founder member of the Malta Short Sea Promotion Centre.” Furthermore, Malta Motorways of the Sea has committed itself to support the training of Maltese cadets in the process of making them young officers to be employed on the vessels sailing under the MMOS flag and other companies of the Grimaldi Group. The company has entered a permanent co-operation agreement with the Malta College of Arts, Science and Technology (MCAST – Maritime Institute), through which as many as 10 young cadets are currently being trained on-board the Grimaldi Group’s ships. Once their sea time is over, the students return to college to complete their studies; and yet another generation comes one step closer to making their living from the sea, on board a Grimaldi vessel. Eugenio Grimaldi will be headlining the national conference ‘A Family Affair – Safeguarding Malta and Europe’s Beating Heart’, organised by the Malta Chamber of Commerce, Enterprise and Industry on 1st October.
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STOCK MARKET REVIEW
e role of the audit committee Doreanne Caruana The audit committee of a public limited liability company plays an increasingly important role, one which will be outlined and highlighted throughout this article. However, before doing so, it would be beneficial to understand how boards are structured and where the audit committee sits within these structures. There are two kinds of governance structures of companies – one-tier boards and two-tier boards. Malta’s Companies Act follows the Anglo-American approach, whereby companies apply the former structure, also known as the unitary model. This governance model consists of one board of directors that may include a mix of both executive and non-executive directors. This is the model applied by the UK and the US, hence the name Anglo-American. In continental Europe, the tendency is to follow the two-tier board system. The executive board, as the name implies, is made up of the executive directors who generally are tasked with running the day-to-day operations of the company, while the supervisory board is made up of non-executive board members. The main objective of the supervisory board is that of monitoring and representing the interests of shareholders on the board. With a one-tier board, this supervisory function is often undertaken
by the audit committee. Public limited liability companies that have their securities – whether equity or debt – listed on the official list of the Malta Stock Exchange (more commonly referred to as issuers or listed companies) are required to have an audit committee which is compliant with the local listing rules issued by the Malta Financial Services Authority (MFSA). While a board of directors of a listed company may include executive directors, listed companies are required to have a number of non-executive directors. The listing rules – amended in 2016 to implement new EU directives and regulations on the statutory audit of public interest entities (PIEs) which issuers classify as such – require that the audit committee of a listed company is composed solely of non-executive directors. Furthermore, the majority of those directors have to be independent of the company. These requirements reflect the local transposition of Article 39 of Directive 2014/56/EU into our rules. Additionally, the listing rules require at least one member of the audit committee to be competent in accounting and/or auditing, and the chairman of the audit committee has to be one of the independent directors. The rules also talk about the minimum number of times that the audit committee is set to meet during the year – at least four times. What is the role of the audit committee and why is it important, particularly with listed entities? The primary objective of an audit committee is to protect the interests of the company’s shareholders and stakeholders. If we were to look at entities that have their shares listed on the stock exchange, there exists a clear delineation between the ‘principal’ and the ‘agent’. The directors are considered to be agents who take decisions on behalf of the owners – the principals. The audit
“e primary objective of an audit committee is to protect the interests of the company’s shareholders and stakeholders.”
committee plays an important role in such cases, ensuring that they take objective stances on material matters, keeping in mind the interests they are bound to protect. If we had to look at issuers of bonds, most terms of reference of the audit committee also seek to protect the interests of bondholders as important stakeholders in the company. Companies that issue bonds on the stock exchange include family-owned businesses, and to improve confidence in the transparency and good governance of the company with bondholders, the audit committee would seek to protect their interests in the company. Another primary objective of the audit committee is to assist the board of directors in the company’s decision-making processes and to ensure qualitative reporting, including financial, at all times. In
satisfying the latter objective, the audit committee is expected to manage the relationship between the company and the statutory auditors, monitoring the audit process and the consolidation of the financial statements, review any reports drawn by the statutory auditors, ensuring the independence of the external auditors and discussing any recommendations made by the auditors to improve quality and effectiveness of the financial reporting, among others. Quality and risk management controls are important considerations for the audit committee, as its members are tasked with monitoring the effectiveness of the company’s internal quality control and risk management systems, particularly with regards to the financial reporting of the company, to enContinued on page 24
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STOCK MARKET REVIEW
Transmitting transparency and confidence in the company and its business Continued from page 23 sure that quality of reporting is not compromised. The committee members are also expected to assess impact and requirements in terms of new reporting standards that may affect the company and its reporting regime. Another important aspect of the audit committee is its oversight role on various matters concerning the company. As discussed earlier, the audit committee must transmit transparency and confidence in the company and its business, and as such, one important oversight role that its members have is that of monitoring material transactions, including any related-party transactions that the company may be planning to enter. The listing rules require the audit committee to scrutinise the transactions with related parties (which may include transactions with the shareholders, directors or other senior officers within the company) to ensure that these are conducted at arm’s length. This means that the transactions that are presented must be
set on normal commercial terms. This is a safeguard to prevent a related party from taking advantage of its position, and to provide a level of comfort and confidence to external stakeholders. In such instances, the audit committee is expected to assess and, if deemed fit, approve the transaction, taking into consideration the materiality of the transaction, ensuring the transaction is in the ordinary course of the business of the company and assessing whether the related party has been given any preferential treatment. When the transaction is approved by the audit committee and the committee considers that the transaction is material in the context of the company’s business, then a company announcement should be made, describing the transaction, mentioning who the related party is and the nature and extent of interest of the related party in the transaction. Another instance when a company announcement is to be issued is when the audit committee does not recommend the transaction but
“Quality and risk management controls are important considerations for the audit committee, as its members are tasked with monitoring the effectiveness of the company’s internal quality control and risk management systems.” the company still intends to proceed with the transaction. In such an instance, apart from the company announcement, the audit committee will request that a circular is also sent out to the shareholders to obtain their approval, or otherwise. At no time during the discussion of the transaction with the related party may the latter be allowed to vote on the transaction. Companies which have securities offered to the public and listed on a stock exchange are considered public-interest entities (PIEs). This is a classification given to entities
including listed companies, banks and insurance companies among others. Due to the nature of their business, their size and/or number of employees, they are considered to have a significant public relevance. It is therefore important to have a balanced board that is composed of people with integrity and who can and would pose questions to ensure that all stakeholders’ interests are protected. Doreanne Caruana is a Corporate Advisory Executive at Rizzo, Farrugia & Co (Stockbrokers) Limited.
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. © 2018 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved
e Malta Business OBSERVER
BUSINESS UPDATES
Only 39 per cent of Maltese companies have a talent strategy Talent management has become Malta’s main HR challenge. The country’s economic growth and influx of foreign companies have led to an increase in the demand for workers and the creation of new job profiles, making the management of talent a priority for local businesses. 60 per cent of Maltese companies have identified motivating and retaining their staff as their top priority for the coming 12 months. At the same time, only 39 per cent have a talent strategy. This data emerges from this year’s HR Pulse Survey report, an annual survey carried out jointly between PWC Malta and FHRD. In order to address the salient points of how talent can be managed and nurtured in organisations, how it can be leveraged to create a positive workplace, and how to keep talent engaged, this year’s HR conference theme is related to talent management. Managing talent has become a source of competitive advantage for local entities, and if managed well, it can improve business performance in the long run. Already 400 delegates have registered for the event, all coming from a wide range of organisations. The conference also has a trade show with more than 25 exhibitors participating. As per previous editions, FHRD has lined up a number of well-established international keynote speakers, together with speakers coming from local organisations. The event will be held at the Hilton Malta Conference Centre on the 19th October 2018. To register for the event, visit www.fhrd.org/2018conf or email events@fhrd.org for more information.
60 per cent of Maltese companies have identified motivating and retaining their staff as their top priority for the coming 12 months.
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BUSINESS UPDATES
Cluttons forms association in Malta Cluttons has formed an association in Malta, prompted by the island’s strengthening residential sales markets. Malta recorded the second-highest property price growth in Knight Frank’s Global House Price index, recording 13.6 per cent growth year-on-year in Q1 2018, with other key European markets recording much steadier growth rates of 3 – 5 per cent. Cluttons will be working with Dhalia Real Estate as their local Associated Partners. Joanna Leverett, Cluttons Head of International Residential Markets, said, “We are very excited to form an association with Dhalia. Malta has strong connections with the UK and we look forward to offering our clients access to this important market.” Chris Grech, Head of Dhalia Real Estate, commented, “Together with Cluttons, Dhalia will be bringing fresh access to Malta’s high-end real estate market for clients around the globe.” The financial services and gaming industries are attracting a significant number of people who are relocating to Malta. Growing demand from both local and international buyers is driven by a strong rental market, limited land supply, and a very cautious and stable banking system. Cluttons delivers ideas and solutions that add value to its clients’ assets. In addition, its commercial proposition understands the dynamics at play in the future of the office sector, delivering insights and value to investors, landlords and tenants. Clients range from international corporations and institutional investors, to private individuals and families.
Supporting businesses in trading safely and securely Creditinfo is a leading service provider for credit information and risk management solutions worldwide. It has been developed through its multiple subsidiaries in more than 20 countries around the world, generating numerous innovative products and services from official and customer information sources, and facilitating best practices in credit risk management. Founded in 2002, Creditinfo Malta has become a household name, supporting businesses in trading safely and securely, locally and internationally, by minimising financial risk. Our local online database provides customers with live information, which enables them to access the financial risk they face from their potential new and existing clients. Our ready-to-use credit reports are accessible online 24/7, and contain different types of information required by modern-day businesses. Creditinfo Malta customers can comply with the 4th Anti-Money Laundering (AML) Directive through KYC Watch, due diligence, international and local company credit reports, individual reports and debt
EQUIOM LEGAL DIRECTOR, CHRIS CINI
collection. By gaining more insight and having access to information when they need it most, our clients can make better decisions and trade more safely. Other products and services that Creditinfo offers include pressure letters, monitoring of
clients, and more, enabling improved cash flow and maximising the benefits of business relationships. Creditinfo Malta Limited, 199, Eucharistic Congress Road, Mosta. T: 2131 2344; E: info@creditinfo.com.mt; www.creditinfo.com.mt
Equiom’s Legal Director, Chris Cini, takes on Monaco Yacht Show 2018 The yachting and crewing team from global professional services provider Equiom is currently exhibiting at the world-famous Monaco Yacht Show, this year bolstered by Equiom’s new local office which specialises in corporate and trust structures. Legal Director Chris Cini, along with Mark Young, Senior Manager of Yachting and Aviation from Equiom Malta, are accompanying the team of 10 employees from the Group’s Isle of Man, Malta, and Jersey offices.
The team consists of experts in tax, VAT, ownership structures, sales and purchases, as well as the administration of crewing services. In addition, representatives from the Monaco office will be present throughout the week, offering local support and meeting clients. Chris, Mark and the Equiom team are at Booth QS107 in Darse Sud. To arrange a meeting in Monaco or for advice on matters relating to yachting, contact chriscini@equiomgroup.com
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BUSINESS UPDATES
Elizabeth de Portzamparc to headline Malta Architecture and Spatial Planning conference Leading Brazilian-French architect Elizabeth de Portzamparc will be the keynote speaker at the second edition of the Malta Architecture and Spatial Planning (MASP) conference which is being organised by the Planning Authority on Thursday 4th October. The theme chosen for this year’s conference is ‘Planning for liveable places’. Key experts will debate the big issues related to the challenges that are affecting land use in Malta. At the forefront of Malta’s agenda, the conference will discuss the need to create the right social, economic and environmental conditions for liveable places. As keynote speaker, Ms de Portzamparc will demonstrate, using a dual sociological and architectural approach, how she manages to combine the
At the forefront of Malta’s agenda, the conference will discuss the need to create the right social, economic and environmental conditions for liveable places.
requirements of the social, urban and ecological aspects within her projects. Her work is characterised by innovative flexibility, architectural layouts designed to foster sociability on the scales of both the building and the city, giving much importance to the total spatial interconnections. Some of her major architectural projects include the iconic railway station of Le Bourget, the Grand Documentary Equipment of Aubervilliers, the Musée de la Romanité in Nîmes, projects for cultural facilities, and buildings for hotels and houses in France, Brazil, Morocco, China and the United States. Renowned architectural writer Philip Jodidio says that the range and breadth of Ms de Portzamparc’s projects place her at the forefront of contemporary French architecture, but her international background and designs for other countries also make a case for her emergence on the larger stage of ‘star’ architects. The PA has also invited a line-up of foreign and local experts to address the conference including Dr Mary Keeling (IBM), Stephen Hilton (Bristol Futures Global), Jerome Frost (ARUP), Mark Atherton (Greater Manchester Combined Authority), Jacco Schuurkamp (Department of City Management, Public Space and Green Infrastructure, The Hague), David Harley (Scottish Environment Protection Agency), Professor Andrew Azzopardi (University of Malta), David Sislen (World Bank), Gerald Muscat (European Investment Bank), Angelique Spina (PwC Malta), John Acres (Royal Town Planning Institute – UK) and Simone Vella Lenicker (Editor – The Architect). The conference, which will be held at the Dolmen Hotel in St Paul’s Bay, will also serve as a forum for networking and idea-generation. Reservations can be made through the Authority’s online portal, www.pa.org.mt. All proceeds from the conference will go towards the Malta Autism Centre.
ELIZABETH DE PORTZAMPARC
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BUSINESS UPDATES
HSBC Global Asset Management Malta launches the Lower Carbon Funds range As global awareness of environmental sustainability risks increases, and momentum around climate-related investments continues to build, more investors realise the importance of sustainable investment. HSBC Global Asset Management Malta has announced the launch of the HSBC GIF (Global Investment Fund) Lower Carbon Equity Fund and the HSBC GIF Lower Carbon Bond Fund, two lower carbon funds that aim to address climate-related investment risks using robust composite carbon data to achieve a lower carbon portfolio than their respective reference benchmark. Climate change is a material investment issue, creating risks and opportunities as companies are impacted directly, or as a result of regulatory changes. By taking a proactive approach, HSBC is offering investors the opportunity to mitigate some of the risks associated with cli-
“THE WORLD NEEDS TO MOVE TO A LOWER-CARBON ECONOMY”
mate change. As a leading fund manager, HSBC Global Asset Management has integrated sustainable investing in its investment management. The implications of climate change and transitioning to a lowercarbon economy are now core investment considerations. The HSBC GIF Lower Carbon Bond and Equity Funds aim to reduce total exposure to securities and sectors that produce the highest greenhouse gas emissions. In the Lower Carbon Funds, all holdings must pass a carbon-intensity assessment to be eligible for purchase. These funds are managed by HSBC Global Asset Management, one of the largest asset managers in the world. It specialises in investment products both for retail and institutional clients, managing over €400 billion in assets and present in over 26 countries.
Transaction monitoring is a key component of AML compliance Nowadays, it has become mandatory for compliance teams to think about regulation in a holistic way, and to find improved methods of managing the vast amount of transactional data being collected each day. Organisations must comply with Anti-Money Laundering (AML) rules, with the main purpose of detecting and reporting suspicious activity. This is effectively achieved through the use of an AML transaction monitoring solution. By monitoring and analysing cash deposits, withdrawals, and wire transfers, AML transaction monitoring software can provide the compliance team with a complete view into a customer’s profile, risk levels, and predicted future activity. THE NEED FOR A HOLISTIC APPROACH There is a growing focus on monitoring every transaction, which leads to the importance of adopt-
ing a broad-based approach towards dealing with business risk. Organisations need to be able to identify potentially unusual financial transactions which might subsequently prove to be suspicious within the context of existing antimoney laundering regulations. The mapping of these data points is critical for a full picture of the client’s profile, their commercial activities, private wealth distribution, and management structure. Although many organisations have implemented robust and costly Know Your Customer (KYC) solutions, the problem often remains in the identification of suspicious transactions. This tends to involve submitting large amounts of alerts, many of which are false positives, without any form of analysis. Consequently, compliance teams are flooded with information which reveals very little intelligence. Therefore, KYC cannot simply be a random data grab if it is to provide any meaningful
transaction analysis. It eliminates unnecessary manual work, minimises the likelihood of missing critical information, and assists organisations in maintaining a compliant profile.
identification of suspicious behaviour. Rather, a suitable KYC solution requires intelligent transaction monitoring of a client’s activities, with the appropriate analysis nec-
essary to create a holistic view of financial behaviour. An effective AML transaction monitoring solution is a powerful compliance tool for financial
AXON AML TRANSACTION MONITORING The AXON transaction monitoring solution helps organisations detect suspicious behaviour quickly and effectively. It optimises transaction monitoring by automating processes in order to minimise unnecessary alerts, while also offering real-time tracking and reporting functionality. With AXON, compliance teams become more accurate and efficient in their monitoring of potentially fraudulent behaviour. Visit www.computimesoftware.com or email info@computimesoftware.com to learn more about AXON and how it can help your business remain AMLcompliant.