Despite the slowing, however, the central bank describes the sentiment as strong and robust. Economic activity in Malta is foreseen “to remain robust over the projection horizon, supported by both demand and supply factors,” the CBM says in its Q4 2019 Economic Projections 2019-2022 (link to archive).

The central bank says the GDP growth will drop as it is gradually normalising from its “historical” highs. Furthermore, the CBM expects the currently weak international environment to limit export growth in 2019.

The central bank revised its GDP growth projection for 2019 marginally down from its forecast in August due to weaker than expected outturn in private consumption expenditure in the first half of the year.

The CBM also revised growth forecasts for the coming years downward, chiefly due to a weaker international environment affecting export growth and a weaker outlook for gross fixed capital formation. The net export contribution is thought to turn to positive in 2020.

In the coming years, domestic demand will act as the major driver of economic growth, with private consumption seen to remain robust due to favourable market conditions. Private consumption growth is set to decelerate from 2018’s 7.3% to 5.0% in 2019, slowing further to 4.1% in 2020, and to a respective 3.8% in 2021 and 2022.

The central bank expects government consumption to lift domestic demand by the government using some of its fiscal space. The central bank projects government consumption to be heavily influenced by the projected growth in intermediate consumption and compensation of employees, as well as the expected decline in inflows from the Individual Investor Programme (IIP), which are netted against consumption expenditure, according to the Q4 Economic Outlook.

Planned expenditure on infrastructure projects is expected to make investment rebound in 2019, however, growth will slow markedly in 2022 as a number of large projects will be winding up, the CBM foresees. The central bank expects residential investment to grow at a progressively slower pace after the strong expansion of the recent years.

The central bank also warns that the robust growth on the demand side should be supported by the supply side of the economy. “The labour supply is expected to increase further, reflecting continued positive but decelerating net migrant flows and an increase in the capital stock contribution,” the CBM says in its outlook.

The full outlook is available for download from the official webpage of the Central Bank of Malta.

The post CBM forecasts slowing GDP growth dropping to 3.5% by 2022 first appeared on The Malta Business Weekly.

Aspire Global’s revenues increased by 32.1%, from €24.7m to €32.8m in Q2 2019, spurring growth in earnings before interest, taxes, depreciation, and amortisation (EBITDA) by 7.2%, from €5.7m to €6.1m. The performance of the group was considerably lifted by B2B revenues jumping by 57.5%, from €12.4m to €19.5m, constituting 59.6% of total revenues.

“Our B2B operations have been performing very strongly recently, which is very satisfying because we are bearing the fruits of all the hard work we have done in the last two to three years. Our product development teams have been designing and launching great new features for our partners and we have continued to focus on providing the best CRM [customer relationship management] system in the business so our operators can maximise lifetime values and reduce churn,” Aspire Global CEO Tsachi Maimon tells Business Malta.

Although the CEO could not reveal too much about their plans and expectations for the future — for Aspire being a public company — Mr Maimon believes the trend is clear: “We will strengthen our current portfolio of partners and add new ones to our platform; while enabling them to offer new products and features to their players,” the CEO tells BM.

With such a strong business-to-business (B2B) arm, one would wonder how strong the muscles are on the business-to-customer (B2C) limb. “We believe the way we have managed to combine our B2C work with our B2B activities is one of the reasons we have grown so successfully in recent years. We have a team that is focussed on B2C because like every other strong operator in the market we want Karamba to compete with the biggest names out there,” Mr Maimon breaks it down.

Success around Karamba has enabled Aspire Global to grow and perform well as a company, which the company sees has resulted in a strong showcase for the B2B partners of the firm. “They can see what our platform is capable of and when potential B2B partners come to us, we can show them the quality of our platform and when they sign with us they often finish the conversation by saying they want ‘Karamba-style success’,” according to the CEO.

M&A to fuel further growth

Aspire has recently agreed to acquire 100% of the shares in GMS Entertainment Limited, owner of the B2B group Pariplay, for approximately €13.1m in cash. Pariplay operates a game aggregator platform globally, including their own game studios, providing operators with access to thousands of game titles from leading game producers.

“Our M&A strategy will focus on B2B technology companies that can add volume and can further contribute to Aspire.”

“Pariplay will play a very important and strategic role in Aspire Global’s operations. Strategically, it will enable us to increase our presence across the value chain of the iGaming industry. As for the United States, Pariplay is already licensed to operate in New Jersey. It represents a major advantage over other games aggregators and studios and will act as a spearhead for potential moves Aspire Global might make in the US market in the future,” the CEO says.

When Aspire announced the planned acquisition, the firm tagged it as a “crucial” moment in gaining control of another section in the iGaming value chain. The transaction should be closed during Q3 2019, with a positive effect on the company’s EBITDA as of 2020. For 2019, however, the transaction is not expected to have any material effect on financial results. Nevertheless, Aspire sees the possibility of further mergers and acquisitions activities (M&A).

“Pariplay is the first of a number of acquisitions we have planned as a group. We have been very ambitious and thanks to our successful operations and performance we have cash in the bank that we plan to use. Our M&A strategy will focus on B2B technology companies that can add volume and can further contribute to Aspire. We want to control more steps within the iGaming value chain so that we have more control and can save costs in the process, while also growing revenues through operations outside of our platform,” according to Mr Maimon.

Despite some busy months behind, Aspire Global does not appear to take a rest, in fact, the company is eyeing further expansion. “Our vision is to enable our partners to achieve their full potential. There are many ways of doing this: launching more partners, enabling them to have a larger product offering in store with additional verticals that would allow them to launch into more markets. Our partners are part of our roadmap and future vision and will play a key role in both Aspire Global’s growth and their own,” Mr Maimon concludes.

The post Aspire Global bets on further growth, plans more M&A first appeared on The Malta Business Weekly.

The central bank believes that growth in private consumption and government expenditure is expected to “remain robust” while investment is expected to recover from the contraction recorded in 2018.

During the projection horizon, GDP growth will be supported by domestic demand, mainly reflecting “robust” growth in private consumption and investment. 

The net export contribution to growth is expected to be negative in 2019 and 2020, reflecting the weak international environment, and a pickup in import growth as a result of strong domestic demand. The contribution of net exports should turn positive in 2021, reflecting faster export growth, according to the press release.  

Furthermore, the pace of job creation is set to moderate while the labour market is expected to remain tight, with the unemployment rate projected at 3.8% by 2021. 

Annual inflation, based on the Harmonised Index of Consumer Prices (HICP), is projected to ease slightly in 2019, before edging up to 1.9% by 2021, reflecting a pick-up in services and non-energy industrial goods inflation (NEIG). 

Moreover, the government balance is expected to remain in surplus over the coming years, such that the debt-to-GDP ratio is projected to decline to below 40% by 2021. 

The external environment poses downside risks to the projections of economic activity and inflation while domestic risks remain largely on the upside in the medium-term.

The risks to public finances are broadly balanced due to a possible slowing down in the implementation of investment projects that could be offset by higher current expenditure.

The post CBM envisages 4.4% economic growth in 2019-2021 in Malta first appeared on The Malta Business Weekly.

The second quarter of 2019 saw 130 cruise liner calls, with an increase of 27 calls compared to 2018. Transit passengers accounted for 79.9% of the majority of total traffic of 210,671. 

Furthermore, 2,421 passengers visited Gozo while 8,419 spent at least one night on board their berthed cruise liner. Every vessel that berthed in Malta carried approximately 2,028 passengers, 253 more than the previous year, the NSO press release says.  

On the one hand, tourists from EU member states represented 65.5% of total traffic, with Germany, the United Kingdom, Italy and France being the major markets. On the other hand, the total number of passengers from non-EU countries stood at 90,966, of whom 42.6% came from the United States. 

Focusing on genders and age, women passengers made up 54.3% of the total and the largest share of passengers fell within the 60-79 age group and was followed by those aged between 40 and 59.  

Traffic ups in H1

Moreover, during the first six months of the year, total cruise passengers increased by 35.3% to 341,659 over 2018. Some 65.6% of the total came from EU member states. Major increases were recorded in the German, American and British markets, according to the NSO figures.

In the first half of the year, women passengers were 184,799 and represented the majority. Most passengers were between 60 and 79 years old, amounting to 138,732, who were followed by passengers aged 40-59, reaching 103,988. 

In addition, there were 151 cruise liner calls during the period January-June, with an average of 2,263 tourists per vessel, compared to 120 calls and approximately 2,105 passengers in the same period of 2018.

The full report with charts and tables is available for download at the NSO website.  

The post Malta’s cruise pax influx soars 44.2% in Q2 first appeared on The Malta Business Weekly.

“Innovation is now firmly established as a central pillar of our strategic vision and in whatever we do, as success can never be taken for granted in the ongoing attainment of our resilient results,” added Mr Aquilina.

Simonds Farsons Cisk directors announced earlier this year that the group registered a 5% increase over the previous year reaching €99.8m on the value of the products, while profit attributable to shareholders reached €15m, with an increase of 10% from 2018.

“In spite of ongoing market changes and growing competitive pressures, our ability to consistently register year on year improvements in our results is motivating us to further pursue our strategic vision,” said group CEO Norman Aquilina.

“Over the last year, Farsons continued to implement wide-ranging initiatives to embrace our social and environmental responsibilities. We are also actively engaged in the preparation for the introduction of the Beverage Container Refund Scheme which will see the introduction of a compulsory deposit on beverage containers, bringing along additional challenges, particularly in its enforcement,” added Mr Aquilina. “The Group is supporting this measure even if the Authorities still have a lot to do to bring into action a more equitable and broadly represented circular economy in the interest of the environment as a whole.”

The post Farsons looks to innovate to maintain growth in fierce competition first appeared on The Malta Business Weekly.

Nibe Beverages has grown at a rate of 33% since 2017. In comparison to 2003 when the company’s staff only counted two, Nibe now provides job to 50 full-time employees. The company invested €1m in its business in 2017 and also entered the North African market, says the press release.

“Nibe Beverages is another example of the potential of a Maltese company, with an economy-stimulating government that considers their added-value,” said Chris Cardona, Minister for the Economy, Investment and Small Businesses, who visited the company in San Gwann along with Aaron Farrugia, Parliamentary Secretary for European Funds and Social Dialogue. The economy minister also praised the company for its sustainable operations that suggest awareness of the company’s impact on the environment. This aspect “is one that businesses should consider, as both business and country can benefit from it,” the minister added during his visit.

“This [Nibe’s success in growing] is the economic model our country has adapted: create work, create wealth, and ensure that wealth to participate in all layers of society. This wealth has been created with the capital that the government invests, with European funds, and by local and foreign business investment”, said Mr Farrugia.

The company benefited from a European fund for a project worth over €600,000, which supported the company’s zero-waste model adoption and new lines of production. Nibe also benefited from a labour training program financed by European funds, the DOI press statement adds.

Mr Farrugia underscored that the Business Enhance scheme used by Nibe is not limited to small and medium enterprises, but also available to start-ups and companies that want to diversify and engage in e-commerce.

The post Nibe Beverages to invest €860,000 in machinery first appeared on The Malta Business Weekly.

With the delayed deadline for a Brexit deal to 31 October, uncertainties around the United Kingdom leaving the bloc have not settled yet. Nevertheless, Revolut says they prepared for any possible scenario. “If the United Kingdom and the European Union strike a deal, or if there’s a period of transitional relief, then we would continue to passport our UK-authorised permissions — via Revolut Ltd — across Europe, and there would be no action required on our customers’ side,” Mr Litsikakis tells BM.

Should the two parties be unable to reach a deal, Revolut has plans in the pipeline. Last year, Revolut Payments UAB was set up in preparation for a no-deal Brexit scenario. Revolut says that although this entity is fully operational, it is only a precautionary measure, for now. “We are pleased to confirm that this new entity is now in beta phase. As we all sit and wait to see what happens, mitigating any disruption to your services is our paramount concern. We will only switch our EEA-based customers over to this new entity in the event of a no-deal scenario,” the country manager responsible for Malta says.

Although an uncertain environment might linger on until at least the 31 October deadline, Revolut says that European customers should rest assured. “We want to assure all of our customers in Europe that we have taken the necessary preparations to ensure that they can continue to use Revolut in the same way, whatever the outcome,” the country manager underscores.

A market of ‘phenomenal’ growth

It is almost impossible to line up for payment at any POS in Malta, seeing not a single individual flashing a Revolut card. It is equally unlikely to carry out a conversation with acquaintances without bumping into Revolut card holders, or people who have at least heard about the concept. What makes the Maltese land such fertile soil for a fintech company such as Revolut?

“The Maltese market is extremely important to Revolut due to a large number of expats, migrant workers and professionals transferring money in and out of the country. So far, Revolut has proved to be incredibly popular in Malta, with over 90,000 customers signed up to date, that is around one-fifth of the population. We are signing up around 200 customers per day and only expect that to increase. Six months ago we only had around 30,000 customers in Malta, so the growth has been phenomenal,” Mr Litsikakis says.

“Revolut has proved to be incredibly popular in Malta, with over 90,000 customers signed up to date, that is around one-fifth of the population. We are signing up around 200 customers per day,”

says Revolut’s Dimitris Litsikakis.

Revolut believes its popularity lies in the “modern design” that their mobile application offers for users, as well as the fact that they issue no hidden fees and sport responsive customer service. Additional features such as instant payment notifications, automatic spending categorisation, budgeting tools, spare change saving and enhanced security further boost their prestige in the eyes of users, the company believes.

Furthermore, Revolut allows users to buy and sell a selection of cryptocurrencies, as well as to get pay-per-day travel insurance through their app. Registration for a Revolut account takes places in approximately ten minutes, and once an account is opened, users can send, spend and exchange 29 currencies in-app and spend fee-free globally in over 150 currencies, up to a threshold of £200 every month on the free plan.

Revolut’s expansion comes in a time when people appear, albeit slowly, to become more open to fintech solutions, as well as they are becoming more conscious about taking elevated control over their finances. “Fintechs are gaining in popularity across the world due to a growing shift of consumers using their phones to handle their finances and demanding more from their banks. They are no longer happy to accept rubbish exchange rates and monthly fees. Fintechs, such as Revolut, offer an alternative to the big banks,” Mr Litsikakis says.

For fuelling further growth, Revolut is planning to host more RevRally [awareness-raising promotional] events this year in Malta to encourage more consumers to open accounts with the company. “In Europe, we currently have over 4.6 million customers and are building a European Growth Machine that will help us scale at speed in every European country where Revolut’s service is currently available to further boost our customer numbers,” the country manager tells BM.

Additionally, Revolut aims to grow out of Europe. They expect to expand into a number of global markets in the coming months, with foreseen launches in the United States, Canada, Singapore, Japan, Australia and New Zealand planned in 2019.

Revolut insists on unshaken compliance

The Telegraph broke the news on 28 February that Revolut was “accused of violating basic banking rules by failing to block thousands of potentially suspicious transactions on its platform,” the report writes. Citing documents The Telegraph says had acquired, the online daily reported that Revolut switched off its system flagging suspicious transfers.

This was briefly followed by news that CFO Peter O’Higgins had resigned from his position at the company. On top of this, Revolut ran into technical issues on 1 March, affecting their app’s functionality including top-ups, exchanges and other features. Revolut’s engineers fixed the issues in a matter of minutes. Nevertheless, some Maltese customers, reading international news and swiftly jumping to unsubstantiated conclusions, ran to ATMs quickly withdrawing money, in the belief that Revolut was going down.

Nikolay Storonsky, the founding CEO of Revolut, soon after the news broke denied reports suggesting that his company would have been involved in activities raising the issue of possible “money laundering”. He also said that no connection could be found between the resignation of his company’s finance chief and the alleged “money laundering”, despite what news reports suggested.

Business Malta asked Revolut to explain the events of end-February and early-March from their perspective. “In the middle of last year, we rolled out a new sanctions screening system in parallel with our existing systems and controls. The new system required recalibration on the basis that it was creating some false positive cases (pending payments),” Mr Litsikakis tells BM about the roots of the events. During this period, Revolut says their 200-strong compliance team reviewed all payments on their platform. “The new system and subsequent recalibration had nothing to do with money laundering, and we want to make it abundantly clear that there were no breaches,” Mr Litsikakis puts his feet down.

“The new system and subsequent recalibration had nothing to do with money laundering, and we want to make it abundantly clear that there were no breaches,”

says Revolut’s Dimitris Litsikakis.

By the second week of March, the Telegraph substantially amended its article and issued a correction statement both online and in their print edition related to news they broke about Revolut.

“We would like to clarify that there never was any lapse in our anti-money laundering controls or our sanction screening process. It is also important to note that a number of articles erroneously conflated our anti-money laundering systems and our sanctions screening process,” Mr Litsikakis insists.

Business Malta was interested to learn about the magnitude of cash withdrawal in Malta at the time of unfavourable news stirring waters among its local users about the company; however, Revolut declined to disclose figures. “We do not share details of how much money is deposited in Revolut,” the company says.

The post Revolut readies intact services regardless of Brexit outcome, eyes further expansion first appeared on The Malta Business Weekly.

During the last quarter of 2018, organic growth in local currencies was 7% on total, and excluding the UK it was 14%. EBITDA was €8.1mm (6.1), corresponding to an EBITDA margin of 9.6%, according to a press statement announcing the quarterly report. Net Gaming Revenue (NGR) from regulated markets was 33% of total NGR.

The number of depositing customers increased year-on-year 29% to 327,156, while the number of returning depositing customers grew by 46% to 181,747. Earnings per share were €0.22 before dilution and €0.22 after dilution.

During the last quarter, LeoVegas applied for a gambling licence for the Spanish market, as Business Malta reported earlier. Approval and implementation of this application are expected during the first or second quarter of 2019. During Q4, LeoVegas also received a licence for both casino and sports betting in Sweden.

Following Q4 2018, due to developments in the UK market, LeoVegas postponed its financial goals from 2020 to 2021. Despite this, the direction remains unchanged with business targets in absolute numbers to reach €600m in revenue and €100m in EBITDA, the company says. Also, LeoVegas Group’s Pixel.bet brand was granted a licence for online casino and sports betting in Sweden.

The Board proposes a total dividend of SEK 1.20 per share, to be paid out on two occasions during the year, the press statement says. Revenue amounted to €28.7m in January, representing growth of 16%.

Gustaf Hagman, CEO of LeoVegas Group, tags 2018 as the most challenging year in the group’s history, challenges of which hindered growth. “It was also a year in which we carried out a number of strategically crucial projects that have taken us large steps forward on our growth journey … Our multi-brand strategy is in place, enabling us to launch new casino brands rapidly, and we are ready to expand in more markets in 2019 with an overall focus on cost control and increased profitability,” the CEO says.

This year has had quite a strong start for the group, according to the CEO. Revenue hit €28.7m in January, growing by year-on-year 16%. Underlying customer activity strengthened by a 42% growth in depositing customers compared to the same period last year.

“We have now forged ahead through both an eventful and challenging year with several acquisitions, accolades, higher regulatory requirements, a number of major platform projects and a change in listing to the Stockholm Stock Exchange’s main market list,” the CEO adds.

The post LeoVegas sees 25% revenue increase in Q4 2018 first appeared on The Malta Business Weekly.