Diversity and Inclusion at AX Group

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My name is Simbarashe Mapfumo. I am 27 years old and I come from Zimbabwe. I arrived in Malta in December 2018 after living in Cape Town for five years, where I also worked in hospitality.

I fled my beloved Zimbabwe due to the unstable political situation. I miss my country and my family deeply, but unfortunately going back is not an option. I settled in South Africa and when my work permit expired, I came to Malta. I now eagerly await my clearance for asylum from the Refugee Commission.

I actually studied computer engineering but I fell in love with the hospitality industry from the time of my very first job in a restaurant. Since then, I never looked back! Something about giving a great service and making a customer happy is very rewarding for me. I have worked in restaurants, cafes and hotels doing different service jobs, from waitressing to being a front desk agent. In all instances, knowing I am the reason for making customers happy at the moment, is most satisfying.

I’m always asked the same question: ‘Why Malta? So far away from home and without a family network to support me?’ Well, from my extensive research, Malta seemed to be a homely place with a strong sense of community, where people are friendly and English widely spoken.

And indeed, not only have I not been disappointed, but Malta has also surpassed all my expectations in every way imaginable! Malta has become my home away from home. The Maltese society has redefined my notion of family. I have found true friends, supportive colleagues and warm neighbours. I have since changed the way I view the world while still nurturing my sense of self-identity. And my hope for humanity has been revitalised through the numerous positive experiences I have had since my arrival.

I have been fortunate enough to be employed as a front desk agent at AX The Palace since January 2019. Fortunate because I have been given the chance to be the best I can be, by playing with the best the local industry has to offer, surrounded by a winning team determined to deliver service excellence with creativity, determination and integrity.

Being part of AX Hotels has exposed me to unlimited possibilities for my career growth. Professional mentoring and guidance from management has brought out my best skills and capabilities. Ongoing training has helped me bring out my talents and I’m mastering the mindset required for giving a service expected from a five-star hotel.

My aspiration is now to eventually hold a management position within my field of expertise. I would then pass on the leadership values I have learnt and put them to good use, ultimately always to the service of guests and customers.

I’m currently being trained as a night manager. This is a big step for me, and one which I’m really excited about. It is an opportunity I am extremely grateful for and I’m eager to prove myself worthy of this responsibility. Once again, I know it will be one step towards my long-term goals and I look forward to any opportunity for exposure in other areas of hospitality in this five-star establishment.

I love my job and my workplace and every day I go to work safely in the knowledge that I am accepted, in an ambience of diversity and mutual respect of different cultures.

I have Learned from Experience to Never Give Up

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It’s safe to say that 2021 is not turning out to be the year we had hoped for. After a tumultuous 2020, we were all determined to make this year a success. We had plans in place, ideas to improve our hospitality offerings, a new restaurant and menu concepts to launch, exciting marketing strategies to go … the works. We were ready to re-open our doors with open arms and treat our guests to even more unforgettable experiences in true AX Hotels fashion.

However, despite definite strides forward, the COVID-19 situation continues to play havoc with our industry. It seems that we’ll need to hold onto our plans for a brighter tomorrow, for a little while longer at least.

This entire experience can feel very disheartening. Believe me, I know. I’ve worked my entire professional life in the industry. It’s an industry I am extremely passionate about, an industry I’ve invested years in trying to improve and move forward for the benefit of this country I love so dearly. Our tourism sector remains the lifeblood of Malta and people from all over the world have come to know and love our little island for our big hearts and warm hospitality. It pains me to see this industry I care so much about grounded to a halt.

But I refuse to give up.

In our current situation, it certainly feels as if life is a boxing match. We are in a fight with this pandemic and the match is far from over. However, as every champion boxer knows, you only become stronger when you fall down and learn to pick yourself up again, round after round, no matter how many times it takes.

At this moment in time, I know there are parents juggling home-schooling, work meetings, and countless other work and life situations in between. I admire our front of house staff who continue to rise to the occasion to make sure our guests are still receiving first-class service; our maintenance teams who are keeping our properties in ship-shape condition; as well as our kitchen and catering teams who are working around the clock to deliver amazing dine-at-home experiences for our customers.

At AX Hotels, we have weathered good times and bad, ups and downs, and everything in between before. I have learned from experience to never give up. With hard work, determination, and vision we can face any challenges that come our way.

Claire Zammit Xuereb

Group Director AX Hotels

AX Group’s 2020 Annual Report

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AX Group’s 2020 annual report is now available online. The publication contains the Group’s financial statements along with overviews of its core activities across the key sectors it operates in, namely construction, development, healthcare, and hospitality. In the face of a public health emergency and unprecedented operating conditions, AX Group has continued to respond to market conditions to deliver for its clients, people, and stockholders. The AX management team has implemented new strategic approaches to optimise its operations in light of the evolving challenges. This publication gives information on the company’s progress and the various initiatives it is taking to meet the challenges of the future with foresight and optimism.

“I am proud to say that all through the challenges we faced during 2020, the management and staff of the group were exceptional in their commitment and determination to prevail. With the support of the Xuereb family, the AX Group board, and our management and staff, I am confident that we will come through this,” says Mr Michael Warrington, CEO of AX Group.

 

Download the AX Group 2020 Annual Report here.

Improving our Mobility with a Monorail System

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Written by Mr. Angelo Xuereb, Chairman AX Group

I am very pleased that the President of Malta is strongly supporting the idea to introduce a Monorail system to eliminate traffic congestion and ever-increasing emissions in Malta.

I have been promoting the concept of introducing a Monorail system since 1991. At the time, I already considered the traffic problem acute. Now, 30 years later, the problem is becoming more and more severe. Admittedly, significant strides are continuously being made to improve our road network. However, if vehicles continue to increase, we will have no other option but to create more flyovers, traffic junctions, and widening of roads, all to the detriment of our environment and our health.

While I welcome the Government’s call for a study into the introduction of a Monorail, Metro system, it has been dragging on for far too long.

The government would greatly benefit by opening up the discussion to public consultation. I am not against a  plan being drawn up by foreign experts, but from my experience, local experts and stakeholders are pricier to the particularities of the problems we face.

Recently, my friend engineer Konrad Xuereb has also been promoting the idea of introducing a Metro system.  The least that the Government or its’ consultants can do, is approach us, listen to our views and concerns, then continue with their in-depth studies.  These studies will reveal if it is better to opt for a Monorail or Metro system.  Most importantly is that we implement a modern, mass transportation system to improve our mobility across the country.

Since my first proposal of 1991, I have continued to extend and improve upon the system over the years. I have published these updated proposals in 1996, 2001, 2013, 2014, 2015, 2016, and 2017.  Naturally, the more in-depth the studies conducted, the more refined a concept we can come up with to determine the system, routes, and location of the stations, that would be the least damaging and most cost-effective. This study would also include the best way to split the project into phases.

For clearer context, many consider a Monorail as a Tram travelling on an elevated structure.  The meaning of ‘mono’ is ‘single’. Therefore, a single rail system can either be on an elevated structure or a single rail (single continuous concrete beams) that passes through a tunnel.

My proposal is to have a system that makes use of both elevated and tunnel rails.  The gradient of the rail should not exceed 10 degrees, which will allow the underground tunnel to pass beneath urban areas and hills, while elevated rails will be erected in rural areas.

For many reasons, the stations and interchange stations, should not be located in the urban core, but in the periphery of the urban areas, so as to provide an integrated public transportation system. It is impossible to have a station in the centre of each of our towns and villages, considering the heritage, space, and incompatible structures. For better efficiency, these stations will still need to integrate Electric Buses, which can be referred to as ‘circular buses’, that make a route around urban areas and transport commuters directly to the nearest station.

It is imperative that there be frequent bus stops, to encourage commuters to walk to their nearest bus stop, for not more than 10 minutes, rather than use their personal car.

The attached Monorail system proposed plan is feasible and has more advantages than a complete underground Metro system.

 

It will also offer a pleasant route to view our rural areas when passing over on elevated routes.   Furthermore, elevated routes are much cheaper to construct than underground and make it more possible to avoid disturbing underground freshwater springs and galleries, in rural areas.

It may take over a 10-year period to complete the entire system from the final approval of the master plan. Therefore, it is a must that the project is developed in phases.  The first phase should target the most congested urban areas around the inner and outer harbour areas.  When towns and cities like Valletta, Cottonera, Marsa, Hamrun, Msida, Sliema, and Gzira areas were developed, these were never designed for car parking and in fact, provide minimal or no private garages. To make matters worse, these areas feature high population density and narrow streets.

Once this initial stage is implemented, it will be easier to carry out extensions to the grid over the subsequent phases. The second priority is to extend to the Airport, Paceville, St. Paul’s Bay, and Marsascala areas. Over time, the Government will decide on the priorities that extend to Cirkewwa.

It is of utmost importance that when a master plan is proposed, it has to be approved by all political parties in Parliament. This is a long-term project that cannot be halted after a new party is elected to Government.

Government should seriously take up the introduction of this modern and environmentally friendly integrated public transportation system with urgency. Time is crucial considering our ever-increasing traffic and environmental issues.

 

Finding the Right Career Path

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Written by Zsofia Antal, Senior Recruitment Specialist AX Group

Dear Knowledge Centre Visitor,

What knowledge can I share with you as a recruiter? This is what I asked myself when I started to work on this article.

First, I was thinking of writing about job interview preparation then I quickly realized there is plenty of online material about this topic and I didn’t want to join the line. Then it came to my mind that during my recruitment career I met so many people who were still looking for the right career path and tried to `squeeze` themselves into a job that was not theirs. I cannot blame them nowadays when there are so many opportunities, it is hard to decide, and one can get lost quickly. Thinking about this I decided to share my own story with you. How I found the career I love – hoping that it will encourage you to turn to us, recruiters.

I grew up in the countryside of Hungary, in a small village. I enjoyed every minute of it but let`s be honest it is not the most open-minded environment for a curious teenager. I was always a good student and as firm believers in conventional education ideas, my family and teachers were expecting me to become either a medical doctor or a lawyer. Like most of us at the age of 17, I was pretty much undecided and easily influenced about my career choice, therefore I was doing my best to meet these expectations.

In the last year of high school, we went on a school trip to Italy – it was the first time I have ever travelled by plane. I immediately fell in love with travelling and aviation, exploring unknown places, meeting different cultures, languages and at the last minute I changed my mind and despite everyone`s expectations, I went for tourism studies. After a gap year that I spent in Italy, I continued my studies in international economics with the purpose to understand the world around us better. The following few years, spent in university, were filled with learning about successfully operating businesses, theories of economics, rational consumers…but somehow all seemed to be so artificial and far from reality.

At one point, I realized that everything happening around us is related to the human factor.  Individuals who create our society, small businesses and large enterprises, NGOs, governments. Individuals who come up with ground-breaking ideas and innovations. I found out that I am more interested in people than in numbers but even after those years in higher education, I was still unsure about what I wanted to pursue as a career. I was out of university and I was on the lookout for my first full-time job…it was frightening.

I got my first recruitment position right after graduation, at an airline, totally by coincidence. I applied for a different role; I have not even thought about becoming a recruiter. I was lucky enough to come across recruiters who were open-minded enough and quickly realized that I could be the right fit for another role. Finally, everything made sense and I immediately felt that I found my place in the right environment. They were the ones who kicked off my recruitment career and helped me to find the job which I love deeply and suit me. What they have seen in me? I am still not fully aware, it is hard to be your judge, but most probably it was my people’s personality and passion for travelling that made them choose me.

Since then many things changed around me, life brought me to Malta, I got this amazing opportunity to join AX Group as a Senior Recruitment Specialist and all through the years, I have kept this passion with me.

My personal story somehow also determined my mindset as a recruiter. I believe that it is the personality and passion that makes the difference and it is the people within the organization who determine if any business will succeed or fail.

Knowledge can be thought, skills can be trained but personality, determination, and passion are trades that are hard to teach. As a recruiter at AX Group,  I try to follow this philosophy every day in my work and I wish one day I could be `That Recruiter` for someone who is still looking for the right path in the labyrinth of thousand opportunities.

Are you still undecided about what career to pursue or what environment do you fit in? Let`s connect, let`s talk and let`s find it out together – this is the duty of a recruiter!

With love,

Zsofia

The Evolving Role of the Corporate Lawyer

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Written by Dr. David Wain, Chief Legal Officer AX Group 

A corporate legal office (CLO) can be generally described as the department within a commercial organisation which is vested with the responsibility of overseeing every legal aspect of the business. In the past, this role was generally incorporated within the ‘administrative’ function of an organisation, with specific legal services being farmed out in a reactionary manner. Today, the legal function within the organisation plays a far more critical role than it did in the past, given the greater scrutiny of the business overall and the continuous increase in oversight regulation.

From the perspective of the legal professional eyeing a career as a corporate lawyer, it presents challenges and opportunities for professional growth not normally faced by legal professionals regularly operating within law firms or by practitioners with an array of different clients – and it makes for a very interesting job!

IS A CORPORATE LEGAL OFFICE NECESSARY, OR EVEN DESIRABLE?

Both the local and the global business climates are changing rapidly, and an organisation has to demonstrate the required nimbleness to change strategy as required in order to survive and flourish. The inherent risks triggered by this necessary approach are both reputational and financial nature and are further exacerbated by the growing number of laws, regulations, data security considerations and an array of other matters.

Generally, given the greater scrutiny over business overall and the incessant increase in oversight regulation, one could argue that a corporate legal function is required notwithstanding the size of the business. Due to financial constraints, not all organisations will find an internal employed legal office viable. However, irrespective of whether the resources of an organisation command a ‘full time’ or ‘part-time’ function, it is key, in the context of the developing business reality we are living to be proactive rather than reactive. This has led to an increasing number of local corporations investing directly in legal talent. There is an increasing awareness of the fact that while external counsel may be extremely adept at fixing something once it has already happened, disentangling and solving a problem is generally much tougher and riskier than preventing one.

Enterprise risk management is an increasingly crucial part of the CLO’s role. The CLO must be aware of the potential risks facing the company and make sure appropriate procedures are in place to prevent these risks from arising and to address them in the event they do arise. The immediate and widespread availability of information (and misinformation) in today’s ‘Internet Age’ has increased the velocity with which a company can suffer material reputational and financial harm.

One of the most recent issues to capture the public’s imagination landing on CLO’s lap was the General Data Protection Regulation (GDPR), which entered into force in May of last year. For AX Group, which employs in excess of 1,000 people and comprises around 35 companies, the task towards ensuring compliance was complex and stimulating, with our Legal Office leading the process from the advisory stage all the way through to implementation.

The project started off with an analysis of the relevant legal provisions, following which an analysis of such provisions in the context of the extant procedures within the AX Group was conducted. Following the analysis, Legal Office offered recommendations for compliance, and finally project-managed the implementation of a framework meant to facilitate such compliance.

FROM LEGAL TECHNICIAN TO CORPORATE ADVISOR AND MANAGER

The creation of an internal legal function within an organisation opens up further the possibilities of obtaining value, as it departs from the idea of a lawyer being a ‘legal technician’ to one where he or she is considered as an adviser, who will advise the business when changes are made to the laws and proactively providing legal solutions to business quandaries which increases value. This is besides the more traditional ‘advocacy’ role which was traditionally carried out by external counsel.

Therefore, the legal professional heading a corporate legal office, the Chief Legal Officer or General Counsel (depending on the organisation) should be a strategic business partner on the senior executive team. This requires the development of a set of skills that a legal professional is not necessarily trained for. It will be difficult, if not impossible, for a corporate lawyer to recognise and assess risks to the company and its business if they are not adequately informed about the company’s business, strategies, etc, and do not have a good understanding of the markets within which the organisation operates.

Furthermore, business acumen is critical. The CLO is often expected to wear many hats – that of Company Secretary, Chief Compliance Officer, Chief Privacy Officer, Chief Corporate Adviser, just to name a few. Therefore the robust marriage between legal knowledge and business understanding is crucial to a CLO’s skills set. To acquire credibility in his or her organisation, the corporate lawyer must understand the business, know his or her industry, and be able to provide strategic alternatives and ideas on both legal issues, as well as business issues affected by material legal considerations. Raising awareness and sensitising senior management to legal risks in a fast-paced business environment requires the CLO to be trusted and recognised as a leader within the organisation, being patient and diplomatic, whilst persistent and unwavering whenever required.

The Law must Change

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Written by Mr. Angelo Xuereb, Chairman AX Group

The following are my comments on how we can improve the new construction laws for the benefit of all those concerned. They are based on my 45 years of practical experience in the construction industry.

Excavation adjacent to party walls

During my tenure as president of the Fede­ration of Building Contractors (FOBC), we had presented our concerns and published an article in the Times of Malta on January 7, 2007, with our recommendations. Most of its content is still applicable today, although the challenges now are more acute due to developments requiring deeper excavations.

For more than 12 years, we have been highlighting the need to change the law – specifically Section 439 of the Civil Code – stipulating a 76cm distance of excavation from third-party walls. This law came into force over 150 years ago (1868) with the purpose of protecting the stability of wells, not adjacent buildings, and has remained unchanged since.

The law states: “It shall not be lawful for any person to dig in his own tenant, any well, cistern or sink, or to make any other excavation for any purpose whatsoever, at a distance of fewer than 76 centimetres from the party wall.” In that era, developers would have had no real reason to cut rock to construct basements since in those days there was ample space for development.

Today, the circumstances have chang­ed, and it is imperative that structures are designed within the boundaries of each individual site while making the necessary allowances for the stability of nearby structures.

Ultimately, having a blanket requirement to leave a gap of 76cm from the third-party wall up to the neighbour’s foundation does not serve to protect neighbouring structures. This leads to the practice of either having the overlying structure supported by the dividing wall or creating a huge cantilever structure at ground level.

The problems usually present themselves when the adjacent property decides to repeat the same methodology, resulting in the foundation of the dividing party wall being left in a very weak and dangerous state. The fragile, narrow rock left in between the properties is prone to give way under heavy loads.

Similarly, the law – Section 407 of the Civil Code – regarding the thickness of the party walls, must also change. It does not make sense anymore to have 230cm- or 380cm-wide walls. These walls are being abused by irresponsible chasing horizontally on both sides.

In short, these two laws, namely Section 407 and 439 of our Civil Code related to the party wall, must be amended to reflect today’s realities.

The Site Technical Officer

While I agree that all sites must be supervised by a Site Technical Officer, I do not agree that there is a need to appoint an independent STO. I will explain the reasons for this further on.

Any development needs three entities – the developer, the architect and the contractor.

The developer is not expected to be technical, which is why an architect is appointed to provide direction on all technical matters.

The architect is responsible for the design of all the drawings and structures, including excavation, foundations and other technical matters. The architect may appoint other specialists such as geologists, structural engineers and interior designers, where necessary.

It is a known fact that architects are normally involved in several projects being developed simultaneously, which means it is impossible for them to physically attend each site every day. But the architect should have the obligation to visit the sites periodically and when needed.

It is hard to believe that a hawker dealing with a few hundred euro needs a licence to operate while a building contractor dealing in millions does not need one

The architect may appoint his or her representative to oversee a project and coordinate with the contractor to assure himself/herself that their design is being adhered to properly, with the ultimate responsibility still lies with the architect.

The contractor is responsible for the method statement, construction management plan (CMP) and the construction and supervision of all works related to their contract. This means they need to appoint an STO or a project manager to follow the design and other instructions from the architect.

The contractor’s role is to give a service to the developer based on the design and instructions of the architect.

No need for independent STOs

If the three aforementioned entities adhere to their responsibilities, there should be no need to appoint an independent STO. This additional role would create disagreement and confusion between the three entities that can easily end up with litigations, with the possibility of delaying the project time frames to the detriment of all those in­volved, including the neighbours.

Registration and licensing of contractors

It is hard to believe that a hawker dealing with a few hundred euro needs a licence to operate while a building contractor or an excavation contractor dealing in contracts worth millions does not need one! With immediate effect, the Building Regulation Office (BRO) should start with their registration, followed by their classification.

This would help inexperienced developers choose the right contractors that fit the size and expected quality of their development. It would be like the classification of hotels based on certain standards. If one chooses to stay in a 3-star hotel, they would not be expecting a 5-star service, and vice versa.

To develop large projects, the requirements are more intense, with more responsibility and a higher price to pay. In this way, the developer has the liberty to choose the classified contractor and receive the service for which he is paying.

In conclusion, developments involve many other trades, but I have kept my short comments only in relation to third party walls, construction/excavation and site responsibility during the construction phase, as well as licensing.

If these are adhered to, I am sure we can have more quality projects, more reliable methods of construction, excavation and, above all, more protection to the neighbours and the surrounding residents.

All We Have are Moments

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Written by Charmaine Attard, General Manager Hilltop Gardens and Simblija Care home
Elements of the “Butterfly Model” were included in the framework used for the Butterfly Unit in Simblija Care Home. The Butterfly unit is a memory support unit that houses residents who suffer from different degrees of dementia.

Dementia is not a specific disease. It’s an overall term that describes a group of symptoms associated with a decline in memory or other thinking skills. The condition can become so severe that it reduces persons’ ability to be themselves. Unfortunately there is no cure for Dementia. What we can do is help ease the symptoms and concentrate on giving person-centred care to individuals suffering from this disease which in turn would give them a better quality of life.

People are fundamentally emotional beings and although they might forget how to boil water or might forget the name of their child – they will react to the kindness they will react to something like a smile. The “Butterfly Approach” for dementia is based on empathy and activities that are focused on the moment.

It is a feeling of “being with” and not “doing to” the person.

One example that I would like to share is one of the resident rooms’ doors. Following the “Butterfly approach” which promotes individuality, we introduced the “memory box”. In n a regular unit the door would have a number however numbers might not mean much to a person with cognitive decline. A memory box is instead put outside of the client’s room with pictures the client may recognise, be it of them as a child, a picture of a parent, their wedding day, or a logo of their favourite team. These images act as wayfinding and help clients identify their room. Things like these touch people at the core of their emotions and in turn produce a reaction.

Another element used is colour and imagery on the walls. In all the rooms, the common room, corridors, and bathrooms colour is used to either colour-code a particular area, such as the toilets where the colour serves as a guide or acts as a trigger to elicit positive emotions. Doors of client rooms are made to look like front doors painted in the client’s favourite colour giving a sense of home and belonging.

Latest statistics show that there are around five thousand Maltese suffering from Dementia and this number will double by 2030. This means that measures to assist and care for people with Dementia have to receive wider recognition and use.  Nurses and carers need to be trained to think differently where dementia care is concerned and trained in giving person-centred care instead of the normal clinical care sometimes lost in bureaucracy, systems and procedures. In this way, dementia wards can portray real homes, heartfelt staff, engaging environments, and people really living good quality lives.

“As we become more emotional and less cognitive, it’s the way you talk to us, not what you say, that we will remember. We know the feelings, but don’t know the plot. Your smile, your laugh and your touch are what we connect with. Empathy heals. Just love us as we are. We’re still here in emotion and spirit, if only you could find us.” (Christine Bryden 2005)

The Answer is in the Balance Sheet

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Written by Michael Warrington, Chief Executive Officer AX Group

Business restructuring is tricky. There are a number of angles that can be adopted to turn a business around but the approach that I have always preferred is to start with a close examination of the balance sheet. It is there that many of the answers to the strategies that would be adopted will lie.

The balance sheet tells the story of what the business owns and what it owes. By delving into the numbers one begins to understand the challenges and opportunities that the business is facing.

Throughout my career, I have found business transformation exciting. I have been involved with numerous businesses in different industries varying from banking, travel and tourism, airline, construction, development, hospitality, healthcare, and financial services. In each of the businesses, I was always able to identify the key elements that made the business successful and then to look at the processes and identify ways to simplify and automate things.

I have been involved with the AX Group for almost 20 years and during that time I have seen the group grow and flourish. In the early days, the group was asset rich but like many companies in their growth phase, cash flow was challenging. I developed a good working relationship with AX Group chairman Angelo Xuereb. The combination of his entrepreneurial skill and my own financial acumen has served the AX Group well. One of the biggest tasks for the group was the transition from a family-run business to a corporation with a clear second-generation succession plan in place and strong management structures being implemented.

I think our prime objective now is to build clear structures within what is a very complex group of companies and to instil a culture of how structured decision-making should be undertaken. It is growing into a more formal and corporate structure than the one that existed in the past.

The group is also focusing heavily on its IT infrastructure to efficiently analyse market information and make informed decisions at all structure levels. I continuously ask myself questions about how we can improve things as there is always room for investment.

The group is asset rich and given the nearly 45 years of the company history, there are assets that are already in different stages of their ‘life’. AX Sunny Coast, which has been the first hotel investment is now 40 years old. One has to look at the property and ask if it stands the test of time or should be adapted? AX Group pioneered the timeshare market at the time. The self-catering apartments were big with large kitchens. Maltese and foreign holidaymakers alike travelled in big numbers. Perhaps families were bigger, perhaps the way people travelled was different. In either case, today people hop on a Ryanair for a weekend break and they don’t necessarily need large indoor areas for their leisure. These are the types of discussions and decisions that one has to make when looking at the business and its balance sheet. It will make me ask these questions and dig deeper to find the answers.

Spread the net wide but don’t spread yourself thin

The diversification from AX Construction to AX Development happened fairly quickly and was a natural progression. The Group built capital on the construction work that was contracted and started investing in the development of its own properties. The big jump was into hospitality. AX Group wanted to be involved in long term projects that would contribute to the economy of the country. We acquired land in Qawra that was ideal for hospitality development. With the right set of people managing the projects, we developed two properties that mark the beginnings of the AX Hotels chain. The next step was diversifying into care.

Before the AX Group decided to branch out into the care business, which in itself has certain similarities with the hospitality business, the management team carried out a gap analysis in order to understand the strategic assets that were essential prior to take this bold move. In this process, we learnt that we already acquired a number of them already namely the centrality and neighbourhood of the identified site, secondly the technical expertise required to develop a large scale project and thirdly an extensive experience in the four-star and five-star hotel industry. The gap analysis clearly identified an opportunity to acquire talent and expertise from the healthcare sector. We moulded it into the business and created a unique concept – the first retirement village on the island – Hilltop Gardens and Simblija Care Home.

Additionally, the reason for going into the care business was that unlike the construction and tourism sectors it isn’t characterised by cyclical fluctuations.

Work smarter not harder

Innovation more often than not is not revolutionary. It’s what they call creating a better mousetrap. Creating an evolution to what is already there but adding value to a process, to the operations in the restaurant, responding accurately to the market’s needs. These are very important mechanisms that improve the success of the group and the efficiency of my teams. When we acquired Luzzu a couple of years ago we knew that it was a very popular family place. We felt however that it didn’t address an important element that families encounter when going out with small children – entertainment. And so we created Luzzu with a dedicated large play area.

All I can say is that it’s been a very successful journey so far and I am looking forward to the exciting projects in the future with a view to delivering significant shareholder value and returns.

Don’t Put all Your Eggs in One Basket

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Written by Albert Bonello, Chief Financial Officer AX Group

One of the most difficult decisions that businesses face across the globe is whether to diversify or not. Business diversification can open up a number of opportunities, but the risks and uncertainty tied to this strategy can have long-term repercussions. So why do businesses opt for diversification?

The first thing that comes to mind is the concept of spreading the risk. It’s smart to hedge against fluctuations between industries, looking towards different audiences, evolving what the company knows about customers’ needs and their expectations.

Unfortunately, I have seen some businesses realise the need for diversification at a very late stage and hence the circumstances in which this critical decision is taken are generally rushed and not properly thought out. Managers and financial analysts are under pressure when asked to prepare projections, analyse market trends and look at competitive benchmarks. So what factors are to be taken into consideration to achieve a structured approach towards diversification?

Companies need to carry out internal analysis to identify the processes and abilities that generate sustained competitive advantage, which competitors cannot easily obtain. These are very often referred to as strategic assets. Such strategic assets may be a management team with strong entrepreneurial skills, the company’s superior purchasing power, or an extensive customer knowledge base in a specific industry. For instance, for the AX Group, the diversification from the construction industry into development happened fairly quickly. The Group built capital on the construction work that was contracted and started diversifying into the development of its own property portfolio.

Very often, companies fail with diversification because they assume that having some of the identified strategic assets is sufficient. Therefore, companies must ensure that a proper gap analysis is carried out to ensure that they have all the identified strategic assets in hand prior to moving forward with diversification. Any missing strategic assets can either be acquired externally, developed internally or be adapted to accommodate better customer expectations. Very often the strategic assets held need to be moulded and adapted to fit with the strategic assets acquired in order to create synergy and finally result in a successful diversification strategy.

A long-lived successful diversification strategy is one that is unique; not easy to imitate or substitute. How easy is it for competition to catch up by acquiring or imitating strategic assets built? Can competition create similar strategic assets that might be an alternative to customers? For example, Amazon had initially started as an online bookseller but eventually, the company became the largest retailer of consumer goods, even if it lacked a physical store network. Amazon was able to leverage its existing strengths by identifying and adopting the strategic assets necessary to create an alternative to the traditional retail industry.

Shareholders and investors alike would expect that a successful diversification strategy will give a competitive edge against other players. Before the AX Group decided to branch out into the care business, which in itself has many similarities with the hospitality division, management carried out a gap analysis to understand the strategic assets that were essential prior to take this bold move. Many of the strategic assets were already held by the Group. A few of these strategic assets were the centrality and neighbourhood of the identified site, the internal technical expertise on how to properly plan and develop the property and the extensive experience in the 4-star and 5-star hotel industry. Notwithstanding, a number of strategic assets and processes had to be adapted and acquired. For example, the Group had to acquire knowledge of the healthcare industry and eventually mould this knowledge with the existing hospitality and development processes to create a unique concept.

Above all, a structured approach towards diversification will lead to organisational efficiency that will enhance the internal expertise and knowledge for future diversification decisions. If planned well, diversification will lead to organisational growth and ultimately increase shareholders’ wealth.