Esteemed Ladies and Gentlemen,
Welcome to Zara Investment Company 19th ordinary meeting of the general assembly of the shareholders
In 2012 Zara witnessed a slight rebound in its performance registering higher revenues than 2011. Consolidated operating revenues increased by 6.1% to JD 82.9 million compared with JD 78.2 million in 2011. Net operating revenues increased by 5.7% to JD 22.7 million compared with JD 21.5 million in 2011, and consolidated profit attributable to shareholders reached JD 1.1 million compared with a loss of JD .867 million in 2011.
We ushered the year 2012 with an uncertainty fueled by the surrounding regional political unrest in addition to local acute economic challenges marked by high unemployment and increasing living expenses triggered mainly by reliance on foreign sources of energy. All of these factors exacerbated an already fragile economy exerting tremendous pressure on the budget and worsening the deficit. In managing this delicate situation the government found itself resorting to a mix of higher taxes coupled with an ease on subsidies, which eventually had an inflationary impact on all aspects of the economy. Considering these challenges, it was reassuring to see that the economy of Jordan continued to expand with a GDP growth estimated at 2.8% in 2012. Moreover, specific sectors of the economy witnessed a healthy growth most importantly of which was in tourism.
In a year marked by persistent economic and political turbulences, and amidst a slew of global economic volatilities, international tourism demand remained resilient. In 2012 and despite the world’s economic and political uncertainty, tourism continued to be one of the few vibrant sectors driving growth. The situation in Jordan was no exception. Tourism receipts grew by 15.3% from JD 2.1 billion ($3.0 billion) in 2011 to JD 2.5 billion ($3.5 billion) in 2012. The total number of visitors to Jordan dropped by 7.3% compared with 2011 and that is attributed to the drop of same day visitors by 24.6% to 2.2 million visitors in 2012. In contrast, the number of overnight visitors, a much coveted travel segment, increased by 5.1% to 4.2 million visitors in 2012. The drop in the overall number of visitors is also attributed to the fact that foreign visitors remained wary of traveling to and across Jordan given the unrest in the region; in addition to the economic crisis in Europe, one of Jordan’s main source markets.
In 2012 Zara continued to maintain its leading market share of 5-star hotels and 5-star room inventory in Jordan. Our leadership was also evident in the number of human resources employed vis-à-vis the total number of persons employed in the hospitality sector. Employment in the 5-star hotels segment in Jordan reached 8,990 persons in 2012 of which approximately 29% are employed by Zara; while employment in the hospitality sector reached 43,781in 2012 of which approximately 6% are employed by Zara.
In April 2012, in light of our objective to improve Zara’s capital structure, the general assembly approved a capital increase of JD 25 million of which JD 20 million were paid up and subscribed for. Of the remaining JD 5 million, JD 3.3 million were subscribed for and remain to be registered during 2013, which would bring Zara’s paid up and registered capital to JD 148.3 million. The capital increase will improve our financial leverage by reducing the company’s outstanding debt and financing costs.
Contributing to the sustainability of the tourism sector in Jordan as well as the communities in which we are present remained one of our important priorities in 2012. Our efforts to employ environmentally friendly methods in running our properties continue with the introduction of alternative sources of energy leading to cleaner production and lower costs. We also intensified the application of the energy efficient lighting light-emitting diode (LED). The energy saving LED bulbs promise to reduce our energy cost given that they use only one-fourth of the electric power needed to illuminate an incandescent bulb of comparable brightness. Our hotels also continue to successfully move away from the use of diesel fuel to clean-burning liquefied petroleum gas (LPG) for a variety of their substantial heating needs.
All of the above have not only enhanced the efficiency of our operations, but they have also achieved savings through the decrease in our electricity and fuel consumption, which in turn also resulted in substantial reduction in emissions of carbon dioxide (CO2).
Moreover, during 2012 all of Zara hotels were among the first in the country to be certified with ISO 22000 food safety standard. These certificates enhance the hotel’s preparedness and ability to control food safety hazards.
In line with our firm commitment to work on forging meaningful partnerships aimed at improving the tourism sector in Jordan, we concluded the refurbishment of 23 accommodation rooms at Salt Vocational Training Center that has become known as “Saltos Hotel”. This facility will provide ideal state-of-the-art hands on training environment in addition to availing a revenue stream to the Center. Saltos Hotel is the first classified hotel in Salt City, which is expected to enhance local tourism in one of Jordan’s most beautiful cities.
Continuing the strategy we followed in 2011, and due to the prevailing circumstances, new projects in 2012 were kept to a minimum. In 2012 we continued the comprehensive renovation of the rooms and suites of the Grand Hyatt Amman expected to be completed during the first quarter of 2013. We also embarked on smaller projects needed to maintain the level of quality and service at all of Zara’s hotels and resorts
The key areas that we will focus on during 2013 will continue to be cost cutting measures and expense control to carry us through what we expect to be a difficult year. We will also continue our ongoing program of clean production projects. The first quarter of 2013 is due to witness the completion of the renovation of the rooms and suites of the Grand Hyatt Amman, which will give us a significant competitive edge in the luxury market in the city of Amman. During the second quarter of 2013, we will embark upon a soft room renovation program at the Movenpick Resort and Spa Dead Sea. This renovation is long overdue and is needed to maintain the hotel’s competitive position in the market. Another area of great importance to us will be to build on and enhance the significant role that your Company plays in the development of the local communities in which it operates. Year 2013 will witness the operation of the first training hotel developed by Zara and belonging to the Vocational Training Corporation in Jordan which is a milestone that we are all eagerly looking forward to.
By all standards 2012 was in no way an easy year. I am confident it would have been even harder and more challenging had it not been for the dedication and hard work of our entire team of professionals running our properties all over Jordan. To these wonderful men and women I extend my deepest thanks and appreciation for a job well done.
Finally and in closing, on behalf of the board of directors, I would like to thank all of our shareholders for their trust and continued support.
Sabih Taher Masri
Chairman of the Board of Directors