adminprocurement arm Hotelserve as the division continues to “underperform”.
ASL acquired Hotelserve on the onset of dollarisation in 2010 to enhance procurement efficiencies of imported hotel amenities vital to the business.
Chairman Mr Timothy Chiganze said revenues from Hotelserve were depressed during the six-month period to March 31, 2011, falling by 20 percent.
The decline, compounded by the strong South African rand, resulted in earnings before interest, tax, depreciation and amortisation loss of US$92 333, representing a minus-1 percent margin.
“The group is looking at possible ways of unlocking value from this business, possibly by way of disposal,” said Mr Chiganze.
Management says the business was acquired at a time when it made sense to have their own procurement so as to cut out middlemen.
“Hotelserve no longer fits into our business model,” added another official.
The business was expected to complement the group’s expansion into the sub-Saharan Africa region where they enjoyed structural synergies for procurement.
This resulted in the division focusing more on supplying the retail market.
Most companies listed on the Zimbabwe Stock Exchange have been shedding off non-core and loss-making entities to concentrate on core business.
Trade in procurement business is volume-based with low margins and is sensitive to sectoral and macro-economic influences.
The appreciation of the rand and the temporary ban on importation of meat and dairy products due to the outbreak of the Rift Valley fever in South Africa affected the division margins in the previous year.
Hotelserve imports and distributes a number of leading consumer brands exclusively into Zimbabwe from significant brand owners.
Hotelserve Distribution was established in 1990 as a supplier of goods and services to the hospitality industry in Zimbabwe.
In 1992 the company started supplies to retailers and wholesalers, becoming, in the process, the brand representative for a number of leading international and regional manufacturers.
Meanwhile, Aico Africa Limited, another ZSE-listed company indicated they were disposing of their 75 percent shareholding in Scottco and Exhort to finance working capital and retire expensive debt.
CFI Holdings is also disposing of its non-core assets, including its shareholding in Windmill and Dore & Pitt and others, to raise about US$8 million to recapitalise operations.
Most companies have resorted to disposing of non-core business to raise funding as opposed to going to the market to raise funds due to liquidity challenges.
Online Reporter