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Oliver Kazunga Senior Business Reporter
THE Zimbabwe Stock Exchange-listed hospitality concern, African Sun will focus on foreign markets after it incurred a $0,77 million loss in the half-year ending March 31, 2014 due to a decline in local business as liquidity challenges facing the economy persist.
African Sun said its revenue for the period under review was $25,33 million which is a four percent reduction from the comparable period last year of $26,44 million.
“The drop is attributed to a five percent decline in the depressed Zimbabwe segment. The group reported a loss for the period of $0,77 million down from a profit of $0,91 million last year,” said the group’s chairman Bekithemba Nkomo in a statement accompanying its interim results.
“Exceptional costs amounted to $202,945 relating to a fair value adjustment and selling costs for the 16,54 percent investment in Dawn Properties Limited which was classified as a non-current asset held for sale during the period under review.” He said the group’s Earnings, Before Interest, Taxes, Depreciation and Amortizations for the period reduced by 38 percent to $2,17 million from $3,48 million.”
“The decline is attributable to depressed revenue performance as well as the opening of a new hotel in Ghana. Amber Hotel Accra Airport is still in the “soft opening phase” and the operating model is yet to achieve optimum efficiencies. Operating costs increased by two percent from the same period in 2013 to $16,90 million from $16,61 million.”
He said it is envisaged that the foreign market would continue to sustain the group’s Average Daily Rate and Revenue Per Available Room as the domestic market was likely to remain depressed into the next 24 months.
“To mitigate the depressed domestic business, the group will leverage on its aggressive selling of the foreign market improving arrivals from our traditional inbound markets and any other upcoming international markets,” he said.
The group’s net debt went down by 14,5 percent from September 2013 closing at $1,47 million during the period under review owing to a net reduction in borrowings amounting to $5,14 million and reduced cash balances.
African Sun directors have also approved the disposal of the remaining investment in Dawn Properties in order to reduce borrowings.
“The investment was carried at $6,07 million at September 30, 2013, and was subsequently adjusted by $205,943 to a final amount in non-current assets held for sale of $5,83 million,” he said.
Debt reduction, the hospitality concern said, remains its priority in the financial year.
“To date, the group has paid net of $5,14 million towards its borrowings using mainly proceeds from the disposal of 12 percent investment in Dawn Properties Limited.
On African Sun business overview, Nkomo said foreign arrivals improved by a consolidated two percent from the same period last year spurred by growth from Europe and Asia, which increased by five percent and 25 percent respectively.
He said this growth trajectory was however, slowed down by a decline of five percent and 19 percent in arrivals from America and the African region respectively.
“The African region’s poor performance was driven by a 36 percent decline in South African arrivals. The two percent growth in foreign arrivals resulted in an increase of 12 percent in rooms’ revenue over the same period last year,” said Nkomo.
“The domestic market rooms revenue reduced by 13 percent as a result of a 6,65 percent decline in room nights owing to the depressed economic environment. The sum effect was an improved contribution of foreign room nights to the business mix to 40 percent up from 38 percent achieved last year.”
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