African Sun suffers US$1,3m loss

loss for the half-year ended March 31, 2011.
This follows in the heels of last year’s loss of
US$221 514.
Revenues grew by 6 percent to US$27,7 million from US$26,06 million in the comparable period in 2010.
The group’s performance was, however, significantly weighed down by operating expenses, which stood at US$17,1 million.
The Pan-African hotel group is yet to turn to profitability since dollarisation of the local economy two years
ago.
However, occupancy levels for the hotel group increased to 45 percent from 40 percent last year, while revenue per average room and average daily rate recorded growth of 16 percent and 5 percent, respectively compared to the same period last year.
African Sun’s revenue growth registered during the period resulted in the group reporting a marginal earnings before interest, tax, depreciation and amortisation profit of US$91 617 from an EBITDA loss of US$28 571 reported in the same period last year.
The EBITDA position of the group was weighed down by losses registered in South Africa and retailer, Hotelserve.
The depressed performance of South Africa also pushed up the cost of sales 8 percent, while operating expenses increased by 5 percent during the period under review.
Finance costs also increased during the period as the group continued to finance working capital with highly priced short-term loans for the period, the company reported.
The performance of the group’s South Africa operations generally remained depressed, while the new operations in West Africa have recorded steady growth.
Zimbabwean operations reflected an improved performance during the period, reflecting the strong revenue growth recorded in the country.
In his half-year statement ASL chairman, Mr Tim Chiganze said Zimbabwe was on a recovery path, with the loss-making entities expected to turn to profitability in the outlook period.
“Zimbabwe hotels closed at an average occupancy of 47 percent, up from 40 percent achieved in the same period last year.
“This resulted in a 23 percent increase in RevPAR to US$37 from US$30 last year, as ADR grew by 8 percent.
“While city hotels sustained higher occupancies of 63 percent compared to 59 percent last year, resort hotels still lagged behind at 35 percent compared to 28 percent last year.
“The loss-making resort hotels, which sustained an EBITDA loss of US$729 000, are expected to be profitable in the second half,” he said.
Meanwhile, ASL has commenced refurbishment of some of its hotels.
The refurbishment capped at US$10 million and is being funded from proceeds of a five-year loan facility from the Industrial Development Corporation of South Africa.
The group has indicated that the loan facility has an extension option for an additional two years.
According to ASL, priority under the refurbishment programme will be given to the relaunch requirements of the hotels operated under the Holiday Inn franchise.