daniel chigunwe
Business Writer
INVESTMENT holdings company, Arden Capital, says the consolidation of hotel group African Sun and real estate firm, Dawn Properties, would create a strong balance sheet with enhanced financial leverage for future developmental capital.
African Sun acquired the entire issued ordinary shares in Dawn through an offer to Dawn shareholders in January this year, and consequently, Dawn was delisted from the Zimbabwe Stock Exchange (ZSE) on 16 February 2021.
The investment holding group is the largest shareholder in African Sun, which is listed on the ZSE.
African Sun is currently engaged in the necessary legal processes to acquire the remaining 8,83 percent shareholding in Dawn.
Simon Village, the group’s chairman, in a statement of financial results for the interim to June 30, 2021, said after completing the transaction, Arden was now implementing a revised operating business model that consolidates these two businesses.
“The consolidation of the two subsidiaries’ businesses will create a robust balance sheet, with enhanced financial leverage for unlocking future developmental capital for the combined business to survive the Covid-19 downturn, protect jobs, as well as guarantee the future for the business and its stakeholders,” he said.
Village said the group had not yet witnessed recovery in travel and tourism that it had hoped for in 2021 but remained optimistic the vaccination programmes around the world and softer restrictions for vaccinated travellers would contribute to the gradual normalisation of travel.
“In the short term, domestic travel will continue driving the recovery, strengthening further with the recent easing of local travel restrictions,” he said.
He added that the group anticipated that the domestic market would continue to drive recovery of the hospitality business in the medium term.
As a result, he said, the group remained optimistic that it would emerge a stronger and more resilient business after the hotel refurbishments and product refreshments currently under way, positioning it to deliver better value to stakeholders in the years ahead.
“Given the stability in the economy, the group expects that the monetary authorities will continue enhancing the auction system from a foreign currency supply and pricing perspective. The general upward performance trajectory by all the industrial sectors in Zimbabwe is expected to continue driving economic growth,” he said.
For the half year period under review, the group’s revenue increased 56 percent to US$13,3 million, from US$8,5 million recorded during the 2020 comparative period.
Village said the increase in revenue was recorded across all the group’s segments, with a notable increase being recorded by the hospitality segment which remains the major driver of total revenue.
“The increase in revenues is primarily attributable to an increase in hotel occupancies to 24 percent, relative to 22 percent recorded in the prior period as a result of fairly relaxed Covid-19 lockdown restrictions,” he said.
He noted that in the current year, the group’s hotels were operating during the lockdown period, with flexibility on local, regional, and international flights as airlines continued to ply most routes as compared to the same period in prior year.
Village said the prior year occupancies reflect the devastating impact of the global outbreak of Covid-19, which affected global and domestic business and leisure travel which resulted in closure of all the group’s hotels during April 2020 and limited services at 4 city-hotels in May 2020.
The group’s operating expenses at US$13,2 million, were 43 percent up in comparison to the prior year operating expenses of US$9,2 million.
Village said the increase was related to the increased revenues driven by improved business activity compared to prior year’s performance which was faced with the adverse impact of significantly curtailed operations as a result of the impact of the pandemic.
However, excluding the net monetary gain of US$0,6 million arising from the application of International Accounting Standard (“IAS”) 29, the group recorded loss before tax of US$1,9 million during the period under review, relative to comparable US$1,3 million loss recorded over the same period in the prior year.
Bongani Ndlovu