admin
Business Reporter
RAINBOW Tourism Group (RTG) has restructured its $13.6 million National Social Security Authority loan facility, a move that will effectively see the hospitality concern having the capacity to service its debt and continue investing in properties. RTG corporate communications and innovations manager Pride Khumbula said the new facility has a seven year tenure at an interest rate of six percent per annum.
“RTG successfully restructured its $13.6 million National Social Security Authority (NSSA) loan facility, which had become current. Effectively the restructuring gives RTG the capacity to service the debt and continue investing in its properties. The longer term facility will release RTG to continue reducing the legacy working capital gap,” she said in a statement.
“Operationally the company continues to gain strength. Operational profit before interest and depreciation grew by 300 percent from $900,000 in 2014 to $3.6 million in the company’s full year 2015 results.”
The group posted an operating profit of $1 million in comparison to a loss of $800,000 in 2014. This performance is largely attributable to the reduction in expenses compared to prior year, said Khumbula.
During the period under review, RTG’s revenues remained flat at $30.6 million.
However, group occupancy grew by four percent from 48 percent to 50 percent, driven by foreign business, which grew by six percent to $9.28 million from $8.75 million recorded in the corresponding period prior year.
The group achieved this positive revenue performance despite the industry challenges which resulted in the cancellation of bookings due to xenophobic attacks in South Africa which houses tour operators that drive the Victoria Falls market, and the restrictions on international travel due to the Ebola virus in West Africa.
Revenue growth was impacted negatively by the Value Added Tax (VAT) on foreign revenues which was introduced in January 2015.
Adjusted for VAT of $600,000 on foreign revenues, the growth would have been 12 percent on a like for like basis.
The positive performance helped RTG by softening the impact of the depressed local market.
Zimbabwe occupancy remained flat at 54 percent.
“This market was adversely affected by the weak aggregate demand as a result of persistent liquidity challenges, business viability constraints and diminishing incomes.
“The impairment charges of $2.8 million for the Capital Bank and Savoy Hotel debt were effected in December 2014. This prudent move by the Group had a direct knock on the current assets balance,” she said.
On the outlook, Khumbula said the group will focus on revenue growth through foreign business generation while sustaining domestic business as driven by innovative and unique programmes.
Online Reporter