AFRICAN Sun Limited (ASL) has posted its first full year profit since dollarisation in 2009 attributed to effective cost-cutting measures and a strong performance of resort hotels in Victoria Falls.
Report by Victoria Mtomba Business Reporter
ASL recorded an after tax profit of $2,6 million for the year ended September 2012 from a loss position of $10 million the previous financial year.
The hotel group’s finance director Nigel Mangwiro told an analysts briefing on Monday in Harare that the cost-cutting measures that the company embarked on last year were now bearing fruit as the group had realised $3,2 million in savings at head office.
Mangwiro said revenue grew by 12% to $54,4 million compared to $48,7 million the previous year.
The growth in revenue has been attributed to the strong performance of resort hotels in Victoria Falls and a 14% growth in the average daily rate.
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Revenue per available room went up by 18% to $47 from $40, while earnings before interest depreciation taxation amortisation stood at $6,3 million compared to $2,7 million from continuing operations.
Mangwiro said the group requires $14,2 million for refurbishments with $10 million having been availed by Afreximbank and the remainder expected to be financed through operations.
The funds would be used to refurbish 2 372 rooms at the group’s hotels.
ASL chief executive officer Shingi Munyeza said the increase in international arrivals was expected to spur business for the group although for the period under review it lost some money due to the cancellation of bookings at Elephant Hills.
“We expect the increased air capacity to improve our capacity going forward.
“For the first eight months of this year, from January to August, we had cancellation of about $2 million into our hotels and the main victim of that was Elephant Hills,” Munyeza said.
He said the cancellations were as a result of the inaccessibility of Victoria Falls by air, thereby making it difficult for prospective clients to access the conference facilities.
“We are glad to say we are out of the woods completely and we have turned a corner. We are now growing the business further,” he said.
Munyeza said the refurbishments of the group’s six hotels should have been completed by August this year, but this was inhibited by several hurdles encountered by the hotel.
Munyeza said Holiday Inn Bulawayo and Harare would be completed this month, while Crowne Plaza would be done by the first quarter of next year.
ASL is refurbishing its hotels and introducing the InterContinental Hotel Group (IHG) franchise.
The company will rebrand Holiday Inn Mutare to African Sun Amber, while Holiday Inn Beitbridge would be rebranded to Beitbridge Express Hotel.
Munyeza said the company would reduce the average cost of debt to not more than 15% next year.
“We will reduce borrowings from $15,49 million to $12 million by the end of the financial year,” he said.
He said ASL was hopeful to pay a dividend in 2013. The company last paid a dividend in 2008.
ASL forecast revenue and EBIDTA to grow by 12% respectively.