African Sun return to profitability

Published: 22 June 2015

Listed hospitality concern African Sun Limited (ASL) recorded a profit of $850 519 in the six months to March 2015, compared to a loss of $1,4 million in the prior period, due to increased foreign tourists arrivals.

Herbert Nkala, ASL chairman, on Friday said foreign arrivals into the group's hotels grew by a consolidated 24 percent compared to the same period in 2014.

"Europe recorded the most growth (44 percent), driven mainly by Germany (141 percent) and the United Kingdom (30 percent)," he said adding that South Africa – a recovering market – increased by eight percent during the period under review.

"Asia, a very sensitive market, declined by 53 percent compared to same period last year as a result of the Ebola Disease outbreak," added Nkala.

In the period under review, ASL occupancy grew by six percentage points to 47 percent and this was attributable to an increase in room-nights largely driven by the improvement in conferencing business in Zimbabwe and an improvement in the room occupancy of the group's Ghana unit Amber Accra Hotel.

"The Zimbabwe operations reported a 12 percent increase in room-nights, driven by a 20 percent growth in the domestic market whilst the foreign market remained flat compared to same period last year," said Nkala.

"However, the increase was at the backdrop of a reduced ADR, which declined by seven percent to $92 from $99 achieved last year. The Zimbabwe ADR was partially affected by the introduction of Value Added Tax on foreign accommodation that became effective on 16 January 2015," he added.

Nkala noted that Amber Accra Hotel reported an increase in room-nights from its soft opening period last year, though at a reduced ADR of $102 compared to $123.

"Consequently, the group's revenue per available room (RevPAR) for the period under review grew by 10 percent to $44 from $40 achieved in the same period last year.

The RevPAR growth is mainly attributed to Amber Accra Hotel as the Zimbabwean hotels grew by two percent to $42 from $41 reported in the comparable period," he said.

Amber Accra Hotel reported a growth in RevPAR of 217 percent, from $18 same period last year to $57 in the period under review.

In the half year to March, ASL's revenue for the period also surged 10 percent to $44 million on the back of revenue growth from ASL's Ghana hotel, Amber Accra Hotel.

"…attributed to Amber Accra Hotel which achieved $2,87 million compared to $320 000 recorded in its soft opening phase last year.

Revenues from the Zimbabwe operations remained flat, reducing only by 0,33 percent to $24,7 million posted in the same period last year," Nkala said.

Operating costs increased by 8,5 percent compared to a 10 percent increase in revenue, attributed to the Ghana hotel which is now operating at an increased capacity.

"Resultantly, EBITDA for the half year increased by 56 percent from the $1,4 million achieved in the same period last year to $2,2 million.

Operating loss was 106 percent worse than last year, mainly as a result of once off costs of $1 million included in other expenses," the chairman said.

Financing costs charged to the statement of comprehensive income of $1,62 million remained flat over last year, while expense costs are expected to reduce following the 44 percent reduction in borrowings in the period under review.

"The group's debt reduction strategy is on course, following significant debt repayments in the period under review. Bank borrowings reduced by 44 percent rose $9,6 million from $17,3 million. Consequently, the group's gearing reduced to 39 percent from 58 percent reported previously," Nkala said.

Remaining bank borrowings of $9,6 million are set to be repaid through proceeds of a rights offer and operating cash flows, the board expects to notify shareholders of the rights issue in "due course".
- dailynews

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