By Tendai Sahondo
Listed hospitality firm, African Sun continued to perform exceptionally despite the economic headwinds bedeviling the country and recent termination of the company’s management contract with Legacy Hospitality.
African sun posted a profit of ZWL26.90 million compared to ZWL3.11 million recorded in the same period for the half-year ended 30 June 2019.
Profit before income tax for the six months was at ZWL39.15 million (profit margin of 49%) compared to a profit of ZWL3.55 million (profit margin of 13%). Improvement in profit margin was a result of the foreign exchange gain of ZWL18.97 million posted during the period, as well as cost management.
Revenue for the period amounted to ZWL79.13 million with a mix of 55% local and 45% export. Occupancy closed at 45% representing a 10-percentage points decline from 55% recorded in the same period last year. Room nights dropped by 16% to 132,525 from 158,210 reported last year. The decline was across both our markets, with domestic and export reducing by 7% and 19% respectively. The Group posted EBITDA of ZWL42.72 million (54% margin) compared to an EBITDA of ZWL5.27 million (19% margin) reported in the same period last year. Included in EBITDA is other income of ZWL18.97 million relating to foreign exchange gain arising from uplifting of foreign currency denominated net monetary assets to ZWL. Excluding foreign exchange gains, EBITDA was ZWL23.8 million which represents a 30% margin. Net finance costs for the six months amounted to ZWL1.37 million compared to ZWL0.33 million recorded in the same period last year. Included in the finance costs for the current period is ZWL1.22 million relating to lease liabilities following the adoption of IFRS 16, Leases on 1 January 2019.
As previously reported, the hotel management agreement with Legacy Hospitality Management Serves Limited (“Legacy”) covering five of hotels (The Elephant Hills Resort and Conference Centre, The Kingdom at Victoria Falls, Monomotapa Hotel, Hwange Safari Lodge and Troutbeck Resort) was terminated. The matter is still going through legal processes, and with the firm set to advise once this is completed.
However, Afsun advised all our stakeholders that, this termination has limited impact on the Group’s operations.
“To date, we have fully integrated and taken over the management of the hotels, with the operations now segmented,” read a statement released to the media.
The firm said it remains hopeful that the international and regional arrivals particularly into the Victoria Falls destination will benefit its hotels.
“We have intensified our investment in sales and marketing initiatives to support and promote international and regional tourism as we anticipate the domestic market to remain subdued. In addition, we will continue leveraging our foreign currency generation capacity to invest in our refurbishment program to ensure that our hotels are in line with international standards and comply with franchisors’ brand standards where required,” read the statement.