African Sun revenue up 6pct, reduces debt

African Sun revenue up 6pct, reduces debt

By Chipo Musoko, HARARE, March 31 (The Source) – Hospitality group African Sun has recorded a six percent growth in revenue for the five months to February compared to the same period last year due to the growth in its Ghana business, outgoing group chief executive Shingi Munyeza said on Tuesday.

The Amber Hotel in Accra, which opened last year, contributed 10 percent to the group’s revenue while Zimbabwe recorded a two percent decline in ADR (hotel average daily rate) due to the persistent liquidity challenges putting pressure on the margins, Munyeza told shareholders at the company’s annual general meeting.

Occupancy was six percent up to 45 percent while hotel revenue per available room was up eight percent to $42 from $39.

Operating costs were down three percent driven by the company’s initiatives to match trading environment, particularly in Zimbabwe with the firm saving
$1,353 million in interest in this financial year, a 38 percent decrease from last year .

Earnings before interest, tax, depreciation and amortization at six percent margin was ahead of last year breakeven position, he said.

Turning to the company’s debt, Munyeza said since September 2013 to end of March this year, long-term loans had been reduced from $8 million to $3,4 million while short-term loans had been reduced from $14 million to $6,4 million reducing total borrowings to $9,9 million.

“Borrowings came down due to final disposals of shares in Dawn which unlocked $5,7 million and through operating cash flows we managed to repay some of the loans,” he said.

He said the company will implement more initiatives to reduced debt such as a capital call of $6 million whose details would be availed after a mandatory offer to minority shareholders and disposal of freehold properties worth $4 million under negotiations.

Munyeza said the Ebola outbreak in West Africa had affected the company’s source markets especial in Asia – Japan, China, South Korea as well as and the United States due to the negative perception.
He said Zimbabwe was now becoming an expensive destination due to the weakening of the Rand and Euro although the German, Italian and Spanish markets continued to grow.

“South Africa has been our biggest market and there has been a reduction in arrivals from that destination,” he said.

However, he said, the firming of the USD will result in increased arrivals from the US market from the second half of the year into 2016.

The United Kingdom and Australian markets were also registering growth.
The domestic market, he said, was on the rise due to conferencing following the recent injection of development aid from the European Union.