African Sun narrows H1 loss to $560k

African Sun narrows H1 loss to $560k

HARARE, August 10 (The Source) – African Sun Limited narrowed its half-year 2016 loss position to $560,000 from $1,2 million over the same period last year as the group continues with its drive towards profitability.

In an update for the six months to June 30, 2016, AfSun said its operating expenses were 14 percent lower at $13,3 million compared to $15,6 million previously, as a result of cost reduction initiatives and changes in the business model.

Revenue in the period fell 20 percent to $17,99 million from $22,41 million last year after occupancy levels declined by seven percentage points to 37 percent from 44 percent during same period prior year.

Business from the regional markets fell 46 percent, weighed down by South Africa as a result of the depreciation of the Rand against the US dollar while the local market also declined 17 percent due to reduced conferencing and current liquidity challenges.

“However, the international market room night was 4 percent up on last year with strong performance coming out of the Victoria Falls Hotel.”

The performance by the international market drove its Average Daily Rate (ADR) up 2 percent to $94 during the period for the hotel.

Overall, the reduced occupancy however resulted in a 15 percent decline in revenue per room (RevPAR) from $40 achieved same period last year to $34.

Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) dropped 92 percent to $110,000 million, from $1,41 million last year as a result of reduced revenue.

The company says the repayment and continuous restructuring of expensive loans resulted in savings of 39 percent in finance costs — from $1,21 million last year to $740,000.

AfSun said it will continuously focus on revenue generation and cost reduction initiatives to navigate the current challenges and to compliment the expected peak season surge in business.

Performance is expected to improve, particularly at its Victoria Falls properties.

It operates Elephant Hills Hotel Kingdom Hotel and controls 50 percent of Victoria Falls Hotel with Meikles Africa holding the other 50 percent.