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The increase in revenue for the group was largely due to the contribution of Africa Sun Amber Hotel Accra

Tinashe Makichi Business Reporter
Hospitality group, African Sun‘s revenue for the year to September 2014 increased 1,3 percent to $56,72 million up from $55,97 million achieved in the comparable year ago period.

The increase in revenue for the period is largely on the back of contribution of Africa Sun Amber Hotel Accra, which opened during the year albeit it is still to achieve its full potential.

On a like-for-like basis (excluding Ghana hotel) revenue for the group decreased 25 percent last year while gross profit remained flat compared to last year as cost of sales grew by four percent with the addition of the new Ghana hotel.

“The increase is fully attributable to the revenue contribution of African Sun Amber Hotel Accra which was opened during the year although it is still to achieve its full potential.

“Our business model has proved to be very robust in mitigating seasonality (resort market growth), market sensitivities (Ebola scare), weakening market demand (local market), currency fluctuations (the weakening rand),” said African Sun group chief executive Dr Shingai Munyeza.

The group’s operating costs for the period under review reduced 4,7 percent resulting in a saving of $1,8 million compared to prior year as cost reduction measures begin to bear fruit.

Resultantly EBITDA for the group increased 70 percent to $6,95 million up from $4,095 million achieved last year, while operating profit grew 134 percent to $325 million up from $138 million last year.

The gains were, however, reversed by high finance costs of $3,5 million and impairment of assets amounting to $3,3 million. As a result the group reported a loss for the period of $2,3 million, an improvement from a loss of $8,8 million recorded prior year.

Dr Munyeza said measured by the group’s EBITDA the company continues to grow in its revenue generation inspite of the current harsh economic environment.

He said the completion of a three-year long refurbishment programme has given the company a competitive edge against local competitors and evidence is that REVPAR and ADR is at least 20 percent ahead of the company’s closest competitor in a competitive set.

Dr Munyeza however, was hopeful of the coming financial year and said the group will continue rolling out initiatives to consolidate its market position.

“The company has finally got on top of its painful short-term debt without another capital call.

“The local market continues to be tough but we are seeing a silver lining in the return of development funds into the economy which will increase our conferencing business,” said Dr Munyeza.

He said although the group’s debt will be largely long-term by the end of the first half of the year, the cost of that is still high at around 12 percent.

Dr Munyeza said the company needs to restructure or renegotiate to be below 10 percent at least.

He said debt reduction remains the group’s priority going forward and the total debt decreased 22 percent from September 2013, closing at $17,4 million following repayments amounting to $6,8 million made during the financial year under review.

Occupancy for the period remained flat at 48 percent despite an 8 percent increase in rooms capacity which was offset by an increase in actual rooms sold.

Rooms capacity increased following the opening of the Ghana hotel and the release of refurbished rooms in Zimbabwe.