Brainworks’ underlying businesses have continued to reflect resilience and growth notwithstanding the myriad of challenges the country is facing, the company’s management have said in a statement accompanying its half-year results. Revenue for the half-year ended June 30, 2017 was up 23 percent to $24,2 million from $19,67 million achieved prior year comparative.
The bulk of the revenue as usual came from the hospitality businesses where revenue amounted to $21 million up 17,31 percent from $17,98 million for the comparative prior year. The hospitality segment contributed 87 percent of the total group revenues for the period under review, 4 percent lower when compared to the comparable 2016 period on the back of revenue growth in the other business segments. The real estate businesses was even better after registering a higher growth rate than that of the hospitality businesses. Revenue for the real estate business came out at $2,2 million up 18,91 percent from $1,85 million prior year comparative.
In explaining the revenue growth for the hospitality business, management said the tactical downward review of the hotel room rates yielded the desired outcome as occupancy increased by 8 percentage points from 37 percent reported last year to 45 percent. As a result, revenue per available room (‘RevPAR’) increased by 14 percent to $40 from $35 achieved last year. This management said, had a notable impact on revenue growth.
“Occupancy growth was supported by strong performance from all our markets, with local, international and regional rooms sold increasing by 21 percent, 33 percent and 2 percent respectively. In addition, the commissioning of the upgraded Victoria Falls International Airport which now has capacity to handle wide body aircraft positively contributed towards improving occupancies and ultimately revenue from the group’s Victoria Falls based hotel assets.” The group, however, posted a loss before tax of $4,87 million, which was substantially higher when compared to the $2,20 million recorded in same period last year. Management attributed the loss to once off expenses amounting to $1,78 million made up of non-recurring expenses of $0,52 million, $1,26 million listing costs as well as impairment allowance of $0,92 million.
The impairment is attributed to the group’s receivable from its associate investment, Coporeti Support Services (Private) Limited t/a GetCash. Brainworks has since disposed 51 percent in GetCash to MyBucks, a Luxembourg company listed on the Frankfurt Stock Exchange. The disposal is still subject to approval by the regulatory authorities in Zimbabwe. Overall, the group’s operating expenses increased by 23 percent to $16,3 million with operating expenses in the hospitality businesses increasing by $1 million in line with revenue increases.
Management, however, defended the loss saying historically, the group incurs losses in the first half of the year as the business cycle is such that the peak season of the group’s principal business activity is in the second half of the year. Accordingly, as in previous years, the group expects the improvement in performance seen in the first half of the year to accelerate in the second half of the year. In 2016, approximately 60 percent of the group’s revenue and gross profits were achieved in the second half while a loss of $1,6 million in the first half was turned into a profit of $3,4 million by the end of the financial year. In the outlook, the Group expects improved performance from Victoria Falls based hotels as well as sales of its maiden residential units. With the Group’s current liabilities exceeding its current assets by $16,08 million, with loans contributing a significant portion, management intends to raise capital via a share placement and disposal of the existing treasury shares to raise funding for repayment of some of the maturing debt, simultaneously engaging Lenders for debt restructuring.
“The group is also considering issuing a convertible loan note with interest in the convertible instrument having been received from certain investors. The board is confident that the combined impact of these initiatives would enable the group to fully discharge its obligations as they fall due.”