African Sun Limited optimistic despite US$2,17m loss in HY performance
AFRICAN Sun Limited, a Victoria Falls Stock Exchange-listed group, recorded a post-tax loss of US$2,17 million for the half-year ending 30 June 2024, compared to a US$1,81 million loss during the same period last year.
The decline in performance was primarily driven by non-recurring costs. However, the group remains confident in its ability to recover, citing strong cash reserves and strategic initiatives to boost revenue and profitability.
In its half-year report, African Sun Ltd said despite the subdued performance, it maintains a solid financial foundation.
The group reported being debt-free, positioning it to leverage opportunities for debt financing if needed in the future. The directors, in their going concern assessment, took into account the tourism sector’s projected performance, cash flow, liquidity projections, and key financial commitments over the next 12 months.
“The group remains debt-free, representing leveraging opportunities should there be a need for debt finance in the foreseeable future. The group is optimistic about its ability to recover from the losses incurred during the period, attributing this confidence to a variety of implemented measures,” read the statement.
The company outlined several recovery measures, including actively exploring debt financing options in both local and regional markets to support planned product improvements. Additionally, African Sun Ltd is focusing on strategic marketing initiatives aimed at increasing international market penetration, which is expected to boost hotel occupancy rates and improve average daily rates.
Sun African Hotel
The company also anticipates increased revenues from the sale of residential stands completed during the period. This is expected to enhance cash flow and contribute positively to profitability.
The group said in light of the ongoing macro-economic challenges, including frequent power outages and the effects of poor rainfall, it will continue to align its overhead costs with revenue growth.
“Furthermore, the group will continue to monitor and align its overhead costs with revenue growth in light of the ongoing turbulent macro-economic environment, which is characterised by frequent power outages and the effects of poor rainfall,” said African Sun Ltd.
Despite the challenges, African Sun Ltd posted revenue growth of US$25,58 million, a 14 percent increase compared to the same period last year.
Board chairman, Mr Lloyd Mhishi, attributed the improved performance to higher average daily rates of US$112, up from US$103 last year. Hotel occupancy also showed positive signs, closing at 50 percent, a four percentage point increase from the previous year.
Mr Lloyd Mhishi of Sun African Hotels
Additionally, the group’s real estate division contributed significantly, increasing its revenue share from two percent to six percent and generating US$1,28 million from the sale of residential stands.
Operating expenses (excluding depreciation) rose by just one percent to US$14,09 million, despite inflationary pressures in the first quarter of 2024.
“The group recorded a loss after tax for the period of US$2,17 million, despite improved top line largely due to higher taxes, loss from the sale of property of US$0,27 million, discontinued operations loss of US$0,35 million and non-recurring costs of US$0,60 million,” read the statement.
Despite the losses, African Sun Ltd maintained a strong liquidity position, with a cash and cash equivalents balance of US$10,56 million at the end of the period, recovering US$2,37 million from operations compared to US$1,13 million used in the same period last year. Looking ahead, Mr Mhishi expressed optimism for the second-half of 2024, traditionally a peak season for the tourism industry. The group anticipates an up-tick in international tourist arrivals, a boost in conference bookings, and increased domestic tourism demand.
Founded in 1971, African Sun Ltd is one of Southern Africa’s largest hotel chains, with 10 properties across the SADC region. These include iconic establishments such as The Victoria Falls Hotel (operated in partnership with Meikles Hospitality), Elephant Hills Resort and Conference Centre, Caribbea Bay Resort, Great Zimbabwe Hotel, Hwange Safari Lodge, Holiday Inn Harare, Holiday Inn Bulawayo, Holiday Inn Mutare, and Monomotapa Hotel, among others.-chroncile
