LISTED hotel group African Sun’s profits before tax dropped to $1,23 million in the half-year ended March 31, weighed down by an increase in interests from short-term loans.
Report by Gamma Mudarikiri
In an unaudited statement sent to shareholders yesterday, the hotel group said interest expenses increased by 84% to $1,55 million in the period under review following an increase in short-term loans and the average cost of borrowing.
The group’s borrowings soared to $12,3 million from $10,2 million recorded in the same period the previous year leading to the plunge in profit.
Revenue, however, grew by 1,6% to $26.6 million attributed to the marginal growth in the average daily rates (ADR), which was helped by the on-going hotel refurbishments.
The company said the first phase of the refurbishment programme had started to yield positive results, with ADR for the refurbished hotels increasing by an average of 11%.
The refurbished Holiday Inn Bulawayo was commissioned during the period under review while Crowne Plaza Monomotapa in Harare and Holiday Inn Harare refurbishments were expected to be complete by the end of July 2013.
Cash generation from operations improved to $3,13 million up from $0,58 million.
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Cost of sales and operating expenses were also down 5% and 4% respectively, driving a 65% growth in operating profit to $3,59 million during the period.
The growth in performance was, however, diluted by a high increase in finance charges in this period, resulting in a net profit of $1,23 million down from $1,50 million realised in the prior period.
Going forward, the company said the United Nations World Tourism Organisation General Assembly set for August will provide the tourism sector with a unique marketing platform, which will enhance the visibility of Zimbabwe as a destination.
“The resurgence of our national airline (Air Zimbabwe) is also expected to increase volumes into our Victoria Falls hotels, through domestic conference business,” the company said in a statement.
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