African Sun records $10,1m profit

Published: 27 April 2019

AFRICAN Sun says it recorded a 110 percent increase in profit to $ 10,135 million during the year ended December 31, 2018 compared to $4,816 million achieved in prior period driven by both an increase in prices and volumes.

Alex Makamure, the listed hospitality group's chairperson said the hotelier recorded a 32 percent increase in revenues to $68,499 million compared to $51,827 million.

"The growth was spurred by a seven percentage point increase in occupancy from 52 percent last year to 59 percent. The revenue growth was also augmented by a 17 percent growth in average daily rate (ADR) from $93 recorded last year to $109 as the hotels continued to align domestic rates to the implied exchange rate between US$ and RTGS$," he said.

The group's assets increased to $ 47,519 million during the review period compared to $38,738 million recorded during the previous comparable period.

Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) was $17,13 million, an improvement of 78 percent from the 2017 position.

The EBITDA position resulted in an increase of 119 percent in cash generated from operations from last year.

African Sun said it managed to close the working capital gap and recorded a positive working capital balance of $1,34 million as at December 31, 2018, an improvement of 52 percent from negative capital of $0,84 million in prior year.

"Related to this, the cash and cash equivalents of the group improved by 66 percent to $13,88 million from $8,36 million. Of these balances, $6,41 million (2017: $0,66 million) was in foreign currency accounts (FCAs).

"In light of the recent policy announcements, the group is in sound position to generate enough revenue in 2019 to sustain its operations and declare profits," Makamure said.
He said the position is further augmented by the group's refurbishment programme to ensure that hotels are in line with international standards and comply with franchisors' brand standards where required.

"With regards to foreign currency generation, management is optimistic that the trend of at least 45 percent revenue in foreign currency will sustain supported by the growth in foreign arrivals which is expected to increase by between two and three percent in line with global trends," he said.

"To leverage this sustained global tourism growth, the group is in the process of increasing capacity in the safari sector, starting with 75 rooms in campsites at Great Zimbabwe Hotel and Carribbea Bay Hotel with a combined capacity of 150 beds."

The firm said occupancies for the first two months of 2019 were weak compared to same period last year as January was affected by violent strikes and demonstrations.

"This resulted in cancellations of bookings, mainly from corporate customers and deferrals without concrete dates.

"Going forward, we anticipate the business to improve supported by the positive changes and sentiments brought about by the Economic Stabilisation Programme, and the recently announced monetary policy statement," Makamure said.
- dailynews

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