African Sun dumps 2 subsidiaries

FLAMBOYANT hotel chain, African Sun Limited, has finally dumped two of its loss-making subsidiaries, Chairman Timothy Chiganze, has confirmed.

Chiganze said the Group had dumped its South African operations as well as the Hotelserve (Private) Limited subsidiary.

To boost its business prospects, however, the hotel chain reviewed its agreement with Holiday Inn Gaborone.

In Zimbabwe African sun operates the Holiday Inn Harare, Holiday Inn Mutare and Holiday Inn Beitbridge, known as Holiday Inn Express.

African Sun is listed on the Zimbabwe Stock Exchange (ZSE.

Chiganze said his company would operate in South Africa until end of 2011 but would then exit the lease agreement with the landlord.

African Sun's Chief Executive is Shingai Munyeza, one of Zimbabwe's longest serving hotel executives and a former Tourism Personality of the Year.

Chiganze said the Group's performance in 201 was "mixed", with Zimbabwe hotels resgistering strong growth, while the two South African hotels reported losses due to "persistent difficult trading conditions".

"Consequently, a decision was taken to close these two hotels and this was implemented in the last quarter of the financial year," he said.

"In addition, and persuant to a decision taken to disinvest out of non-core operations as previously advised, Hotelserve was disposed of, with completion of the transaction expected in the first quarter of the next financial year."

Chiganze said the two South African hotels, together with hotelserve had consequently been accounted for as discontinued operations in the Statement of Comprehensive Income to shareholders.

He said the South African operations remained depressed for the year under review posting a loss of $3,77 million.

"This resulted mainly from a further drop in occupancies to an average of 30 percent," Chiganze said.

"Revenue achieved for the 11 months amounted to $4,84 million, which was 59 percent of prior year. The operations were closed by mutually agreeing with the landlords to exit the lease."

On Hotelserve, Chiganze said the entity was disposed of as it had become non-core to African Sun's operations.

"Revenue from Hotelserve was depressed during the year under review, falling 39 percent short of what was achieved last year as volumes declined and margins were affected by the United States dollar/South African Rand volatility, registering a loss of $279 100.

African Sun has a market capitalisation of $831 472 907 and a share price of 80c on the bourse.

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