The Group Chief Executive, Shingai Munyeza, said the Hotelserve subsidiary had raked in major losses for the year ended March 31, 2011.
"The six percent growth resulted in the Group reporting marginal Earnings Before Income Tax Attributable (EBITDA) profit of $91 617 from an EBITDA loss of $28 571 reported during the same period last year," Munyeza said.
"The EBITDA position of the Group was weighed down by losses in South Africa and Hotelserve."
Revenue at African Sun Limited for the period grew six percent to $27,74 million from $26,06 million achieved in the previous period, spurred by a strong revenue growth recorded in Zimbabwe.
Munyeza said occupancy for the group increased some 45 percent from 40 percent last year.
"Revenue from Hotelserve was depressed during the period under review, falling by 20 percent," Munyeza said.
"This decline, compounded with the strong South African Rand resulted in an EBITDA loss of $92 333. The Group is looking at possible ways of unlocking value from this business, possibly by way of disposal."
Looking ahead, Munyeza said African Sun had set aside $10 million to refurbish the Holiday Inn franchise in Zimbabwe. The cash was secured from the Afreximbank Group.
The loan has a tenure of five years with an option to extend an additional two years.
It will be applied towards the refurbishment of the five main Zimbabwe hotels especially the Holiday Inns, located in Harare, Bulawayo, Mutare, and Beitbridge.
"Looking at our pipeline, we anticipate adding 231 rooms in the next six months," Munyeza said.
"This will be through addition of another Holiday Inn as a lease in Gaborone, Botswana, and a management contract in Benin City, Nigeria. The construction of a new Amber Express is underway in Accra, Ghana, with the project expected to be completed within the next 24 months."
African Sun's net current liabilities position increased from $1,39 million in September, 2010 to $4,43 million at the end of the period under review, owing mainly to the depressed performance at the two South African hotels and capital expenditure.
"This position is expected to improve as we enter in to our peak season and as the rental concessions in South Africa begin to be realised," said Munyeza.
Post published in: Business