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Business Reporter
HOSPITALITY group, African Sun Limited, has lowered its loss for the year ending September 30, 2014 to $2.29 million from the $8,83 million incurred in the previous year following the opening of its Amber Hotel in Ghana.Group chairman Bekithemba Nkomo said yesterday in a statement accompanying the firm’s financial results for the period that revenue grew marginally by 1,3 percent to $56.72 million from $55.97 million achieved last year as the Ghana unit contributed about four percent of the hospitality concern’s total gains.

“The increase is fully attributable to the revenue contribution of African Sun Amber Hotel Accra (3.8 percent of revenue), which was opened during the year but is still to achieve its full potential,” said Nkomo.

The revenue, excluding the new Ghana hotel, decreased by 2.5 percent compared to last year.

Nkomo said gross profit for the period under review remained flat compared to the previous year as cost sales grew by four percent with the addition of the new hotel.

“Operating costs dropped 4.7 percent resulting in a saving of $1.8 million compared to prior year as cost reduction measures begin to bear fruit.

“Resultantly, earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 70 percent to $6.95 million from $4.095 million achieved last year while operating profit grew by 134 percent to $3.25 million up from $1.38 million last year,” said Nkomo.

Operating costs also fell 4.7 percent resulting in a saving of $1.8 million.

“Financing costs charged to statement of comprehensive income increased by 15 percent from $3.07 million last year to $3.53 million due to the fact that interest on refurbishment loans is no longer being capitalised following completion of hotel refurbishments. No borrowing costs were capitalised during the year compared to $1.05 million capitalised in the prior year,” said Nkomo.

He said the above costs would be reduced as the anticipated debt restructuring and reduction initiatives gather momentum in the coming year.

“Debt reduction remains the group’s priority going forward. Total debt decreased by 22 percent from September 2013, closing at $17.4 million, following repayments amounting to $6.8 million made during the financial year under review. The group is targeting to raise additional funds through disposal of staff houses, disposal of 16.54 percent investment in Dawn Properties and a possible rights offer whose details will be announced in due course,” he said

The group’s occupancy remained flat at 48 percent despite an eight percent increase in rooms capacity, which was offset by an increase in actual rooms sold.

Nkomo said rooms’ capacity increased following the opening of the Ghana hotel and the release of refurbished rooms in Zimbabwe.

On the outlook, he said the domestic market was envisaged to remain depressed, exerting further pressures on rates and margins.

“This will, however, be mitigated by forecasted growth in average daily rate and revenue per average room driven by foreign arrivals. To this extent, focus will go towards improving marketing efforts in the traditional source markets,” he said.