Oliver Kazunga, Senior Business Reporter
LISTED hospitality group, African Sun Limited, says it is in a sound position to generate enough revenue this year to sustain its operations and declare profits.
In a statement accompanying the group’s financial results for the period ended December 2018, it said the scope for growth was high through leveraging on the recent fiscal and monetary policy announcements by Government.
“In light of the recent policy announcements, the group is in a sound position to generate enough revenue in 2019 to sustain its operations. This 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,” said the group.
During the period under review, the hospitality concern recorded a 32 percent increase in revenues to US$68,5 million from US$51,8 million in the prior year.
Growth was driven by both an increase in prices and volumes.
Average daily rate went up 17 percent while occupancy also went up by seven percent to 59 percent from the 52 percent recorded the same period last year as the domestic market recovered from the 2017 position.
An analysis of the financial statement for the period under review indicates that the group’s financial position was sound as its current ratio improved to 1,7 from 1,4 in 2017. This means that African Sun is liquid and capable of meeting its short-term financial obligations to creditors. The group’s profit went up to US$10,14 million from US$4,81 million in 2017.
Total assets for the period under review amounted to US$47,5 million compared to US$38,7 million while total liabilities as at December 31, 2018 stood at US$27,8 million from US$27,2 million the previous year.
During the reporting period, the group also managed to close the working capital gap and recorded a positive working capital balance of US$1,34 million reflecting a 52 percent improvement from a negative capital of US$0,84 million as at December 31, 2017.
“Related to this, the cash and cash equivalents of the group improved by 66 percent to US$13,88 million from US$8,36 million. Of these balances, US$6,41 million (2017: US$0,66 million) was in foreign currency accounts,” it said.
“With regards to foreign currency generation, management are 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.”
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.
“Based on the aforementioned, the directors have assessed the ability of the group to continue as going concerns,” said African Sun.