ASL reaps DPL deal benefits

RYAN CHIGOCHE

 

Listed hospitality chain African Sun Limited (ASL) says the company has started reaping the benefits of its recent acquisition of Dawn Properties Limited following the group’s return to profitability during the year ended December 31 2021.

Having reported a loss position of ZWL$2bn in 2020 when the pandemic was its peak the group posted a profit of ZWL$9.7bn due to the opening up of the economy and reduction of Covid-19 cases.

ASL group chief executive Peter Saungweme said DPL acquisition was a game-changer to the company.

“The strategic acquisition of Dawn Properties Limited means that the group performance now benefits from reduced overheads, as rentals for the seven hotels hitherto paid to Dawn is now retained within the group. The group is further benefiting from cost savings from other synergistic opportunities brought about by the acquisition,” Saungweme said.

The group anticipates enhanced earnings growth through increased revenue generation, targeted cost-saving strategies and other synergistic benefits which include leveraging on the properties to raise debt financing to finance key initiatives namely hotel refurbishment and future growth and expansion, he said.

ASL acquired a 91.17% equity stake in Dawn in February 2021, in furtherance to a corporate transaction that was overwhelmingly supported by the company’s shareholders in 2020.

Subsequent to year-end, the remaining Dawn shareholders comprising 3.61% accepted the offer for their shares to be acquired via a Tag-Along process, taking ASL total shares to 94.78%.

In the 2021 financial year 12% of group’s ZWL$4.3bn revenue was attributable to DPL with key contributors being 22 residential stand sales at Marlborough Sunset Views and also property consultancy revenue.

The revenue at ZWL$4.3bn increased by 48% against the prior year on the back of an increase in occupancy levels from prior year to 31% and also firmer average daily rates.

The tourism and hospitality sector was heavily anchored by domestic market during 2021 as international tourism continues to be depressed.

Resultantly the groups resort hotels, which largely depends on international tourism, registered occupancy of 19%, up from 12% recorded in 2020 with the jump in occupancy largely driven by conferences and festive season business after the government lifted inter provincial travel restrictions.

The city and country hotels were the cornerstone of the hotels business in the period contributing 63% of the group’s total hospitality revenue for the year under review.

The segment registered an occupancy rate of 45%, up 9 percentage points over the 36% mark set last year.

Performance of most of the city hotels is expected to remain firm in the run-up to 2023 harmonised elections where NGO and government business is expected to increase.

On the outlook the company is optimistic of growth as international tourism is expected to bounce back in 2023.

Saungweme said the group would focus on cost management and also enhancing the customer experience through refurbishments.

‘’We continue to be optimistic about the future of the group and are confident that our business model and strategy will put us in a strong position to succeed,” he said.

 

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