BUSINESS REPORTER
Listed hospitality group, African Sun Limited (ASL) says it has begun legal processes to acquire the remaining 8.7% shares held by Dawn Properties minority shareholders as it moves to wholly own the property concern.
The development comes after ASL completed the acquisition of 91.3% of Dawn shares early this year.
Dawn is now a subsidiary of ASL.
“The company is going through pertinent legal processes to acquire the remaining 8.7%.
The integration of the two businesses to achieve the anticipated synergies has commenced in earnest,” ASL board chairman, Alex Makamure (pictured) said.
In its financial results for the six months to June 30, 2021, ASL revenue grew 20% to ZWL$1.15bn from ZWL$954m reported in the prior comparative period.
Profit for the group grew to ZWL$6.3bn profit in the reviewed period from a loss of ZWL$451.9m during the same period last year.
Total assets spiked 200% to ZWL$12.2bn from ZWL$4.2bn with property division which was boosted by the Dawn acquisition contributing 67% with ZWL$8.1bn.
Various companies are beginning to turn to burgeoning property investment.
The ASL’s strategic acquisition of Dawn will help it in a volatile environment.
The group recorded an inflation adjusted earnings before interest, tax, depreciation and amortisation of ZWL$6.6bn mainly arising from the bargain purchase of ZWL$6.45bn from the acquisition of 91.17% of Dawn.
“This was largely a result of inflation driven fair value adjustments on Dawn’s investment properties by the time of acquisition,” Makamure said.
The group recorded occupancy of 24%, a 2 percentage point improvement from the 22% achieved in the same period last year.
This was still lower than the 38% that was achieved in 2019 (the last normal trading year) for the same period.
Makamure said included in the current year revenue is ZWL$84m, with 7% attributable to the recently acquired subsidiary Dawn.
The group’s operating expenses increased by 6% mainly due to the consolidation of Dawn expenses.
Excluding the effects of the Dawn consolidation, the hotel business operating expenses (excluding depreciation) decreased by 9% from ZWL$ 882.5m to ZWL$802.3m.
The company said there has been extensive attention given to the Company’s cost base that has resulted in substantial and sustainable savings in the cost structures.
According to the United Nations World Tourism Organisation, between January and May 2021, international tourist arrivals were 85% below the 2019 levels due to the effects of Covid-19 induced lockdown which restricted people from travelling.
“After low occupancies in January and February 2021 due to the reintroduction of tighter lockdowns, the group’s volume performances improved progressively from March to the end of June with occupancy averaging 31% as the restrictions were relaxed.
However, tighter restrictions were imposed at the end of the period in response to the upsurge in infections arising from the Delta variant,” Makamure said.
On a positive note, Makamure anticipates that the ongoing vaccination programmes both locally and internationally will accelerate the re-opening of the much-needed international travel and stimulate tourism.
In the meantime, we are continuing with our focus on the domestic market that has responded quite well under the circumstances.
The company expects the group to emerge stronger and more resilient on the back of ongoing hotel refurbishments currently underway, positioning the group to deliver better value to customers in the years ahead.
The fall in Covid-19 cases across the world over the past weeks and specifically a partial return to normalcy in key source markets such as the United Kingdom and United States of America, signals a new dawn in the fight against the virus, Makamure said.
He said the company was cautiously optimistic that the accelerated vaccination programmes around the world and the likely easing of restrictions for vaccinated travellers will contribute to the gradual normalisation of travel.
In the short-term, domestic travel will continue to drive the hospitality group’s recovery.
Makamure said the Legacy Hospitality Management Services Limited matter was still going through legal processes but the group had fully integrated and taken over the management of the hotels previously managed by Legacy.
He said the transition has not impacted the group’s operations.
