ASL to dispose more assets
STAFF WRITER
African Sun Limited (ASL), a publicly traded hospitality group, has hinted on plans to dispose of more hospitality assets as a strategic step to unlock more value.
The issue will be brought up for discussion before shareholders during an extraordinary general meeting on a date to be advised.
It follows ASL’s recent decision to sell the Great Zimbabwe Hotel, while the Beitbridge Express Hotel was held as an asset available for sale from September 21, 2021.
According to the company, negotiations were entered into concerning the Beitbridge Hotel and an Agreement of Sale was executed on July 18, 2024.
Subsequently, negotiations for the sale of the Great Zimbabwe Hotel were held with the same prospective purchaser and an Agreement of Sale was executed on August 15, 2024.
In a cautionary statement yesterday, the firm said: “Further to the announcement to Shareholders on September 3, 2024, the directors of African Sun Limited wish to advise all shareholders and the investing public that in keeping with its strategy of unlocking value, the company has entered into negotiations for the disposal of additional hospitality assets.
“The proposed disposals will constitute a “Category 1” transaction, accordingly, the Company would be seeking the approval of its shareholders at an Extraordinary General Meeting (“EGM”) to be convened at the appropriate time,” it said.
ASL said the disposal of Great Zimbabwe Hotel in Masvingo and Beitbridge Express Hotel for a combined US$6,9m to TD Hotels and Leisure (Private) limited, an upcoming local hospitality concern was occasioned by the need to complement capital raising by selling selected assets considered not to be core to the group’s future.
Revenue for the group in 2023 grew 30% to US$54.73m against the comparable period.
The group, however, recorded a marginal profit after tax from continuing operations of US$0.52m, largely as a result of a harsh macroeconomic operating environment, characterised by costs escalating at a higher rate than revenues, compounded by material exchange rate losses triggered by the rebasing of the group’s functional currency.
The group’s operating expenses, excluding depreciation, increased by 43% to US$27.63m in 2023 compared to US$19.29m in 2022 driven largely by exchange rate volatility, inflationary pressures, and the crystallisation of expenses in US$ as the economy continued to dollarise at a rapid pace.
Earnings before interest, tax, depreciation, and amortisation (“EBITDA”) was US$9.45m, down from US$17.86m in 2022, and the loss for the period was US$0.36m.
Two of the group’s hotels under external leases had their base rentals changed from Zimbabwe dollars to United States dollars and this had the downstream effect of significantly increasing the lease liability interest and right-of-use assets depreciation compared to 2022.
The discontinued operations loss of US$ 0.89m largely comprises property and equipment impairments post the closure of the Kingdom at Victoria Falls Hotel and the Makasa Sun Casino.
This follows the mutual termination of the lease at the Kingdom at Victoria Falls Hotel, due to an untenable lease tenure.
ASL said the group will continue looking for suitable expansion opportunities in appropriate locations and with the right timing and funding structures.
With regards to liquidity, the group operated free of debt and had cash and cash equivalents of US$10.87m as at December 31 2023.
“The group is currently in discussions with leading financial institutions to secure funding to complement its healthy cash balances for deployment in carrying out accelerated material hotel refurbishment projects,” ASL said.
