Hotel and leisure group, African Sun Limited (ASL) reported a 64% decline in revenues to ZWL$279.52m for the quarter to March 31, 2021 from ZWL$784.82m achieved in the prior comparative period due to the adverse impact of Covid-19 pandemic.
Occupancies for ASL plummeted to 14% during the reviewed period, reflecting a 26 percentage points decline from 40% reported in the same period in 2020.
The group operates more than 10 hotels including Monomotapa Hotel in the capital, Caribbean Bay Resort in Kariba, the Kingdom Hotel, Elephant Hills, Victoria Falls, in the resort town of Victoria Falls, Great Zimbabwe Hotel in Masvingo, Holiday Inn in Harare, Bulawayo and Mutare, Troutbeck Resort in Nyanga and Hwange Safari Lodge.
“The 2021 first quarter results reflect the devastating impact that the Covid-19 second wave induced lockdowns and travel restrictions had on the business.
The impact of the Covid-19 pandemic on tourism carried over into 2021. The group’s steady recovery recorded in the last quarter of 2020, suffered further setbacks at the beginning of 2021 as countries tightened travel restrictions in response to a surge in Covid-19 infections and outbreaks of new variants,” ASL company secretary, Venon Musimbe said.
Earnings before interest, depreciation, tax and amortisation was ZWL$5.91m due to the bargaining purchase of ZWL45.96m from the acquisition of 91.17% of Dawn in January 2021.
The bargain purchase during the period was largely a result of inflation driven fair value adjustments on Dawn’s investment properties post establishment of the share swap ratio.
In US$ terms, Dawn’s net assets declined 6% to US$80.66m as at December 31, 2020 from US$85.59m as at December 31, 2019.
The group’s financial position improved during the period under review largely driven by an increase of ZWL$5.54bn in property and equipment following the consolidation of Dawn.
Turning to liquidity, the group closed the first quarter with cash and cash equivalents of ZWL$737.23m; an 8% decline from ZWL$799.37m reported on 31 December 2020.
“The group has two undrawn facilities amounting to ZWL$318m which will be utilised should the need arise,” Musimbe said.
He expects the group’s occupancy to maintain an upward trajectory spurred by the domestic market and the key drivers of the domestic market will remain non-governmental organisations, corporate and government business in the short-term.
“We expect the growth to remain modest on the back of the government’s Covid-19 vaccination programme, with real impact likely to be felt in the last quarter of the year,” Musimbe said.
However, he noted that international business was expected to remain subdued over the coming months as some of the group’s key source markets are experiencing resurgence in Covid-19 infections.
Musimbe said this third wave of infections requires the company to remain diligent in its various cost containment and cash preservation initiatives.