RTG profit down 28%

LIVINGSTONE MARUFU

LISTED hospitality concern, Rainbow Tourism Group’s (RTG) profit was down 28% to ZWL$49.3m in the half year to June 30 from the ZWL$68.7m realised during the comparative period in 2019 as the business was disrupted by the Covid-19 pandemic.

The outbreak of the Covid-19 pandemic spawned off global restrictions on travel and lockdowns as countries move to contain the spread of the virus.

This also resulted in company closures and restrictions on physical meetings thereby affecting the conferencing business, a cash cow for the hospitality industry.

In a statement accompanying the group’s financial results, board chairman Arthur Manase said the hospitality concern attained a profitable performance notwithstanding the difficult period and refurbished the Rainbow Towers Hotel within three months.

“The group posted revenues of ZW$230m, 51% below ZW$470m posted same period in 2019.

Gross margins for period under review closed at 63% from 74% posted in 2019. “The decline in gross margins can be attributable to revenues lost during the lockdown period,” Manase said.

He said occupancy for the period under review closed at 25% compared to 43% recorded during the first half of 2019.

The group posted earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 38%, a growth of 19% compared to 32% posted in 2019.

The growth in EBITDA margins was mainly as a result of various cost reduction initiatives adopted prior to and during the lockdown period.

Net profit margin for the period closed on 9% in 2020 compared to 15% in 2019.

The group’s profitability was supported by the increase in fair value of its stock market investment.

Manase said the group also eliminated its remaining significant debt, the 6% long-term debenture amounting to ZW$16.7m, resulting in an almost debt-free position and gearing of 4%.

This instrument was issued in February 2018 at an interest rate of 6% and tenure of 7 years.

The early payment of the debenture released the group’s assets which were pledged as security.

The group said its mobile and web application-based subsidiary, the Gateway Stream, gained momentum through the provision of online shopping for groceries and food items as well as delivery services.

The group expanded the Gateway Stream which originally had hospitality and leisure, room auctions as well as homes and boats, to grocery delivery, hardware, farming and transportation services.

The platform now has more than 16,000 product lines listed across eight regional online shops.

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