Mishma Chakanyuka, Staff Writer 
HOTELIER African Sun says it will go ahead with the disposal of several assets considered not essential to its future strategic focus as part of its capital raising initiatives to finance other growth areas.
This comes after the group last month agreed a cumulative US$7 million deal with TD Hotels & Leisure for the disposal of its underperforming assets, the Great Zimbabwe Hotel for US$4,45 million and Beitbridge Express Hotel, which has been shut down since 2016 for US$2,5 million.
The deal was classified as a “category 3” transaction, which is ordinarily deemed not big enough to seek shareholder approval.
Great Zimbabwe hotel
However, the Victoria Falls Stock Exchange (VFEX)-listed group last week issued a notice of termination of the deal with no further details provided.
Nonetheless, the group views the disposal of other non-core assets as priority to raise funds to complement capital expenditure, including ongoing refurbishments at most of its hotels.
“To expedite the refurbishment of several key hotels in our portfolio, the board resolved to complement capital-raising initiatives by selling selected assets that are considered non-core to the group’s future positioning,” African Sun chairman, Lloyd Mhishi, said in a statement accompanying the group’s financials.
In a cautionary statement issued September 3, 2024, the group announced it had entered into negotiations for the disposal of additional assets. It is not yet clear which assets are in consideration for disposal but the company said the proposed disposals will constitute a “Category 1” transaction and, accordingly, it would be seeking the approval of its shareholders at an extraordinary general meeting to be convened “at an appropriate time.”
The group’s financial performance has been steadily growing since the return to normalcy after the devastating Covid-19 pandemic era which almost crippled the hospitality sector.
During the half year ended June 30, 2024, the group’s revenue was up 14 percent to US$25,58 million, compared to the same period last year, driven by firmer average daily rates at US$112, an increase of nine percent from US$103 during the comparable period.
African Sun’s hotel occupancy closed the half-year at 50 percent, a four-point increase from the prior period last year.
Real estate’s contribution grew during the period from two percent to six percent, generating incremental revenue of US$1,28 million from residential stand sales.
The group’s operating expenses, excluding depreciation, at US$14,09 million, increased by one percent compared to the same period last year despite the inflationary pressures experienced in the first quarter of the year.
“Through constant monitoring of costs and improved procurement processes, the group managed to contain overheads amid high risk of price distortions after the introduction of the new currency,” Mhishi said.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) at US$2,54 million, were two percent higher than the prior year period, owing to improved topline numbers performance.
African Sun however recorded a loss after tax for the period of US$2,17 million, despite an improved topline, largely due to higher taxes, loss from the sale of property of US$0,27 million, discontinued operations loss of US$0,35 million and non-recurring costs of US$0,60 million.
The increase in income tax paid was in line with the additional profit while deferred tax expenses were above the comparable period.
The group maintained its strong liquidity position, with a cash and cash equivalents balance of US$10,56 million at the end of the period under review, generating US$2,37 million. This was a recovery from the US$1,13 million utilised in the comparable period. Mhishi said.
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