DAWN Properties Limited’s (Dawn) revenue for the five months to May 30, 2020 declined 11 percent to $36,9 million from the same period last year.
Updating shareholders at an annual general meeting, Dawn said the decline was largely due to its exposure to the hospitality industry as hotels were forced to close due to the coronavirus (Covid-19) pandemic.
“Profit before tax and monetary adjustments of $16,4 million was a 27 percent decline compared to the prior year. Hotel revenue was down 20 percent as average occupancy levels declined from 39 percent in the prior period to 23 percent as all hotels were closed from the end of March 2020 and the whole of April 2020,” Dawn said.
In May, the group reopened Holiday Inn Mutare and Great Zimbabwe Hotel in Masvingo.
The property consultancy unit was affected by the lockdown due to a decline in demand but it was able to post a two percent increase in growth compared to the corresponding period.
“Property management services, which contribute to the property consulting services, were negatively affected by the mismatch between rentals and increasing inflation. The loss of the National Social Security Authority, a major client, further depressed rental revenues,” the group said.
During April and May the company cut its cost of living adjustment payments to employees by 50 percent as a result of the effects of Covid-19. All non-core expenses were also deferred, resulting in administration expenses declining nine percent compared to the prior period.
Going forward, Dawn said property development will be the company’s focus.
“Management will bring forward the sales of some of the land the company has in order to soften the blow caused by Covid-19, given the group’s exposure to the hospitality sector,” the group said.
Analyst say increasing Covid-19 cases were a concern and could lead to a further lockdown period thus affecting the hotel revenues as well as demand for the group’s other services.
However, utilisation of the group’s land bank could help alleviate the economic difficulties the company will face in light of the Covid-19 pandemic as the eventual end of the pandemic and its full economic impact on the group remains unclear.
Dawn’s directors are currently evaluating an offer by African Sun Limited to acquire 100 percent of their share capital in exchange of the hospitality group’s shares and would communicate in due course.
In a cautionary statement issued by the hoteliers yesterday, the shares would be acquired after both parties agree on a price.
African Sun noted that its shareholders would be provided with more details on the transaction in due course, while also advising that they should consult with their financial advisors before dealing in the company’s shares.
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