African Sun Ltd (Zimbabwe) – HY22 inflation adjusted revenue up 153% to ZWL8.45 billion

By Published On: September 26th, 2022Categories: Corporate announcement, Earnings
African Sun Limited 2022 Interim Results For The Half Year

African Sun Limited (ASUN.zw) HY2022 Interim Report

The Directors of African Sun Limited (the Company) are responsible for the short-form financial announcement which is issued in terms of Practice Note 13 of the Zimbabwe Stock Exchange.

The short-form financial announcement is only a summary of the information contained in the condensed consolidated financial statements for the half year ended 30 June 2022. Any investment decisions by investors and and/or shareholders should be based on the complete condensed financial statements for the half year ended 30 June 2022 published on the ZSE website: www.zse.co.zw and Company’s website:www.africansunhotels.com/investorrelations. The condensed financial statements for the half year ended 30 June 2022 are also available on request, at no charge, from the registered office of the Company during working hours or via email on [email protected].

Financial performance

Revenue
The inflation adjusted revenue at ZWL8.45 billion, was 153% up compared with the same period last year (“SPLY”). The improved performance was driven by higher business volumes and firmer average daily rates (“ADR”) at the back of increased demand. Hotel occupancy, at 41%, increased by 17 percentage points compared to the SPLY. This was, however, 4 percentage points lower than the occupancy levels achieved over the same period in 2019.

The Group’s business continue to be predominantly domestic driven. However, we have also started to witness signs of recovery on the regional and international market front. Foreign business contributed 15% towards hospitality revenue, representing a 7 percentage point increase from the SPLY. The hospitality segment, which is the key driver of the Group’s revenues and profitability, contributed 95% of the total revenue whilst the real estate segment contributed 5%. Key contributors to the real estate segment revenues were residential stand sales at Marlborough Sunset Views as well as property consultancy revenue.

Operating Expenses
The increase in the Group’s inflation adjusted operating expenses (excluding depreciation), at 127% compared to the SPLY trailed the 153% increase in revenue. Operating expenses increased mainly due to increase in business volumes; and inflationary pressures which the Group has also been experiencing even in United States of American Dollars (“USD”) denominated costs. The Group will continue to monitor costs and implement various cost cutting initiatives.

Profitability and liquidity
The Group recorded inflation-adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) of ZWL7.30 billion and profit after tax of ZWL6.07 billion as a result of improved business performances and firmer cost management initiatives.

Turning to liquidity, the Group is currently ungeared and had cash and cash equivalents of ZWL4.67 billion as at 30 June 2022. The Group is currently in discussions with local financial institutions, earmarked at establishing standby financing facilities for material hotel refurbishment projects that are in the pipeline.

Interim dividend declaration

The Board resolved to declare an interim dividend of ZWL0.102118 per share plus USD0.000545 per share, with respect to the half year ended 30 June 2022. A separate dividend notice will be issued with respect to the interim dividend declaration.

Outlook

The first half of the year delivered performance that exceeded our initial expectation. Zimbabwe, like many destinations across the globe, continues to witness encouraging signs of a much accelerated recovery to the pre-pandemic tourism arrival levels. Inspite of the current global economic and geopolitical challenges, the UNTWO revised its outlook for 2022, projecting that with international arrivals are now expected to reach 55% to 70% of 2019 levels. We expect recovery of our international business to continue into the second half of the year.

External Auditor’s review conclusion

These inflation adjusted condensed consolidated financial statements for the six months ended 30 June 2022 have been reviewed by Grant Thornton Chartered Accountants (Zimbabwe) in accordance with International Standards on Review Engagements (ISRE) 2410. The auditors have issued a qualified conclusion on the interim condensed consolidated financial statements with respect to non-compliance with International Accounting Standard (IAS) 21 – The Effect of Changes in Foreign Exchange Rates, and International Financial Reporting Standard (IFRS) 3 -Business Combinations with respect to measurement of gain on bargain purchase on acquisition transaction in the prior financial year.

The engagement partner on the audit resulting in the review conclusion auditor’s report is Edmore Chimhowa (PAAB Number 0470).


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