RTG suspends retrenchment exercise

HARARE - Rainbow Tourism Group (RTG) has suspended its retrenchment exercise after coming out of the woods, posting a $105 000 profit after tax in the half year to June 2013 from a $3,2 million loss incurred in prior comparable period.

The listed hotelier last year lay off 20 percent of its 1 200 workers at a cost of $80?000.

“The retrenchment is off the cards,” Tendai Madziwanyika told analysts at the group’s financial results briefing yesterday.

“Our revenues have improved, so has occupancy. Costs have a marked 12 percent decrease” he said, adding that the group was focusing on improving its service and match guest expectations.

The group’s occupancy rate increased by 10 percent to 43 percent while revenue per room went up 13 percent to $36.

RTG recently raised $14,5 million, of which $4,5 million was through a rights issue while $10 million was from a loan facility.

Proceeds of the rights issue were applied towards retirement of the company’s short-term debt.

During the period under review, the group’s debt went down to $21, 09 million from $23,34 million.

“Revenue for the group registered positive growth, a four percent increase was recorded for this half year whilst the average room rate grew from $81 in 2012 to $84,” he said.

Madziwanyika said overall group performance was in line with year-end profit targets.

“The current focus for the group is to achieve profitability by year- end. At the same time, the restructuring of our operations so as to reduce cost structures, ensure maximum productivity and increase revenues will continue to be effected,” he said.

The hospitality group registered a 982 percent increase in earnings before interest and tax, depreciation and amortisation from $152 000 for the same period in 2012 to $1,6 million in 2013.

It managed to reduce expenses significantly with cost of sales dropping by 12 percent compared to 10 percent in the last half while interest expenses went down 47 percent to $851 000 during the six months under review.

The group did not declare an interim dividend.

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