African Sun exits Mauritius

ZIMBABWE Stock Exchange-listed African Sun Limited (ASL) is continuing with its disposal of foreign assets to focus on local operations.

The hospitality firm’s chairman, Herbert Nkala, yesterday said after exiting regional markets early this year, the group was now moving to dispose its Mauritian entity, African Sun PCC.

“The disposal is expected to be complete before the end of the year and is expected to reduce the working capital gap by $1,2 million and improve profitability and cash flows as these were funded out of Zimbabwe operations,” he said.

Nkala, however, said the group will retain its South African branch as a separate operating entity held directly by ASL, with management currently concluding regulatory approvals for the transaction.

The group’s offshore units — in Nigeria, Ghana, South Africa and Mauritius — had accumulated comprehensive losses of $19, 5 million and a net liability position of $3,9 million as at December 31, 2015.

ASL is also moving to restructure its balance sheet to convert short-term loans to long-term at reduced pricing, with a total of $3,9 million of short-term loans expected to have been converted by August 30, 2016.

The hotelier, after having sustained losses since the introduction of the multi-currency system, has seen deterioration of group equity to $2 million from $9 million in 2015, high gearing of 74 percent and a widening liquidity gap of $14,7 million as at June 30, 2016.

As part of its strategy to restructure operations, ASL also entered into a management partnership with South Africa’s Legacy Group last year.

Meanwhile, in the half year to June 30, ASL revenue slumped 20 percent to $17,9 million from $22,4 million.

“The sharp decline in revenue is mainly attributed to a subdued trading environment with occupancies declining by seven percentage points to 37 percent from 44 percent achieved same period last year,” Nkala said.

The regional market suffered a 46 percent drop, weighed down by South Africa owing to the depreciation of the rand against the United States Dollar as the group’s local market also declined 17 percent on the back of reduced conferencing and liquidity challenges.

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