Crowne Plaza hotel in Harare
DAWN Properties` revenue for the interim period ended 30 September 2015 declined 14 percent to US$2 347 million from US$2 694 million over the same comparable period last year, but the group says it has implemented a raft of measures aimed at driving revenue growth and cost containment.
The company says these measures will bear visible results in 2016.
Group Chair Phibion Gwatidzo in a statement accompanying the results, said revenue reduction is reflective of the pervasive challenging economic environment hence rationalisation of operating expenses remains a top priority.
“Cost containment, improved revenue generation and value creation would remain the dominant objectives in the short to medium term and in relation to revenue generation, the company is excited about the establishment of a management contract between African Sun and Legacy Hotels,” he said.
In terms of the contract, Legacy will operate ASL`s four prime assets namely Elephant Hills hotel, Crown Plaza, Hwange Safari Lodge and Troutbeck Inn, and this is expected to boost the hotel lease revenues.
During the six month period, the Hotel lease segment contributed US$1,223 mln to total revenue but was lower than $1 381 mln contribution same period last year.
Outstanding lease rentals amount to US$470 940 and is up on last year at US$405 255. Meanwhile, the consultancy business’s contribution to half year revenue was US$1,1 mln.
Operating expenses in the interim widened to US$2 301 mln from US$1 944 mln same period last year. Gwatidzo said, included in the operating expenses figure, was an income tax penalty provision of US$0.18 mln following the conclusion of the court case that was disclosed as part of the prior year contingent liabilities.
This provision, Gwatidzo said, coupled with the revenue reductions in the financial year, largely accounted for the reduction in the operating profit which went down 85 percent to US$114 105 from 779 158 in prior year.
On the other hand, Gwatidzo said as part of the group’s revenue creation thrust, the first phase of property development of the Marlborough land bank commences during the period under review.
A total of 58 residential units in a cluster model are expected to be delivered out of that initiative within the next financial year.
Meanwhile, Chief Executive Officer Justin Dowa resigned effective December 1, 2015 and has since been replaced by Patrick Matute with effect from the same date. FinX
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