RAINBOW Tourism Group (RTG)’s chief executive Chipo Mtasa has said the group’s occupancy rate last year was 40% compared to an estimated national rate of 42% during the same period.
RTG made an annual profit before tax of US$179 000 for the financial year ending December 31 2009 from a loss of US$742 000 incurred during the first half of the period under review.
The group’s revenue was US$17,5 million. Zambian operations contributed 5% of the revenue.
Announcing the group’s financial results, RTG finance director Paschal Changunda said the group could have performed better had price distortions in the market not had a negative impact on the company’s procurement, employment and recurrent expenses.
“The overall cost to income ratio stood at 98%, largely driven by the employment cost that stood at 32% of turnover. Cost of sales stood at 16%, while repairs and maintenance was 10%,” he said.
“The interest cost, at US$338 000, representing 2% of turnover was high. This is a reflection of the tight liquidity conditions that obtained on the financial markets in 2009.”
The tourism sector, which contributes about 4% to GDP, has maintained a relatively mixed performance over the past five years.
During the period under review, the average room rate was US$52.
Total non-current assets amounted to US$27 million mainly due to its property portfolio. Networking capital was negative at US$1,9 million and the group’s gearing ratio stood at 2%.
“The group continues to explore business opportunities in Zimbabwe and the region. We have signed a lease agreement for the 182-roomed Hotel Mozambique in Beira effective April 1 2010,” Mtasa said. “Discussions are at an advanced stage regarding a new business transaction in East Africa. The Market will be advised of developments at an appropriate time.”
Africa First ReNaissance Corporation increased its stake in RTG by about 10% during the period under review. Afre’s shareholding in RTG is now 25,18%.
Afre previously owned 15,3% in RTG, which it acquired in June 2008.
As a result of that acquisition, Afre was allocated two board seats resulting in its executive chairman Patterson Timba being appointed RTG board chairman.
Insiders said Econet boss Strive Masiyiwa is behind the deal which was done to shore up shareholding in RTG in line with Afre’s strategic thrust.
The additional acquisition moves Afre closer to the 30 – 35% that would make RTG an associate company of the group.
In a statement accompanying the group’s financial result, Timba said business is forecast to remain low in the first half of the year due to liquidity challenges.
“However, efforts will focus on ensuring that all business units achieve reasonable volumes and prudently manage their cost profiles,” he said on RTG’s outlook.
Going forward, Mtasa said the group’s strategic focus would be business growth targeting effective cost management, revenue enhancement, increased turnover of Safari operations and new business growth.
She said RTG had secured more than US$10 million to refurbish flagship Rainbow Towers and Conference Centre and A’ Zambezi River Lodge
Businessman Nicholas Van Hoogstraten still has a 30,48% stake according to the March 31 2010 RTG register despite re-organising his shareholding in the group last year in what analysts described as “packaging it ready for disposal”.
Then Van Hoogstraten held 463 million shares in RTG, representing 34% of the total issued share capital of the company through Banhams Investments, Messina Investments and Willoughby’s Finance.
He has re-registered the shares from Messina to Les Nominees now with 18,23% and EFE Security Nominees 12,25%.