Rainbow Tourism Group (RTG) shareholders this week seemed to be in the same camp for the first time in many years at the group’s annual general meeting.
Report by Taurai Mangudhla
RTG has previously held successive controversial AGMs, with major shareholders firing shots at each other over differences.
Non-executive chairman Joseph Kanyekanye seemed to be on top of the situation as shareholders adopted key resolutions without opposition, in what insiders described as an indication the investors were pulling in the same direction.
CEO Tendai Madziwanyika assured investors of profitability in the current financial year after the successful completion of a major recapitalisation and restructuring exercise.
“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.
Madziwanyika said overall group performance was in line with the year-end profit targets, with a better performance expected from the second quarter of the financial year.
He said group revenues were on an upward trend since the beginning of the year due to various initiatives that were now being implemented in the market, giving management confidence the company would sustain the trajectory.
Madziwanyika said several of the group’s hotels were now showing positive occupancy growth, enabling them to achieve budgeted revenues and improvements in conferencing business and yield management.
“A marked recovery in occupancies was recorded in March, April and May. May closed with a record high occupancy as compared to previous years,” he added. RTG successfully raised US$14,5 million, of which US$4,5 million was through a rights issue and US$10 million was from a loan facility.
Proceeds of the rights issue, according to RTG, were applied towards retirement of the company’s short-term debt while the loan facility was applied towards restructuring its short-term debt into a more affordable three year facility.
“The recapitalisation initiatives had the effect of reducing the average costs of funds from 24,6% in 2012 to the current 12%,” Madziwanyika said.
The group had managed to reduce costs significantly, with cost of sales dropping to 10% compared to 11 % last year.
The company said water costs had dropped 64% through the roll out of boreholes, while electricity charges also dropped 11% due to the use of gas in the kitchens and installation of energy-saving monitors.
Madziwanyika said the group also recorded a 13% drop in costs of goods purchased through central procurement as compared to November 2012.
A 15% drop was also registered in telephone costs as the group adopted Skype and voice over internet protocol to take advantage of its fibre optic backbone, he said.
During the year, the company also successfully disposed of its Touch the Wild lodges and the destination management company Tourism Services Zimbabwe.
The group discontinued operations at Hotel Edinburg located in the Kitwe mining town of Zambia on expiry of the company’s lease agreement in 2013.
Management says there were no onerous lease liabilities as a result of the exit.