Rainbow Tourism Group (RTG) successfully restructured a US$13,6 million National Social Security Authority (Nssa) credit facility into a seven-year loan at an interest rate of 6% per annum, the company said.
By Chris Muronzi
The funds had become current.
In a statement attached to its full year results to December (FY15), chairman John Chikura (pictured) said the restructuring gives RTG the capacity to service its debt and invest in its properties. The longer term facility will help RTG reduce a legacy working capital gap.
Net finance costs were US$2,5 million as at December 31. RTG has current borrowings of US$4 million, which management is confident it will pay in 2016 (FY16).
The US$4 million was part of a long-term loan which has become current. Another US$1 million in bank overdrafts is also current.
The group’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew by 300% from US$900 000 in FY14 to US$3,6 million in FY15. The group reported an operating profit of US$1 million compared to a loss of US$800 000 in FY14. This performance is largely owing to a reduction in expences.
Revenues, however, remained flat at US$30,6 million.
But group occupancy grew by 4% buoyed by foreign business, which rose by 6% to US$9,28 million from US$8,75 million in FY14.
The group revenue growth was achieved despite the industry challenges that saw the cancellation of bookings due to xenophobic attacks in South Africa, which houses tour operators that drive the Victoria Falls market, and the restrictions on international travel due to the Ebola virus in West Africa.
Revenue growth was impacted negatively by the value added tax (VAT) on foreign revenues introduced in January 2015. Adjusted for VAT of US$600 000 on foreign revenues, the growth would have been 12% on a like for like basis, the company said.
Zimbabwe occupancy remained flat at 54% owing to weak aggregate demand stemming from persistent liquidity challenges, business viability constraints and diminishing incomes.
Impairment charges of US$2,8 million for the Capital Bank and Savoy Hotel debt were effected in December 2014. “This prudent move (impairment) by the group had a direct knock on the current assets balance,” the company said.
The group says it will focus on revenue growth through foreign business generation, while sustaining domestic business as driven by innovative and unique programmes.
To continue the drive on foreign business, the group will focus on opening new markets as well as consolidating revenue streams from existing source markets.
Further growth is anticipated in foreign business revenues aided by the newly expanded Victoria Falls airport, which will see the airport handling larger, wide bodied aircraft. The RTG says it will keep costs in check and grow EBITDA.
“Cost management will remain key to the delivery of value, through the removal of inefficiencies from the system. In the face of a worsening liquidity crunch the company’s costs remain the more controllable element in the bid to grow EBITDA,” the group said.
It said product upgrades and refurbishment to improve customer experience, and drive business growth will be a strategic focus area. Kadoma Hotel and Conference Centre is undergoing refurbishment on soft room furnishings, while Victoria Falls Rainbow Hotel will undergo an overhaul of all bathrooms and replacement of furniture.