“Over the last three years the board and management have implemented broad strategies and initiatives in pursuit of mitigating the hotel’s financial losses,” ASL company secretary Venon Musimbe said yesterday.
“The financial losses continued despite various initiatives implemented, as such the board was left with no other option, but to take the considered view that dis-investing was the most prudent option,” he added.
The termination and discontinuation of the hotel operation, which was being leased to ASL by Dawn Properties, is with effect from January 31, 2016.
The African Sun boss said the rationale for the termination was as a result of the prolonged loss making by the Hotel which was eroding the group’s equity.
“The hotel repowered losses amounting to $217 910 for the year ended December 31, 2015, and the accumulated losses for the past two years amount to $507 944.
“As at December 31, 2015, the net current liabilities position of the hotel was $194 607,” Musimbe added.
In the full year to September 2015, ASL widened its loss by 47 percent to $3,36 million as the group incurred huge retrenchment costs following its exit from the regional market.
The losses were due to a high fixed costs structure, and a slow revenue upturn.
The loss for the year from the Ghana operations was $1,97 million, from a loss position of $1,64 million. Loss from continuing operations was $1,39 million from a prior year loss of $640 000.
“The current year loss was driven by the $4,23 million that was incurred by the company on other expenses which include retrenchments and separation costs of $2,02 million,” the company said then.
“Following the change of business model, discontinuation of loss-making operations in Ghana and Nigeria as well as recent retrenchments, the group is poised to move from a loss-making position to a profit position,” ASL added.
Finance costs declined by 32 percent to $3,1 million following repayment of borrowings amounting to $9,1 million. The group achieved revenue of $50,15 million, eight percent lower than the previous year.
The company said the drop in revenue was mainly as a result of a seven percent reduction in the average daily rate (ADR) from $96 achieved last year.
The ADR was partly affected by the introduction of VAT on foreign revenue. Occupancy levels recorded a marginal increase from 47 to 48 percent. Revenue per available room (RevPAR) fell four percent to $43.
EBITDA achieved for the period under review registered a 33 percent drop to $5,47 million. Basic loss per share increased to 0,17 cents from 0,08 cents.