HARARE - TA Holdings (TA) has suspended a $1,5 million refurbishment exercise for its hotel, as the group incurred a $ 5, 6 million loss in the year to December 2013.
The investment group, which suffered the loss on the back of a $13,7 million impairment charge against its fertiliser making subsidiary Sable Chemicals, said the renovation of Cresta Lodge Harare was suspended due to harsh trading conditions.
It recorded a profit of $3, 2 million in 2012.
“The impairment arose due to uncertainty over future returns to be realised by the group from this investment,” TA said.
TA holds a 51 percent stake in Sable, which recorded a $2 million loss during the period.
Cresta Zimbabwe, which owns the Cresta hotels, also incurred a loss before tax of $4 million against a profit of $6 million recorded prior year.
“The loss was mainly due to a 34 percent decline in earnings before interest, tax and depreciation.
“This was a result of a 12 percent drop in revenue per available room from $50 million last year to $44 million, due to a decline in occupancy rates from 60 percent last year to 54 percent this year,” said TA.
The hotels’ occupancy rates were weighed down by the Sprayview Hotel in Victoria Falls, which started operations in August 2013.
“$2 million pre-opening costs for Cresta Sprayview, increase in depreciation charges as a result of refurbishments at Cresta Lodge Harare, rise in finance costs as a result of additional borrowings to finance the refurbishment of Cresta, also contributed to the loss in the hotel units,” it said.
Cash generated from operations remained static at $7 million when compared with prior year.
The group’s life assurance unit Zimnat Life underwriting profit was 10 percent below last year’s despite a 31 percent growth in gross written premium.
“This was largely due to an increase in the claims ratio from 36 percent last year to 45 percent during the year under review,” the statement said.
Insurance arm, Zimnat Lion, had a 48 percent rise in underwriting profit, mainly driven by a 37 percent growth in gross written premium and a reduction in the reinsurance ratio from 58 percent last year to 39 percent.
Grand Reinsurance incurred an underwriting loss of $3 million during the year under review largely due to a 61 percent drop in gross written premium and a rise in the reinsurance ratio from 19 percent last year to 66 percent during the year under review.
“The reduction in premiums and increase in reinsurance ratio was due to primary insurance companies increasing their retention ratios thereby reducing the need for reinsurance,” said TA.