Pamodzi suffers loss after tax at full year
Taj Pamodzi Hotels Plc, Tourism

The only listed hotel on the Lusaka Securities Exchange has posted a loss after tax of K4.4 million for the financial year ending March 2020, according to a published statement.

Photo from Best of Zambia

The total turnover decreased by 5 percent from ZMW83.0 million to ZMW78.7 million as compared to previous year”, read a statement published by the hotel’s assigned company secretary, BDO Zambia Limited, on 1st July 2020. “Operating profit margin also decreased by 58 percent from ZMW15.3 million to ZMW6.3 million as compared to previous year”.

The hotel reported its audited financials at the peak of the current COVID-19 pandemic which has bruised many companies in the hospitality industry across the world following many governments instituting protocols that saw shut-downs and lockdowns of many businesses. However, in Pamdozi’s case, business was already deteriorating prior to COVID. “The decreases are due to decrease in room segment income and Food and beverage segment income as compared to previous year”. The reduction in these segments alone contributed to an overall “Loss after tax for the year ZMW4.4 million as compared to profit of previous year ZMW2.4 million”. This was the first loss after tax that the hotel has recorded in recent years.

Naturally, the hotel does mention in their narrative that the final quarter of the financial year ended 31st March 2020 did have a touch of COVID to blame. “The room segment income decreased due to decrease in lower number of delegations arrived in the hotel over the last year especially in the last quarter due to the worldwide pandemic and have seen less travel”. However, what the notes do not mention is the increase in competition that the hotel has faced in recent years from new offerings that have entered the market.

The abridged cash flow statement indicates that the hotel has made reductions in its spending on investments into the hotel. This has had an adverse impact on its performance in operations that saw a sizable reduction in cashflows from operating activities.

The management team also appear to be facing liquidity challenges as a result of reduction in cash flows. Current Assets compared to Current Liabilities stood at 64% for the former against the latter indicative of tightened liquidity due to the cooling of business for the hotel. This is the reason why the cash flow statement shows that the hotel was forced to adjust its capital structure and opted for a bank overdraft to meet some of its financing needs.

This has now resulted in the hotel recording a negative earnings per share which will no doubt raise the eyebrows of shareholders. The management team however remain “optimistic post the epidemic and expect a slow recovery of the industry worldwide”. Furthermore, they intend to focus on cost control. “Management will remain focused on cost control and productivity improvements”. Curiously, the hotel also “aims to drive growth through our operations by embarking on a strategy to maintain and enhance operational efficiency while remaining focused on delivering a high-quality service that is unrivalled on the Zambian market”. However, being efficient when your market share is reducing at an accelerated pace may not be enough for the legacy hotel.

Sharing is caring!

(Visited 127 times, 1 visits today)
The information contained on this website is for general information purposes only. While we endeavour to keep the information as accurate as possible, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or subject companies or matters contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
 right-arrow   right-arrow