Zimbabwe’s RTG declares first cash dividend of $1mln after 2 decades, now holds 3.6% in FMHL
HARARE – Rainbow Tourism Group (RTG) has declared a $1 million cash dividend in the year ended December 31, 2018 after nearly 2 decades as the hospitality group is now strong financially with sound fundamentals.
This is the first cash dividend payout since the company was listed in 1999 and it follows the dividend in specie declared back then in 2006. Previously, the minority shareholders were up in arms against the company’s board of directors for pocketing large sums of money despite passing dividends in the past 6 years.
RTG chief executive Tendai Madziwanyika told shareholders that 30% of it will be paid in US Dollars while the large chunk of it in RTGS$.
“Of course it’s not every one of our shareholders who has nostro accounts, so if there want to elect to get their money in RTGS$ that can be done and the conversion at the prevailing interbank rate,” he said.
The group projects an increase in foreign currency revenue buoyed by its growing digital platforms and tour operations. This year, the hospitality group invested in 2 tour operating arms specialising in on inbound and outbound travel. Exotic Travel International (ETI), a new subsidiary based in United States of America – is in the selling of destinations across the world to Americans. The local arm Heritage Expeditions Africa is selling packages for destinations around the country and the region. RTG has also invested in a mobile and web application: The Gateway Stream.
“When we started which was end of 2012, foreign currency revenues stood at $5.4 million and last year 2018, we closed at $11 million the contribution foreign currency to total revenue back then was about 21%, today its about 33% contribution is actually increasing,” he said.
However, both local and foreign currency market are growing which will position the company to exploit many growth opportunities in Zimbabwe and abroad.
“Of the $11 million, almost of is coming out from the international market, they is just a few local companies that elect to pay in USD, but I can tell you that maybe 95% of it is coming from people that are coming outside the country.”
Revenue for the group rose 27% to $34.3 million from $27 million in 2017. Revenue from RTH virtual increased 141% to $323 609 while Gateway Stream revenue from February to December 2018 – $90 000.
RTG recovered $2.5 million net owed by Capital Bank – converted the proceeds into shares in First Mutual Holdings and it now holds 3.6% stake in FMHL (25 million shares).
“It took 6 years, to eventually get that money, when we started that money was already owed and initially it was very difficult because initially Capital Bank was operational that payment plans that they never on it until it went down and after that we had to start now trying to get our money from the legal process. That was very difficult because at some point it did not have directors and registered offices but we had to work through all that,” he said.
“So we managed to get a rate of excursion finally last year and we went after their asset which were identified and we managed to get the sheriff to attach and you know we recovered our money with interest. It was just the shares in First Mutual and remember FM is a listed entity so we could identify their Capital Bank was holding about 76 million shares in first mutual and we only needed 25 million shares to satisfy our own needs.”
Also recovered US$900 000 in 2019from savoy hotel in Zambia through the sale of land pledged as security. Occupancy was up 7% to 61%, RevPAR, up 36% to $53 and ADR went up 28% to $87.
Due to refurbishments, RTG capex stood at $2.2 million in 2018. This year the hospitality has budgeted a capex of US$4 million as it will embark on refurbishments at Rainbow Towers – aim to do 180 rooms. Refurbishments will also be done at its New Ambassador Hotel – commencing in the last two weeks of this year ending mid February 2020.