The Orion Group has successfully completed another financial year ending 30 June 2022. Covid-19 has taught us many lessons and each person will have his or her own stories to tell about pain, drama, loss, hardships, and perseverance.
Thankfully lockdown, social distancing, the wearing of masks, and “work from home” are now officially behind us. Like the aftermath of the 1919 Spanish flu, the impact of Covid will be with us for years to come.
Now recently the Russian/Ukrainian war resulted in skyrocketing commodity prices which caused inflation to peak resulting in interest rate increases. Unfortunately, such events, as always, hurt the poorest in our societies the most. Fuel prices (taxi fares) are up. Maize and other food prices are skyrocketing. Your hard-earned Rand does not quite stretch to where it needs to go. This is really a very calamitous situation in that the world is bumbling from one crisis to another since the beginning of 2020. Where it will end we cannot predict.
Using the above facts and information our Group EXCO and Orion Real Estate Board of directors are deliberating our business models regularly. Part of the regular conversations are on how to stay relevant. If we don’t we will become extinct. Further conversations revolve around how to expand our business models or alternatively how to extend the value chains in existing businesses.
To this end we are in the beginning phases of some new startup businesses;
Our online travel portal offering credit facilities as part of our value proposition. This business is the reincarnation of our original STAY NOW PAY LATER which we shut down during Covid.
This new division offers a full back up generator supply, installation, maintenance, insurance and finance solution.
This company has operations in 120 countries and our new franchise partnership for an 800sqm Regus office in Nelspruit will go a long way to find a solution to our surplus office space and creates an avenue to expand our property business in new territories.
MONT AUX SOURCES HYDRO AND WELLNESS RETREAT
This beautiful property has been mothballed for the past three years and the time has now come to spend the time, effort and capital to bring it to the R250 million glory it deserves.
RECAPPING OUR PAST FINANCIAL YEAR:
This division did exceptionally well;
- Reducing debt at the rate of over R1 million per month resulting in our “loan to value” LTV’s to reduce to 10%
– The Municipal accounts are all under control and most accounts are running on “current” with two large AOD’s running for some time until these are also settled. Municipal billing versus recoveries is also on a strong trajectory
- Rent collections have improved substantially with hotels also making a significant contribution
- A number of repair and renovation projects are in progress
- Leases are being renewed and new leases signed. The continuous relationship building with brokers and national retailers is paying dividends
- The Promenade Centre is doing exceptionally well and phase two of the expansion programme is well under way with a number of new national retail leases being signed
- The Regus franchise partnership will add additional income and take up 800 sqm of office space
- The acquisition of our head office at 26 Wellington Road has been successfully funded and this R40 million property will be transferred in the next few weeks
- The sale of Wartburg Hotel has been signed by both parties and this strategic disposal will result in our vacancy factor reducing plus adding R11,4 million of development capital
- The company will produce a good net profit after tax for the financial year to 30 June 2022
- During the past financial year Velmore and Promenade Hotels were shut down. These were traumatic events for our Hotel management teams. However the four remaining hotels can now move forward decisively with a strong future focused strategy
- Repair, improvement and refurbishment projects are happening continuously at each hotel. Improvements are becoming more visible and the original internal brand promise of “beautiful properties” is now becoming a reality
- The relaxation and later cessation of lockdown and social distancing rules is having a positive impact on occupancy levels at the hotels
- The surplus linen, operating equipment and furniture recovered from the shut down hotels is being put to good use by the remaining hotels
- We have also employed an in-house seamster and the full time table napkin, pillow covers, chair covers and other fabric repurposing is in full swing
- Operational and financial controls are improving month by month and this is showing up positively on the net profit figures
- The hotel division will produce a net profit for the year ended 30 June 2022. This is a massive turnaround from the significant annual losses incurred before the restructure
- We are now refocussing our attention to acquisitions and other opportunities
- Bakwena with its three day spas at Velmore, The Venue and Zevenwacht also survived covid and are steadily gaining market share and becoming financially stronger each year
- This business has virtually zero debt and its FNB business loan has been repaid
- Continuous improvements in systems and procedures is the order of the day
- Each spa has ongoing repair, improvement and upgrade projects
- The Venue Bakwena enlarged their guest change rooms and the expanded facilities are much improved resulting in much better guest satisfaction
- In 2023 Bakwena will plan their next expansion which will be executed with own cash resources
- GI Holdings is the main holding company in Orion. It is the Controlling Shareholder of Orion Real Estate and owns 5 hotel properties:
- Safari Hotel & Convention Centre
- Coach House Hotel & Spa
- Ditholo Game Lodge
- Mont Aux Sources Hotel
- GIH has only one remaining mortgage with FNB. This mortgage will be settled in full within the next four years
- This company has the strongest balance sheet in the group and produces good profits
- GIH is planning to expand its investment holdings in the near future
Orion Personnel Corps.
None of the above survival and growth strategies would have been possible without a committed head office staff supported by good people working at the various business units and branches.
Team coaching is being reintroduced as well as some selected training courses. Our total staff headcount has reduced significantly from the days of over 1000 staff spread over three
countries. In this instance, smaller is better.