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Tourvest - Reviewed results
Tourism Investment Corporation Limited
for the year ended 25 June 2002
Reviewed results
* Headline EPS up by 34%
* Attributable income up by 44%
* Revenue up by 29%
* Dividend of 8cps
www.tourvest.co.za
Income statement for the year ended 25 June
Group
25 June 30 June
2002 2001
Change Restated
% R000 R000
Revenue 29 1 303 996 1 010 379
Cost of sales and 1 134 686 881 113
operating costs
Operating income 31 169 310 129 266
Interest paid (7 656) (18 192)
Interest received 22 891 24 417
Share of associate 323 1 316
company income
Income before 35 184 868 136 807
taxation
Taxation (52 884) (43 941)
Income after 42 131 984 92 866
taxation
Outside (11 030) (8 613)
shareholders`
interest
Attributable income 44 120 954 84 253
Earnings per share 47 16,0 10,9
- cents
Headline earnings 34 15,8 11,8
per share - cents
Diluted earnings 47 15,7 10,7
per share - cents
Diluted headline 35 15,6 11,6
earnings per share
- cents
Weighted number of 756 571 771 707
shares in issue
(000s)
Depreciation 26 473 23 010
(R000s)
Reconciliation to
headline earnings:
Attributable income 120 954 84 253
Impairment (2 310) 9 582
provisions (R000s)
Profit on sale of - (5 000)
associate (R000s)
Capital (557) 354
(profits)/losses
(R000s)
Amortisation of 1 781 1 804
goodwill and
trademarks (R000s)
Headline earnings 119 868 90 993
CASH FLOW STATEMENT for the year ended 25 June
25 June 30 June
2002 2001
R000 R000
Cash flows from 204 709 88 859
operating activities
Cash generated by 221 692 120 832
operations
Net interest received 15 235 6 225
Taxation paid (32 218) (38 198)
Cash flow from investing (22 969) (54 794)
activities
Purchase of property, (39 347) (44 619)
plant and equipment
Proceeds on disposal of 9 569 19 101
property, plant and
equipment
Proceed on disposal of 14 808 15 000
financial assets
Decrease in loans 6 019 -
advanced
Goodwill acquired (11 686) (17 382)
Acquisition of 2 220 (26 894)
subsidiaries, net of
cash acquired
Acquisition of (4 573) -
businesses, net of cash
acquired
Sale of subsidiary, net 21 -
of cash relinquished
Cash flow from financing (27 542) 460
activities
Buyback of shares (13 931) (7 145)
Reduction in liabilities (16 424) 7 286
Loan to share incentive 2 813 319
trust
Net movement in cash and 154 198 34 525
cash equivalents
Cash and cash 154 155 119 630
equivalents at beginning
of year
Cash and cash 308 353 154 155
equivalents at end of
year
Segmental analysis
25 June 30 June
2002 2001
R000 % R000 %
Revenue
Travel and 792 904 61 716 306 71
financial
services
Retail 511 092 39 294 073 29
merchandise
1 303 996 100 1 010 379 100
Income before
taxation and
share
of associate
company income
Travel and 87 188 47 73 827 54
financial
services
Retail 97 357 53 61 664 46
merchandise
184 545 100 135 491 100
Net assets
employed
Travel and 282 792 59 239 661 65
financial
services
Retail 197 904 41 130 999 35
merchandise
480 696 100 370 660 100
Balance sheet at 25 June
Group
25 June 30 June
2002 2001
R000 R000
Assets
Non-current assets
Property, plant and 94 078 92 479
equipment
Goodwill and trademarks 34 007 12 772
Deferred taxation 43 203 53 140
Financial assets 73 110 117 364
Current assets
Inventories 133 749 84 769
Trade and other receivables 135 721 137 072
Cash and bank balances 334 624 171 413
Foreign notes held 52 785 40 898
Total current assets 656 879 434 152
Total assets 901 277 709 907
Equity and liabilities
Capital and reserves
Share capital and premium 35 135 78 517
Non-distributable reserves 44 511 54 394
Retained income 387 491 257 307
Ordinary shareholders` 467 137 390 218
interest
Outside shareholders` 21 906 21 668
interest
Non-current liabilities
Interest-bearing borrowings 6 728 9 946
Deferred taxation 232 -
Current liabilities
Trade and other payables 241 854 169 711
Provisions 44 584 38 732
Current portion of interest- 5 131 320
bearing borrowings
Bank borrowings 29 895 24 253
Loans relating to foreign 49 161 33 903
notes held
Taxation payable 34 625 21 132
Dividends payable 24 24
Total current liabilities 405 274 288 075
Total equity and liabilities 901 277 709 907
Net asset value per share 56,25 46,99
(cents)
Net tangible asset value per 52,16 45,45
share (cents)
Shares in issue (000s) 830 350 830 350
Capital commitments 11 022 11 463
Operating lease commitments 224 491 138 139
Additions to property, plant 41 055 51 709
and equipment
Statement of changes in equity
Share Non-
capital
and Retained distributable Total
premium income reserves equity
R000 R000 R000 R000
Balance 30 85 662 162 953 24 581 273 196
June 2000
Attributable 84 253 84 253
income to 30
June 2001
Treasury
shares
repurchased
in terms of (7 145) (7 145)
general
buyback
Deferred tax 36 428 36 428
arising on
trademarks
Deferred tax 10 101 (10 101) -
reversing on
trademarks
Arising on
recovery of
previously
written-off 3 386 3 386
goodwill
Capital 100 100
profits
Balance 30 78 517 257 307 54 394 390 218
June 2001
Attributable 120 954 120 954
income to 25
June 2002
Treasury
shares
repurchased
in
terms of (13 931) (13 931)
general
buyback
Treasury
shares
repurchased
in
terms of (51 125) (51 125)
specific
buyback
Issue of
shares to
share
incentive
scheme from 21 674 21 674
treasury
shares
Deferred tax 6 634 (6 634) -
reversing on
trademarks
Adjustment
to deferred
tax opening
balance on (4 220) (4 220)
trademarks
Capital 871 871
profits
Arising on
recovery of
previously
written-off 2 696 2 696
goodwill
Previously
written-off
goodwill
realised
on sale of 2 596 (2 596) -
subsidiary
Balance 25 35 135 387 491 44 511 467 137
June 2002
RESULTS
Following Imperial Holdings Limited`s acquisition of a controlling interest in
Tourvest, Tourvest has changed its year-end to 25 June to align itself with its
major shareholder. This means that the current Tourvest reporting period covers
51 weeks compared with 52 weeks in the 2001 financial period.
In spite of the past year being one of the most tumultuous periods for the
tourism industry in recent memory, Tourvest`s results were above budget for the
year and we regard the group`s performance as pleasing.
As a result of the tragic events of September 11, the year was characterised
into three distinct periods. In the period prior to September 11 trading was
pedestrian. Trading in the period between September 11 and early December 2001
was severely affected by the aftermath of the terrorist attacks but revived
strongly during December and remained buoyant throughout the remainder of the
financial year as South Africa was rediscovered as a safe and "value for money"
tourist destination. The weakness of the rand during this period created
opportunities for the inbound travel and retail merchandise businesses.
Revenue grew by 29,1% to R1 304 million and operating income increased by 31,0%
from R129 million to R169 million. The group`s operating margin improved from
12,8% to 13,0%, largely as a result of improved margins in the travel and
financial services division. Tourvest`s effective tax rate declined to 28,6%
from 32,1% leading to a 43,6% increase in attributable income, which rose to
R121 million. Headline earnings per share grew 33,9% to 15,8 cents.
Dividend
In light of the group`s strong cash flow and healthy cash balances, the board
has decided to pay an annual dividend equivalent to 50,0% of earnings per share.
On this basis, a dividend of 8 cents per share has been declared for the year.
ACHIEVEMENTS
A number of achievements were registered this past year as the repositioning of
the group and the strengthening of management started to bear fruit.
- Tourvest generated cash of R205 million from operations resulting in net
cash resources totalling R308 million at the year-end.
- Acquisitions included 100% of Associated Tour Operators (Pty) Limited; a
further 30% of Gametrackers (Pty) Limited increasing Tourvest`s shareholding to
90%; the remaining 40% of SafariPlans (Pty) Limited to increase Tourvest`s
holding to 100%; and the outstanding 30% of the Shongololo group.
- Tourvest Holdings (Pty) Limited repurchased 42,1 million shares from the
share trust in line with a special resolution and an additional 13,1 million
shares in terms of the group`s buy-back programme. Of these repurchases, 26,3
million shares were transferred to the share option trust in February 2002.
As much of Tourvest`s business centres on the selling of dollar based products
and services to foreign tourists, who pay cash for their purchases, Tourvest is
a beneficiary from the weakness in the currency. In addition the costs of these
products and services are rand based.
TRAVEL AND FINANCIAL SERVICES DIVISION
In spite of difficult market conditions, the division`s revenue rose 10,7% to
R793 million for the year under review and pre-tax profit from operations grew
by 18,1% to R87 million. Operating margin improved from 10,3% to 11,0%.
The inbound operations performed well and participated in the revival of South
Africa`s fortunes as a preferred travel destination. There is a marked increase
in the number of foreign individual travellers coming to this country and our
businesses have designed specific products to cater for their needs. The
management restructuring and cost reductions undertaken over the past year
benefited these operations.
South Africa is still being perceived as a safer and inexpensive destination.
The World Summit on Sustainable Development and the 2003 Cricket World Cup will
boost volumes in the year ahead.
The outbound operations experienced a very difficult period. The two retail
travel companies, Seekers Travel Group and American Express Travel Services,
were severely affected by the contraction in travel post September 11. However,
management moved quickly and embarked on a strategic cost reduction exercise
within these two businesses that is now 90% complete. The businesses are well
positioned for the year ahead.
The outbound tour operators, namely Absolute Tours and Associated Tour
Operations, were also affected by the events of September 11 and in addition had
to contend with the rapid devaluation of the rand at the end of calendar 2001.
With the recovery in the rand, there is a slight improvement in the number of
South Africans travelling abroad.
American Express Foreign Exchange reported good results and succeeded in
increasing its share of the outbound foreign exchange market. The improved
results were achieved through cost and risk control as well as margin
management. Both the brand and branch network benefited from the larger number
of foreign tourists visiting South Africa from December 2001 onwards.
RETAIL MERCHANDISE DIVISION
The retail merchandising division again produced strong results. The division
achieved a 73,8% improvement in revenues to R511 million. Pre-tax profit from
operations grew by 57,9% to R97 million but operating margin declined from 21,0%
to 19,0%. This was primarily the result of lower margins in The Parks Shop and a
full year of royalties paid to SAA on the duty free business.
In October 2001 the division commenced operating the stores in the National
Parks, which have been branded as The Parks Shop. Initial results have been
encouraging, especially during local holidays.
In September 2001 The Diamond Works opened close to the Waterfront in Cape Town.
The Diamond Works is an integrated jewellery retail and manufacturing store,
which is performing well and fast becoming a tourist attraction.
In the duty-free business, the addition of Air Namibia and Inter Air increased
the number of Tourvest`s duty-free airline operations to four.
PROSPECTS
Tourvest is confident that there is a recovery in the tourism sector and that
South Africa is well placed, in this instance, to continue benefiting from the
weakness of the rand. In the past year South Africa has risen to become the
world`s 25th most popular travel destination from position 52, a remarkable
progression. All signs point to South Africa continuing to improve on that
position and Tourvest is well placed to participate in the growth of tourism as
an industry.
The socio-political situation in Zimbabwe remains a concern. Should conditions
ease, perceptions of the Southern African region as a whole will improve.
The greater availability of airline seats and competitive airfares together with
the determined marketing efforts of South African Tourism will pave the way for
increased international travel to South Africa and, significantly, the return of
United States visitors.
Tourvest expects to achieve good growth in earnings per share in the new
financial year.
Dividend declaration
Dividend number 3 of 8 cents a share has been declared for the year ended 25
June 2002.
In compliance with STRATE the following dates are applicable:
2002
Last day to trade cum 27 September
dividend
Date trading commences
ex dividend payment 30 September
Record date 4 October
Date of payment 7 October
Shares may not be
dematerialised or
rematerialised between 30 September and 4 October
NOTES
1. Compliance with GAAP
These results have been compiled in accordance with South African Statements of
Generally Accepted Accounting Practices.
2. Accounting policies
Consistent accounting policies and methods of computation have been used in the
preparation of these financial statements as were used in the annual financial
statements to 30 June 2001, except that owner-occupied properties are now
depreciated and leave pay accruals are based on total cost of employment. The
effect of the changes are not considered material and the group has applied
these changes prospectively.
In prior years the Zimbabwe operations were not consolidated as management
considered the companies to be operating under severe long-term restrictions.
The matters giving rise to this have subsequently changed. The effect on the
current year income statement was a charge of R3 million, relating to the prior
year non-consolidation.
3. Restatement of comparatives
The Group previously charged the deferred taxation effect of the amortisation of
trademarks directly to a non-distributable reserve. This charge is now recorded
as a charge against earnings ans al related amount is appropriated from non-
distributable reserves to retained income. The effect of the charge is to
increase taxation expense for the year ended 30 June 2001 by R10 101 000. There
is no effect on non-distributable reserves and accumulated profits at 30 June
2001 and there is no effect on the financial position at 30 June 2001. the prior
year figures have been restated to reflect this change.
4. Change in estimates
No changes in estimates occurred during the period under review.
5. Material subsequent events
No material events have occurred between 25 June 2002 and the date of this
report.
6. Review by auditors
The results have been reviewed by Tourvest`s auditors - Deloitte and Touche.
Their review opinion is available for inspection at Tourvest`s registered
office.
For and on behalf of the board
W G Lynch C E Scott
Chairman Chief executive officer
Johannesburg
20 August 2002
Tourism Investment Corporation Limited Registration number 1996/008144/06 JSE
code: TRT ISIN number: ZAE000012472
Registered office: Moorgate, Dunkeld Park, 6 North Road, Dunkeld West
Transfer secretaries: Computershare Services Limited, 3rd Floor, Edura House, 41
Fox Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Directors: W G Lynch (Chairman), C E Scott (Chief executive officer)*, I W C Hay
(Chief financial officer)*, E de Jager*, A Geldenhuys*, B W Gutkin, M Makwana, I
Meltzer*
*Executive
Date: 21/08/2002 08:04:11 AM Produced by the JSE SENS Department
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