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TOURISM INVESTMENT CORPORATION LIMITED
www.tourvest.co.za
Group Interim Results for the six months ended 25 December 2002
Highlights
- Record six months
- Revenue up 48%
- EPS up 63%
- Attributable income R70 million
- R320 million in cash
Group income statement for the period ended
6 months 6 months 12 months
25 Dec 25 Dec 25 Jun
2002 2001 2002
R000 Unaudited Unaudited Audited
Revenue 895 502 604 820 1 309 996
Operating income 107 291 65 458 169 310
Net interest 13 769 4 608 15 235
received
Share of
associate
company income (29) 195 323
Income before 121 031 70 261 184 868
taxation
Taxation (41 683) (22 448) (52 884)
Income after 79 348 47 813 131 984
taxation
Outside
shareholders`
interest (9 329) (4 706) (11 030)
Attributable 70 019 43 107 120 954
income
Earnings per 9,3 5,7 16,0
share (cents)
Diluted earnings
per
share (cents) 9,3 5,7 16,0
Headline
earnings per
share (cents) 9,4 5,8 15,8
Dividend paid 8,0 0,0 0,0
per share
(cents)
Weighted shares
in
issue (000s) 752 760 752 896 756 571
Depreciation 14 056 12 026 26 473
Headline
earnings
adjustments:
Impairment - - (2 310)
provisions
Capital profits (195) (300) (537)
Amortisation of 936 711 1 781
goodwill
Group balance sheet as at
25 Dec 25 Dec 25 Jun
2002 2001 2002
R000 Unaudited Unaudited Audited
ASSETS
Non-current
assets
Property, plant 111 161 97 677 94 078
and equipment
Goodwill and 39 115 28 015 34 007
trademarks
Deferred tax 39 298 49 814 43 203
Financial 47 124 21 776 73 110
assets
Unlisted - 29 697 -
investments
Current assets
Inventories 191 471 115 881 133 749
Trade and other 175 975 150 718 135 721
receivables
Cash and bank 320 377 243 211 334 624
balances
Foreign notes 63 669 90 961 52 785
held
Total assets 988 190 827 750 901 277
EQUITY AND
LIABILITIES
Capital and
reserves
Share capital 35 135 27 581 35 135
and premium
Non- 45 631 50 809 44 511
distributable
reserves
Accumulated 398 024 303 731 387 491
profits
Minority 29 761 20 064 21 906
interest
Non-current
liabilities
Interest- 4 329 9 218 6 728
bearing
borrowings
Deferred - - 232
taxation
Current
liabilities
Trade and other 354 668 258 215 241 878
payables
Provisions 34 663 23 173 44 584
Bank borrowings 8 902 36 804 29 895
Loans re 55 306 81 929 49 161
foreign notes
held
Current portion
of
interest- 19 146 5 131
bearing
borrowings
Taxation 21 752 16 080 34 625
payable
Total equity 988 190 827 750 901 277
and liabilities
Net asset value 57,66 48,47 56,25
per share
(cents)
Net tangible
asset value
per share 52,95 44,91 52,16
(cents)
Shares in issue 830 350 830 350 830 350
(000s)
Capital 5 511 9 625 11 022
commitments
Operating lease 178 472 118 963 224 491
commitments
Group statement of changes in equity for the period ended
Share Non-
capital Accu- distribu-
and mulated table Total
R000 premium profits reserves equity
Balance 25 78 517 257 307 54 394 390 218
June 2001
Income to 25 120 954 120 954
June 2001
Treasury
shares
repurchased (65 056) (65 056)
Issue of
shares to
share
incentive
scheme from
treasury 21 674 21 674
shares
Deferred tax
reversing
on trademarks 6 634 (6 634) -
Adjustment to
deferred tax
opening
balance
on trademarks (4 220) (4 220)
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
Capital 871 871
profits
Balance 25 35 135 387 491 44 511 467 137
June 2002
Income to
25 December 70 019 70 019
2002
Dividends (66 450) (66 450)
paid
Dividends
accruing
to treasury 3 569 3 569
shares
Deferred tax
reversing
on trademarks 3 395 (3 395) -
Previously
written off
goodwill
realised on
sale of 4 515 4 515
subsidiary
Balance 25
Decem-
ber 2002 35 135 398 024 45 631 478 790
Group cash flow statement for the period ended
6 months 6 months 12 months
25 Dec 25 Dec 25 Jun
2002 2001 2002
R000 Unaudited Unaudited Audited
Cash flow
from
operating 39 028 84 311 204 709
activities
Cash 134 133 75 818 221 692
generated by
operations
Net interest 13 769 4 608 15 235
received
Change in 4 191 28 546
working
capital
Taxation paid (50 883) (24 661) (32 218)
Dividend paid (62 182) -
Cash flow (28 729) (24 264) (22 969)
from
investing
activities
Fixed asset (36 988) (13 330) (29 778)
replacement -
net
Net
acquisition
of operations
and (3 181) (10 934) (2 332)
investments
Goodwill (5 178) - (11 686)
acquired
Net disposal 16 618 - 20 827
of financial
assets
Cash flow 1 186 1 237 (27 542)
from
financing
activities
Payment for - - (13 931)
shares
repurchased
Reduction in (7 511) (902) (16 424)
long-term
liabilities
Loan to share 8 697 2 139 2 813
option trust
Net movement
in cash and
cash 11 485 61 284 154 198
equivalents
Segmental analysis
Net
Pre-tax assets
Revenue profits employed
R000 % R000 % R000 %
Six months
to
December
2002
Travel and
financial 539 135 60 61 459 51 247 391 56
services
Retail
merchandise 356 367 40 59 601 49 192 101 44
895 502 100 121 060 100 439 492 100
Six months
to
December
2001
Travel and
financial 385 113 64 30 339 43 200 954 58
services
Retail
merchandise 219 707 36 39 727 57 143 719 42
604 820 100 70 066 100 344 673 100
Commentary
Results
Tourvest is pleased to report a record six months.
These results must be viewed with the following factors in mind:
- The base of the prior year period was weak due to the September 11 events,
which severely impacted world tourism.
- The current period contains 26 weeks of trading compared to the prior year`s
25 week period (i.e. 4% extra).
Revenue grew by 48,1% to R895 million (2001: R605 million) and operating income
increased by 63,9% from R65 million to R107 million. The group`s operating
margin improved from 10,8% to 12,0% due to stronger performance from Travel and
Financial Services. Net interest received increased from R5 million to R14
million. This was due to strong cash flow for the period coupled with higher
interest rates.
The effective tax rate increased from 32,0% to 34,4% due to STC on the dividend
paid.
This led to a 62,4% increase in attributable income, which rose to R70 million
(2001: R43 million).
Earnings per share grew 63,2% to 9,3 cents (2001: 5,7 cents).
Dividend
A dividend of 8 cents per share was paid on 7 October 2002 in line with our
policy of paying an annual dividend post year-end.
Achievements
A number of achievements were registered in the period:
- Tourvest generated cash of R134 million from operations.
- Cash at the end of the period amounted to R320 million.
- 30% of Shongololo Express (Pty) Ltd was sold to an empowerment partner for R4
million.
- Pilanesburg Elephant Safaris, in which Tourvest has an effective 60% interest,
commenced trading on 20 December 2002.
- The consolidation of American Express Travel and Seekers Travel was completed,
resulting in increased efficiencies.
- The contract to conduct duty free on board Kuwait Airways was secured. Trading
commenced in September 2002.
Travel and Financial Services division
Revenue rose 40,0% to R539 million for the period under review. Income before
taxation grew 102,6% to R61 million. The margin improved from 7,9% to 11,4%.
The inbound operations performed well and continued to enjoy good passenger
growth. The strengthening of the rand had a negative impact on margins towards
the end of the period.
The World Summit on Sustainable Development went off well and provided a great
marketing platform for the country. In November, South Africa entered into a
Memorandum of Understanding with the Republic of China, granting Approved
Destination Status (ADS) to our country. This will result in a significant
increase in tourists from Mainland China. The Cricket World Cup is now upon us
which will give South Africa further exposure internationally as a destination
and prospects going forward are encouraging.
The outbound operations achieved a significant turnaround from the prior period.
The consolidation of Seekers Travel and American Express Travel has paid off and
market share has increased.
The Tour Operators are well down the road to sustained profitability. Costs have
been reduced substantially and both ATO and Absolute Tours are clearly focused
on their respective niches. The strengthening of the rand is also assisting with
their performance.
Our cruise business, Starlight Cruises, which has changed from agent to
charterer, has had a better than expected season. This has been due to a
successful marketing campaign, which has increased passenger numbers by 40% over
the prior year.
American Express Foreign Exchange achieved acceptable results. A burglary at one
of the hub branches resulting in an insurance excess cost of R6 million,
together with the impact of a strengthened rand, dented what would otherwise
have been a strong performance.
Retail Merchandise division
The division again produced strong results. Revenue rose 62,2% to R356 million
and income before taxation grew 50,0% to R60 million.
However, our margin decreased from 18,0% to 16,7%. This resulted from two
primary factors: In the first instance, the National Parks concession, awarded
some 18 months ago, delivered a strong trading performance, but at lower
margins. Branded in a retail context as The Parks Shop, these 15 stores have a
significant grocery component, which results in lower overall margins being
achieved relative to our traditional curio business model.
In the second instance, the Inflight Duty Free operation has been affected by
the strength of the rand. This company is dollar-based and competes in a global
market. Due to the nature of the business, the strengthening of the local
currency has resulted in margin erosion whilst its trading performance has
remained strong.
The roll-out and refurbishment of the Forma Viva jewellery chain has continued
over the period under review. There are now ten stores in the chain and suitable
sites for further expansion are constantly being reviewed. The overall
performance of our jewellery interests were "solid" rather than "exciting",
compared to the flurry of trading activity which took place in the last quarter
of the prior period. An exception is the performance of Centenary Jewellers.
This company introduced a new generation tourist retail concept in The Diamond
Works. They have traded well ahead of budget and this performance is set to
continue.
During the period under review, we commenced operation of the Inflight Duty Free
Kuwait Airways concession, which was awarded as a result of an international
tender process.
Board of directors
Vivienne Mennell was appointed as an independent non-executive director on 6
December 2002. Brian Gutkin has resigned as a director with effect from 25
February 2003.
Prospects
Whilst the first half of the year traded well, this quantum of improvement will
not be experienced in the second half.
The reasons for this are:
- The bulk of Tourvest`s income is derived from foreign tourists, thus the
impact of a firmer rand will depress earnings growth.
- Our performance in the second half of the prior year was excellent. Due to
this high base, we will not record anything near the percentage growth achieved
in the first half of the current year.
For the year overall however, growth is still expected to be good.
Notes
1. Compliance with GAAP
These results have been compiled in accordance with AC 127 of South African
Statements of Generally Accepted Accounting Practice.
2. Accounting policies
Consistent accounting policies and methods of computation have been used in the
preparation of this financial information, as were used in the annual financial
statements to 25 June 2002.
3. Change in estimates
No changes in estimates occurred during the period under review.
4. Material subsequent events
No material events have occurred between 25 December 2002 and the date of this
report.
For and on behalf of the Board
WG Lynch CE Scott
Chairman Chief executive officer
Johannesburg
21 February 2003
Registered office
Moorgate, Dunkeld Park, 6 North Road, Dunkeld West
Transfer secretaries
Computershare Services Limited, 4th Floor, Edura House
41 Fox Street, Johannesburg, 2001, (PO Box 61051, Marshalltown, 2107)
Directors: WG Lynch (Chairman), CE Scott (Chief Executive)*,
IWC Hay*, E de Jager*, A Geldenhuys*, IC Meltzer*, BW Gutkin,
M Makwana, V Mennell *Executive
Company secretary: J Esekow
Registration number 1996/008144/06
Share code: TRT
ISIN code: ZAE000012472
Date: 24/02/2003 08:00:00 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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