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Tourvest -
TOURISM INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/008144/06
("Tourvest")
Share code: TRT
ISIN: ZAE000012472
Reviewed Group Results for the year ended 25 June 2003
www.tourvest.co.za
Highlights
- Revenue up 28%
- EPS up 27%
- Attributable income R154 million
- R388 million in cash
- Special dividend of 30 cents per share (total dividend 40 cps)
GRAPHS
Earnings per share (cents)
2003 20.3
2002 16
2001 10.9
2000 10.8
1999 10.72
1998 7.55
Attributable income (R000)
2003 154103
2002 120954
2001 84253
2000 82076
1999 64455
1998 30650
Revenue (R000)
2003 1665072
2002 1303996
2001 1010379
2000 914072
1999 702992
1998 414273
Group income statement for the year ended 25 June
Change 25 June 25 June
R000 % 2003 2002
Revenue 28 1 665 072 1 303 996
Cost of sales and (1 444 276) (1 134 686)
operating costs
Operating income 30 220 796 169 310
Interest paid (11 574) (7 656)
Interest received 42 124 22 891
Share of associate - 323
company income
Income before taxation 36 251 346 184 868
Taxation 56 (82 443) (52 884)
Income after taxation 28 168 903 131 984
Outside shareholders" (14 800) (11 030)
interest
Attributable income 27 154 103 120 954
Earnings per share 27 20,3 16,0
(cents)
Headline earnings per 25 19,8 15,8
share (cents)
Diluted earnings per 25 19,7 15,7
share (cents)
Diluted headline 23 19,2 15,6
earnings per share
(cents)
Weighted number of 758 874 756 571
shares in issue (000s)
Depreciation 29 887 26 473
Amortisation of 2 268 1 781
goodwill and trademarks
Reconciliation to
headline earnings:
Attributable income 154 103 120 954
(R000s)
Impairment provisions (1 265) (2 310)
(R000s)
Capital profits (R000s) (4 476) (557)
Amortisation of 1 963 1 781
goodwill (R000s)
Headline earnings 150 325 119 868
Group balance sheet at 25 June
Change 25 June 25 June
R000 % 2003 2002
ASSETS
Non-current assets
Property, plant and 111 219 94 078
equipment
Goodwill and other 40 822 34 007
intangibles
Deferred taxation 42 913 43 203
Financial assets 41 268 73 110
Current assets
Inventories 172 856 133 749
Trade and other 131 994 135 721
receivables
Cash and bank balances 418 054 334 624
Foreign notes held 49 788 52 785
Total current assets 772 692 656 879
Total assets 1 008 914 901 277
EQUITY AND LIABILITIES
Capital and reserves
Share capital and 35 135 35 135
premium
Non-distributable 31 467 44 511
reserves
Retained income 487 089 387 491
Ordinary shareholders" 553 691 467 137
interest
Outside shareholders" 29 766 21 906
interest
Non-current liabilities
Interest-bearing 11 787 6 728
borrowings
Deferred taxation 2 213 232
Current liabilities
Trade and other payables 234 686 241 878
Provisions 37 490 44 584
Current portion of - 5 131
interest-bearing
borrowings
Bank borrowings 38 948 29 895
Loans relating to 40 869 49 161
foreign notes held
Taxation payable 59 464 34 625
Total current 414 457 405 274
liabilities
Total equity and 1 008 914 901 277
liabilities
Net asset value per 66,7 56,3
share (cents)
Net tangible asset value 61,8 52,2
per share (cents)
Shares in issue (000s) 830 350 830 350
Capital commitments 14 391 11 022
(R000)
Operating lease 213 456 224 491
commitments (R000)
Additions to property, 52 599 41 055
plant and equipment
Abridged group statement of changes in equity
Share Non-
capital distribu-
and Retained table Total
R000 premium income reserves equity
Balance 25 June 2001 78 517 257 307 54 394 390 218
Attributable income to
25 June 2002 120 954 120 954
Net treasury shares (43 382) (43 382)
repurchased
Deferred tax on 6 634 (10 854) (4 220)
trademarks
Recovery of previously 2 596 971 3 567
written off goodwill
Balance 25 June 2002 35 135 387 491 44 511 467 137
Attributable income to 154 103 154 103
25 June 2003
Dividend paid (63 077) (63 077)
Deferred tax reversing 8 572 (8 572) -
on trademark
Foreign exchange (4 472) (4 472)
translation differences
Balance 25 June 2003 35 135 487 089 31 467 553 691
Group segmental analysis
25 June 2003 25 June 2002
R000 % R000 %
Revenue
Financial services 106 200 6 105 751 8
Inbound tourism 663 916 40 517 742 40
services
Outbound travel 253 443 15 169 412 13
services
Retail merchandise 641 513 39 511 092 39
1 665 072 100 1 303 997 100
Operating income
Financial services 49 430 22 43 032 25
Inbound tourism 25 602 12 30 862 18
services
Outbound travel 44 163 20 1 293 1
services
Retail merchandise 101 601 46 94 123 56
220 796 100 169 310 100
Net operating
assets/(liabilities)
employed
Financial services 38 266 23 23 375 15
Inbound tourism 20 710 13 5 675 3
services
Outbound travel (29 510) (18) 3 053 2
services
Retail merchandise 136 200 82 126 681 80
165 666 100 158 784 100
Abridged group cash flow statement for the year ended 25 June
25 June 25 June
R000 2003 2002
Cash flows from operating activities 135 952 204 709
Cash generated by operations 232 368 221 692
Net interest received 30 550 15 235
Taxation paid (55 333) (32 218)
Dividend paid (71 633) -
Cash flow from investing activities (56 208) (22 969)
Purchase of property, plant and equipment (52 115) (39 347)
Proceeds on disposal of property, plant and 3 651 9 569
equipment
Proceeds on disposal of financial assets - 14 808
Decrease in loans advanced - 6 019
Goodwill and other intangibles acquired (10 846) (11 686)
Acquisition of subsidiaries, net of cash (1 058) 2 220
acquired
Acquisition of businesses, net of cash acquired - (4 573)
Sale of interest in subsidiary, net of cash 4 160 21
relinquished
Cash flow from financing activities (72) (27 542)
Buyback of shares - (13 931)
Reduction in liabilities (72) (16 424)
Loan to share incentive trust - 2 813
Net movement in cash and cash equivalents 79 672 154 198
Cash and cash equivalents at beginning of year 308 353 154 155
Cash and cash equivalents at end of year 388 025 308 353
Commentary
Results
Tourvest has again produced a good set of results.
The financial year was split into two distinct phases, corresponding to the
first and second half reporting periods.
The first half was significantly better than the prior period. This was due to:
a) Strong passenger growth;
b) A weaker Rand (average 8% weaker than the comparative period);
c) An extra week"s trading; and
d) The 9/11 tragedy, which resulted in a low base for the comparative period.
The second half was however, slow due to:
a) A firmer Rand (average 25% stronger than the comparative period);
b) The Gulf War; and
c) The SARS outbreak in the Far East.
Our forecast of a much tougher second half, as announced in our interim results
proved to be correct.
Overall however, the results for the year were good.
Revenue grew by 27,7% from R1 304 million to R1 665 million and operating income
increased by 30,4% from R169 million to R221 million. The Group"s operating
margin improved from 13,0% to 13,3%, largely as a result of the turnaround in
the Outbound Division. The effective tax rate grew from 28,6% to 32,8% due to
STC on the dividend paid in October 2002. Attributable income increased by 27,4%
from R121 million to R154 million.
Earnings per share rose 27% to 20,3 cents. Headline earnings per share increased
25% to 19,8 cents.
Ordinary dividend declaration
In accordance with our policy of paying an annual dividend of 50% of earnings
per share, a dividend of 10 cents per share has been declared for the year.
Special dividend declaration
We have accumulated significant cash reserves over the last few years. Our
ability to generate strong cash flows into the future, will ensure that we are
able to service our organic and acquisitive growth. We also have an unutilised
borrowings capacity which can be used to fund acquisitions.
Accordingly we have declared a special dividend of 30 cents per share. Thus the
total dividend for the year will amount to 40 cents per share. This, together
with the related STC will absorb R357 million of cash.
In compliance with STRATE, the following dates are applicable:
Last day to trade cum 29 August 2003
dividends
Date trading commences ex 1 September 2003
dividend payments
Record date 5 September 2003
Date of payments 8 September 2003
Share certificates may not be dematerialised or rematerialised between Monday,
1 September 2003 and Friday, 5 September 2003, both days inclusive.
Achievements
A number of achievements were registered during the past year:
- Tourvest generated cash from operations of R232 million.
- Our first cash dividend of 8 cents per share was paid in October 2002.
- Cash and cash equivalents at the end of the year amount to R388 million.
- 30% of Shongololo Express (Pty) Limited was sold to an empowerment partner for
R4,2 million.
- Pilanesberg Elephant Safaris, in which Tourvest has a 60% shareholding was
established and is trading well.
- The consolidation of American Express Travel and Seekers Travel was
implemented successfully.
- Our Duty Free business acquired the Kuwait Airways concession. and was awarded
the "Inflight Duty Free Operator of the Year" for the third consecutive year.
- American Express Foreign Exchange won preferred supplier to the Sure Travel
Group and co-preferred supplier the City Centre Travel Group.
- American Express Travel won the Anglo American travel account. Our other
retail travel brands also won major accounts thus increasing our market share.
A 70% stake in Congo-Joe Artworks (Pty) Ltd was acquired for R1,0 million.
Divisional reviews
In order to achieve better disclosure and to facilitate greater understanding of
the Group, it has been decided to segment the business into four divisions as
compared to the previous two.
Financial Services Division
Revenue grew by 0,4% from R105 million to R106 million and operating income
increased by 14,9% from R43 million to R49 million.
The foreign exchange business is directly linked to the Rand/Dollar exchange
rate. During F2003 we experienced a net average appreciation in that rate of
some 11%. This factor, combined with management"s decision to cut certain low
margin/high risk wholesale business means that the underlying real dollar for
dollar trading increase in revenue for F2003 has been acceptable.
The improvement in operating income was a result of:
a) lower head office costs;
b) reduced overhead and operating costs in the business;
c) additional sundry income due to rebate deals and joint venture income.
It is of significance that our cost to income ratio has decreased from 59,3% to
53,5%.
The inbound component of the business had an acceptable first half, but suffered
during the second half due to the factors mentioned above. The branch network
was increased from 47 to 52. The extensive branch network together with the
American Express brand will ensure that we will continue to excel in servicing
the forex needs of our tourists.
The outbound element of the business fared better due to:
a) more outbound travel; and
b increased market share due to winning the Sure and City Centre accounts.
An enhanced IT system has enabled us to manage our stocks more effectively and
this together with tighter security should ensure that we continue to minimise
our risks.
Looking ahead, the business is in the best condition its ever been in and is
well positioned for a year of acceptable growth, subject to the Rand/Dollar
exchange rate.
Inbound Tourism Services Division
Revenue increased by 28,2% from R518 million to R664 million. Operating income
decreased by 17,0% from R31 million to R26 million.
Once again it was a tale of two halves. The first being excellent and the second
impacted by the trio of aforementioned factors.
The World Summit on Sustainable Development and the Cricket World Cup were
successful for the country, but only made a minor contribution to the division.
In April the final agreement between the Republic of China and South Africa was
signed giving South Africa Approved Destination Status (ADS).
Crown Travel, our Asian inbound tour operator was badly affected by the SARS
issue and a stronger Rand. Felix Unite Tours had an extremely good year.
Gametrackers performed exceptionally and together with the newly launched
Pilanesberg Elephant Safaris now offers a complete range of activities at Sun
City.
The Shongololo train business had a poor year with passenger numbers dropping
off in the second half. Our Wilson Collins Japanese business also suffered
towards the end of the year as a result of SARS.
Welcome Tourism Service performed well and our Wild Horizons business in
Zimbabwe stood up admirably considering the problems in that country.
Whilst we are now finally over the SARS issue and the Gulf War is past, a
strong rand will inhibit growth.
Outbound Travel Services Division
The division had an outstanding year.
Revenue increased by 49,6% from R169 million to R253 million. Operating income
grew from R1 million to R44 million.
This was achieved as a consequence of:
a) the consolidation of Amex Travel and Seekers with consequent cost savings;
b) increasing our market share in retail travel;
c) the return of Absolute Tours to profitability;
d) the low base of the prior year due to the effects of:
- 9/11;
- costs of the initial restructuring in Retail Travel; and
- losses in Absolute Tours.
The year ahead will see:
a) the completion of one IT system for the Retail Travel Group
b) a year of increasing market share in retail travel; and
c) a second charter of the "Olympia Countess".
All of the above should ensure another successful year for the division.
Retail Merchandising Division
Revenue grew 25,5% from R511 million to R642 million. Operating income increased
7,9% from R94 million to R102 million.
The margin decreased from 18,4% to 15,8%. This was a combination of lower
margins from "The Parks Shop", which has a significant grocery element, and a
fall off in the performance of our Inflight Duty Free business, who sell their
products in US Dollars and were impacted by the stronger Rand.
The Tigers Eye Group performed exceptionally as operating efficiencies and
optimisation of the "Parks Shop" continued. At year-end, a strategic stake was
acquired in the Congo Joe business with the intention of rolling out another
five stores by next year-end.
Kuwait Airlines is only now coming back to normality post the Gulf War.
The Jewellery business had a pedestrian year with the performance of the Diamond
Works being a notable exception.
Moderate growth is expected in the year ahead, subject to the exchange rate and
inbound passenger numbers.
Board of Directors
Vivienne Mennell was appointed as an independent Non-Executive Director on 6
December 2002.
Philip Maisel was appointed as an independent Non-Executive Director on 31 March
2003.
Brian Gutkin resigned as a director on 25 February 2003.
Tommy Edmond was appointed CEO and a director on 28 July 2003.
Bill Lynch stepped down as Chairman on 14 August 2003.
Carol Scott was appointed Chairman on 14 August 2003.
Prospects
Due to the way that the year under review evolved into two distinct halves, the
year ahead will also have two very different bases for comparison.
Our business is largely dependent on the exchange rate. A weaker rand will
result in real growth in operating income. New growth opportunities are being
actively pursued.
STC and forgone interest on the special dividend (R47 million, 6,1 cps) will
result in our attributable income and EPS for F2004 being lower than F2003.
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 these financial statements as were used in the annual financial
statements to 25 June 2002. In prior years, profits realised on previously
written off goodwill were disclosed as movements in the Non-Distributable
Reserve. Such profits are now being reported through the income statement.
3. Changes in estimates
No fundamental changes in estimates occurred during the year under review.
4. Subsequent events
- The remaining 10% of Gametrackers (Bophuthatswana) (Pty) Limited was acquired.
- We have entered the inbound conferencing market by acquiring 100% of Global
Conferences (Pty) Limited, 60% of Global Conferences Africa (Pty) Limited and
50% of Global Conference iKapa (Pty) Limited.
- 100% of the business of Maties Travel has been acquired.
5. Review by auditors
The results have been reviewed by Tourvest"s Auditors, Deloitte and Touche.
Their unqualified review opinion is available for inspection at Tourvest"s
registered office.
For and on behalf of the Board.
CE Scott RT Edmond
Chairman Chief Executive
Johannesburg
14 August 2003
Registered office
Moorgate, Dunkeld Park, 6 North Road, Dunkeld West
Transferors
Computershare Limited, 70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Directors: CE Scott (Chairman), RT Edmond (Chief Executive)*+, E de Jager*,
A Geldenhuys*, IWC Hay*, WG Lynch, P Maisel, M Makwana, IC Meltzer*,
V Mennell,
*Executive +British
Company secretary: J Esekow
Registration number 1996/008144/06
Share code: TRT ISIN code: ZAE000012472
Date: 14/08/2003 02:14:11 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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