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Tourvest - Group Interim Results For The Six Months Ended 25 December 2004
TOURISM INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/008144/06)
Share code: TRT ISIN: ZAE000012472
GROUP INTERIM RESULTS FOR THE SIX MONTHS ENDED 25 DECEMBER 2004
ABRIDGED GROUP INCOME STATEMENT
6 months to 6 months to 12 months to
25 Dec 2004 25 Dec 2003 25 Jun 2004
R000 Unaudited Unaudited Audited
Revenue 800 804 825 644 1 560 076
Operating income 78 171 74 695 147 527
Net interest
(paid)/received (4 003) 1 287 (3 173)
Income before
Taxation 74 168 75 982 144 354
Taxation (21 889) (65 682) (87 939)
Income after
taxation 52 279 10 300 56 415
Outside shareholders
interest (4 817) (5 416) (8 671)
Attributable income 47 462 4 884 47 744
Earnings per share
(cents) 6.3 0.7 6.3
Diluted earnings
per share (cents) 6.1 0.6 6.2
Headline earnings
per share (cents) 6.0 1.4 5.9
Dividend paid per
share (cents) 3.0 40.0 40.0
Weighted shares in
issue (000`s) 759 065 746 517 755 874
Depreciation 17 147 16 590 33 973
Headline earnings
adjustments:
Impairment
provisions 4 742 3 559 (2 200)
Amortisation of
goodwill - 2 197 4 052
Capital profits (6 491) - (4 996)
GROUP BALANCE SHEET
At 25 Dec At 25 Dec At 25 Jun
2004 2003 2004
R000 Unaudited Unaudited Audited
ASSETS
Non current assets
Property, plant and
equipment 111 363 116 602 112 692
Goodwill 83 239 82 155 82 131
Trademarks 2 086 2 353 2 228
Deferred tax 29 809 37 811 33 438
Financial assets 5 640 6 780 5 598
Current assets
inventories 179 959 199 074 175 193
Trade and other
receivables 148 248 128 110 142 757
Cash and bank
balances 61 749 60 991 92 555
Taxation paid in
advance 6 740 - -
Foreign notes held 61 291 66 500 34 164
Total assets 690 124 700 376 680 756
EQUITY AND LIABILITIES
Capital and reserves
Share capital and
premium 11 657 22 475 10 573
Non-distributable
reserves 18 506 26 965 20 858
Accumulated
profits 268 732 178 737 240 500
Minority interest 24 664 22 708 26 024
Non-current liabilities
Interest bearing
borrowings 8 248 10 446 8 726
Deferred tax 1 792 - 1 792
Current liabilities
Trade and other
payables 227 017 304 129 228 152
Provisions 28 552 31 049 21 343
Bank borrowings 51 500 22 862 87 721
Loans re foreign
notes held 49 456 55 334 27 812
Current portion of
interest
bearing borrowings - 2 734 1 271
Taxation payable - 22 937 5 984
Total equity and
liabilities 690 124 700 376 680 756
ABRIDGED GROUP CASH FLOW STATEMENT
6 months to 6 months to 12 months to
25 Dec 2004 25 Dec 2003 25 Jun 2004
R000 Unaudited Unaudited Audited
Cash flow from
operating
activities 15 516 (264 318) (281 730)
Cash generated by
operations 79 455 137 512 150 628
Net interest
(paid)/received (4 003) 1 287 (3 173)
Taxation paid (31 217) (102 716) (131 488)
Dividend paid (28 719) (300 401) (297 697)
Cash flow from
investing
activities (10 663) (76 459) (89 481)
Fixed asset
replacement - net (14 135) (21 426) (37 271)
Net (acquisition)
/disposal of
operations and
investments 3 472 (55 033) (52 939)
Net disposal of
financial assets - - 729
Cash flow from
financing
activities 562 (200) (3 061)
Reduction in
long-term
liabilities (522) (1 600) (3 061)
Net proceeds from
realisaton of
employee share
options 1 084 1 400 -
Net movement in
cash and cash
equivalents 5 415 (340 977) (374 272)
Cash and cash
equivalents at
beginning of year 4 834 379 106 379 106
Cash and cash
equivalents at
end
of period 10 249 38 129 4 834
GROUP STATEMENT OF CHANGES IN EQUITY
Share Accu- Non-dis-
capital and mulated tributable Total
R000 premiums profits reserves equity
Balance as
previously
reported
25 Jun 03 (325) 487 089 31 467 518 231
Change in
accounting
policy - (1 241) - (1 241)
Restated
balance
25 Jun 03 (325) 485 848 31 467 516 990
Attributable
income to
25 Jun 04 - 47 744 - 47 744
Dividend
paid - (332 140) - (332 140)
Dividend
accruing
to treasury
stock - 32 256 - 32 256
Disposal of
treasury
stock for
acquisition of
businesses 2 652 - - 2 652
Exercise of
shares in
share trust 8 246 - - 8 246
Deferred tax
reversing on
trademark - 6 792 (6 792) -
Foreign
exchange
translation
differences - - (4 086) (4 086)
Profit arising
on sale of
treasury
stock - - 269 269
Balance
25 Jun 04 10 573 240 500 20 858 271 931
Attributable
income to
25 Dec 04 - 47 462 - 47 462
Dividend
paid (2 285) (22 626) - (24 911)
Deferred tax
reversing on
trademark - 3 396 (3 396) -
Exercise of
shares in
share trust 3 369 - - 3 369
Foreign
exchange
translation
differences - - 1 044 1 044
Balance
25 Dec 04 11 657 268 732 18 506 298 895
SEGMENTAL ANALYSIS
Operat- Operat-
ing ing assets
Revenue income employed
R000 % R000 % R000 %
Six months
to Dec 04
Inbound 304 806 38 14 365 18 58 163 20
Outbound 102 730 13 19 229 25 23 843 8
Financial
services 54 846 7 16 032 20 63 160 21
Retail
merchandise 338 422 42 28 545 37 151 938 51
800 804 100 78 171 100 297 104 100
Six months
to Dec 03
Inbound 361 422 44 20 277 27 62 437 21
Outbound 113 046 14 1 619 2 3 732 1
Financial
services 50 820 6 10 237 14 64 528 21
Retail
Merchandise 300 356 36 42 562 57 170 442 57
825 644 100 74 695 100 301 139 100
COMMENTS
In the 6 months ended 25 December 2004, the average rand rate appreciated
against the dollar by 12% compared with the prior period (6:27 vs. 7:15) and
the dollar depreciated against the euro and pound by 8%.
The rand strength resulted in reduced volumes of passengers entering South
Africa especially from Germany, our major market, and a general price down grade
by tourists.
Rand sales in the retail outlets were depressed as the rand`s strength also
reduced the discretionary spend of tourists.
The financial services division benefited from strong foreign currency sales due
to the rand`s strength and market share gains. The retail travel business
produced good results and benefited from the previous investment in Indo Jet
Travel.
Restructuring and once-off costs of R7 million were absorbed during this period.
Starlight was sold for a profit, as it did not meet our risk/reward criteria.
All businesses focused on streamlining operations to reduce costs and improve
efficiency.
The sale of Starlight in November 2004 has a material effect on the
comparability of the balance sheet and cash flow at 25 December 2004 compared to
the previous year. The effect of this sale will not be as pronounced at year-
end.
The Starlight balance sheet consisted of the following key components:
Rmillions 25 June 2004 25 Dec 2003
Trade and other
receivables (8.0) 0.8
Cash and bank balance 53.3 6.0
Trade and other payables (35.6) (8.1)
ORDINARY DIVIDEND
An ordinary dividend of 3 cents per share was paid on 13 September 2004 in
respect of the previous year.
DIVISIONAL REVIEWS
Inbound Tourism Services
The consolidation of the inbound tour operators as well as our product companies
is now complete, with the anticipated benefits achieved.
Inbound tourism numbers have declined in our traditionally strong German market.
The Asian market, in which we are dominant, has also been particularly hard hit
by the decline in pricing and the downgrading of product.
The Victoria Falls acquisition has not yet been approved by the Zimbabwe Reserve
Bank.
The tour operator businesses` performance was substantially down on the prior
year on reduced volumes. The products business performed on par with last year
and the Shongololo Express returned to profitability.
At the current exchange rate, lower volumes than the previous year are
anticipated in the second half of the year.
Outbound Travel Services
The retail travel business has performed well.
The supplier dispute is not yet resolved. The quantities have been agreed but
the interpretation of the agreement is still in dispute.
SAA have announced zero commission with effect from 1 May 2005. It is expected
that other airlines will follow suit. This will not have a material effect on
the profitability of the operation as our business model had already anticipated
the change.
The outbound tour operator business performed badly during this period. The
business has been restructured and is expected to perform better in the next 6
months.
Financial Services
The division had a good trading period with dollar for dollar sales growing by
some 23%. This growth was mainly in outbound sales, which benefited from the
strong rand.
Non-performing branches have been closed and a new outlet opened at the V&A
Waterfront in Cape Town.
Retail Merchandising
Tough trading conditions continued during the period under review.
The African art and curio operation performed below last year as the reduced
discretionary spend of tourists continued to have an impact. The Afsaal tourist
stopover site was acquired in the Kruger National Park to complement our
national parks portfolio.
The duty free operation performed below last year primarily as a result of
reduced rand receipts. The Virgin Atlantic Duty Free concession launched in May
2004 experienced start-up problems and only contributed marginally to profits.
The key SAA concession traded well in dollar terms.
The jewellery operation continued to underperform due to restructuring costs,
lower trading volumes and margins. It produced an operating loss for the
period.
Tourist destination restaurant outlets were acquired in Tsitsikamma, Addo and
Pilgrims Rest. The entry into tourist destination restaurants has been
successful with financial targets being achieved.
PROSPECTS
At current exchange rates we anticipate inbound tourist numbers for the second
half of the year to be lower than last year especially in our traditionally
strong markets (UK, Germany and Asia).
In addition, those tourists arriving will have less discretionary spending power
than the previous year as the average dollar rate for the same period last year
was 6.74.
These factors will negatively impact on our inbound, forex and retail
merchandise divisions.
We don`t expect South African tourist volumes to benefit materially from the
Tsunami disaster in South East Asia.
Despite the above, second half earnings are expected to be marginally above the
same period last year.
SUBSEQUENT EVENTS
There are no subsequent events to report.
BOARD OF DIRECTORS
Osman Arbee was appointed as a non-executive director on 1 November 2004. Andre
Geldenhuys resigned on 1 November 2004. Ian Hay resigned from the Board on 21
February 2005 and will take up the MD position for the Tourvest Duty Free
operation within the retail division.
BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These results have been compiled in accordance with South African Statements of
Generally Accepted Accounting Practice (AC127). The accounting policies and
methods of computation used in the preparation of these results are consistent
in all material respects with those used in the annual financial statements to
25 June 2004 with the exception of the implementation of IFRS3.
Comparative figures at 25 December 2003 have been restated to include the
effects of the consolidation of the Tourvest Share Trust. Accordingly the
following adjustments to 25 December 2003 results have been made.
Previously stated Restated balance
Financial assets (Rmillions) 20.8 6.8
Share capital and premium
(Rmillions) 36.5 22.5
Weighted shares in issue
(000`s) 766 112 746 517
Earnings per share (cents) 0.6 0.7
Headline earnings per share (cents) 0.9 1.4
Diluted earnings per share (cents) 0.6 0.6
In addition, financial services teller rand cash of R16.8 million was
reclassified from foreign and local notes held to cash and bank balances to be
consistent with 25 June 2004.
COMPANY SECRETARY
Conrad Mortimer replaced Jeremy Esekow on 1 November 2004.
For and behalf of the Board
C E Scott R T Edmond
Chairman Chief Executive
Johannesburg
22 February 2005
Registered Office: 2nd Floor, Forum V, Braampark, 33 Hoofd Street,
Braamfontein, Johannesburg, 2001
Transfer Secretaries: Computershare Investor Services 2004 (Proprietary)
Limited, 70 Marshall Street, Johannesburg, 2001, P O Box 61051, Marshalltown,
2107
Sponsor: Investec Securities Limited
Directors: CE Scott (Chairman), RT Edmond (Chief Executive)*+, O Arbee, E de
Jager*, IC Meltzer*, WG Lynch**, P Maisel (*Executive, +British **Irish)
Company Secretary: CG Mortimer
Date: 22/02/2005 12:15:35 PM
Produced by the JSE SENS Department
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