| Tue 22 Feb 2005, 12:18 | | Strong Rand challenges Tourvest |
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Tourvest - Strong Rand challenges Tourvest
TOURISM INVESTMENT CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/008144/06)
Share code: TRT ISIN: ZAE000012472
STRONG RAND CHALLENGES TOURVEST
Johannesburg, 22 February 2005 - The continuing rise of the rand against the
dollar created uphill for Tourvest in the six months to 25 December, reducing
the volume of foreign tourists to South Africa as well as their discretionary
spend. Some 75% of the group`s business is geared to inbound tourism.
Interim results published today show revenue down from R825 million to R800
million with operating income up to R78.2 million from R74.7 million.
Attributable income was R47.5 million against the corresponding period`s R4.9
million and headline earnings per share amounted to 6 cents (2003: 1.4c) but
these comparisons are skewed by the substantial STC the group paid in 2003.
Restructuring and once-off costs of R7 million were absorbed in the results for
the past six months.
The group noted that during the period under review, the dollar had weakened by
12% against the rand and by 8% against the euro and pound, compared to the same
six months in 2003. This resulted in reduced volumes of passengers entering
South Africa especially from Germany, Tourvest`s major market, and a general
price downgrade by tourists. While the group`s Inbound Tourism Services and
Retail Merchandising divisions consequently showed the scars of tough trading
conditions, its outbound retail travel business performed well while its
Financial Services division (the American Express bureaux de change operations)
produced exceptionally good results on the back of strong outbound forex demand,
increasing dollar-for-dollar sales by 23%.
Chief executive Tommy Edmond said the good performances from Financial Services
and Tourvest Retail Travel were the highlights of what had otherwise been a very
difficult trading period. The group`s successful entry into the tourist
destination restaurant sector, through the acquisition of restaurants at a
number of national parks, also marked an advance.
`Aside from the impact of the exchange rate, which we obviously can`t control,
the disappointments were the start-up problems with our Virgin Atlantic duty-
free concession, the continuing delay in getting Zimbabwe Reserve Bank approval
for our Victoria Falls acquisition, and the underperformance of the jewellery
and outbound tour operators businesses,` Edmond said.
It was announced today that chief financial officer Ian Hay had resigned from
this position and the board to take over as managing director of the Tourvest
duty free operation. He succeeds Maurice Hartshorne, who has been appointed
managing director of the jewellery business.
`Getting these two operations up to speed is one of our key priorities,` Edmond
said. `Ian will focus his considerable expertise on settling down the Virgin
Atlantic business and raising its contribution to the anticipated level, as well
as winning new business, whilst Maurice will bring his extensive retail
experience to bear on the restructuring of the jewellery business.`
Reviewing the rest of the group, Edmond noted that
* the consolidation of the inbound tour operators and product companies had
been completed and was producing the expected benefits;
* the outbound tour operator business was in the process of being consolidated
and restructured following the sale of Starlight Cruises; and
* the group`s retail travel business model had been geared to the zero-
commission airline dispensation expected later this year.
Looking ahead, he said that at current exchange rate levels, inbound tourist
numbers - particularly from traditional Tourvest strongholds Germany, the UK
and Asia - would likely be lower in the second half of this year than in 2004,
while discretionary spending from arriving tourists would also be down. The
Tsunami disaster in South-east Asia was not expected to have a material effect
on tourist volumes to South Africa.
`There`s no escaping the fact that Tourvest is a currency-dependant business,
and the prevailing exchange levels will inevitably have a negative impact on our
inbound, retail and forex operations,` he said.
`We are, however, seeking to counter this impact by streamlining our operations
to reduce costs and improve efficiency, adjusting our marketing focus, and
fixing the Virgin Atlantic, jewellery and outbound tour operators businesses.
In spite of the very challenging trading environment, we expect a marginal
improvement in second-half earnings over the corresponding period last year.
`In the meantime, we actively continue to look for new growth opportunities both
locally and abroad. We believe our expertise in inbound tour operations,
financial services and destination retail is eminently exportable, and that
there is also scope for expanding our recently established presence in the
tourist destination food sector.`
For further information call
Tommy Edmond, CEO, 011-339-6044
Issued by du Plessis Associates on behalf of Tourism Investment Corporation.
dPA contact Kathy du Plessis Tel : +27 11 728 4701,
Fax: +27 11 728 2547, Mobile: 083 266 5847 or e-mail: tourvest@dpapr.com
website : www.tourvest.co.za
Date: 22/02/2005 12:16:16 PM
Produced by the JSE SENS Department
