Download - ANALYST BRIEFING
ANALYST BRIEFING
WEDNESDAY 5WEDNESDAY 5THTH DECEMBER 2007 DECEMBER 2007
GLOBAL TOURISM TRENDS ( 8 months to August 2007 ):
Tourism growth for Europe remains unchanged at 4%
Source: UNWTO / World Travel & Tourism Council (WTTC)
Trends in the Americas currently stand at 4% growth representing 2 percentage points increase from last year
The Middle East recorded an increase of 8% compared to 4% last year
Asia & the Pacific are currently the top global performer recording an increase in international tourism of 10%
Africa recorded a growth of 8%
International Visitor Arrivals for Sub-Saharan Africa (000s)
Sub-Saharan Africa Market Share of Africa Total Demand 2007
TOURISM TRENDS: SUB-SAHARAN AFRICA
ARRIVAL TRENDS WITHIN ZIMBABWE
Arrivals into Zimbabwe grew by 24% compared to the same period last year
Foreign arrivals into Zimsun hotels grew 17.8% compared to 12 months
ARRIVAL TRENDS WITHIN ZIMSUN HOTELS
Below is an indication of the increase of international business into Zimsun properties
Italy (129% UK (21%) Americas (40%) USA (62%) China (139%) South Korea (131%) Zambia (71%) Mozambique (85%)
OPERATING ENVIRONMENT: LOCAL
The Group has been resilient in operating in a price controlled environment, however there has been a negative impact on:
• supplies (reliance on imports)• utilities• staff costs
Decreased revenue resulting in increased borrowings
The Group continues to work with the National Incomes and Pricing Commission ( NIPC) to review prices
LOCAL OPERATIONS:Product Improvement
The Group continues to invest in utilities namely power and water
Primary Power has been augmented through generators at major hotels
New boreholes were installed, others upgraded to the requirements at major hotels
The Group is on track with current refurbishments including:
–Upgrading of facilities at CPM–Beitbridge Restaurant–250 seater Conference Center, Great Zimbabwe Hotel
LOCAL OPERATIONS:Expansion
The Group has new hotels planned in
- Beitbridge
- Eastern Highlands
-Harare
- Vic Falls
- Kariba An additional 832 rooms are planned by
2012
LOCAL OPERATIONSTraining & Development
To support growth strategy into Africa HTA will be upgraded to tertiary level status based in Zimbabwe
Satellite facilities will be implemented in West Africa
East Africa will come on board once capacity increases
‘How May I Serve You?’ (HMISY) service culture has been implemented in Zimbabwe and will be replicated throughout Africa
OPERATING ENVIRONMENTREGIONAL: S.A.
Inflation as measured by CPIX remains stable closing at 6.7% at the end of September 2007 in comparison to 5.1% in September 2006
The South African Rand appreciated by 12% against the United States Dollar to close at 1USD to ZAR6.91 at the end of September 2007
Interest rates increased by 2 percentage points over the period with a prime lending rate closing at 13.5% at the end of September 2007
REGIONAL OPERATIONS The Grace continues to perform above the Group’s
expectations, with occupancies growing from 58% to 72% in this period
The Grace was also nominated as:
One of the top 10 hotels in Africa and the Middle East (Conde Nast traveller awards)
Best hotel in Johannesburg ( Travel & Leisure 2007) Top 10 in Africa & Middle East (Travel & Leisure 2007) Positioning The Grace favorably as blueprint for
regional growth initiatives
The Group continues to footprint into Sub-Saharan The Group continues to footprint into Sub-Saharan AfricaAfrica
The following figures depict the confirmed and signed The following figures depict the confirmed and signed mandates for targeted rooms in the region:mandates for targeted rooms in the region:
700 rooms by 2008700 rooms by 2008 2000 rooms by 20092000 rooms by 2009 1500 rooms by 20101500 rooms by 2010
REGIONAL GROWTH
2010 SOCCER WORLD CUP STRATEGY
All the Group’s Victoria Falls rooms have been approved for the FIFA family.
The Group is now dealing with MATCH for the final details
The Grace in Rosebank has also been contracted to provide accommodation complete month of the tournament
FINANCIAL RESULTS FOR THE 12 MONTHS ENDED
30 SEPTEMBER 2007
GROUP PERFORMANCE
Revenue for the 12 months amounted to $1.859 billion, an increase of 45 369% on last year.
Local operations contributed 81% to Group turnover from 84% in the prior reporting period, whilst regional operations contributed 19% to group turnover from 16% in the prior reporting period.
TRENDS IN REVENUE DRIVERS: GROUP OCCUPANCIES AND SALES
MIX
12 MONTHS TO 30 SEPTEMBER 2007
18 MONTHS TO 30 SEPTEMBER 2006
Average Occupancy 40% 35%
Foreign Mix (% of total rooms sold)
38% 36%
Contribution of foreign revenue to total revenue
44% 40%
TRENDS IN REVENUE DRIVERS: GROUP ROOMNIGHTS SOLD
12 MONTHS TO SEPTEMBER
2007
12 MONTHS TO SEPTEMBER
2006
% CHANGE
Domestic 167 146 140 511 19%
Foreign 103 064 86 759 19%
Total 270 210 227 270 19%
YIELD ANALYSIS: LOCAL HOTELSSEPTEMBER
2007SEPTEMBER
2006% CHANGE
Average Revenue per Local Guest
$4 380 794 $11 348 38 502%
Average Revenue per Foreign Guest
$4 732 083 $12 209 38 659%
Revenue Multiple (Foreign Guest vs Local Guest)
1.1x 1.1x
YIELD ANALYSIS: LOCAL HOTELS vs. THE GRACE
SEPTEMBER 2007
SEPTEMBER 2006
% CHANGE
Average Revenue/ Guest: Local Hotels
$4 498 424 $11 619 38 616%
Average Revenue/ Guest: The Grace
$18 672 043 $24 986 74 986%
Revenue Multiple (The Grace vs. Local Hotels)
4.15x 2.15x
YIELD ANALYSIS: LOCAL HOTELS vs. THE GRACE
The growth in the Revenue Multiple derived from comparing the average revenue per guest at The Grace and average revenue per guest in the local hotels from 2.15 times to 4.15 times in the current year reflects the negative impact that the regulation of selling prices has had on the Group’s local hotels.
GROUP PERFORMANCE
Net operating costs increased by 41 415% over expenses to $1.294 billion.
The Group posted an operating profit of $564 billion in comparison to $970 million achieved in the prior reporting period. This represents an increase of 58 078%.
The rate of growth in net operating costs is however lower than the rate of growth in revenue of 45 369%.
GROUP PERFORMANCE
Net profit amounted to $361.8 billion. However, the net profit margin declined to
19% from 23% achieved in light
Basic earnings per share amounted to $563 per share (56 311 cents per share), representing a 36 339% increase over basic earnings per share of the prior reporting period.
FINANCIAL POSITION Non-current assets stood at $10.2 trillion in
comparison to $41.3 billion in the prior reporting period as a result of re-valuation of PPE.
The investment in Dawn Properties was valued at $3 trillion according to the equity method of accounting for investments in associates.
The market value of the Group’s shareholding in Dawn Property however amounted to $3.7 trillion at 30 September 2007
CASHFLOW
The Group generated $427 billion from operating activities.
$283 billion was utilized in investment activities, namely construction of the Beitbridge restaurant and the refurbishment Crowne Plaza Monomotapa facilities
Although selling prices of services were controlled in the last quarter of the financial year, the Group managed to close the period in a positive net cash position.
OUTLOOK
Continued operational challenges due to shortages of commodities and erratic supply of utilities
The Group will remain focused on containing the impact of the above adverse effects by utilizing cash generated to maintain adequate stock levels
The increase in foreign arrivals to the Group’s hotels is however expected to continue as a result of the representation in international and regional markets.
STRATEGIC GOALS1.To grow rooms in Sub-Saharan Africa to at least
4000 within 5 years
2.To develop and maintain the highest quality of skills and competencies
5.To establish brand leadership
4.To achieve a market capitalization of USD1 billion
3.To be listed on a regional bourse in the next 3 years