GROUP PERFORMANCE DASHBOARD 32% Profit increase from $105 000 in - - PowerPoint PPT Presentation

“Business Fundamentals are now Strong”

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UNAUDITED FINANCIAL RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2014

WEDNESDAY 24 SEPTEMBER 2014

GROUP PERFORMANCE DASHBOARD

2% 11% 8%

$13,5m in 2014 $13,2m in 2013 43% in 2014 43% in 2013 $40 in 2014 $40 in 2013 52% in 2014 48% in 2013 $32 in 2014 $36 in 2013

REVENUE ZIMBABWE OPERATIONS OCCUPANCY EBITDA ZIMBABWE OPERATIONS REVPAR GROUP OCCUPANCY GROUP REVPAR

$1,5m in 2014 $1,6m in June 2013

6%

32% Profit increase from $105 000 in H1 ,2013 to a $139 000 in H1,2014

Profit after tax

KEY INTERNATIONAL TOURISM HIGHLIGHTS

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• 1. According to the WTTC (World Travel and Tourism Council)

Economic Impact Report in 2014: Ø Travel and Tourism growth is expected to outpace growth in

• ther economic quadrants by 4.3%

Ø Travel and Tourism investment is forecasted to increase by 5.6%. Ø China is expected to grow the most among G20 countries in 2014. Ø Globally, the tourism sector is expected to generate around 6.5 million new jobs.

• 2. The highest growth in bookings was recorded in international flight

reservations from Ø Asian source markets (+8.3%) Ø Americas (+8%).

TOURISM OVERVIEW -ZIMBABWE

Ø Average hotel occupancy level in Zimbabwe for the period declined by 17% from 46% to 38%. (Zimbabwe Tourism Authority(ZTA), May Report ) Ø Average bed occupancy declined by 20% from 35% in the first half of 2013 to 28% in the first half of 2014 due to a decline in

• ccupancy from Victoria Falls, Midlands and Beitbridge

markets. Ø Main business for 2013 was from the referendum and elections across the country.

ECONOMIC OVERVIEW -ZIMBABWE

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• 1. The economic environment in Zimbabwe is calling for
• rganizations to be creative and innovative.
• 2. RTG has established revenue programs which are now making

meaningful contribution to RTG revenues and these include-: v Stay Now Pay later payment platform v RTG Virtual v RTG Mobile

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ECONOMIC OVERVIEW -ZIMBABWE

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3. The RTG system is now geared to absorb most of the economic pressures and fiscal policy pronouncements as a result of -: ¡

Ø Cost reduction strategies that commenced in 2012. Ø ISO 9001 certification , RTG rewrote its business systems and processes and these were audited and certified by the Standards Association of Zimbabwe (SAZ) Ø Business process re-engineering that resulted in centralization of key functions including the accounts , sales and procurement departments Ø Re-looked at our systems for continuous improvement in our service delivery – Kaizen Ø Innovations department where there is new idea generation and the assessment of existing business models for their relevancy. ¡ ¡ ¡

TOURISM OVERVIEW -ZIMBABWE

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• 1. There was a 1% decline in tourist arrivals from 404,282 in Q 1,

2013 to 388,732 in Q1, 2014. First quarter arrivals into Zimbabwe : 2009 to 2014.

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0" 50000" 100000" 150000" 200000" 250000" 300000" 350000" 400000" 450000" 2009" 2010" 2011" 2012" 2013" 2014"

TOURIST ARRIVALS : RTG vs NATIONAL

SOURCE RTG ARRIVALS H1,2014 % VARIANCE FROM H1,2013 NATIONAL ARRIVALS H1,2014 % VARIANCE FROM H1,2013 % VARIANCE RTG vs NATIONAL AFRICA 7 657 2% 745 566 (1%) 1% EUROPE 5 318 43% 60 530 13% 30% AMERICAS 2 717 4% 30 373 18% 14% ASIA 2 980 51% 16 370 (61%) 112% AUSTRALIA & OCEANIA 621 (17%) 11 575 16% 33% TOTAL ARRIVALS 19 293 16% 864 414 (1%) 17% OCCUPANCY 43% 42% 2%

Ø Overall, RTG experienced a growth of 16% from international tourist arrivals in the period January to June 2014, whereas the national average was a decline of 1%.

ARRIVALS INTO RTG HOTELS :2014 VS 2013

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1. Arrivals from Africa experienced a growth of 2% from January to June 2014. 2. Arrivals from Europe experienced a growth of 43%. u The major source markets were France, Germany, Holland and the United Kingdom. 3. North America contributed a growth of 3% in the period under review. 4. Asia contributed a positive growth of 51%, in the first half this year. u The main contributors of Asian business were China, Japan and India,

FOREIGN ARRIVALS INTO RTG HOTELS ¡

REGION H1,2014 H1,2013 H1,2012 VARIANCE 2014 vs 2013 VARIANCE 2014 vs 2012

AFRICA 7 657 7 525 5 785 2% 32% EUROPE 5 318 3 722 2 662 43% 100% AMERICAS 2 717 2 624 948 3% 187% ASIA 2 980 1 979 1 741 51% 71% AUSTRALIA & OCEANIA 621 746 392

• 17%

58% TOTAL 19 293 16 596 11 528 16% 68% RTG FAIR SHARE 25% 25% 25% RTG MARKET SHARE 28% 27% 23% 4% 22%

YEAR TO DATE RTG ARRIVALS JANUARY TO JUNE 2014 vs. 2013

Business

• Fundamentals
• are
• now strong
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OUTCOMES OF BUSINESS RE-ENGINEERING

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• 1. COST REDUCTION

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WHAT WE SAID WHAT WE DID PROJECTION TO FY2014

• 1. Undertake

retrenchment. Ø Retrenched 8 head

• ffice staff at a cost of

$130 000. Ø Payback period is 13 months. Ø Retrenched 60 employees at Rainbow Towers Hotel in August 2014 at a cost of $700 000. Ø Payback period is 9 months. Ø Beyond FY, we will achieve a monthly saving of $86 000.

• 2. Reduce procurement

costs of 90% of total goods by $300 000 or 10%. Ø Reduced cost of procured goods and services during the first half by $223 000 or 13%. Ø Reduction of $550 000 or 15% by year end.

• 3. Reduce interest

burden from 11% to 7% by year end. Ø Interest rate at 11% YTD Ø In negotiations to restructure long term loans at low interest rate. Ø Targeting to close at effective interest rate of 9% for the year.

OUTCOMES OF BUSINESS RE-ENGINEERING

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• 2. FUNDING GAP

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WHAT WE SAID WHAT WE DID PROJECTION TO FY2014

1. Zero funding gap by year end 2014. Ø Reduced funding gap from $9,4m in December 2012 to $2,4m as at 30 June 2014. Ø Zero funding gap by year end.

OTHER COST REDUCTION AREAS 2014

COST ¡AREA ¡ ¡ H1,2014 ¡ ACTUALS ¡ % ¡DROP ¡ ¡ H1,2014 ¡vs ¡ H1, ¡2013 ¡ ACTUALS ¡ ¡H1,2013 ¡ ACTUALS ¡ % ¡DROP ¡ ¡FY, 2013 ¡vs ¡ FY,2012 ¡ ACTUALS ¡ OPERATING ¡COSTS ¡PER ¡ ROOM ¡ ¡ 6% ¡of ¡ turnover ¡

• ­‑ ¡ ¡

6% ¡of ¡ turnover ¡ ¡ WATER ¡ ¡ $84 ¡000 ¡ 19% ¡ $104 ¡000 ¡ 57% ¡ ELECTRICITY ¡ ¡ $474 ¡000 ¡ 13% ¡ $546 ¡000 ¡ 13% ¡ TELEPHONE ¡ ¡ $200 ¡000 ¡ 4% ¡ $209 ¡000 ¡ 12% ¡ PRINTING ¡AND ¡STATIONERY ¡ $27 ¡000 ¡ 61% ¡ $69 ¡000 ¡ 12% ¡ STAFF ¡TRAINING ¡ ¡ $29 ¡000 ¡ 69% ¡ $94 ¡000 ¡ 59% ¡ SUBSCRIPTIONS ¡ $34 ¡000 ¡ 27% ¡ $47 ¡000 ¡ 9% ¡ TRAVELLING ¡ $71 ¡000 ¡ 15% ¡ $84 ¡000 ¡ 10% ¡ REPAIRS ¡AND ¡ MAINTENANCE ¡ ¡ $364 ¡000 ¡ 17% ¡ $440 ¡000 ¡ 2% ¡ EQUIPMENT ¡LEASE ¡ $64 ¡000 ¡ 16% ¡ $76 ¡000 ¡ 14% ¡

OUTCOMES OF BUSINESS RE-ENGINEERING

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• 3. BUSINESS SYSTEMS AND PROCESSES ¡

WHAT WE SAID WHAT WE DID PROJECTION TO FY2014

1. Align processes to business model. Ø ISO 9001 certification by Standards Association of Zimbabwe(SAZ). Ø Rewrote business processes in line with the adopted business model. Ø Training on BOPs. Ø YTD GSI index at 89% . Ø Full roll out of BOPs to all hotels. Ø Achieve average guest satisfaction index of 95% by FY 2014. 2. Centralize strategic functions for efficiency and cost reduction. Ø Centralized Accounts , Sales , Procurement and Payroll. Ø Implemented Procurement Workflow. Ø Continue to explore further efficiencies. 3. Improve Business Information technology functions by establishing a Business Information Systems department. Ø Centralized I.T infrastructure. Ø Business Information loss risk reduced by 60% due to centralized back-up systems. Ø Upgraded network and fiber backbone. Ø Licensing costs reduced by $42 000. Ø 80% Micros point of sale roll out for hotels. Ø To further reduce risk by 80% by FY 2014. Ø 100% Micros point

• f sale roll out to all

hotels. Ø 100% upgrade of network and fiber backbone.

OUTCOMES OF BUSINESS RE-ENGINEERING

4. REVENUE GENERATION CAPABILITY

WHAT WE SAID WHAT WE DID PROJECTION TO FY2014

1. Establish stronger revenue generation capabilities Ø Acquired business worth $2,5million to replace once-off major conferences that took place in H1,2013. (CISSA,REFERENDUM and ELECTIONS). Ø 58% increase in e-commerce contribution from $241 000 in H1 2013 to $380 000 in H1 2014. Ø Between January and August 2014; E-commerce contribution was $540 000. Ø Achieve new business worth $6,25m for the full year 2014. Ø Achieve full year revenue

• f $32,6 million.

Ø Achieve full year E-commerce revenue contribution of $800 000. 2. Increase contribution

• f foreign

revenues Ø Average occupancy for A ‘Zambezi River Lodge increased by 17% from 41% in H1,2013 to 48% in H1, 2014. Ø To achieve a full year

• ccupancy increase of

40% over FY,2013 for A ’Zambezi River Lodge.

OUTCOMES OF BUSINESS RE-ENGINEERING

4. REVENUE GENERATION CAPABILITY Cont’d

WHAT WE SAID WHAT WE DID PROJECTION TO FY2014

• 3. Rejuvenation of the

South Africa office Ø Revenue contribution grew by 52% generating $1,284, 000 against $844 000 in same period last year. Ø Contribution to total revenues grew by 50% from 6% in H1,2013 to 9% in H1,2014. Ø To achieve an

• verall

contribution to total revenue of 11% by FY, 2014 from 6% in FY, 2013.

OUTCOMES OF BUSINESS RE-ENGINEERING

4. REVENUE GENERATION CAPABLITY Cont’d : PROPRIETARY PROGRAMS

PROGRAM H1,2014 H1,2013 VARIANCE

STAY-NOW-PAY-LATER $52,107 $11,511 353% RTG VIRTUAL $456 000 gross $119 000 gross 283% RTG MOBILE $131 151 n/a GROUP PROMOTIONS $3,3m $3m 10%

UPDATE ON

• 1. RTG has increased its geographical

spread in Zimbabwe.

• 2. Rainbow Beitbridge Hotel (RBBH) will

take advantage of activities around Beitbridge including the expansion of the border post.

• 3. Going into 2015, the momentum will

spurn the hotel towards break even for the year.

RTG PERFORMANCE

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INCLUDING RAINBOW BEITBRIDGE HOTEL EXCLUDING RAINBOW BEITBRIDGE HOTEL

u The market penetration strategy for Rainbow Beitbridge Hotel resulted in the above dilution.

RTG

% room nights 16% growth Occupancy 43% RevPAR $32 ADR $74

RTG

% room nights 6% growth Occupancy 45% RevPAR $35 ADR $77

FINANCIAL RESULTS

US$’ 000 30 JUNE 2014 30 JUNE 2013 % MOVEMENT Revenue 13,467 13,230 2% Cost of sales (4,769) (4,437)

• 7%

Gross profit 8,698 8,793

• 1%

Operating expenses (7,171) (7,149) 0% EBITDA 1,527 1,644

• 7%

Depreciation (858) (764)

• 12%

Profit from operations 669 880

• 24%

Finance expense (978) (851)

• 15%

(Loss)/profit before tax (309) 29

• 1164%

Income tax 448 183 146% Profit after tax from cont. ops 139 212

• 34%

Loss from discontinued operations

• (107)

100% Profit for the period 139 105 33%

INCOME STATEMENT for the half year ended 30 June 2014

US$’ 000 30 JUNE 2014 30 JUNE 2013 % MOVEMENT Revenue 12,905 13,230

• 2%

Cost of sales (4,517) (4,437)

• 2%

Gross profit 8,388 8,793

• 5%

Operating expenses (6,694) (7,149) 6% EBITDA 1,694 1,644 3% Depreciation (784) (764)

• 3%

Profit from operations 910 880 3% Finance expense (802) (851) 6% Profit before tax 108 29 272%

INCOME STATEMENT for the half year ended 30 June 2014 – before Rainbow Beitbridge Hotel

Ø Operating expenses excluding RBBH is 6% reduction compared to prior year.

PROFITABILITY TREND 2009 TO 2014

(7,000,000) (6,000,000) (5,000,000) (4,000,000) (3,000,000) (2,000,000) (1,000,000)

• 1,000,000

2,000,000

2009 2010 2011 2012 2013 2014

PROFIT AFTER TAX TREND

Half Year Full Year

REVENUE MIX 2013 & 2014

6,525,316 48% 3,716,567 28% 2,847,438 21% 377,609 3%

2014 ¡

6,402,068 48% 3,241,377 25% 3,073,292 23% 512,984 4%

2013 ¡

Other ¡Operated ¡ Departments ¡ Rooms ¡ Food ¡& ¡Beverages ¡ Conference ¡& ¡ BanqueQng ¡ Other ¡Operated ¡ Departments ¡ Conference ¡& ¡ BanqueQng ¡ Food ¡& ¡Beverages ¡ Rooms ¡

OPERATING PERFORMANCE INDICES

30 JUNE 2014 30 JUNE 2013 Staff costs as a % of revenue 42.6% 35.8% EBITDA Margin 9% 12% Interest Rate on Short term borrowings 15.8% 16.6% Interest on Long-tem borrowings 9.2% 9.2% Interest Cover 1.2 times 2.4 times

Ø Staff costs as a percentage of turnover excluding RBBH and retrenchment at 31.5%. Ø Interest cover to grow 3 times FY, 2014.

Impact of Retrenchment & RBBH

Description Excluding RBBH Including RBBH Variance Movement 30-Jun-14 30-Jun-14 (US$’000) (US$’000) (US$’ 000) % Revenue 12,905 13,467 (562) (4%) EBITDA 1,694 1,527 167 10% Profit/(loss) before tax 108 (309) 417 386% Retrenchment 130 130

• Adjusted PBT

238 (179) 417

STATEMENT OF FINANCIAL POSITION as at 30 June 2014

30 June 2014 US$’000 30 June 2013 US$’000 Assets Non-current assets 38,943 36,317 Current assets 12,483 10,837 Assets in disposal group classified as held for sale

• 1,690

Total assets 51,426 48,844 Equity and Liabilities Shareholders equity 16,843 15,851 Non-current liabilities 21,579 20,570 Current liabilities 13,004 10,937 Liabilities directly associated with assets in disposal group – held for sale 1,486 Total equity and liabilities 51,426 48,844

Ø Non current assets grew by $2,6 million. Ø Total liabilities dropped by $2 million. Ø Total liabilities at 67%

• f total assets.

Ø Funding gap closed at $2.9m down from $7.4m last year. Ø Gearing 58% down from 59%

EQUITY & DEBT TREND TO 2014

¡2,771 ¡ ¡ ¡18,472 ¡ ¡ ¡23,197 ¡ ¡ ¡24,530 ¡ ¡ ¡23,873 ¡ ¡ ¡23,487 ¡ ¡ ¡18,595 ¡ ¡ ¡17,404 ¡ ¡ ¡17,014 ¡ ¡ ¡11,269 ¡ ¡ ¡16,788 ¡ ¡ ¡16,843 ¡ ¡ ¡-­‑ ¡ ¡ ¡ ¡ ¡5,000 ¡ ¡ ¡10,000 ¡ ¡ ¡15,000 ¡ ¡ ¡20,000 ¡ ¡ ¡25,000 ¡ ¡ ¡30,000 ¡ ¡

2009 (G:13%) 2010 (G:51%) 2011 (G:58%) 2012 (G:69%) 2013 (G:59%) H1,2014 (G: 58%)

Total ¡Debt ¡ Shareholders ¡Equity ¡

¡

Ø Gearing ¡is ¡projected ¡to ¡close ¡the ¡year ¡on ¡52% ¡compared ¡to ¡59% ¡ ¡ ¡ ¡ ¡ ¡ ¡at ¡31 ¡December ¡2013. ¡ ¡

CASHFLOW STATEMENT for the half year ended 30 June 2014

CASHFLOW 30 JUNE 2014 US$’000 30 JUNE 2013 US$’000 Cash generated from operations after working capital movements 1,439 546 Net finance costs (978) (851) Income Tax paid

• Cash (outflow)/inflow from operations

461 (305) Cash used in investing activities (1,400) (1,178) Financing (used)/raised (406) 3,297 (Decrease)/increase in cash & cash equivalents (1,414) 1,814 Cash & cash equivalents at beginning of period 3,022 (1,199) Cash & cash equivalents at end of period 1,608 615

PERFOMANCE INDICES 2014 2013 % Growth OCCUPANCY ¡ 56% ¡ ¡ 51% ¡ ¡ 10% ¡ ADR ¡ ¡ $75 ¡ ¡ $83 ¡ ¡ 10% ¡ REVPAR ¡ $42 ¡ ¡ $42 ¡ ¡ ¡ REVENUES ¡ $8,8m ¡ ¡ $8,2 ¡ ¡ 7% ¡

TRADING UPDATE : JULY-SEPTEMBER 2014 vs SPLY

OUTLOOK REVENUE GROWTH FULL YEAR 2014

PERFOMANCE INDICES 2014 2013 % Growth OCCUPANCY ¡ 51% ¡ ¡ 47% ¡ ¡ 9% ¡ ADR ¡ ¡ $81 ¡ ¡ $83 ¡ ¡ 2% ¡ REVPAR ¡ $41 ¡ ¡ $39 ¡ ¡ 5% ¡ REVENUES ¡ $31,5m ¡ ¡ $29.3 ¡ ¡ 8% ¡

THANK YOU.

CONTACT DETAILS

¡ NAME ¡ ¡ ¡ OFFICE ¡ ¡ CONTACT ¡ Tendai ¡Madziwanyika ¡ ¡ Chief ¡ExecuOve ¡Officer ¡ ¡ Tendai.Madziwanyika@rtg.co.zw ¡ 0772 ¡572 ¡311 ¡ Napoleon ¡Mtukwa ¡ Finance ¡Director ¡ ¡& ¡ Company ¡Secretary ¡ ¡ Napoleon.Mtukwa@rtg.co.zw ¡ 0772 ¡128 ¡101 ¡