WIL - Wilderness Holdings Limited - Unaudited interim financial results for the
21 Nov 2011
WIL
WIL - Wilderness Holdings Limited - Unaudited interim financial results for the
six months ended 31 August 2011
Wilderness Holdings Limited
(Incorporated in Botswana on 23 February 2004)
(Registration number 2004/2986)
(Registered as an external company in South Africa on 27 November 2009)
(Registration number 2009/022894/10)
ISIN: BW0000000868
Share code: WIL
("Wilderness Holdings" or "the Company" or "the Group")
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2011
* Bednight sales increased by 5% to 103,965;
* Revenue per bednight, in source currency, has increased by an average
of 8%;
* Reported Group turnover has increased by 8% to BWP576 million;
* Source currency turnover has increased in all currencies other than the
Namibian dollar;
* Gross profit margin has been maintained, in constant currency terms;
* HEPS is down 46% in report currency, but up 2% in constant currency;
* Cashflow generated from operations of BWP120 million, up 5% on comparative
period;
* Group net cash position improved to BWP228 million, compared with BWP161
million at the comparable date.
Condensed Group Statements of Comprehensive Income
Unaudited
Unaudited Six months Audited
Six months ended Year
ended 31 August ended
31 August 2010 28 February
2011 % Restated 2011
P'000 change P'000 P'000
Revenue 576 329 8% 535 162 948 607
Cost of sales (318 959) (290 787) (526 837)
Gross profit 257 370 5% 244 375 421 770
Other gains 4 905 5 962 12 995
Operating expenses (202 372) (178 207) (359 184)
Foreign exchange gains 1 513 3 445 1 836
Operating profit for
period before items
listed below (EBITDA) 61 416 (19%) 75 575 77 417
Impairment loss on
property, plant and
equipment (11 449) (3 454) (4 085)
Depreciation and
amortisation (23 600) (24 872) (43 707)
Profit on sale of
business - 29 542 29 219
Goodwill impairment - (1 468) (8 312)
Operating profit 26 367 75 323 50 532
Net finance costs (2 624) (3 631) (6 925)
Unrealised foreign
exchange (loss)/gain on
loans (3 343) 3 105 7 974
Share of associate
company profit/(loss) 1 015 (2 731) 59 437
Profit before taxation 21 415 (70%) 72 066 111 018
Taxation (9 349) (22 537) (18 895)
Profit for the period
from continuing
operations 12 066 49 529 92 123
Loss for the period from
discontinuing operations - (132) -
Profit for the period 12 066 49 397 92 123
Other comprehensive
income/(loss) 3 192 855 (3 054)
Exchange differences on
translating foreign
operations:
Equity holders of the
company 4 477 2 015 (2 757)
Non-controlling interest (346) 254 -
Net investment in foreign
operation (939) (1 414) (297)
Total comprehensive 15 258 50 252 89 069
income for period
Profit/(loss)
attributable to:
Owners of the Company 14 432 51 151 100 033
Non-controlling interest (2 366) (1 754) (7 910)
12 066 49 397 92 123
Total comprehensive
income/(loss)attributable
to:
Owners of the Company 17 970 51 752 96 979
Non-controlling interest (2 712) (1 500) (7 910)
15 258 50 252 89 069
Number of shares issued
(thousands)
- Issued 231 000 231 000 231 000
- Weighted average 231 000 225 833 228 417
- Diluted weighted
average 231 000 231 000 231 000
Earnings per share
(thebe)
- Headline 7,05 13,08 11,05
- Diluted headline 7,05 13,08 10,92
- Basic 6,25 22,65 43,79
- Diluted 6,25 22,65 43,30
Condensed Group Statements of Financial Position
Unaudited
Unaudited As at Audited
as at 31 August As at
31 August 2010 28 February
2011 Restated 2011
P'000 P'000 P'000
ASSETS
Non-current assets 432 650 472 013 440 997
Property, plant and equipment 369 486 367 856 375 732
Goodwill 30 877 38 173 31 022
Investment and loans in associates 11 909 49 077 18 754
Loans to related parties 558 1 606 1 155
Deferred taxation 19 820 15 301 14 334
Current assets 376 963 310 240 289 769
Inventories 19 009 18 214 17 053
Receivables and prepayments 88 686 98 611 72 197
Current tax receivable 12 021 9 647 14 105
Bank balances and cash 257 247 183 768 186 414
TOTAL ASSETS 809 613 782 253 730 766
EQUITY AND LIABILITIES
Equity attributable to owners
of the Company 335 300 689 350 368
321
Stated capital 153 703 153 703 153 703
Foreign currency translation
reserve 16 774 16 891 13 236
Common control reserve (73 324) (72 949) (73 324)
Other non distributable reserve 10 239 16 624 22 158
Retained income 227 929 186 420 234 595
Non-controlling interest (7 652) (6 097) (17 419)
Total equity 327 669 294 592 332 949
Non-current liabilities 133 707 137 233 141 138
Borrowings 104 631 112 337 114 071
Deferred taxation 29 076 24 896 27 067
Current liabilities 348 237 350 428 256 679
Trade and other payables 314 590 314 431 222 513
Current tax liabilities 4 640 12 868 345
Bank overdrafts 29 007 23 129 33 821
Total liabilities 481 944 487 661 397 817
Total equity and liabilities 809 613 782 253 730 766
Net asset value per share (thebe) 145 130 152
Net tangible asset value per share
(thebe) 132 114 138
Condensed Group Statements of Changes in Equity
Unaudited
Unaudited Six months Audited
Six months ended Year
ended 31 August ended
31 August 2010 28 February
2011 Restated 2011
P'000 P'000 P'000
Opening balance
Merger accounted 332 949 235 038 235 038
Change in accounting policy - 5 219 5 219
Restated opening balance 332 949 240 257 240 257
Minority portion of dividend paid (670) (79) (164)
Dividends paid (19 868) - -
Total comprehensive income for
the period 15 258 50 252 89 069
As previously reported 15 258 46 249 89 069
Change in accounting policy - 4 003 -
Issue of shares - 124 000 124 000
Expenses related to issue of shares - (16 358) (16 358)
Common control business combination - (103 480) (103 855)
reserve
Closing balance 327 669 294 592 332 949
Commentary
The directors of Wilderness Holdings Limited are pleased to announce the
unaudited interim financial results for the six months ended 31 August 2011.
Trading environment
Market conditions have remained adverse in the trading period. In the business'
primary source markets of the US and Europe there is still much uncertainty. In
addition, during the period to 31 August 2011, local currencies have
strengthened compared with the prior period and this has negated the positive
impacts of real growth achieved.
Outside our view that the local currencies were too strong during the trading
period, the business has aligned itself to prevailing conditions in the source
markets. We do not believe that these conditions are likely to improve in the
medium term. We have therefore focussed efforts on re-aligning the business to
these market conditions and are pleased to report that we have been able to
achieve this without detracting from quality of service.
Aside from the negative impacts of the volatile exchange rates, we believe that
the business is well positioned to prosper in the current market environment.
As a market leader, and given our strong balance sheet, we have taken the
opportunity to capitalise on the current depressed industry conditions by
continuing our investment programme of maintaining and expanding our asset base
as well as increasing our marketing spend. We believe that this strategy will
benefit the Group in the long term.
Performance
Taking into consideration the operating environment, we are satisfied with our
performance and achievements in the period under review.
Turnover has grown by 8%. Total bednight sales increased by 5% from 98,573 to
103,965. Performance in the high yielding products has been particularly
gratifying, with sales increasing by 11%. It is also satisfying to note that
sales in the lower-yielding Zambian and Zimbabwe products increased by 41% and
28% respectively. Unfortunately, the effects of these increases have been
partially offset by reduced demand for our Namibian products which recorded
sales 14% lower than those of the prior year. This volume growth has been
complemented by improved revenue per bednight, in source currency terms,
averaging 8%.
While the business is fixed cost intensive, gross profit management plays an
important role in the Safari Consultancy business. It is pleasing to note that
we are maintaining near prior year margins of 44.7% (2010: 45.7%) overall.
Fixed costs have been impacted by inflationary pressures which run at between 5%
and 8% in the regions in which we operate. However, included in the current
period's costs are a 2.2% increase attributable to additional marketing
initiatives relating to programmes we have launched to enhance the brand, and
adjustments (new business etc) of 2.8%. Normalising for these brings fixed costs
increases in line with the target range of 6% to 8%.
EBITDA was down 18.7%, largely due to the impact of the exchange rate on the
business.
Net finance costs have reduced by BWP1 million to BWP2,6 million. The BWP6,4
million turnaround in unrealised foreign exchange losses (gains in the prior
period) relates to the revaluation of foreign currency denominated loans.
Profit before taxation has reduced by 70% to BWP21 million. The effective rate
of tax has increased from 31% to 43%, reflecting the impact of non-taxable
capital profits in the prior period, as well as the partial non-recognition of
certain deferred tax assets on current year losses. Profit after tax for the
period was therefore BWP12 million, down from BWP49 million (BWP20 million
without capital profits) in the prior period.
The Group continues to generate cash, in spite of difficult market conditions,
capital expenditures amounting to BWP26 million, and the payment of a dividend
amounting to BWP20 million. The result is that the Group's net cash position was
BWP228 million, up from BWP153 million at the year end and compared with BWP161
million at the previous half-year.
For management purposes, the business has recently adopted reporting in constant
currency. This illustrates the business' real performance relative to prior year
by translating current period source currencies at prior year rates. Constant
currency reporting is needed to separate the management of these two important
aspects of the business, namely real performance and exchange rate impact.
For the first six months, the ZAR and BWP have traded approximately 10% and 5%
respectively stronger than prior year. This had a negative impact on the results
for the first six months. However, we have seen significant reversal at the
beginning of the third quarter after the local currencies depreciated by up to
15% against the USD.
Constant currency adjustments to reported results indicate that turnover has
grown by 8%, gross profit margins are up marginally on prior year levels of
45.9% and EBITDA has increased by 5.2%. HEPS has increased by 2%.
Progress
In spite of the challenging business environment the Group continues to innovate
in a number of important respects. These include:
* We continue to make progress in implementing our 4Cs sustainability platform.
An existing camp in Botswana has been retro-fitted with a 100% solar-power
installation and another is pending. We believe that the latter will be one of
the largest installations of its kind in southern Africa. Our integrated report
for the year ended 28 February 2011 has received favourable responses from
investors and the trade, as well as receiving three international awards;
* We continue to invest in our people and to re-organise roles and
responsibilities. We have made important innovations in training and quality
improvement and these are positioning the Group well for growth in the future;
* We have re-designed the flying model for our Botswana operations, placing more
emphasis on scheduled circuits. This will improve efficiencies considerably;
* We have re-worked the business model for the Namibian operation which is under
negative pressures. The results of this re-working will reflect in future
performance, and;
* We continue innovating in brands, products and communications.
Dividend
As was stated in the prospectus issued prior to the group listing, due to the
annual cash flow cycle of the business an interim dividend has not been
declared. It is anticipated that, in the event that a dividend is declared, this
will be in the form of a final dividend declared in May each year. Subject to
the operating results, financial position, investment strategy, capital
requirements and other factors, Wilderness group has adopted a dividend policy
of maintaining a dividend cover of between two and three times net profit after
tax.
Outlook for the remainder of the year
The ongoing unsettled nature of world economies, particularly those in Europe,
is expected to persist for the remainder of the year and is likely to continue
tempering demand. Nonetheless, our booking sheets suggest a slow recovery in
demand for our products, even including those in Namibia. Price increases will
exert upward pressure on yields and the recent devaluation of the ZAR and BWP
(by 13%), if maintained, will result in improved performance for the remainder
of the year.
The reversal of the trends of strong local currencies (BWP and ZAR notably) post
31 August 2011 will benefit our earnings for the remainder of the financial
year. However, we caution that should the USD get too strong against these
currencies this may place our products at a pricing disadvantage to those of our
competitors who price their products in local currencies.
Prospects
Given the many innovations that we have made in recent years, we are optimistic
about future prospects. Our strong balance sheet and brands also mean that we
are in an excellent position to grow the business, especially when market
conditions improve. Regardless, we need to be mindful that, even if the
situation in Europe improves, the austerity measures imposed on those economies
will temper growth for a longer period of time. Strategies to mitigate this will
be employed and the business will remain agile to adapt to a continually
changing environment.
Condensed Group Statements of Cash Flow
Unaudited
Unaudited Six months Audited
Six months ended Year
ended 31 August ended
31 August 2010 28 February
2011 Restated 2011
P'000 P'000 P'000
Cash flow from operating activities
Profit before depreciation,
amortisation, impairments, interest
and tax 61 416 75 575 77 417
Adjustment for non-cash items (9 163) (5 826) (781)
Changes in working capital 67 648 44 234 1 079
Cash generated from operations 119 901 113 983 77 715
Net finance costs (2 624) (3 631) (6 925)
Taxation paid (4 812) (13 500) (24 811)
Net cash generated from operating
activities 112 465 96 852 45 979
Net cash used in investing
activities (10 204) (105 477) (40 453)
Net cash (used in)/generated from
financing activities (28 899) 105 972 84 726
Net increase in cash and cash
equivalents 73 362 97 347 90 252
Unrealised exchange gains/(losses)
on foreign cash balances 2 285 (631) (1 582)
At the beginning of the period 152 593 63 923 63 923
Cash and cash equivalents at end
of period 228 240 160 639 152 593
Segmental Information
Safari Consultancy
Unaudited
Unaudited Six months Audited
Six months ended Year
ended 31 August ended
31 August 2010 28 February
2011 Restated 2011
P'000 P'000 P'000
Revenue 546 688 534 287 938 075
Reportable segment income (loss)
before tax 10 828 21 616 10 420
Total assets 299 087 255 520 214 457
Finance and Asset Management
Revenue 34 734 24 875 50 645
Reportable segment income (loss)
before tax 11 244 16 619 33 682
Total assets 680 362 576 119 699 262
Reconciliation of reportable
segment profit to profit before
taxation:
Total profit for reportable
segments
Reversal of impairments not
allocated to a segment
Foreign exchange differences
transferred to equity
Associates' income/(loss)
Profit before taxation
Lodges
Unaudited
Unaudited Six months Audited
Six months ended Year
ended 31 August ended
31 August 2010 28 February
2011 Restated 2011
P'000 P'000 P'000
Revenue 168 627 162 457 288 315
Reportable segment income (loss)
before tax (6 358) 24 784 839
Total assets 489 977 404 584 351 907
Intergroup Eliminations
Revenue (283 926) (284 934) (505 238)
Reportable segment income (loss)
before tax (1 639) - 11 547
Total assets (746 215) (552 621) (608 156)
Reconciliation of reportable
segment profit to profit before
taxation:
Total profit for reportable
segments
Reversal of impairments not
allocated to a segment
Foreign exchange differences
transferred to equity
Associates' income/(loss)
Profit before taxation
Transfers
Unaudited
Unaudited Six months Audited
Six months ended Year
ended 31 August ended
31 August 2010 28 February
2011 Restated 2011
P'000 P'000 P'000
Revenue 110 206 98 477 176 810
Reportable segment income (loss)
before tax 4 160 7 991 (5 204)
Total assets 86 402 98 651 73 296
Total Reportable Segments
Revenue 576 329 535 162 948 607
Reportable segment income (loss)
before tax 18 235 71 010 51 284
Total assets 809 613 782 253 730 766
Reconciliation of reportable
segment profit to profit before
taxation:
Total profit for reportable
segments 18 235 51 284
71 010
Reversal of impairments not 1 226 2 373 -
allocated to a segment
Foreign exchange differences
transferred to equity 939 1 414 297
Associates' income/(loss) 1 015 (2 731) 59 437
Profit before taxation 21 415 72 066 111 018
Notes
Basis of preparation
This interim report complies with International Accounting Standard 34 - Interim
Financial Reporting and the disclosure requirements of the Botswana Stock
Exchange and the JSE Limited.
The interim report has been prepared using accounting policies that comply with
International Financial Reporting Standards. The accounting policies are
consistent with those applied in the financial statements for the year ended 28
February 2011. In the previous financial year, the accounting policy for
aircraft was changed from the revaluation model to the cost model and
accordingly the results for the period ended 31 August 2010 have been restated.
The results for the period ended 28 February 2011 are consistent with those
previously reported.
The effect of the restatement for the period ended 31 August 2010 is as follows:
Correction of prior period error
Correction of error relating to intergroup transactions previously omitted. This
error did not have any impact on profit and loss for the period ended 31 August
2010 but resulted in a restatement of Revenue and Cost of Sales as follows:
Previously
reported Correction Restated
P'000 P'000 P'000
Revenue 574 240 39 078 535 162
Cost of sales 329 865 39 078 290 787
Gross Profit 244 375 - 244 375
Contingent liabilities
Included in the results of the prior year is an amount of BWP29,5 million, being
the capital profit before tax arising on the sale of the assets of Duba Plains
Camp. As announced on 16 August 2010, the underlying transaction has been
concluded and full payment has been received by the group. This transaction is
subject to certain regulatory approvals which have not yet been received. As at
the date of this report, the directors are confident that the remaining
resolutive condition will be fulfilled. Accordingly, the capital profit has been
brought to account and the amount is recorded as a contingent liability until
such time as all necessary regulatory approvals have formally been obtained.
Unaudited
Unaudited Six months Audited
Six months ended Year
ended 31 August ended
31 August 2010 28 February
2011 Restated 2011
P'000 P'000 P'000
Reconciliation between profit
attributable to owners of the
Company and headline earnings
Profit attributable to owners
of the Company 14 432 51 151 100 033
Adjustments
Goodwill Impairment - 1 468 8 312
Surplus on disposal of
operations, investments
and associates - (29 542) (87 975)
Profit on disposal of property,
plant and equipment (4 309) (4 147) (3 766)
Net impairment losses 11 449 5 167 4 085
Tax effects of adjustments (3 244) 5 420 4 541
Minority interest (2 042) 13 -
Headline earnings 16 286 29 530 25 230
Commitments
Capital
Authorised by directors and
contracted for - 15 538 -
Not yet contracted for but
authorised by directors 30 908 7 573 57 708
30 908 23 111 57 708
It is intended to finance capital
expenditure from working
capital generated and existing
borrowing facilities.
Operating leases
Minimum lease payments due
-within one year 15 337 14 654 12 996
- in second to fifth year inclusive 54 413 53 872 49 734
- after fifth year 83 483 93 902 65 185
153 233 162 428 127 915
Six months Six months Six months
ended ended ended
31 August 31 August 31 August
2011 2011 2011
Six months Six months Six months
ended ended ended
Borrowings
Non-current
Interest bearing 123 180 137 834 128 714
Non- interest bearing 4 434 3 727 12 126
Less: current portion of long term (22 983) (29 224) (26 769)
liabilities
104 631 112 337 114 071
New accounting policies adopted
Improvements to IFRS
During the period under review, the Group adopted all the IFRS and
interpretations that were effective and deemed applicable to the Group. None of
these had any material impact on the financial results of the Group.
Revenue
Traditionally the Group earns between 55% and 65% of its revenue in the first
six months of the year. The seasonality is attributed in part to the holiday
season in the American and European markets together with the attraction of the
annual water floods in the Okavango Delta in Botswana.
Unusual items
Other gains include the proceeds from insurance claims of BWP4,3 million (2010:
BWP4,2 million).
Operating expenses in the prior period include an impairment loss on loans
advanced amounting to BWP1,7 million.
The unrealised foreign exchange loss on loans of BWP3,3 million (2010: gain
BWP3,1 million) has been recognised as a result of the restatement of the
Group's USD-denominated loans amounting to USD17,1 million at 31 August 2011
(2010: USD17,9 million). Translation of these loans into Pula for financial
reporting purposes results in an unrealised foreign gain or loss, depending on
the USD to Pula exchange rate on the date of reporting. The loans are serviced
and repaid in USD from USD revenue received by the Group from foreign customers.
There is thus a natural currency hedge on the loans.
Wilderness Holdings Limited
Registered office Plot 1 Mathiba Road Maun BotswanaExternal company
registration number 2009/022894/10
Registered office 373 Rivonia Boulevard Rivonia South Africa
BSE Primary Listing
BSE Sponsor Capital Securities (a member of the Botswana Stock Exchange)JSE
Secondary Listing JSE Sponsor RAND MERCHANT BANK (a division of FirstRand Bank
Limited)
Transfer Secretaries Corpserve Botswana and Computershare Investor Services Pty
Ltd
Directors M McCulloch (Chairman) A Payne (CEO) D de la Harpe (CFO) R
Friedman J Gnodde R Hartmann J Hunt R Marnitz R Polet P Tafa G
Tollman M Tollman M ter Haar D van Smeerdijk K Vincent J ZeitzCompany
secretary Desert Secretarial Services (Pty) Limited and Julia Swanepoel
Botswana
21 November 2011
www.wilderness-group.com
Date: 21/11/2011 12:11:22 Produced by the JSE SENS Department.
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