Wilderness half-terms bode well for the rest of 2018


All odds seem to be on the side of eco-tourism outfit after the Group produced an excellent half year performance, matching its best ever occupancy rate of 71 percent, normalised for Governors’ Camp, or 67 percent overall, which is the highest recorded since the acquisition of Governors’. Further, Wilderness completed the successful launch of the newly built Mombo, and was excited by the political stability in Kenya as well as the appreciation of the US Dollar since the beginning of the financial year, and a strong US market provided tailwinds to significant growth

This saw trading profit jump by 26 percent to P235 million in spite of just one percentage point increase in total available bed nights (capacity) to 156 788. The Group posted 36 percent increase in headline earnings per share (HEPS).

Revenue increased by 11 percent to P780 million, following significant improvement in yields and the 3 percent rise in bednights sold to 104 855. In 2017, bednights sold were 101 404.

Trading profit margin increased from 26 percent to 30 percent. Wilderness Chief Executive Officer (CEO) Keith Vincent said this reflects the impact on the bottom line of the strong demand for bednights and the improved utilisation of the Group’s assets. The impact on revenue of the depreciation of the local currencies was negligible, largely because of the adoption of IFRIC 22 which requires that foreign currencies be converted at the earlier of receipt or service. As the Group’s collection period is primarily from February to July, a substantial portion of revenue was recorded at exchange rates lower than those prevailing last year, as the Pula exchange rate to the US Dollar lagged behind until June 2018. Costs have remained well contained at 7 percent higher than prior year.

Some level of upward pressure is evident in transport costs due to higher fuel prices and greater activity, as well as lease costs (impact of new leases and their accounting smoothing). Staff costs increased marginally higher than inflation, largely because of a slight increase in headcount and higher share-based payments charges, increasing by 34 percent to P3.3 million from P2.4 million. Other gains of P4.5 million include proceeds from insurance claims amounting to P2.1 million and profit on sale of a subsidiary of P2.4 million. Impairment losses amounted to P5.2 million and relate to the impairment of Mombo Trails Camp (P3.5 million) and a damaged aircraft (P1.5 million). In line with the Group’s hedging strategy, forward cover remains at zero percent of calculated forward exposure until, in the opinion of the Board, the Rand fundamentals make cover necessary. Net finance costs were 24 percent higher at P11.7 million (2017: P9.5 million), being a consequence of the increased debt to finance capital investment and acquisitions. The Group’s effective tax rate increased to 25 percent from 14 percent in the prior year, largely due to the recognition in the prior year of a P10 million deferred tax asset in the Governors’ Group.

Capital expenditure amounted to P100 million for the period, continuing with the philosophy to ensure the Group’s properties and assets remain in pristine condition. Approximately P9 million was spent on a temporary camp and one new camp, and P45 million on rebuilding existing camps and one additional aircraft. The balance is defensive in nature. Cash balances, less overdrafts, have increased by 83% to P508 million as a result of strong cash generated from operations amounting to P323 million, offset by an outflow in investing activities of P79 million and loan repayments and a dividend payment of P52 million. The carrying values of the financial assets and financial liabilities approximate their fair value.

According to Vincent, the Group’s strategy continues to focus on investing in African tourism markets that offer authentic wildlife and safari experiences and where Wilderness’s specific ecotourism model can have positive conservation and community impacts.

“Our ecotourism model and our vertical integration is a key differentiator from our competitors and places us at a significant advantage. Our forward occupancy for the rest of the year is expected to at least match that of the prior year,” Vincent added.

The rebuilt camps of Mombo, Chitabe and Serra Cafema (September 2018) have all been successful with positive feedback from the trade. Wilderness new lodge development at Magashi in Akagera National Park, Rwanda, is picking up steam and is expected to be completed in the first quarter of next year.