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Wilderness cashes in from US dollar appreciation

Publishing Date : 12 November, 2018

Author : REARABILWE RAMAPHANE

Strong performance of the United States Dollar (USD) during the larger part of 2018 as well as vibrant American market has bolstered Wilderness Safari‘s business  for the half year period ended August 2018 , a report from the Pan African tourism outfit has revealed.


 The report released last week signals strong sets of unaudited financial results for Wilderness Safaris Limited. The Botswana Stock Exchange Limited (BSE) listed Safari camp operator has registered an impressive 11 percent hike on revenue to close H1 2018 at P780 million following significant improvement in yields as well as 3 percent rise in bed nights sold to 104 855 compared to 101 404 in the six-month ended August 2017. 


This revenue for the represented 65percent of the company’s total sales compared to 64 percent of the corresponding period last year. This, according to the company which recently experienced significant shifts in board directorship, is amongst other factors attributable to the successful launch of the newly built Mombo as well as political stability in Kenya. During the period under review the company matched its best ever occupancy rate of 71 percent, normalised for Governors’, or 67 percent overall, which is the highest recorded since the acquisition of Governors’.  


The appreciation of the US Dollar since the beginning of the financial year and a strong US market is further underscored as key factor that provided tailwinds to significant growth.
Wilderness Safaris which operates one of the luxurious camping and hospitality sites in Africa, including in Botswana’s elite tourist attraction places has a strong American market base. A significant share of the company’s booking transactions are actually done in US dollar currencies. These factors saw Wilderness’ 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 

Trading profit margin increased from 26 percent to 30 percent.  Keith Vincent, Group Chief Executive Officer (CEO) says the increase in profit margins mirrors from the impact on the bottom line of the strong demand for bed nights 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” explained Vincent in the results report. 


The Group chief further shared that Wilderness Group’s collection period is primarily from February to July, thus 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% 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” reads an extract of the brief commentary by the company directors. 


Wilderness also notes that 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. Financial figures suggest that Impairment losses amounted to P5.2 million and relate to the impairment of Mombo Trails Camp which seats at P3.5 million and a damaged aircraft which cost the company P1.5 million.


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 Wilderness’s 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. 


Vincent says the balance is defensive in nature.  In addition, figures highlight that cash balances and less overdrafts, have increased by 83 percent 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 as well as dividends payment. 


In terms of segmental performance all geographical segments, other than South Africa, reported increases in segment profit. The two main drags on South Africa were additional corporate recoveries as well as a slow-down in the road transfer business due to the impact on tourism following the water crisis in Cape Town. Wilderness Safari’s footprint stretches across Africa currently doing business in seven countries operating over 40 camps. 

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