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

“Business Fundamentals are now S tr ong” �

UNAUDITED FINANCIAL RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2014 WEDNESDAY 24 SEPTEMBER 2014 ¡ ¡ ¡

GROUP PERFORMANCE DASHBOARD 32% Profit increase from $105 000 in H1 ,2013 to a Profit after tax $139 000 in H1,2014 11% 2% 6% 8% $13,5m in 52% in 43% in $1,5m in $32 in 2014 2014 2014 $40 in 2014 2014 2014 $1,6m in $36 in 2013 $40 in 2013 $13,2m 48% in 43% in June 2013 in 2013 2013 2013 ZIMBABWE ZIMBABWE GROUP GROUP OPERATIONS OPERATIONS REVENUE EBITDA REVPAR OCCUPANCY REVPAR OCCUPANCY

KEY INTERNATIONAL TOURISM HIGHLIGHTS ¡ 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 other 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 occupancy from Victoria Falls, Midlands and Beitbridge markets. Ø Main business for 2013 was from the referendum and elections across the country.

ECONOMIC OVERVIEW -ZIMBABWE ¡ 1. The economic environment in Zimbabwe is calling for organizations 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 ¡ ¡

ECONOMIC OVERVIEW -ZIMBABWE ¡ 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 ¡ 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 . ¡ 450000" ¡ 400000" ¡ 350000" ¡ ¡ 300000" ¡ 250000" ¡ ¡ 200000" ¡ 150000" ¡ 100000" 50000" 0" 2009" 2010" 2011" 2012" 2013" 2014"

TOURIST ARRIVALS : RTG vs NATIONAL % % % RTG VARIANCE NATIONAL VARIANCE VARIANCE SOURCE ARRIVALS FROM ARRIVALS FROM RTG vs H1,2014 H1,2013 H1,2014 H1,2013 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 & 621 (17%) 11 575 16% 33% OCEANIA 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 ¡ ¡ 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 ¡ YEAR TO DATE RTG ARRIVALS JANUARY TO JUNE 2014 vs. 2013 REGION H1,2014 H1,2013 H1,2012 VARIANCE VARIANCE 2014 vs 2013 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 & 621 746 392 -17% 58% OCEANIA TOTAL 19 293 16 596 11 528 16% 68% RTG FAIR SHARE 25% 25% 25% RTG MARKET SHARE 28% 27% 23% 4% 22%

� � � Business � Fundamentals � are � now strong � ¡ � ¡ ¡

OUTCOMES OF BUSINESS RE-ENGINEERING ¡ 1. COST REDUCTION ¡ WHAT WE SAID WHAT WE DID PROJECTION TO FY2014 1. Undertake Ø Retrenched 8 head Ø Retrenched 60 employees retrenchment. office staff at a cost of at Rainbow Towers Hotel in $130 000. August 2014 at a cost of Ø Payback period is 13 $700 000. months. Ø Payback period is 9 months. Ø Beyond FY, we will achieve a monthly saving of $86 000. 2. Reduce procurement Ø Reduced cost of Ø Reduction of $550 000 or costs of 90% of total procured goods and 15% by year end. goods by $300 000 or services during the first 10%. half by $223 000 or 13%. 3. Reduce interest Ø Interest rate at 11% YTD Ø Targeting to close at burden from 11% to Ø In negotiations to effective interest rate of 9% 7% by year end. restructure long term for the year. loans at low interest rate.

OUTCOMES OF BUSINESS RE-ENGINEERING ¡ 2. FUNDING GAP ¡ WHAT WE SAID WHAT WE DID PROJECTION TO FY2014 1. Zero funding gap Ø Reduced funding Ø Zero funding gap by by year end gap from $9,4m in year end. 2014. December 2012 to $2,4m as at 30 June 2014.

OTHER COST REDUCTION AREAS 2014 COST ¡AREA ¡ ¡ H1,2014 ¡ % ¡DROP ¡ ¡ ¡H1,2013 ¡ % ¡DROP ¡ ¡FY, ACTUALS ¡ H1,2014 ¡vs ¡ ACTUALS ¡ 2013 ¡vs ¡ H1, ¡2013 ¡ FY,2012 ¡ ACTUALS ¡ ACTUALS ¡ OPERATING ¡COSTS ¡PER ¡ 6% ¡of ¡ -­‑ ¡ ¡ 6% ¡of ¡ ROOM ¡ ¡ turnover ¡ 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 ¡ $364 ¡000 ¡ 17% ¡ $440 ¡000 ¡ 2% ¡ MAINTENANCE ¡ ¡ EQUIPMENT ¡LEASE ¡ $64 ¡000 ¡ 16% ¡ $76 ¡000 ¡ 14% ¡

OUTCOMES OF BUSINESS RE-ENGINEERING ¡ 3. BUSINESS SYSTEMS AND PROCESSES ¡ WHAT WE SAID WHAT WE DID PROJECTION TO FY2014 1. Align processes to Ø ISO 9001 certification by Standards Ø Full roll out of BOPs business model. Association of Zimbabwe(SAZ). to all hotels. Ø Rewrote business processes in line with Ø Achieve average the adopted business model. guest satisfaction Ø Training on BOPs. index of 95% by FY Ø YTD GSI index at 89% . 2014. 2. Centralize strategic Ø Centralized Accounts , Sales , Ø Continue to functions for Procurement and Payroll. explore further efficiency and cost Ø Implemented Procurement Workflow. efficiencies. reduction. 3. Improve Business Ø Centralized I.T infrastructure. Ø To further reduce Information Ø Business Information loss risk reduced by risk by 80% by FY technology functions 60% due to centralized back-up systems. 2014. by establishing a Ø Upgraded network and fiber backbone. Ø 100% Micros point Business Information Ø Licensing costs reduced by $42 000. of sale roll out to all Systems department. Ø 80% Micros point of sale roll out for hotels. 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 Ø Achieve new business Ø Acquired business worth $2,5million stronger worth $6,25m for the full to replace once-off major revenue year 2014. conferences that took place in generation H1,2013. (CISSA,REFERENDUM and capabilities Ø Achieve full year revenue ELECTIONS). of $32,6 million. Ø Achieve full year Ø 58% increase in e-commerce E-commerce revenue contribution from $241 000 in H1 2013 contribution of $800 000. to $380 000 in H1 2014. Ø Between January and August 2014; E-commerce contribution was $540 000. 2. Increase Ø Average occupancy for A ‘Zambezi Ø To achieve a full year contribution River Lodge increased by 17% from occupancy increase of of foreign 41% in H1,2013 to 48% in H1, 2014. 40% over FY,2013 for revenues A ’Zambezi River Lodge.