01 September 2006
	Financial performance UNITED APPROACH WINS THE DAY By Linda Stafford

"I wish I'd been paid R100 for every time I heard that the company was about to go into liquidation," says CC Africa chief financial officer Leo Scheijde. "In the developing years, the company struggled - it was a long and expensive start-up process as it established itself as a pioneer in ecotourism," he adds. Today, despite the strong rand, the group's distribution capabilities and a resurgence in East African travel have combined to increase turnover for the year to end-June 2006 to R550m and Ebitda (earnings before interest, tax, depreciation and amortisation) to about R35m. Scheijde says the outlook for 2007 is excellent, "with strong revenue growth forecast. And, if the rand stays at R7/US$, gross turnover will exceed R750m and Ebitda will increase to more than R85m, with strong contributions from all divisions." He says profitability is sensitive to exchange-rate movements, but the business model has been amended to cater to a strong-rand environment. "In 2003 and 2004, a business review indicated that profitability could not be achieved at a rate below R8. This threshold has now moved to well below R6." The group is largely ungeared, generating solid cash flows and is well positioned to grow both organically and by acquisition. "It is going to be an exciting time," says Scheijde. Looking back to CC Africa's formative years, he says East Africa, for example, had an established high-volume, low-rate model in which inbound tour operators dictated the nature of the product. CC Africa's approach was contrary to this and it set about creating a high-rate, low-volume product to discerning guests. "This process required courage and a not inconsiderable amount of funding as it evolved and distribution channels were established. "We had the backing of the major shareholders and, despite the trials and tribulations of this period, they never lost confidence in the business model." CC Africa's acquisition of tour-operating company Afroventures in 2000 gave it the necessary distribution capabilities to realise its potential. It took a while to bed down the acquisition, but by August 2001 the business was enjoying record occupancies and rates throughout its portfolio. Turnover for the year to June 30 2001 was R180m. But the terrorist attacks of September 11 2001 struck a devastating blow to world tourism. "Business in East Africa was severely affected and CC Africa moved quickly to rationalise its operations and costs ahead of the projected downturn in business," recalls Scheijde. Considerable cost savings were achieved without a single retrenchment in SA.