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ANALYST BRIEFING

ANALYST BRIEFING. WEDNESDAY 5 TH DECEMBER 2007. GLOBAL TOURISM TRENDS ( 8 months to August 2007 ):. Tourism growth for Europe remains unchanged at 4%. Trends in the Americas currently stand at 4% growth representing 2 percentage points increase from last year.

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ANALYST BRIEFING

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  1. ANALYST BRIEFING WEDNESDAY 5TH DECEMBER 2007

  2. GLOBAL TOURISM TRENDS ( 8 months to August 2007 ): • Tourism growth for Europe remains unchanged at 4% • Trends in the Americas currently stand at 4% growth representing 2 percentage points increase from last year • The Middle East recorded an increase of 8% compared to 4% last year • Asia & the Pacific are currently the top global performer recording an increase in international tourism of 10% • Africa recorded a growth of 8% Source: UNWTO / World Travel & Tourism Council (WTTC)

  3. TOURISM TRENDS: SUB-SAHARAN AFRICA International Visitor Arrivals for Sub-Saharan Africa (000s) Sub-Saharan Africa Market Share of Africa Total Demand 2007

  4. ARRIVAL TRENDS WITHIN ZIMBABWE • Arrivals into Zimbabwe grew by 24% compared to the same period last year • Foreign arrivals into Zimsun hotels grew 17.8% compared to 12 months

  5. ARRIVAL TRENDS WITHIN ZIMSUN HOTELS • Below is an indication of the increase of international business into Zimsun properties • Italy (129% • UK (21%) • Americas (40%) • USA (62%) • China (139%) • South Korea (131%) • Zambia (71%) • Mozambique (85%)

  6. OPERATING ENVIRONMENT: LOCAL • The Group has been resilient in operating in a price controlled environment, however there has been a negative impact on: • supplies (reliance on imports) • utilities • staff costs • Decreased revenue resulting in increased borrowings • The Group continues to work with the National Incomes and Pricing Commission ( NIPC) to review prices

  7. LOCAL OPERATIONS:Product Improvement • The Group continues to invest in utilities namely power and water • Primary Power has been augmented through generators at major hotels • New boreholes were installed, others upgraded to the requirements at major hotels • The Group is on track with current refurbishments including: • Upgrading of facilities at CPM • Beitbridge Restaurant • 250 seater Conference Center, Great Zimbabwe Hotel

  8. LOCAL OPERATIONS:Expansion • The Group has new hotels planned in - Beitbridge - Eastern Highlands -Harare - Vic Falls - Kariba • An additional 832 rooms are planned by 2012

  9. LOCAL OPERATIONSTraining & Development • To support growth strategy into Africa HTA will be upgraded to tertiary level status based in Zimbabwe • Satellite facilities will be implemented in West Africa • East Africa will come on board once capacity increases • ‘How May I Serve You?’ (HMISY) service culture has been implemented in Zimbabwe and will be replicated throughout Africa

  10. OPERATING ENVIRONMENTREGIONAL: S.A. • Inflation as measured by CPIX remains stable closing at 6.7% at the end of September 2007 in comparison to 5.1% in September 2006 • The South African Rand appreciated by 12% against the United States Dollar to close at 1USD to ZAR6.91 at the end of September 2007 • Interest rates increased by 2 percentage points over the period with a prime lending rate closing at 13.5% at the end of September 2007

  11. REGIONAL OPERATIONS • The Grace continues to perform above the Group’s expectations, with occupancies growing from 58% to 72% in this period The Grace was also nominated as: • One of the top 10 hotels in Africa and the Middle East (Conde Nast traveller awards) • Best hotel in Johannesburg ( Travel & Leisure 2007) • Top 10 in Africa & Middle East (Travel & Leisure 2007) • Positioning The Grace favorably as blueprint for regional growth initiatives

  12. REGIONAL GROWTH • The Group continues to footprint into Sub-Saharan Africa • The following figures depict the confirmed and signed mandates for targeted rooms in the region: • 700 rooms by 2008 • 2000 rooms by 2009 • 1500 rooms by 2010

  13. 2010 SOCCER WORLD CUP STRATEGY • All the Group’s Victoria Falls rooms have been approved for the FIFA family. • The Group is now dealing with MATCH for the final details • The Grace in Rosebank has also been contracted to provide accommodation complete month of the tournament

  14. FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 30 SEPTEMBER 2007

  15. GROUP PERFORMANCE • Local operations contributed 81% to Group turnover from 84% in the prior reporting period, whilst regional operations contributed 19% to group turnover from 16% in the prior reporting period. Revenue for the 12 months amounted to $1.859 billion, an increase of 45 369% on last year.

  16. TRENDS IN REVENUE DRIVERS: GROUP OCCUPANCIES AND SALES MIX

  17. TRENDS IN REVENUE DRIVERS: GROUP ROOMNIGHTS SOLD

  18. YIELD ANALYSIS: LOCAL HOTELS

  19. YIELD ANALYSIS: LOCAL HOTELS vs. THE GRACE

  20. YIELD ANALYSIS: LOCAL HOTELS vs. THE GRACE • The growth in the Revenue Multiple derived from comparing the average revenue per guest at The Grace and average revenue per guest in the local hotels from 2.15 times to 4.15 times in the current year reflects the negative impact that the regulation of selling prices has had on the Group’s local hotels.

  21. GROUP PERFORMANCE • The rate of growth in net operating costs is however lower than the rate of growth in revenue of 45 369%. • The Group posted an operating profit of $564 billion in comparison to $970 million achieved in the prior reporting period. This represents an increase of 58 078%. Net operating costs increased by 41 415% over expenses to $1.294 billion.

  22. GROUP PERFORMANCE • Basic earnings per share amounted to $563 per share (56 311 cents per share), representing a 36 339% increase over basic earnings per share of the prior reporting period. Net profit amounted to $361.8 billion. However, the net profit margin declined to 19% from 23% achieved in light

  23. FINANCIAL POSITION • The investment in Dawn Properties was valued at $3 trillion according to the equity method of accounting for investments in associates. • The market value of the Group’s shareholding in Dawn Property however amounted to $3.7 trillion at 30 September 2007 Non-current assets stood at $10.2 trillion in comparison to $41.3 billion in the prior reporting period as a result of re-valuation of PPE.

  24. CASHFLOW • $283 billion was utilized in investment activities, namely construction of the Beitbridge restaurant and the refurbishment Crowne Plaza Monomotapa facilities • Although selling prices of services were controlled in the last quarter of the financial year, the Group managed to close the period in a positive net cash position. The Group generated $427 billion from operating activities.

  25. OUTLOOK • Continued operational challenges due to shortages of commodities and erratic supply of utilities • The Group will remain focused on containing the impact of the above adverse effects by utilizing cash generated to maintain adequate stock levels • The increase in foreign arrivals to the Group’s hotels is however expected to continue as a result of the representation in international and regional markets.

  26. STRATEGIC GOALS To grow rooms in Sub-Saharan Africa to at least 4000 within 5 years • To develop and maintain the highest quality of skills and competencies • To be listed on a regional bourse in the next 3 years • To achieve a market capitalization of USD1 billion • To establish brand leadership

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