harvey world travel delivers 30% after tax profit

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ASX announcement
17 August 2004
Harvey World Travel Delivers 30% After Tax Profit Growth
4 cents fully-franked dividend brings full year dividend to 7 cents
Market share growth expected to continue
Harvey World Travel (HWT) today announced it has delivered on its predictions of
consistent double digit growth, generating a net after tax profit of $4.086 million
for the financial year ended 30 June 2004, a 30% increase on the previous
period. Operating profit before tax also grew by 36% to $6.338 million on a
revenue increase of 14%. EBITDA grew 31% to $8 million; similarly, EBIT
improved by 30% to $6.1 million.
On the basis of these strong results and its debt free financial position, the
directors have declared a 4 cents final dividend bringing the full year dividend to
7 cents fully franked.
Revenue increase was driven by growth in average franchisee turnover, increased
market share and new company initiatives.
According to Chairman Norm Fricker, earnings grew faster than revenue due to
the increased productivity of the company’s new franchise model, which is now
structured to grow revenues without increasing fixed costs, and the significantly
improved contribution from in-house wholesaler Harvey Holidays.
“This year’s result demonstrates HWT’s ability to grow the quality, not just the
quantity, of our distribution network. Our incentive-based franchise agreement
has enhanced buying power and improved automation throughout the network,
driving revenue growth while reducing costs,” he said.
“We have also been successful in developing distribution through a number of
other channels. This includes the launch of our new Corporate Travel business
(CT Partners) that, with a sales distribution network exceeding $200 million, is
forecast to increase network distribution by 14% per annum.”
Growth in market share
During the year, HWT grew its market share largely due to its new incentivebased
franchise model, which generates incremental income for franchisees that
support Harvey World Travel priorities.
The introduction of a number of technology advances has reduced transaction
costs and improved margins within the network. They included Customer
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Relationship Management, Management Information systems and an in-house
ticketing unit.
The franchise network and CT Partners will also benefit from the creation of an
internet operating platform, gained via HWT’s acquisition of an 11% shareholding
in Webjet Limited. In the next financial year, Directors expect the advantages of
online fares system, a ticketing robot and a next generation travel services
aggregation platform to flow throughout the distribution network.
Local and global growth opportunities
Commenting on future growth opportunities, Managing Director Barry Mayo said:
“We expect to see a resurgence of the Australian travel market following a couple
of lean years caused by external factors. Having survived the inevitable industry
consolidation during these years, and with a lean, efficient business model and
leading edge technology, HWT is well positioned for dynamic growth in Australia.”
“Following the strong performance from our South African subsidiary, we are also
convinced that our franchise system is transportable and ready for expansion into
other international markets.”
Outlook
Mr Mayo expects industry numbers to hold firm in the next financial year, with
HWT continuing to drive for greater distribution through additional retail outlets.
“We expect to see an increase in both franchise and ancillary revenues and
profitability. Our first half year projections remains strong: we are on target to
achieve double digit NPAT growth on the previous half year,” he said.
ends
Further information:
Barry Mayo Doug Macdonald
Managing Director, Harvey World Travel Capital Public Relations
02 8565 5105 0424 255 959
Notes to Editor:
Harvey World Travel
Harvey World Travel is the largest single brand travel franchise group in the
Southern Hemisphere and is Australia’s leading full-service travel franchise
providing international and domestic retail travel services from more than 500
franchised agencies throughout Australia, New Zealand and Southern Africa.
There are 350 shops Australia-wide.
Harvey World Travel established in 1951, listed on the ASX in December 1999
and has an annual network turnover exceeding $1.7 billion.