Thursday, 7 November 2019

Thomas Cook (India) Ltd declares results for Q2 FY20


 Consolidated Revenue from Operations grew 6% to Rs. 17 Bn.* from Rs. 16 Bn. for the period

 Consolidated PBT of Core Businesses (Travel & Forex) increased 20% to Rs. 163 Mn. as against Rs. 136  Mn. for Q2 FY20

The Thomas Cook India Group continues to be financially strong with cash and bank deposit balances of Rs. 10,883 Mn. as of September 30, 2019

 Spin off of the Human Capital business of TCIL including Quess Corp. shares to Thomas Cook India shareholders proceeding as planned; to be completed later this year

Digiphoto Entertainment Imaging (DEI), reported revenue of Rs. 1384 Mn. in Q2 FY20 and PBT of Rs. 38 Mn. Entered the lucrative high end Caribbean & Chinese markets signing agreements with three large Atlantis resorts in the Bahamas as well as Universal Studios Beijing

*DEI consolidated w.e.f. March 28, 2019 and hence the Consolidated Results are not comparable

Thomas Cook (India) Ltd. (TCIL), India’s largest integrated travel services company, today announced its financial results for the quarter ended September 30, 2019 against the backdrop of challenging operating environment with continuing weak consumer sentiment impacting the travel segment primarily in the outbound and domestic businesses.

Key Performance Highlights:
   Consolidated Revenue from Operations grew 6% to Rs. 17 Bn.* from Rs. 16 Bn. for the period

 Consolidated PBT of Core Businesses (Travel & Forex) also increased 20% to Rs.163 Mn. as against Rs.136 Mn. on a comparable basis for Q2 FY20

       Consolidated losses* reduced significantly to Rs. -34 Mn. from Rs. -119 Mn.

 Standalone Revenue from Operations decreased by 5% in Q2 FY20 to Rs. 5.3 Bn. from Rs. 5.6 Bn.

   The E-Business segment however, remained unaffected in the current quarter and posted revenue growth of 23% over Q2 FY19.

  The Standalone Financial Services vertical delivered a revenue growth of 9% and an EBIT of 16% led by concerted focus on the retail and prepaid card segment

DEI has been consolidated w.e.f. March 28, 2019 and hence the Consolidated Results are not comparable

Robust Balance Sheet:

The Thomas Cook India Group continues to remain financially strong with cash and bank deposits balances of Rs. 10,883 Mn. as of September 30, 2019. On a standalone basis Thomas Cook India is debt free. This has been made possible using stable and strong cash flows that the Thomas Cook India Group is generating year over year. The Group generates an average annual free cash flow of around Rs. 2,000 Mn.
 Key Development:
   The Mumbai NCLT approved the proposed demerger between TCIL’s Human Capital business including Quess Corp. shares to Thomas Cook India shareholders
 Process progressing as planned, to be completed later this year
  
Highlights of segmental performance Q2 FY20:

Foreign Exchange
Forex segment revenues at consolidated level grew by  4% and EBIT increased by 7%  with sustained retail focus
The Thomas Cook Borderless Prepaid Card (BPC) sales increased by 61% in Q2 FY20
Travel Services
The revenue from operations from the Travel Businesses was impacted on account of:
o    Political unrest and uncertainty in Hong Kong, haze and heat across Singapore and Malaysian peninsula, poor economic sentiment across Europe and UK due to Brexit as well as political disturbances in the Middle East
o    Continued higher domestic & outbound airfares post Jet Airways closure
o    The continuing weak consumer sentiment as well as the negative news around Cox and Kings closure, impacted the travel segment primarily in the B2C outbound and domestic businesses where Standalone Revenue from Operations decreased by 5% in Q2 FY20 to Rs. 5.3 Bn. from Rs. 5.6 Bn. 
  • E-Business revenue growth of 23% on a y-o-y basis
  • The MICE segment reported 4% decrease in revenue
o    Destination Management Specialist (DMS):  
§  India Inbound business was impacted due to reduced charter business volumes but generated income on account of  Service Export from India Scheme (SEIS) of Rs. 291 Mn. for Q2 FY20
§  Private Safaris: (South Africa & East Africa) –both entities reported an increase in topline and a corresponding reduction in losses
§  ATP North America: Witnessed healthy growth in Q2 with demand expected to grow
§  Asian Trails: Muted demand in Thailand, unrest in Hong Kong, lower MICE movements in Vietnam-Cambodia and Australia impacted overall performance
Vacation ownership & resorts business (Sterling Holiday Resorts Limited) Q2 FY20

·         EBITDA/(loss) for Q2 FY20 reduced to Rs. -72 Mn. from loss of Rs. -171 Mn. in Q2 FY19.  EBITDA/(loss) excluding Ind AS 116 is Rs. -137 Mn.
·         Sterling membership sales value grew by 50%
·         Occupancy rate was higher by 5% as against the corresponding quarter of the last fiscal. The ARR has held at Rs. 3,705
·         Expansion of resort-base through an asset-light Management Contract model with new resorts in Guruvayur and Thekkady (Kerala) in this quarter, adding over 150 rooms to inventory
·         Mysore (Karnataka) and Godavari -Konaseema (Andhra Pradesh) to be launched in Q3 and Q4 and will add a further 120 rooms inventory

Performance Highlights of recent acquisitions:

Digiphoto Imaging Services
·         Digiphoto Entertainment Imaging (DEI), one of the world’s leading imaging solutions and services providers, has reported revenue of Rs. 1384 Mn. in Q2 FY20 and EBIT of Rs. 57 Mn.
·         Entered the lucrative high end Caribbean & Chinese markets by signing agreements with three large Atlantis resorts in the Bahamas as well as Universal Studios Beijing
Traveljunkie Solutions Private Limited - “Ithaka” (Thomas Cook India’s strategic investment in travel tech start-up Travel Junkie)
·         For the quarter, over 300 trips booked; 5600 trips planned
·         20 destinations now live on the Ithaka platform with UK, Croatia, Greece among the new destinations
·         Conversion from planning to booking has improved in Q2 FY20 to 16% from 12% in Q1 FY20 with the launch of an automated cart feature in the app where travellers can book all activities that they are planning for themselves

*Ithaka’s financial results have been included as an associate company with effect from March 2019 quarter.

Material Events & Outlook:
·  Innovation and new products-services:
o   Launched ‘TeeCee’ and ‘Ezy’, AI powered chatbots, offering customers a near human experience, for thomascook.in and sotc.in respectively
o   TCIL launched Home Collection Services for its Visa Business, in a focused initiative to empower customers with a two-pronged benefit of convenience and safety
o   TCIL announced the second edition of its Study Buddy program - a focused initiative to catalyze demand and expand its student market-share pan India
o   TCIL & SOTC introduced an array of Autumn & Winter Tours, in order to maximize the potential of this underleveraged season
o   TCIL launched a bucket list of 15 ‘must visit’ gems of India in line with Prime Minister Modi’s message encouraging citizens to travel across the country
o   TCIL launched ‘Undiscovered Antarctica’ in association with National Geographic Expeditions
o   SOTC Travel unveiled its 2019 India Holiday Report. The report revealed insights on the evolution of the Indian traveler across four generations
o   SOTC also introduced a marketing automation tool – to improve targeting and provide personalized products to existing customers basis their past history
o   Asian Trails celebrated 20 years on September 9, 2019. The quarter also saw the launch of its new website www.asiantrails.travel
o   India Network expansion: 
o    TCIL: 6 new Forex outlets opened at Bengaluru Airport and 1 at Delhi Airport; 1 new branch in Delhi, 3 new franchise Gold Circle Partner outlets in Amritsar, Bengaluru and Chennai
o    SOTC: 4 new franchise outlets were opened at Kolkata, Lucknow, Mysore and Surat
o    TCI: 2 new branches opened at Chandigarh and Puducherry 

·  Awards:
o   TCIL won the prestigious ‘Best Travel Agency – India’ award at the 30th Annual TTG Travel Awards 2019
o   TCIL Honored with ‘India Travel Partner of the Year 2018’ Award by SAP Concur for its digital-led achievements in the Business Travel sector
o   TCIL won the ‘Industry Trailblazers Award’ in robotic process automation for processes at the Shared Services Centre from EY & Automation Anywhere
o   SOTC Travel Limited won the Overachiever Award for exceptional service at the 2019 MILT Excellence Awards in the field of MICE
o   SOTC Travel Limited awarded the 2018 MEHK Top MICE Agent Award
o   SOTC Travel Limited received the Top supporting MICE agent award by Sunway Hotels & Resorts India

Management comments:

Commenting on the results, Mr. Madhavan Menon, Chairman and Managing Director, Thomas Cook (India) Ltd., said, “This has been a challenging quarter for the travel industry with the collapse of Jet Airways leading to a surge in airfares, as well as the negative impact on customers and to the entire Indian Travel industry caused by the closure of Cox & Kings.
Globally, the geopolitical unrest in Hong Kong & the Middle East, haze and heat in parts of South East Asia etc. impacted parts of our Outbound and DMS businesses. Also, being a fairly recent event - we continue to monitor the impact at a retail level, of the closure of Thomas Cook UK.

Against this backdrop, the Group managed a credible performance with consolidated revenue from operations growing 6% to Rs. 17 Bn. from Rs. 16 Bn. for the period, while the consolidated PBT of the Group’s Core Travel & Forex businesses increased 20% to Rs.163 Mn. as against Rs.136 Mn. Our Financial Services businesses remained resilient, growing revenue by 4% and EBIT by 7% with sustained retail focus. Our E-Business vertical also performed admirably to post a revenue growth of 23%; as did our African & North American DMS units who registered impressive recoveries during the period.

Looking ahead, given the approval by the Mumbai NCLT on October 10, 2019, the proposed demerger of TCIL’s Human Capital business including Quess Corp shares to TCIL shareholders is proceeding as planned and should be completed later this year. This will be welcomed by stakeholders as it simplifies the group structure and offers both organisations the opportunity to chart their individual future growth paths, in their respective business spaces.”

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