US-China trade war, Brexit put a damper on SA tourism
Airports Company South Africa (Acsa), the largest airport operator in Africa, said yesterday that the ongoing uncertainties in the global economy caused a lot of jitters for both international and domestic travellers.
Chief executive Bongiwe Mbomvu said numbers from Europe declined during the period as Brexit anxieties put pressure on travellers, affecting the viability of some local airlines.
Mbovu said this impacted revenue from commercial activities.
“It has impacted our growth in international and domestic traffic volumes negatively,” Mbovu said. “It will also potentially affect the performance of the GRU consortium and increase the risk of new funding.”
Europe has been in a state of trade and travel turmoil since Britain voted to leave the EU.
Mbovu said this and the US-China trade spark weighed on the global and domestic economies, heightening the risk of a sovereign credit downgrade for South Africa.
She said a downgrade would see state-owned companies such as Acsa suffering.
Acsa reported a 58.9percent profit decline to R227million for the year ending March 31, 2019, from R522m during the corresponding period last year.
However revenue increased 5.6percent to R7.1billion.
The company also managed to reduce its overall debt to R6.6bn after repaying R2.3bn this year.
Mbovu said the weighted average cost of debt now stands at 9.13percent with gearing at 18percent.
But new accounting standards resulted in a higher provision for impaired debts, while changes in the property valuation model also had a negative impact on the profits reported.
“We do our financial statements based in terms of international financial reporting standards, and there is a requirement that we should then value our properties,” said acting chief financial officer Lindani Mukhudwani.
“So every year we get independent valuation done on our properties,” said Mukhudwani. “As the economic conditions deteriorate so does the value of our properties. That is simply what we experienced in the current year.”
Acsa said that it also experienced significant cost pressures, specifically in relation to security services, which rose more than 50percent as a result of regulatory amendments and heightened measures implemented during the year.
The key operational challenge during the year was overcoming the delay in the rollout of airport capacity expansion projects.
Mbovu said capacity constraints were mostly felt at Cape Town International Airport and OR Tambo International Airport.
“We needed to introduce heightened security measures at our land sites in compliance with Civil Aviation Authority regulations, because there were a number of threats that were identified,” Mbovu said.
“We also had to introduce larger airport parameters due to land acquisition, especially at the Cape Town International Airport, introduce K-9 units to enhance our land site security, and regionally increase the scope within the security space.”
Even though Acsa flagged R264m in irregular expenditure for the year, down from around R400m the previous year, it received an unqualified audit. Mbovu said the company would continue to strengthen its supply chain management governance and processes.