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HCI’S R300M TICKET TO RIDE

01 Jun Transport

Much attention remains focused on ivestments made by Cape-based empowerment company Hosken Consolidated Investments (HCI) in the so-called sexy media (e-tv) and gaming (Tsogo Sun) sectors. Understandably then not too much focus is being placed on the group’s investment in well known Cape commuter service Golden Arrow Bus Services. But it would seem – from results just released – that Golden Arrow is hitting all the targets set by HCI. In fact, HCI is pumping capital into Golden Arrow to ensure the bus company can capitalise on its dominant position in Cape Town. HCI holds 100% of Golden Arrow, having acquired the company for around R250 million three years back. At that time Golden Arrow looked well out of place in HCI’s portfolio, which was then dominated by media and technology investments. Many sceptics also believed Golden Arrow was a tired business, and that HCI would battle to eke acceptable returns from the business. That’s hardly been the case. Turnover for Golden Arrow was up 11% to R739 million in the year to end March, while profits came in 13% higher at R121 million. Although passenger numbers were up only 5% on last year, profit growth was secured by management keeping a lid on expenses. HCI chairman Marcel Golding said that since the group acquired Golden Arrow in 2004 the company had purchased 169 new buses and refurbished another 126 buses. This means that almost a third of the fleet has been replaced or revamped – something that has cost HCI R195 million. Clearly HCI is confident of further profit growth from Golden Arrow by committing to acquire another 110 new buses in the year ahead. Golding said that by December 2007 Golden Arrow would have acquired and refurbished a total of over 400 buses at a cost of over R300 million. He reckoned this commitment to the upgrading of the bus service of Cape Town is a key component in the company positioning itself as the primary supplier of scheduled bus transportation for the city for the foreseeable future. If Golden Arrow can offer a service that is reliable, safe, affordable and comfortable there is no reason why the bus company cannot bolster passenger number markedly in the years ahead – notwithstanding the intense competition from the taxi sector. Golding also dropped a hopeful hint around contracts. He hoped the Department of Transport would regularise Golden Arrow’s short term contract with a more sustainable one during the current financial year. If Golden Arrow is doing such a good job, why not?

Source: Cape Business News