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Dolphin Cove looks overseas to drive returns

Published:Friday | May 4, 2012 | 12:00 AM

Marine attraction Dolphin Cove anticipates that overseas expansion will enhance its return on equity beyond the current 20 per cent.

It signifies the growth potential for the Jamaican-based attraction, which nearly doubled its December yearend pre-tax profit to some $204 million. Dolphin Cove operates attractions in Ocho Rios, Montego Bay and Hanover.

The operation's return on equity has vacillated over the years, jumping to 20.1 per cent last year from from 12.5 per cent in 2010. Its historical return on equity hit a high of 37 per cent in 2006 then splashed to a low of 7.2 per cent in 2007.

Stafford Burrowes, the chairman and chief executive officer, said even a small overseas operation would offer large income potential for the operation which earned total operating revenues of J$1.1 billion at yearend December 2011.

"Given the above and our proven ability to conceive and execute in terms of establishing and operating marine parks, we are now looking for opportunities outside of Jamaica as well. Small parks can make large contributions to growth and enhance our overall return on equity, and by being overseas we can expand and diversify," said Burrowes in statements accompanying the annual report.

The annual report did not list Caribbean territories of interest and the Financial Gleaner was unable to reach Burrowes immediately.

The company raised $240 million and issued 80 million shares in December 2010 to list on the Junior Stock Market. Dolphin Cove initially announced plans to expand overseas in its prospectus but gave no indication of the size or impact on operations.

Burrowes however remains bullish on Jamaica and its tourism growth prospects.

"We have great faith in the tourism industry in Jamaica and expect it to remain the base of our stability and success, but believe we would be wise to leverage our strengths to seek opportunities in similar and nearby markets that we understand as well," said Burrowes in statements accompanying the company's financials.

Dolphin Cove, in a first-time analysis of the potential impact on its revenues, said the 2011 results were bolstered from the additional passengers from the Falmouth cruise ship pier that opened last year and the contribution of the Hanover Marine Park in its first full year of operations.

During the year, Dolphin Cove also reduced its debt from the equivalent of 40 per cent of equity to 20 per cent.

"Our future growth in Jamaica can come from increases in cruise shipping activity and the number of guests who stay in hotels and, importantly, from continuing to increase our market share of land-based visitors, which is presently less than five per cent," Burrowes said.