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AFRICAN SUN: Analyst Briefing 23 June 2010

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AFRICAN SUN: Analyst Briefing 23 June 2010

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African Sun, analyst briefing - presentation of Interim Results, 23 June 2010 ...

African Sun, analyst briefing - presentation of Interim Results, 23 June 2010

Highlights

33% Increase in RevPAR from $28 in September 2009 to $37

Occupancy better than prior year closing at 40% from 29% same period last year

Cost of Sales improves to 37% from 38% in H2 2009

$1m savings in operating expenses since September 2009

EBITDA margin recovers from minus 9% in 2009 to breakeven.

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  • 1. H1-2010 Interim Results “GROWTH THROUGH PARTNERSHIPS” 23 June 2010 1600Hrs CAT
  • 2. Market Overview: Global  • International tourism gaining momentum after a challenging 2009 due to the Global Financial Crisis • UNTWO forecasts international tourist arrivals to grow by 3% to 4% in 2010 • Volcanic ash resulted in significant losses globally • WTTC states that nearly US$5bln lost as a result of this disruption. • Economic impact on Africa and the Middle East from the one week was a GDP loss of US$591 million • Drop in Industry rooms pipeline due to lack of funding Troutbeck Resort, Nyanga, Zimbabwe • Overall occupancy still depressed
  • 3. Market Overview: Zimbabwe   • Low liquidity and high borrowing costs but reduced cost of borrowing to 17% from 38%. • 36% RevPAR growth since September 2009 • High operating costs but expecting 19% savings compared to last year • Increasing political stability in the country resulting in revival of Zimbabwe as a destination • Return of tour series business as Elephant Hills Resort, Victoria Falls, Zimbabwe evidenced by confirmed bookings after ITB Germany and Indaba Travel Shows in March and May respectively this year
  • 4. Market Overview: Ghana • Foreign arrivals on the increase • Highest ADR and RevPAR of $187 and $148 respectively in the group Nigeria • Lagos and Abuja markets remain the highest yield markets and accommodation demand continues to grow. • Yields to increase as we add rooms in the growth cities • Hotels undergoing repositioning South Africa The Lakes Hotel & Conference Centre, Benoni, • South Africa greatly affected by the South Africa Global Financial Crisis • Expected to rebound with the 2010 FIFA World Cup
  • 5. Highlights H1 2010  • 33% Increase in RevPAR from $28 in September 2009 to $37 • Occupancy better than prior year closing at 40% from 29% same period last year • Cost of Sales improves to 37% from 38% in H2 2009 • $1m savings in operating expenses since September 2009 • EBITDA margin recovers from minus 9% in 2009 to breakeven. Amber Tinapa, Calabar, Nigeria
  • 6. 2010 Focus: Cash flow Protection & Growth • RevPAR growth • Robust business model • Profitable fee based growth • Concluding recapitalisation and reduce borrowing costs • Reduce fixed costs The Kingdom At Victoria Falls, Zimbabwe • Working capital efficiencies
  • 7. Refurbishment  • Mock rooms completed – Crowne Plaza Monomotapa – Holiday Inn Harare – Holiday Inn Bulawayo – Caribbea Bay Resort – Great Zimbabwe • Electro Mechanical refurbishment progressing well • Rooms refurbishment to commence in October 2010 • IHG compliance due to Holiday Inn worldwide re-branding Artist’s Impression: Restaurant, Holiday Inn Gaborone, Botswana
  • 8. Benefits of Refurbishment • Ability to improve yields (RevPAR) to regional benchmarks • Cost efficiencies will significantly improve • Command a greater market share • Increased global competitiveness Crowne Plaza Monomotapa, Harare, Zimbabwe • Meeting global trends in hotel design New Look Standard Room which will ultimately increase revenue base
  • 9. Pipeline Summary  • Six hotels with a total 754 rooms coming on board in the next 12 months as follows: – West Africa - 5 Hotels (Management Contracts) – Botswana – 1 hotel (Lease) • West Africa remains the area of regional expansion focus • Royal Chundu – Disagreed on commercial terms at pre-opening stage. – Have disengaged from this partnership The Victoria Falls Hotel, Victoria Falls Zimbabwe
  • 10. Business Model Product 2002 24 Resorts 44 City Hotels 32 Lodges
  • 11. Business Model  Geographic 2002 6 Zimbabwe 94 Mozambique
  • 12. Business Model  Deal Type 2002 30% Leases Owner 70% operator
  • 13. FINANCIAL  REVIEW 6 MONTHS ENDED 31 MARCH 2010 Gaborone
  • 14. Financial highlights: Income Statement Trends  31 March 2010 31 March 2009 %  2009  %  Change H2 Change Revenue $ 26 055 908 13 619 733 91 21 616 405 21 Cost of Sales $ (9 718 520) (3 827 956) 154 (8 275 448) 17 COS % 37 28 9 38 (3) Gross Profit $ 16 337 388 9 791 777 67 13 340 957 22 Operating costs $ (16 365 959) (8 943 345) 83 (17 388 770) (6) EBITDA $ (28 571) 848 432 (103) (4 047 813 ) 99 EBITDA margin % ‐ 6 ‐ (19) ‐ ROCE % (1.1) 1.2 ‐ (13) ‐ EPS ‐ cents (0.04) 0.08 ‐ (0.25) ‐ Occupancy % 40 29 38 33 21 ADR $ 93 87 7 90 3 RevPAR $ 37 25 48 28 32 • Revenue on an upward trend • Cost ratios improving – savings in excess of $1m realized since September 2009
  • 15. Financial Highlights: Breakeven (BE) RevPAR *Represents full year ** Represents both full year and forecast • BE RevPAR improves as yields and cost position improve • Forecast full year RevPAR at $42 compared to BE RevPAR of $37 to September 2010
  • 16. Cost Ratios & Cost Reduction March 2010 H2 2009 % Change Target COS 37% 38% ‐3% 30% Overheads to Revenue Payroll 23% 35% ‐34% 20% Rent & rates 10% 9% 11% 10% R & M 4% 5% ‐20% 3% Central Costs 12% 19% ‐37% 7% Other 18% 20% ‐10% 11% Total Overheads to  67% 88% ‐24% 51% revenue • Improvement attributable to increase in revenues and cost reduction in spite of depressed occupancies • Central costs include non-operating overheads • Current structures adequate to support rooms growth without a corresponding increase in costs
  • 17. Financial Highlights: RevPAR Performance • Ghana remain resilient • Zimbabwe shows consistent growth driven by strong performance in city hotels • South Africa almost flat with growth expected during and after 2010 FIFA World Cup • Nigeria to improve with the addition of rooms in Lagos
  • 18. Financial Highlights: Other KPIs March Sept % March % Sept* Matrix 2010 2009 Change 2009 Change 2010 Occupancy % 41 32 28 27 52 43 Zimbabwe ADR $ 73 69 6 63 16 77 RevPAR $ 30 22 36 18 67 33 Occupancy % 40 38 5 40 ‐ 44 South Africa ADR $ 108 106 2 105 3 110 RevPAR $ 43 40 8 42 2 48 Occupancy % 79 70 13 72 10 79 Ghana ADR $ 187 187 ‐ 161 16 189 RevPAR $ 148 131 13 116 28 150 Occupancy % 24 15 60 20 20 27 Nigeria ADR $ 95 116 (18) 101 (6) 105 RevPAR $ 23 18 28 20 15 28 Occupancy % 40 31 29 29 7 44 Group ADR $ 93 90 3 87 3 95 RevPAR $ 37 28 32 25 12 42 *forecast • Group ADR on the rise to match regional rates • Zimbabwe achieves 36% growth in RevPAR since September 2009 • Group occupancy up 11% percentage points from September 2009
  • 19. Financial highlights: Zimbabwe sales mix  Mar F10 Sept  F09 Foreign 18% 15% Regional 15% 12% Local 67% 73% A single foreign arrival  Foreign ADR $ $122 $110 worth 1.5x and 2 x   Regional ADR $ $83 $83 regional and local arrivals Local ADR $ $54 $58 • Resort hotels to drive ADR and RevPAR growth as foreign arrivals increase.
  • 20. Financial highlights: Revenue contribution and business model Revenue distribution Rooms distribution • City Hotels continue to drive Revenue and Zimbabwe still the biggest contributor • Fee income to increase with the addition of rooms
  • 21. Financial Position and Funding: Funding approach Total $35  million Approval by the shareholders • $10m Rights Offer • $15m long term debt • $10m Private Placement
  • 22. Financial Position and Funding 31 March  • $2.5m in cash and $4.1m in  Cashflow 2010 undrawn facilities $ • $10m Rights offer at the beginning  Cash used in  operations (3,710,898) of the year Cash used in  • Secured $15m long term debt investing (869,438) • Cost  of  borrowing  down  to  17%  Financing from 38% in September 2009 Issue of  shares 9,613,869  • Cost of borrowing to further drop  to 11% with introduction of long  Decrease in  borrowings ‐ long term (57,111) term debt ‐ short term (2,545,404)  • $10 Private placement in abeyance  Increase in  due to market conditions cash 1,602,256 Cash at beginning of period 937,582  Cash at end of period 2,539,838 
  • 23. Financial Position and Funding: Balance sheet 30 Sept 09 31 Mar 10 • Stronger balance sheet moving forward. US$ US$ Assets • Assets impaired by $2,9m Long term assets 37,221,062 32,823,474 Current assets 9,467,009 13,192,757 • Improving working capital in line with improving Zimbabwe operations Total assets 46,688,071 46,016,231 • Current liabilities down by $7m Equity and liabilities Shareholders equity  21,065,668 27,884,436 Non‐current liabilities 6,416,924 4,522,195 Current liabilities 19,205,479 13,609,600 Total equity and liabilities 46,688,071 46,016,231
  • 24. Update on RevPAR growth and outlook *Represents forecasts • ASZL to achieve 50% growth in RevPAR since September 2009 • Ghana to surpass previously set target of $137 by 9% to $150 • RevPAR in South Africa to grow from the current $43 to $48 • Group to achieve 108% growth in Revenue for the year from September 2009
  • 25. Questions and Answer The Lakes Hotel, Benoni, Johannesburg, South Africa Caribbea Bay Resort, Kariba, Zimbabwe