African Sun: FY2011 analyst presentation

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African Sun: FY2011 analyst presentation

  1. 1. F11 – Results30 November 2011 STRENGTHENING THE CORE FOR GROWTH
  2. 2. STRENGTHENING THE CORE: OVERVIEWThe following value recovery initiatives were implemented :• Closure of loss making South Africa hotels• Disposal of Hotelserve• Staff rationalization• Mutual termination of the Holiday Inn Gaborone lease• Refurbishment of selected Zimbabwe hotels has commenced
  3. 3. STRATEGYOur strategy going forward :• Dominating the Zimbabwean market which is proving to be profitable• Continued growth in the region through management contracts• There will be no underlying costs from regional growth
  4. 4. CONTINUING OPERATIONS – MARKET DEVELOPMENTS• Zimbabwe recovery sustained, with foreign and domestic room nights up 14% and 12% respectively• Ghana demand spurred by oil and gas, with RevPAR up 10% year on year• Nigeria occupancies on the recovery, with RevPAR anticipated to improve in 2012
  5. 5. ACCESS– MARKET DEVELOPMENTS• There are 43 flights weekly into Harare.• Emirates will commence flights into Harare in February 2012 which increases capacity into Harare by 5 flights a week. Emirates will be operating an Airbus 330-200.• SAA also introduced an Airbus 330-200 to increase seat capacity into Harare.• There are 28 flights weekly into Victoria falls. Capacity increase of 300% is required in this area
  6. 6. ARRIVALS– AFRICAN SUN HOTELS 2010 2011 Growth Local 112 476 126 118 12% Regional 27 449 31 651 15% International 37 480 46 080 23% Total 177 405 203 849 15%• Tourism growth is forecasted at 37.5% for 2012
  7. 7. BUSINESS COMPOSITION– AFRICAN SUN HOTELS 2010 2011 bodies bodies Local 68% 67% Regional 14% 15% International 18% 18% Total 100% 100%
  8. 8. ZIMBABWE HOTELS – PERFORMANCE OUTLOOKPERFORMANCE HOTEL REVPAR COMMENTS RANKING 2012 US $ 1 The Victoria 5 star 95 • Leisure business- free independent Falls Hotel traveler ,groups and series • Refurbishment in progress 2 Holiday Inn 3 star 65 • Best performing city hotel Harare • 93% Occ in May, closed the year at 58% 3 Crowne Plaza 4 star 64 • Conferencing and corporate business 4 Holiday inn 3 star 62 • Conferencing and corporate Bulawayo business 5 Holiday inn 3 star 55 • Conference and corporate business Mutare • Air conditioners and lift issues are being addressed 6 The Kingdom at 3 star 43 • Groups and series Victoria Falls • Soft refurbishment required
  9. 9. ZIMBABWE HOTELS – PERFORMANCE OUTLOOKPERFORMANCE HOTEL REVPAR COMMENTS RANKING 2012 US$ 7 Great Zimbabwe 3 star 45 • Best performing country Hotel hotel • Conferencing and leisure business • Central hub for NGO conferencing • Major structural issues 8 Troutbeck Resort 3 star 42 • Conferencing and leisure business 9 Elephant Hills 4 star 36 • Regional conferencing e.g. Resort Old Mutual, SADC, African Insurance Organization and leisure business • November 2012 – 55% occupancy, $46 Revpar- best performance in last 3 years
  10. 10. ZIMBABWE HOTELS – PERFORMANCE OUTLOOKPERFORMANCE HOTEL REVPAR COMMENTS RANKING 2012 US$ 10 Express by 3 star 35 • Conferencing and Transit Holiday Inn business Bietbridge • Air conditioning being attended to 11 Carribea Bay 3 star 33 • Conferencing and Leisure resort • Access issues 12 Hwange Safari 3 star 15 • Access issues Lodge
  11. 11. MANAGEMENT CONTRACTS – PERFORMANCE OUTLOOK LOCATION HOTEL Ghana, Accra Holiday Inn Airport Accra Nigeria, Lagos Best Western Ikeja Nigeria, Benin City Best Western Homeville Nigeria, Enugu Nike Lake Nigeria Obudu Mountain Resort• Total revenues from management contracts in 2011 was US$ 778k• Growth in management contract revenues for 2012 will be 20%
  12. 12. FINANCIAL HIGHLIGHTS F11CONTINUING OPERATIONS• Revenue ↑ 22% from same period last year• RevPAR ↑ 21% from same period last year• ADR ↑ 8% from same period last year• Occupancy ↑ 11% to close at 51%• EBITDA profit excluding restructuring costs ↑ 432% to $2.71m• Loss from discontinued operations is $6.6 m
  13. 13. UPDATE ON REVPAR AND GROWTH OUTLOOK 2010 2011 Growth *2012 Forecast GrowthRevPAR $33 $40 21% $52 30% *Forecast• Growth of 21% was achieved in 2011 in comparison with SPLY• RevPAR of $52, representing 30% growth from F11 is expected in F12• Performance Update to Nov 2012: • Occupancy - 57%, up from 52% SPLY • RevPAR - $50, 21% up on SPLY of $41• SPLY- same period last year.
  14. 14. 2012 FOCUS• RevPAR growth leveraging on volumes growth at the Resorts and ADR growth in the City hotels• Product refurbishment – relaunch of the Holiday Inns and repositioning of Holiday Inn Mutare and Holiday Inn Express• Reduction of borrowing costs and gearing• Further cost optimisation, especially in light of the NEC wage increases• We expect a minimum 8% EBITDA from continuing operations going forward -up from 5.5%
  15. 15. FINANCIALS
  16. 16. IMPROVED PERFORMANCE FROM CONTINUING OPERATIONS IMPROVED PERFORMANCE FROM CONTINUING OPERATIONSUS$ millions 30 Sept 30 Sept % 2011 2010Revenue $ 48,8 39,9 +22Cost of Sales $ (14,6) (11,4) +27COS % 30 29 +4Gross Profit $ 34,2 28,5 +20Operating expenses $(exc Restructuring costs) (31,5) (28.0) +12.5EBITDA $ (exc Restructuring costs) 2,7 0.5 +432EBITDA margin % 5.5 1.3 +420 bpsProfit / (Loss) before non-recurring items $ 1,2 (2,5) 148%Non-recurring items $ (5,9) - -Loss before tax for the period from continuing ops $ (4,7) (2,5) -88% Revenue up 22% as RevPAR and occupancy increased by 21% and 11% Operating expenses increase constrained at 12.5% Non recurring items include $3.28m - retrenchments and $2.68m - Impairment of Property , Plant and Equipment EBITDA up 432% to $2.7m( 5.5%margin) excluding restructuring costs of $3.28m Discontinued Operations(SA hotels and Hotelserve) however suffered a loss of $6.6m –
  17. 17. GROUP OUTLOOK POSITIVE FOLLOWING CLOSURE OF LOSS MAKING UNITS• EBITDA loss $4.05m, with SA hotels contributing $3.77m• Loss from discontinued operations of to $6.62m, includes $1.9m in impairment charges• Working Capital pressure eases with the closures
  18. 18. OPERATIONAL BREAKEVEN IMPROVES WITH CLOSURE OF LOSS MAKING UNITS AND RESTRUCTURING Improvement on Operational BE • Operational BE EBITDA EBITDA worsened by 139% following Operational BE EBITDA (US$mln) poor performance by the SA hotels 8.61 • With closure of the SA hotels, disposal of Hotelserve and savings from the 3.46 3.60 restructuring, BE EBITDA for F11 improves by 60% • Break even RevPAR has2011(with savings & after 2011(exc restructuring but 2010(as per historical) consequently improved to $38discontinued operations) with impact of discontinued operations) from $ 45
  19. 19. OPERATING EXPENSES UP 12.5% WELL WITHIN INCREASE IN REVENUE AND RevPAR• Costs mainly driven by turnover based costs: Rentals, franchise fees.• Oversight costs to drop from 15% of revenue to less than 10% following the restructuring.• Restructuring -head count reduced by 58%, minimum savings of $2.4m per year expected.
  20. 20. ZIMBABWE OPERATIONS CONTINUE ON AN UPWARD TREND Revenue Vs EBITDA • Revenue ↑ 24%$60,000,000 • Occupancy ↑ from 46% to 51%$50,000,000 • Foreign room nights ↑ 14%$40,000,000$30,000,000 • Domestic room nights ↑ 13 %$20,000,000 • RevPAR ↑ 21% to $40 8% 6%$10,000,000 • ADR ↑ 8% to $80 $- 2011 2010 • 83% contribution to EBITDA by city hotels Revenue $48,008,885 $38,350,470 • 50% contribution to Revenue by city hotels EBITDA $3,875,533 $2,383,963 • Elephant Hills EBIDTA loss improved to $0.367m from $1.04m prior period.
  21. 21. $2.1m CASH GENERATED FROM CONTINUING OPERATIONS 30 Sept 30 Sept • $4.66m in cash and $1.5m in undrawnCashflow 2011 2010 facilities US$m US$m • Cash generated from operations improved to $2.1m from negative $5.1m driven by strong RevPAR growthCash generated/(used )inoperations 2,088 (5,111) • Cash generation to improve following; – Restructuring with possible savings of at least $2.4million a yearCash used in investing (3,812) (1,947) – Closure of loss making units – Disposal of non-core operationsFinancing • Financing Raised includes; – $3.47m drawn for RefurbishmentFinancing Raised 5,225 9,983 – $1.2m drawn for furnishing the Botswana projectIncrease in cash 1,721 1,663 – $1.2m Short term loans to fund loss making unitsExchange Difference 0,126 0,210Cash at beginning of period 2,811 0,938Cash at end of period 4,658 2,811
  22. 22. FINANCIAL POSITION & FUNDING: • Decrease in long-term assets due to discontinuedBalance sheet 31 Sept 11 30 Sep 10 operations and impairment of assets US$m US$m • Current assets declined due reductions in inventoryAssets and trade and other receivablesLong term assets 30,029 31,449 • Shareholders equity impacted by losses arising from $6.45m non-recurring expensesCurrent assets 16,440 18,505 • Non current liabilities • Refurb Loan Drawn( $3.47m) • Botswana Project Loan( $1.2m)Total assets 46,469 49,954 • Deferred Tax Liability($2.46m) • Current liabilities include $8.2m short-term loans,Equity and liabilities which will reduce with Hotelserve disposal.Shareholders equity 15,163 25,003 • Long-term loans to reduce as the Botswana loanNon-current liabilities 7,378 5,053 structure moves to the landlord following exit. • Gearing, at 35.7% will not increase to improve withCurrent liabilities 23,928 19,898 the positive cash generation and as working capital pressure eases with the initiatives implemented.Total equity and liabilities 46,469 49,954
  23. 23. QUESTION & ANSWER

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