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African Sun Limited analyst briefing, FY2010

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African Sun Limited analyst briefing held on 1 December 2010 in respect of the year ended 30 September 2010

African Sun Limited analyst briefing held on 1 December 2010 in respect of the year ended 30 September 2010

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  • 1. F10 Results “GROWTH THROUGH PARTNERSHIPS”1 December 2010 1600Hrs CAT
  • 2. Our Performance 2008-2011 How we explain it in summary…2008 We smiled all the way….2009 We cried most part of the journey… Volumes better, rates slightly up….20102011 Outlook better than 2009 and 2010..
  • 3. Market Developments• Tourism recovering in line with global economic recovery• Zimbabwe recovery driving RevPAR growth• Zimbabwe recovering with improvement in liquidity, increase in foreign arrivals (▲58%), & ADR• 2010 FIFA World Cup success for our South African hotels• Occupancies low in Johannesburg market due to oversupply of rooms• Ghana remains resilient with RevPAR increasing by 18%• Nigeria RevPAR up 5.5% but expected to grow significantly in 2011
  • 4. Highlights FY 2010• Performance improved in the last 12 months• 50% increase in RevPAR in leased hotels• Zimbabwe achieving 50% growth• Occupancies up 41% to close at 45%• ADR up 8%• Cost position improved, with operating expenses at 64% of Amber Tinapa, Calabar, Nigeria revenue compared to 72% last year
  • 5. Business Performance Highlights F10 ZIMBABWE SOUTH AFRICA WEST AFRICA (Hotels) (Mngt Contracts) OCCUPANCY 46% 45% Ghana 81% ▲ from 32% ▲from 38% Nigeria 21% REVPAR $33 $56 Ghana $155 ▲from $22 ▲from $40 Nigeria $19 EBITDA 6.7% -17.6% 8.8% ▲187% ▲40% from 23.5%
  • 6. Business Model by Rooms: Target Revised Downwards to 5500 from 8500 by 2013 2002 2010 2013Deal typeProduct typeLocationRooms 1873 2881 5500
  • 7. Pipeline Summary• Best Western Lagos, Ikeja (112 rooms 1st October 2010)• Holiday Inn Gaborone : (151 rooms – Q2, 2011)• West Africa (583 rooms)• Upturn in pipeline expected in 2012 as market conditions improve The Kingdom At Victoria Falls, Zimbabwe
  • 8. Funding & Refurbishment• Zimbabwe product aging and overdue for refurbishment• Delays encountered in accessing approved facilities for refurbishment• Part of Rights Offer money used to start electro-mechanical refurbishment for some of the hotels• Refurbishment to continue over 24 months as we try to manage the business peak seasons• Drawdown on approved facilities expected early 2011• Update on Crowne Plaza hypothecation
  • 9. 2011 FOCUS• RevPAR Growth• Growth through addition of Management Contracts• Cost Containment• Conclude Capital Raise• Cash Protection Hwange Safari Lodge
  • 10. Outlook FY2011• Group Revenue to reach $64m for F11 with EBITDA margin of 7%• Zimbabwe resort hotels show steady recovery• South Africa to recover from losses• 583 additional rooms in West Africa by the end of December 2011 to enhance EBIDTA contribution from The Lakes Hotel & Conference Centre, mgt contracts Standard Room
  • 11. FINANCIAL REVIEW 12 MONTHS ENDED 30 SEPTEMBER 2010Gaborone
  • 12. Income Statement 30 Sept 2010 30 Sept 2009 % ChangeRevenue $ 54 182 233 35 236 138 +54Cost of Sales $ (19 520 876) (12 103 404) +61COS % 36 34 9Gross Profit $ 34 661 357 23 132 734 +25Operating costs $ (34 325 680) (27 269729) +25EBITDA $ 335 677 (4 136 995) +108EBITDA margin % 0.6 (11.7)ROCE % (5.5) (10) +45EPS - cents (0.36) (0.63) + 43Occupancy % 45 32 +41ADR $ 79 73 +8RevPAR $ 36 24 +57• EBIDTA up 108%, as Revenue grows by 54% spurred by a strong RevPAR growth.
  • 13. Divisional Performance Zimbabwe Regional Hotelserve*Revenue +59% +50% +186% +54%Cost of Sales +57% 15% 185% +61%COS % 31% 42% 75% 36%Operating costs $ +9.6% +27% +180% +25%EBITDA $ +187% +40% -56% +109%EBIDTA $ 2.383mln -$1.696m -$0.220 $0.342EBITDA margin % 6.7% -17.6% -3.8% 0.6%Occupancy % 46% 45% _ 45%ADR $ $74 $124 _ $75RevPAR $ $33 $56 _ $36 •Regional weighed down by Non-recurring costs and low occupancy pre and post World Cup •Operating Expenses increased by 25%, against a 54% increase in Revenue as savings are realized in Zimbabwe. Regional increase of 27% driven by utility and non-recurring costs. •*Hotelserve comparatives only covered a 5 months trading period.
  • 14. RevPAR performance by country RevPAR 2010 Vs 2009 •Zim ▲ 50% emanating from 2010 2009 increase in occupancy and rates $155 •SA ▲ 40% mainly from $131 World Cup and exchange rate movement •Ghana ▲ 18% from increase in occupancies $56 $33 $40 $36 $39 •Zim having a greater impact $28 $22 $19 $18 24 on leases as economy improves Zim SA Gha Nig **Leases *Group •Nigeria greatly affected by Combined low occupancies **represents Zim & SA *includes mgnt contracts on a like-for-like basis•All emerging markets currencies firmed against the USD in the pastyear, a trend expected to continue hence improving RevPAR
  • 15. KPIs growth analysis by Country Matrix Sept Sept % 2010 2009 Growth Occupancy % 46 32 44Zimbabwe ADR $ 74 69 7 RevPAR $ 33 22 50 Occupancy % 45 38 18S.A. ADR $ 124 106 17 RevPAR $ 56 40 40 Occupancy % 81 70 16Ghana ADR $ 191 187 2 RevPAR $ 155 131 18 Occupancy % 21 15 40Nigeria ADR $ 89 116 (23) RevPAR $ 19 18 6 Occupancy % 45 32 41Leased hotels ADR $ 79 73 8 RevPAR $ 36 24 50 • Strong Revpar driven by occupancy recovery in Zimbabwe and World cup in South Africa
  • 16. Zimbabwe recovery sustained… ASZL Revenue and EBIDTA Comparison •Revenue ▲ 59% $45,000,000 $38,962,774 $40,000,000 $35,000,000 •Occupancy ▲ from 32% to 46% $30,000,000 $24,065,253 $25,000,000 •RevPAR ▲ 50% to $33 Revenue $20,000,000 EBITDA $15,000,000 •ADR ▲ 7.2% to $74 $10,000,000 $5,000,000 +6.7% -8.4% •EBIDTA margin at +6.7% from -8.4% $- $(5,000,000) 2010 2009 2010 2009 • Resorts recovering, with surge in foreign arrivals Resorts City Resorts CityRevenue $ 17,300 21,050 11,134 13,564 • Strong Performance in City hotels sustained,EBITDA $ 556 3,158 (992) 2,459 ADR still depressedEBITDA margin % 3% 15% -9% 18%ADR $ 76 72 86 58RevPAR $ 25 44 17 28 • Both achieve EBITDA profit for the yearOcc % 33 62 21 48
  • 17. Zimbabwe..the foreign impact and Breakeven occupancy Export Domestic Breakeve RevPAR Current at 35% at 40% at 45%Rooms 9 006 299 11 576 399 $33Revenue $ 44% 56% $32RN 32% 68% $32contribution $31 ↑58% ↑36%ADR $ 100 61 BE RevPAR X 1.64 ↑ 5% from domestic $58 •Breakeven RevPAR to improve withOccupancy 15% 31% increase in foreign arrivals and Domestic ADR.RevPAR $ 15 19 •Domestic rate to improve in line with improvement in corporate business and market liquidity
  • 18. Key cost Ratios September September % Change H2 2009 % Change 2010 2009 COS 36% 34% 6% 38% -5% Overheads to Revenue Payroll 19% 29% -39% 35% -46% Rent & rates 12% 8% 50% 9% 33% R&M 5% 5% - 5% - Administration 15% 13% 15% 19% -21% Costs Other 15% 18% -17% 20% -25% Operating 66% 72 -8% 88% -25% Expenses• Ratios improve with increase in revenues and impact of cost reduction initiatives• Improvement expected with growth in rooms under management, as this wouldnot require an incremental increase in the oversight costs.
  • 19. Financial Position and Funding 30 Sept 30 Sept • $2.8m in cash and $6.2m inCashflow 2010 2009 undrawn facilities $ $Cash used inoperations (5 910 467) (4 448 324) • Cash used in operations upCash used in 33% to reduce negativeinvesting (1 636 227) (3 186 811) working capitalFinancingIssue of • $10m Rights offer at theshares 9 619 760 beginning of the yearDecrease inborrowings - long term (47 418) 741 543 • Borrowing down to 17% from - short term 525 848 5 617 051 38% in September 2009Increase incash 1,663 039 (1 332 458)Exchange Difference 209 785 9833 • Debt secured to further reduceCash at beginning of period 937,582 2 260 207 borrowing costCash at end of period 2,810,406 937 582
  • 20. Financial Position and Funding:Balance sheet 30 Sept 10 30 Sept 09 US$ US$ • Working capital improves to a net $0.231m from $9.6m last year with the Rights OfferAssets injection and improvement in performanceLong term assets 30 523 385 33 335 011Current assets 19 143 166 9 604 202 •Current assets increase mainly due to;Total assets 49 666 551 42 939 213 •15% Deposit for the IDC facility •Capital work in progress- RefurbishmentEquity and liabilitiesShareholders equity 24 687 261 18 475 207 •Growth in trade receivables with theNon-current liabilities 5 081 379 5 258 527 improvement in business performanceCurrent liabilities 19 897 911 19 205 479 • Maturing long term InvestmentsTotal equity and liabilities 49 666 551 42 939 213
  • 21. Update on RevPAR growth and outlook•Zimbabwe to grow by 12% from $33 to $37 as a result of growth inoccupancies• Ghana to achieve 8% growth from $155 to $168, with theimprovement in yields.• South Africa to be driven by the strengthening of the Rand• Nigeria to improve to $30, from $19 with the addition of rooms inLagos• Overall RevPAR to growth by 71% to close at $41, up from $24
  • 22. Questions and Answer The Lakes Hotel, Benoni, Johannesburg, South AfricaCaribbea Bay Resort, Kariba, Zimbabwe

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