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AFRICANSUN: Analyst briefing for year ended 30 Sept 09

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Highlights …

Highlights

Revenue: $35.2 m
Cost of sales: ($12.1 m)
Gross profit: $23.1 m
EBITDA: ($3.1 m)
Occupancy: 31%
ADR: $90
RevPar: $28
Dep. amortisation & impairment: $1.8 m
Net financing costs: $380,000

Published in: Business, Travel

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  • 1. Analyst Briefing: January 2010 “ OPEN FOR BUSINESS IN AFRICA”
  • 2.
    • Overview: Where we are coming from?
    • Zimbabwe
      • The year 2009 saw businesses relegated to ‘start-up’ status without corresponding capitalisation to function in the new economy.
      • High operating costs, of note:
        • Utility costs.
        • Payroll
      • Cautious approach to Global Political Agreement.
      • Occupancies plummeted by 10 percentage points (24% in real terms) from 41% in September 2008 to 31% in September 2009 namely due to:
        • Cholera
        • Reduced Arrivals
        • Liquidity Crunch
        • H1N1
  • 3. Overview: Where we are coming from?
    • Global Financial Crisis
      • Depressed occupancies in Southern Africa due to slow down of long haul travel – decreased by approximately 30%.
      • Strategic goals were affected in several ways:
        • Tighter global funding conditions expected to have noticeable effects on middle income countries like South Africa and the frontier markets of Ghana, Nigeria, Kenya and Tanzania (IMF Policy News).
        • Low liquidity in international markets increased cost of capital.
        • General slowdown in development from investor community, e.g. Private Equity Funds.
        • Pressure on room rates and occupancies.
  • 4. Overview: African Sun
    • Footprint will continue to grow based on the rate of expansion of the past 3 years.
    • Group has created advocates for its brands across the continent.
    • Group to build upon this base as global economy recovers.
    • Capital raising initiatives implemented with phase one (Rights Offer) being completed
      • Refurbishment of hotels (Zimbabwe)
      • Restructuring of short term borrowings
    • Stronger balance sheet in USD terms. This will enable the Group to fulfil its growth thrust for both arrivals and addition of new rooms.
    • Performance in Zimbabwe improving.
  • 5. Progress on Strategic Goals: Capacity Growth - Destination 2012 (8500 rooms)
    • The focus was on consolidation of :
      • existing rooms.
      • Zimbabwe rooms
      • 2008 Openings
    • New rooms
      • Zambia (Livingstone Area): Royal Chundu River Lodge, 5 Star upmarket lodge.
    • New Openings 2010
      • More than 600 rooms coming on board in South Africa, Nigeria, Ghana, Botswana and Kenya.
    • Projected rooms contributions by 2012 will be:
      • West Africa 35%
      • East Africa 7%
      • Southern Africa (excluding Zimbabwe) 33%
      • Zimbabwe 25%
  • 6. Progress on Strategic Goals: Recently opened Royal Chundu River Lodge, Zambia
  • 7. Progress on Strategic Goals : Human Resources and Hospitality Training
    • Focus remains on key skills retention and training.
    • Group has been able to attract international skills, namely Hotel General Managers and Chefs.
    • Target of investing at least 3% of turnover into Training and Development programmes.
    • 10% of staff are undergoing structured training and development programmes.
    • Work is underway to establish HTA in West Africa.
  • 8. Progress on Strategic Goals: Brand Leadership
    • It has been 12 months since ASL opened first Amber in Nigeria.
    • Brand has been received positively by developers leading to the development of a select service hotel brand under the name Amber Express.
    • Amber Express becomes the value brand that ASL will drive into the continent as the group extends its footprint.
    • ASL will be launching its five star city brand, Mulberry, into Nigeria by mid 2010.
    • ASL’s relationship with Intercontinental Hotels Group (IHG) is growing with the imminent signing of Holiday Inn Gaborone consolidating our position as the largest operator of IHG brands in Africa.
    • Developments are underway to establish our long-stay brand, My Place, in West Africa
  • 9. FINANCIAL REVIEW YEAR ENDED 30 SEPTEMBER 2009 Nike Lake Resort, Nigeria
  • 10. Financial Highlights: Group Income Statement   Revenue $35.2million COS ($12.1million) GP $23.1million EBITDA ($3.1million) Occupancy 31% ADR $90 RevPar $28 Depreciation amortisation and impairment $1.8million Net financing costs $380,000
  • 11. Financial Highlights: RevPar Performance
    • The year 2009 was a difficult year with the Global Financial Crisis affecting occupancies, RevPar and ADR resulting in double digit declines in some areas.
      • Ghana remained resilient
      • Zimbabwe starting to show signs of improvement
      • South Africa affected but recovering
  • 12. Financial Highlights: RevPar Performance **First year of operation         2009/ Feb 2009 Q1 Q1 2010/2009 Country Matrix 2009 Feb 2009 % change 2010 % change   Occupancy % 32 23 +39 43 +34 Zimbabwe ADR $ 69 70 -1 71 +3   RevPar $ 22 16 +38 30 +37         2009/2008 Q1 Q1 2010/2009 Country Matrix 2009 2008 % change 2010 % change   Occupancy % 38 52 -27 42 +11 South Africa ADR $ 106 104 +2 98 -8   RevPar $ 40 54 -25 41 +3   Occupancy % 70 70    - 80    +14 Ghana ADR $ 187 169    +11 180    -4   RevPar $ 131 118    +11 144    +10   Occupancy % 15 ** ** 32    +113 Nigeria** ADR $ 116 ** **   138   +19   RevPar $ 18 ** **   44   +132
  • 13. Financial highlights : Revenue contribution and business model Rooms distribution
  • 14. Cost Ratios
    • Operating costs amounted to 82% of revenues as a result of:
      • Depressed revenues
      • High payroll costs
      • High food and beverage costs
    As a % of Revenue....         2009   Target COS   34   30 Payroll   32   19 Rent and R&M 12   7 Other   38   28 Total   82   54
  • 15. Zimbabwe on the recovery trend
    • The Occupancy story…
    The Lakes Hotel, Benoni, Johannesburg, South Africa The operations achieved 43% occupancy for the first quarter ended 31 December as leisure business starts to gain momentum with all the resorts achieving 100% occupancy over the just ended festive.
  • 16. Zimbabwe on the recovery trend
    • ADR on the rise…
    The Lakes Hotel, Benoni, Johannesburg, South Africa
  • 17. Zimbabwe on the recovery trend
    • RevPar increasing…
    The Lakes Hotel, Benoni, Johannesburg, South Africa
  • 18. Zimbabwe: 2009 City Hotels carry the day….
    • City Hotels business driven by NGOs and Conferencing (low yields).
    • Resorts were slow to recover from the downturn due to the long lead times and country risk issues.
    • With the return of other segments such as Corporate and Leisure (domestic and foreign) yields are expected to improve.
    City Resorts Total Revenue $ (‘000) 13 564 11 134 24 698 EBITDA $ (‘000) 2 459 (992) 1 467 Hotel Net Profit $ (‘000) 1 826 (1 538) 288 Occupancy 48% 21% 32% ADR $ 58 86 69 RevPar $ 28 17 22
  • 19. Zimbabwe: Q1 Resorts on a come back…
    • Occupancies into Resort hotels expected to increase as international arrivals improve in 2010 with imminent FIFA 2010 World Cup and improved image and visibility of the region as a whole.
    • In-system bookings looking stronger for 2010
      • The Victoria Falls area achieved an average of 22% for the quarter as compared to 21% for F09.
      • The Victoria Falls hotel on top with 46% in-system bookings as compared to 28% for the same period last year.
    City Resorts Total Revenue $ (‘000) 4 998 3 907 8 905 EBITDA $ (‘000) 922 (17) 904 Net Profit $ (‘000) 817 (263) 554 Occupancy 62% 29% 43% ADR $ 61 93 74 RevPar $ 37 27 32
  • 20. Financial Position
    • $0.94million in cash and $4.6million in undrawn facilities
    • Asset light balance sheet
    Strong cash position compared to year ended 30 September with the just ended Rights Offer and improving operations. Cashflow     30 Sept 09       $ Cash used in operations   (4,988,015) Cash used in investing   (3,186,811) Financing       Disposal of investments   483,774 Increase in borrowings - long term 741,543     - short term 5,617,051 Decrease in cash   (1,332,458) Cash at beginning of period 2,270,040 Cash at end of period   937,582
  • 21. Financial Position : Funding
    • Stronger balance sheet moving forward.
    • Pleased to announce a successful Rights Offer.
    • US$3million short term loans retired by 31 Dec 2009.
    • Improving working capital in line with improving Zimbabwe operations.
    • Cost of borrowing down to 29% from 38%.
    • Cost of borrowing to be reduced further as long term loans negotiated.
    • $15million equity secured credit and $10million from private placement being pursued as we target cheaper finance subject to changing market conditions.
    • Dilution from additional equity will be mitigated because the funds will be used for expansion.
    • Additional capital raised to be applied to regional expansion
    Balance sheet 30 Sept 09 Pro forma 31 Dec 09   US$ US$ Assets     Long term assets 37,221,062 37,221,062 Current assets 9,467,009 16,484,009       Total assets 46,688,071 53,705,071       Equity and liabilities     Shareholders equity 21,065,668 31,082,668 Non-current liabilities 6,416,924 6,416,924 Current liabilities 19,205,479 16,205,479       Total equity and liabilities 46,688,071 53,705,071
  • 22. African Sun Focus
    • Cash flow
    • Reduction in operating costs targeting:
      • Employment costs
      • Procurement (food and beverage) - to reduce by 10%
    • Growth targeting our business model
  • 23. RevPar Outlook The Lakes Hotel, Benoni, Johannesburg, South Africa         Growth Country Matrix 2009 2010 % change Zimbabwe RevPar $ 22 39 +38   South Africa RevPar $ 40 54 +27   Ghana RevPar $ 116   137   +18   Nigeria RevPar $ 18   53   +194   Group RevPar $ 28 45 +61
  • 24. Dividend
    • Dividend declaration
    • In light of the Group’s capital requirements and depressed performance, the Board has resolved not to declare a dividend for the year ended 30 September 2009.
    The Lakes Hotel, Benoni, Johannesburg, South Africa