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F11 – Results
30 November 2011 STRENGTHENING THE CORE FOR GROWTH
STRENGTHENING THE CORE: OVERVIEW
The 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
STRATEGY
Our 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
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
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
• Tourism growth is forecasted at 37.5% for 2012
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%
BUSINESS COMPOSITION– AFRICAN SUN HOTELS
2010bodies
2011bodies
Local 68% 67%
Regional 14% 15%
International 18% 18%
Total 100% 100%
ZIMBABWE HOTELS – PERFORMANCE OUTLOOKPERFORMANCE
RANKINGHOTEL REVPAR
2012 US $COMMENTS
1 The Victoria Falls Hotel
5 star 95 • Leisure business- free independent traveler ,groups and series
• Refurbishment in progress2 Holiday Inn
Harare3 star 65 • Best performing city hotel
• 93% Occ in May, closed the year at 58%
3 Crowne Plaza 4 star 64 • Conferencing and corporate business
4 Holiday inn Bulawayo
3 star 62 • Conferencing and corporate business
5 Holiday inn Mutare
3 star 55 • Conference and corporate business• Air conditioners and lift issues are
being addressed6 The Kingdom at
Victoria Falls3 star 43 • Groups and series
• Soft refurbishment required
ZIMBABWE HOTELS – PERFORMANCE OUTLOOKPERFORMANCE
RANKINGHOTEL REVPAR
2012 US$
COMMENTS
7 Great Zimbabwe Hotel
3 star 45 • Best performing country 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 Resort
4 star 36 • Regional conferencing e.g. Old Mutual, SADC, African Insurance Organization and leisure business
• November 2012 – 55% occupancy, $46 Revpar- best performance in last 3 years
ZIMBABWE HOTELS – PERFORMANCE OUTLOOK
PERFORMANCE RANKING
HOTEL REVPAR 2012 US$
COMMENTS
10 Express by Holiday Inn
Bietbridge
3 star 35 • Conferencing and Transit business
• Air conditioning being attended to
11 Carribea Bay resort
3 star 33 • Conferencing and Leisure• Access issues
12 Hwange Safari Lodge
3 star 15 • Access issues
MANAGEMENT CONTRACTS – PERFORMANCE OUTLOOK
• Total revenues from management contracts in 2011 was US$ 778k
• Growth in management contract revenues for 2012 will be 20%
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
FINANCIAL HIGHLIGHTS F11
CONTINUING 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
UPDATE ON REVPAR AND GROWTH OUTLOOK
2010 2011 Growth *2012 Forecast Growth
RevPAR $33 $40 21% $52 30%
• 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 $41
• SPLY- same period last year.
*Forecast
2012 FOCUS
• RevPAR growth leveraging on volumes growth at the Resorts and ADR growth in the City hotels
• Product refurbishment – relaunch of the Holiday Inns and repositioning of Holiday Inn Mutare and Holiday Inn Express
• Reduction of borrowing costs and gearing
• Further cost optimisation, especially in light of the NEC wage increases
• We expect a minimum 8% EBITDA from continuing operations going forward -up from 5.5%
FINANCIALS
IMPROVED PERFORMANCE FROM CONTINUING OPERATIONSUS$ millions 30 Sept 2011
30 Sept 2010
▲%
Revenue $ 48,8 39,9 +22
Cost of Sales $ (14,6) (11,4) +27COS % 30 29 +4
Gross Profit $ 34,2 28,5 +20
Operating expenses $(exc Restructuring costs) (31,5) (28.0) +12.5
EBITDA $ (exc Restructuring costs) 2,7 0.5 +432EBITDA margin % 5.5 1.3 +420 bps
Profit / (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 –
IMPROVED PERFORMANCE FROM CONTINUING OPERATIONS
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
OVERALL REVPAR PERFORMANCE TREND POSITIVE
Zim Gha Nig
$40
$203
$20 $33
$191
$19
RevPAR by country2011 2010
Overall RevPAR trend positive with Zimbabwe leading at 21% growth year on year.
REVPAR GROWTH LARGELY DRIVEN BY AN OCCUPANCY RECOVERY IN THE PAST!
H2FY09 H1FY10 H2FY10 H1FY11 H2FY11 FY12
32%20% 23%
0%
16%
-4%
6% 1%
7%
0%
44%
14%24%
-8%
15%
Half year on half year growth in KPIsRevPAR ADR Occ
• Occupancy growth mainly driven by the city hotels
• RevPAR growth continues, though slowing down as city hotels near optimum occupancies
• Future RevPAR growth expected from:• ADR growth from the city
hotels with the Refurbishment
• Occupancy recovery from the Resorts
• RevPAR growth to be driven by the recovery of the Resorts and the after effect of refurbishment on ADR in City Hotels
OPERATIONAL BREAKEVEN IMPROVES WITH CLOSURE OF LOSS MAKING UNITS AND RESTRUCTURING
3.46
8.61
3.60
Improvement on Operational BE EBITDA
Operational BE EBITDA (US$mln)
• Operational BE EBITDA worsened by 139% following poor performance by the SA hotels
• With closure of the SA hotels, disposal of Hotelserve and savings from the restructuring, BE EBITDA for F11 improves by 60%
• Break even RevPAR has consequently improved to $38 from $ 45
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.
ZIMBABWE OPERATIONS CONTINUE ON AN UPWARD TREND
• Revenue ↑ 24%
• Occupancy ↑ from 46% to 51%
• Foreign room nights ↑ 14%
• Domestic room nights ↑ 13 %
• RevPAR ↑ 21% to $40
• ADR ↑ 8% to $80
• 83% contribution to EBITDA by city hotels
• 50% contribution to Revenue by city hotels
• Elephant Hills EBIDTA loss improved to $0.367m from $1.04m prior period.
8% 6%
2011 2010
Revenue 48008885 38350470
EBITDA 3875533 2383963
$5,000,000
$15,000,000
$25,000,000
$35,000,000
$45,000,000
$55,000,000
Revenue Vs EBITDA
$2.1m CASH GENERATED FROM CONTINUING OPERATIONS
• $4.66m in cash and $1.5m in undrawn facilities
• Cash generated from operations improved to $2.1m from negative $5.1m driven by strong RevPAR growth
• Cash generation to improve following;– Restructuring with possible savings of at
least $2.4million a year– Closure of loss making units– Disposal of non-core operations
• Financing Raised includes;– $3.47m drawn for Refurbishment– $1.2m drawn for furnishing the Botswana
project – $1.2m Short term loans to fund loss
making units
Cashflow 30 Sept
201130 Sept
2010
US$m US$m
Cash generated/(used )in operations 2,088 (5,111)
Cash used in investing (3,812) (1,947)
Financing
Financing Raised 5,225 9,983
Increase in cash 1,721 1,663
Exchange Difference 0,126 0,210
Cash at beginning of period 2,811 0,938
Cash at end of period 4,658 2,811
FINANCIAL POSITION & FUNDING:
Balance sheet 31 Sept 11 30 Sep 10
US$m US$m
Assets
Long term assets 30,029 31,449
Current assets 16,440 18,505
Total assets 46,469 49,954
Equity and liabilities
Shareholders equity 15,163 25,003
Non-current liabilities 7,378 5,053
Current liabilities 23,928 19,898
Total equity and liabilities 46,469 49,954
• Decrease in long-term assets due to discontinued operations and impairment of assets
• Current assets declined due reductions in inventory and trade and other receivables
• Shareholders equity impacted by losses arising from $6.45m non-recurring expenses
• Non current liabilities• Refurb Loan Drawn( $3.47m)• Botswana Project Loan( $1.2m)• Deferred Tax Liability($2.46m)
• Current liabilities include $8.2m short-term loans, which will reduce with Hotelserve disposal.
• Long-term loans to reduce as the Botswana loan structure moves to the landlord following exit.
• Gearing, at 35.7% will not increase to improve with the positive cash generation and as working capital pressure eases with the initiatives implemented.
QUESTION & ANSWER