Southern Sun Limited · JSE:SSU
Southern Sun — Tsogo Sun Hotels — FY2021 Earnings Presentation
32 slides from Southern Sun's earnings presentation, May 2021
Slide 1: Investor Presentation May 2021
F’21 • Full year occupancy at 12% • Ebitdar loss limited to R177m with R160m incurred in Q1 • Debt reduced by R183m to R3 069m • R1.5bn in liquidity maintained TSOGO TSOGO SUNSUN HOTELS HOTELS INVESTOR PRESENTATION INVESTOR PRESENTATION May 2021 May 2021
Slide 2: Disclaimer
DISCLAIMER Certain statements in this document may constitute ‘forward looking statements’. Such forward looking statements reflect the company’s beliefs and expectations and involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance o
Slide 3: Group Structure
GROUP STRUCTURE Public 41% 59% 100% 100% HOTEL OPERATIONS Offshore South Africa South Africa • Owned, managed and • Owned and leased • Hotel property owner leased hotels hotels • UK Investments 25% • Manco 3
Slide 4: Board of Directors
BOARD OF DIRECTORS Executive Directors Marcel von Aulock – CEO Laurelle McDonald – CFO Non-Executive Directors Johnny Copelyn – Chairman Rob Nicolella Independent Non-Executive Directors Mohamed Ahmed – Lead Independent Chris Gina Moretlo Molefi Jabulani Ngcobo Cornelia September 4
Slide 5: Operated Portfolio
OPERATED PORTFOLIO LUXURY FULL SERVICE 54 Arabella © Southern Sun Yg Jo weresemr nm Sun RESORTS J BEVERLY HILLS MOUNT GRACE (vy (©) a orden 0 PALAZZO INTERCONTINENTAL a THE 4f SANDTON SUN WHCOAST EDWARD Heda fem S owe me, ECONOMY Ostayeasy hr HOTELS © TSOGO SUN HOTELS
Slide 6: Portfolio by Rooms
PORTFOLIO BY ROOMS PORTFOLIO BY NUMBER OF ROOMS, BRAND AND REGION (EXCLUDING RBH AND IHL IN THE UK) Land & Building Owned TsogoSun 3rd party Brand Freehold Lease Total Gaming Owner Total Internally managed Luxury Portfolio 430 557 987 411 138 1 536 Southern Sun 3 956 366 4 322 714 - 5 036 Sun Square
Slide 7: Group Financial Structure – Hotel Ownership
GROUP FINANCIAL STRUCTURE – HOTEL OWNERSHIP Freehold title or Land/building lease 75 hotel income statements contribute to group revenues and expenses (MAIA Luxury Resort & Spa disposed of effective 13 July 2020) Internal management fees are paid to Manco which eliminate on consolidation Rent
Slide 8: Group Financial Structure – Hotel Management
GROUP FINANCIAL STRUCTURE – HOTEL MANAGEMENT Tsogo Sun Gaming 17 hotels owned by Tsogo Sun Gaming and run for their account Managed by Tsogo Sun Hotels with the management fee income recognised in Manco Third-party owned 13 hotels owned by third parties and run for their account (includes the
Slide 9: Financial Overview
FINANCIAL OVERVIEW FINANCIAL OVERVIEW
Slide 10: Quarterly Performance (Rm)
QUARTERLY PERFORMANCE (Rm) Q1 Q2 H1 Q3 Q4 H2 Total Revenue F’21 58 261 319 464 355 819 1 138 F’20 961 1 113 2 074 1 334 1 055 2 389 4 463 Change on F’20 (903) (852) (1 755) (870) (700) (1 570) (3 325) Ebitdar F’21 (160) (46) (206) 47 (18) 29 (177) F’20 206 353 559 481 312 793 1 352 Change on F’20 (3
Slide 11: South Africa System-Wide Portfolio – Trend in Rooms Sold
SOUTH AFRICA SYSTEM-WIDE PORTFOLIO – TREND IN ROOMS SOLD July August September October November December January February March April Lockdown Level 3 Level 3|2 Level 2|1 Level 1 Level 1 Level 1|3 Level 3 Level 2 Level 1 Level 1 Total F’21 20 117 33 710 66 268 88 370 102 155 113 071 50 712 67 629 10
Slide 12: Rooms Sold – F’94 to F’21
Rooms sold 0 500 000 1000 000 1500 000 2000 000 2500 000 3000 000 3500 000 F'94 F'95 F'96 F'97 F'98 F'99 F'00 F'01 F'02 F'03 ROOMS SOLD – F’94 TO F’21 F'04 F'05 F'06 Rooms sold F'07 F'08 F'09 F'10 Occupancy F'11 F'12 F'13 F'14 F'15 F'16 F'17 F'18 F'19 F'20 F'21 0% 10% 20% 30% 40% 50% 60% 70% 80% 12
Slide 13: Income Statement (Rm)
INCOME STATEMENT (Rm) Change F’21 F’20 on Income 1 138 4 463 (3 325) Rooms revenue 593 2 791 (2 198) Food & beverage revenue 269 1 063 (794) Property rental income (net of costs) 27 319 (292) Other income 249 290 (41) Owned stats F’21 F’20 Overheads (1 315) (3 111) 1 796 Occupancy (%) 12.2 59.3 Aver
Slide 14: Income Statement (Rm) Continued
INCOME STATEMENT (Rm) CONTINUED Change F’21 F’20 on Loss before interest and taxation (b/f) (656) (766) 110 Finance costs (net) (346) (360) 14 Finance costs (net) (218) (259) 41 Finance costs – IFRS16 (128) (101) (27) Share of loss of associates & joint ventures (128) (3) (125) Income tax 148 (96) 2
Slide 15: Reconciliation to Headline Earnings (Rm)
RECONCILIATION TO HEADLINE EARNINGS (Rm) F’21 F’20 Gross Net Gross Net Attributable loss (896) (896) Loss on disposal of PPE 1 - 2 2 Impairment of PPE 237 236 716 664 Fair value adjustment of investment property 99 83 888 888 Impairments of investments in associates 15 15 17 17 Share of associates’
Slide 16: Reconciliation to Adjusted Headline Earnings (Rm)
RECONCILIATION TO ADJUSTED HEADLINE EARNINGS (Rm) F’21 F’20 Gross Net Gross Net Headline (loss) / earnings (783) 216 Transaction costs 6 6 3 2 Restructuring costs (including termination benefits) 36 26 40 30 Pre-opening expenses 3 2 - - Impairment of inventory 8 8 2 2 Derecognition of deferred tax -
Slide 17: Exceptional Items – FV Adjustment on Investment Properties (Rm)
EXCEPTIONAL ITEMS – FV ADJUSTMENT ON INVESTMENT PROPERTIES (Rm) WACC FV % adjustment Fair value adjustment on investment properties Champagne Sports Resort 14.0 (31) Birchwood Hotel and ORT Conference Centre 14.0 34 Radisson Blu Waterfront 13.0 (51) Sandton Eye 13.0 (24) (72) Fair value adjustment o
Slide 18: Exceptional Items – Impairments of PPE (Rm)
EXCEPTIONAL ITEMS – IMPAIRMENTS OF PPE (Rm) WACC FV % adjustment Impairment of PPE – Hotels SA Southern Sun Rosebank 14.0 (5) Holiday Inn Sandton 13.5 (27) Garden Court Eastgate 14.0 (13) Garden Court Umhlanga 13.5 (1) Southern Sun Hyde Park 13.5 (22) (68) Impairments of PPE - HPF The Westin 13.5 (1
Slide 19: Segmental Analysis (Rm)
SEGMENTAL ANALYSIS (Rm) Income Ebitdar F’21 F’20 F’21 F’20 Manco 68 266 (27) 154 Rental income – HPF 27 310 27 310 Trading income – HPF 38 - (24) - Internally managed 904 3 501 (131) 787 Coastal 429 1 885 (92) 463 Inland 334 1 344 (56) 262 Other 141 272 17 62 Offshore 135 569 (22) 101 Internal manag
Slide 20: Cash Flow (Rm)
CASH FLOW (Rm) F’21 F’20 Ebitdar per income statement (177) 1 352 Property rentals (106) (210) Move in working capital adjusted for non-cash and exceptional items 144 95 Dividend income from associates - 22 Cash (utilised)/generated from operations (139) 1 259 Net finance costs paid (excluding IFRS1
Slide 21: Cash Flow (Rm) Continued
CASH FLOW (Rm) CONTINUED F’21 F’20 Free cash (outflow)/inflow (b/f) (446) 484 Dividends paid to NCI - (245) Disposal proceeds - 6 Investment activities – expansion capex (16) (211) Associates, joint ventures, loans and investments 481 (60) Net cash surplus / (deficit) 19 (26) Currency (13) 31 Move i
Slide 22: Cash Flow Analysis (Rm)
CASH FLOW ANALYSIS (Rm) Hotels Hotels SA Offshore F’21 Opening net IBD (1 977) (1 275) (3 252) Net IBD movement (386) 569 183 Comprising of: Ebitdar / (Cash burn) (155) (22) (177) COVID-19 contractual income 125 - 125 Trading income 903 135 1 038 Less: Employee costs (including termination benefits)
Slide 23: Investment Activities (Rm)
INVESTMENT ACTIVITIES (Rm) F’21 F’20 Investment activities 16 211 Southern Sun Pretoria - 200 Riverside Conference Centre 16 11 Maintenance capex 46 366 Hotel major refurbishments: Southern Sun Ridgeway Lusaka - 73 Southern Sun Ikoyi - 12 Southern Sun Elangeni - Maharani 2 Southern Sun Cape Sun 3 9
Slide 24: Interest Bearing Debt (Rm)
INTEREST BEARING DEBT (Rm) F’21 F’20 External debt – Offshore (US$ based) 750 1 430 External debt (Rand based) 2 730 2 550 Prepaid borrowing costs (4) (6) Gross IBD 3 476 3 974 Cash on hand – Hotels SA (365) (571) Cash on hand – Hotels Offshore (42) (151) Net IBD 3 069 3 252 Analysed as: Hotels SA 2
Slide 25: Financial Covenant Waivers and Facilities
FINANCIAL COVENANT WAIVERS AND FACILITIES Lenders have approved covenant waivers for September 2021 subject to revised Ebitda and liquidity thresholds Based on the COVID-19 interventions already implemented and cash flow forecasts, management believes that the company should meet revised covenan
Slide 26: Group Facility Profile
GROUP FACILITY PROFILE 800 700 600 500 Rand millions 400 800 530 300 300 600 20 500 155 200 371 300 100 214 230 200 171 190 148 78 100 - 26 Dec-21 Mar-22 Mar-22 Apr-22 Jun-22 Aug-22 Dec-22 Feb-23 Mar-23 Mar-24 Sep-24 Feb-25 Dec-25 Offshore Offshore Offshore HPF SA HPF HPF Offshore HPF HPF HPF Offsho
Slide 27: COVID-19 Status and Action Plan
COVID-19 STATUS AND ACTION PLAN Phased re-activation of portfolio Leisure hotels opened earlier to cater for demand for both intra and inter-provincial travel Outlying hotels that traditionally cater to government and corporate groups traded better in the second half of the year The lifting of
Slide 28: COVID-19 Status and Action Plan
COVID-19 STATUS AND ACTION PLAN Phased re-activation of portfolio As a result, recovery in the international and corporate travel markets is likely to take longer than originally anticipated, particularly if there is a third wave of infections or further delays in the vaccine rollout locally The
Slide 29: Corporate Activity
CORPORATE ACTIVITY MAIA Sale of MAIA for R467m was opportune and improved the group’s liquidity Investment Property in Hospitality Five of Hospitality’s properties were vacated by Marriott during the year and are now managed by Tsogo Sun Hotels − Arabella Hotel, Golf & Spa − Hazyview Sun − The E
Slide 30: Corporate Activity
CORPORATE ACTIVITY Hospitality As announced on SENS on 11 March 2021, the group successfully acquired 100% of Hospitality’s ordinary shares in issue in exchange for the issue of 417 million Tsogo Sun Hotels’ shares at an exchange ratio of 1.77 With effect from 2 February 2021, Hospitality delist
Slide 31: Prospects
PROSPECTS Trading Encouraged by the move back to Level 1 with rooms sold increasing to 106 889 in March 2021 and to 117 952 in April 2021 Group currently has 86% of its hotel portfolio open and trading Hotels that remain closed are concentrated in the Cape Town and Sandton nodes in South Afric
Slide 32: Thank You
THANK YOU Y TSOGO SUN HOTELS