Southern Sun Limited · JSE:SSU
Southern Sun — Tsogo Sun Hotels — Investor Presentation (November 2020)
29 slides from Southern Sun's investor presentation, November 2020
Slide 1: Tsogo Sun Hotels Investor Presentation November 2020
TSOGO SUN HOTELS INVESTOR PRESENTATION November 2020
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 47 % 53% 100% 75% HOTEL OPERATIONS Offshore South Africa • Owned, managed and • Owned and leased leased hotels hotels • UK Investments • 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 ECONOMY 5
Slide 6: Portfolio by Rooms
PORTFOLIO BY ROOMS PORTFOLIO BY NUMBER OF ROOMS, BRAND AND REGION (EXCLUDING RBL AND IHL IN THE UK) Land / building Owned TsogoSun 3rd party Brand Freehold Leases HPF Total Gaming Owner Total Internally managed Luxury Portfolio 164 557 266 987 246 138 1 371 Southern Sun 301 1 468 2 439 4 208 714 - 4
Slide 7: Group Financial Structure
GROUP FINANCIAL STRUCTURE Hotel Ownership Freehold title or Land/building lease • 28 hotels are run for the group’s account (MAIA Luxury Resort & Spa disposed of effective 13 July 2020) • The 28 individual hotel income statements contribute to group revenues and expenses • Internal management fees
Slide 8: Group Financial Structure
GROUP FINANCIAL STRUCTURE Hotel Ownership Hospitality Property Fund • Managed by third-party owners − The 8 hotels managed by external parties remain investment properties on the group balance sheet − The rental income earned by HPF from these 8 hotels are reflected as rental income in the group c
Slide 9: Group Financial Structure
GROUP FINANCIAL STRUCTURE Hotel Ownership 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 • 11 hotels owned by third parties and run for their account (includes the
Slide 10: Financial Overview
FINANCIAL OVERVIEW
Slide 11: Quarterly Performance (Rm)
QUARTERLY PERFORMANCE (Rm) Q1 Q2 Total Revenue F’21 H1 ex-Sandton hotels 58 234 292 F’20 H1 ex-Sandton hotels 961 1 113 2 074 Change on F’20 H1 (903) (879) (1 782) Ebitdar F’21 H1 ex-Sandton hotels (160) (46) (206) F’20 H1 ex-Sandton hotels 206 353 559 Change on F’20 H1 (366) (399) (765) Adjusted ea
Slide 12: South Africa System-Wide Portfolio – Trend in Rooms Sold
SOUTH AFRICA SYSTEM-WIDE PORTFOLIO – TREND IN ROOMS SOLD June July August September October Lockdown Level 3 Level 3 Level 3/3 Level 2/1 Level 1 Total 2020 9 687 20 117 33 710 66 268 88 370 Total 2019 251 186 262 886 263 352 288 360 286 017 % of prior period 4% 8% 13% 23% 31% 12
Slide 13: Income Statement | F'21 H1 vs F'20 H1 (Rm)
INCOME STATEMENT | F’21 H1 vs F’20 H1 (Rm) Change F’21 H1 F’20 H1 on Income 335 2 080 (1 745) Rooms revenue 121 1 303 (1 182) Food & beverage revenue 47 501 (454) Property rental income 27 137 (110) Other income 140 139 1 Owned stats F’21 H1 F’20 H1 Overheads (541) (1 521) 980 Occupancy (%) 21.6 59.
Slide 14: Income Statement | F'21 H1 vs F'20 H1 (Rm) Continued
INCOME STATEMENT | F’21 H1 vs F’20 H1 (Rm) CONTINUED Change F’21 H1 F’20 H1 on (Loss)/profit before interest and taxation (b/f) (44) 320 (364) Finance costs (net) (184) (179) (5) Finance costs (net) (119) (130) 11 Finance costs – IFRS16 (65) (49) (16) Share of (loss)/profit of associates & joint ven
Slide 15: Reconciliation to Adjusted Headline Earnings (Rm)
RECONCILIATION TO ADJUSTED HEADLINE EARNINGS (Rm) F’21 H1 F’20 H1 Gross Net Gross Net Attributable (loss) / earnings (176) 54 Loss on disposal of PP&E - - 1 1 Gain on disposal of investment in MAIA (355) (355) - - Share of associates’ headline earnings adjustment 90 90 - - Headline (loss) / earnings
Slide 16: Segmental Analysis (Rm)
SEGMENTAL ANALYSIS (Rm) Income Ebitdar Ebitdar margin % F’21 H1 F’20 H1 F’21 H1 F’20 H1 F’21 H1 F’20 H1 Manco 20 127 (51) 64 (255) 50 Rental income 3 123 3 123 100 100 Internally managed 264 1 600 (126) 302 (48) 19 Coastal 91 875 (89) 157 (98) 18 Inland 123 593 (36) 115 29 19 Other 50 132 (1) 30 2 2
Slide 17: Cash Flow (Rm)
CASH FLOW (Rm) F’21 H1 F’20 H1 Ebitdar per income statement (206) 559 Property & equipment rentals (51) (106) Move in working capital adjusted for non-cash and exceptional items 158 6 Dividend income from associates - 13 Cash (utilised)/generated from operations (99) 472 Net finance costs paid (excl
Slide 18: Cash Flow (Rm) Continued
CASH FLOW (Rm) CONTINUED F’21 H1 F’20 H1 Free cash (outflow)/inflow (b/f) (276) 72 Dividends paid to NCI - (160) Investment activities – expansion capex (16) (200) Associates, joint ventures, loans and investments 467 (51) Net cash surplus / (deficit) 175 (339) Currency (7) 5 Move in net IBD 168 (33
Slide 19: Cash Flow Analysis (Rm)
CASH FLOW ANALYSIS (Rm) Hotels Hotels SA HPF Offshore F’21 H1 Opening net IBD 279 (2 256) (1 275) (3 252) Net IBD movement (14) (247) 507 246 Comprising of: Ebitdar / (Cash burn) (203) 29 (32) (206) Covid-19 contractual income 117 - - 117 Trading income 91 86 41 218 Less: Employee costs (201) (6) (3
Slide 20: Investment Activities (Rm)
INVESTMENT ACTIVITIES (Rm) F’21 H1 F’20 H1 Investment activities 16 211 Southern Sun Pretoria HPF - 200 Riverside Conference Centre TGO 16 11 Maintenance capex 18 202 Hotel major refurbishments: Southern Sun Ridgeway Lusaka TGO - 59 Southern Sun Cape Sun TGO 2 7 Garden Court Hatfield HPF 1 - Westin
Slide 21: Interest Bearing Debt (Rm)
INTEREST BEARING DEBT (Rm) F’21 H1 F’20 H1 External debt – Offshore (US$ based) TGO 814 1 279 External debt (Rand based) HPF 2 578 2 334 Prepaid borrowing costs (7) (5) Gross IBD 3 385 3 608 Cash on hand TGO (307) (306) Cash on hand HPF (72) (27) Net IBD 3 006 3 275 Analysed as: TGO 503 970 HPF 2 50
Slide 22: Financial Covenant Waivers and Revised Covenants
FINANCIAL COVENANT WAIVERS AND REVISED COVENANTS Tsogo Sun Hotels • Lenders have approved covenant waivers for March 2021 provided the revised covenants set out below, measured quarterly at December 2020 and March 2021 are met: − A maximum rolling 12-month negative Ebitda threshold of R1bn − A minim
Slide 23: Covid-19 Status and Action Plan
COVID-19 STATUS AND ACTION PLAN The group implemented the following steps to reduce costs and preserve cash: Reduction of payroll burden • Temporary layoff of employees • Materially reduce pay for all levels including executive management and board members • Operate on skeleton staffing levels until
Slide 24: Covid-19 Status and Action Plan
COVID-19 STATUS AND ACTION PLAN Rent relief The group has received rental concessions from its various landlords and while terms varied, these mainly involved a discount in rent due for 2021 in exchange for the extension of lease terms by one year In other instances, property owners agreed to fo
Slide 25: Covid-19 Status and Action Plan
COVID-19 STATUS AND ACTION PLAN Health and safety protocols With our culture of prioritising customer health and safety, the group was well placed to comply with these regulations and worked closely with government and the Tourism Business Council of South Africa to develop the health and safety p
Slide 26: 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 Regulations on international inbound travel were restrictive with many of the group’s key source markets, including Germany, the UK, Fran
Slide 27: Prospects
PROSPECTS Trading Encouraged by the recent move to Level 1 of the national lockdown as well as the lifting of the international travel ban Group now trading approximately 68% of the hotels in its portfolio Recovery of the hospitality industry is expected to be slow due to the uncertainties aro
Slide 28: Prospects
PROSPECTS Corporate Activity Hospitality • The general meeting to vote on the Hospitality transaction takes place on 19 November 2020 • Cash retention is a priority – especially in this low revenue environment where Hospitality is increasing its debt burden through covering the fixed property-rela
Slide 29: Thank You
THANK YOU
Tsogo Sun Hotels — Investor Presentation (November 2020) on 6ix