Sun International Limited · JSE:SUI
Sun International — FY2018 Earnings Presentation
36 slides from Sun International's earnings presentation, Mar 19, 2019
Slide 1: Audited Summary Group Financial Results for the Year Ended 31 December
AUDITED SUMMARY GROUP FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER
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: Contents
CONTENTS STRATEGIC OBJECTIVES FINANCIAL REVIEW SEGMENTAL REVIEW CAPITAL INVESTMENT BORROWINGS AND CASH FLOW SUPPLEMENTARY INFORMATION
Slide 4: Income, adjusted EBITDA, operating profit and HEPS growth
Income Adjusted operating profit 7% to up 4% to up R16.4 billion R2.8 billion Adjusted EBITDA Adjusted diluted HEPS 5% to up 4% to up R4.4 billion 316 cents per share
Slide 5: Key Highlights
KEY HIGHLIGHTS • Time Square is now fully operational and reflecting steady casino market share growth. January and February 2019 gaming growth was 9% and 32% respectively • Sun Slots continues to trade well with 10% growth in income and 15% growth in adjusted EBITDA • Commenced restructure of Carou
Slide 6: Overview
Despite challenging trading conditions, OVERVIEW our business proved its resilience and we remain cash generative and can adapt to the ever-changing environment SOUTH AFRICA LATAM Trading remained subdued Comparable Sun Dreams performed well • Continued pressure on disposable income • Income in seco
Slide 7: Strategic Objectives
STRATEGIC OBJECTIVES
Slide 8: Improve Guest Experience
IMPROVE GUEST EXPERIENCE STRATEGIC OBJECTIVES Increased focus on service and customer engagement Significant promotions to celebrate Sun City’s 40th birthday SunBet went live with its new Adobe website using the Bede and Kambi platform in June 2018 prior to the Fifa World Cup Refurbishments at prope
Slide 9: Efficiency and Optimisation
EFFICIENCY AND OPTIMISATION STRATEGIC OBJECTIVES Efficiency and optimisation team identified a number of areas for improvement Review of SIML structures and services commenced Operating margins critically assessed and benchmarked Implementation of Kronos and advanced scheduling in the final stages o
Slide 10: Protect and Leverage Existing Asset Portfolio
PROTECT AND LEVERAGE EXISTING ASSET PORTFOLIO STRATEGIC OBJECTIVES SOUTH AFRICA Comments submitted on draft Tobacco Bill Bill for the new Gauteng tax regime withdrawn by MEC Draft legislation to be published for comment on proposed national gambling tax of 1% Comments to the amended National Gamblin
Slide 11: Protect and Leverage Existing Asset Portfolio (continued)
PROTECT AND LEVERAGE EXISTING ASSET PORTFOLIO STRATEGIC OBJECTIVES SOUTH AFRICA continued Carnival City land development progressing with various approvals underway Disposal of Sibaya excess land for R45 million approved by gaming board. Transfer expected in June 2019 NIGERIA Exit Nigerian operation
Slide 12: Grow Our Business into New Areas and Products
GROW OUR BUSINESS INTO NEW AREAS AND PRODUCTS STRATEGIC OBJECTIVES Acquisition of Thunderbird Resorts in Peru was concluded in April 2018 • Generated revenue of R194 million and adjusted EBITDA of R25 million Acquired 100% of the Park Hyatt Hotel, Casino & Spa in Mendoza, Argentina effective 11 July
Slide 13: Our People
OUR PEOPLE STRATEGIC OBJECTIVES Constitutional Court ruling on labour brokers • Employed 1 342 temporary employees • Relatively seamless integration • Will have short term effect Removed disproportionate income differential levels over time – equal pay for work of equal value Into second year of thr
Slide 14: Governance and Sustainability
GOVERNANCE AND SUSTAINABILITY STRATEGIC OBJECTIVES Changes to remuneration policy to be proposed Dedicated group ethics office to reinforce ethical culture Risk methodology and risk ranking revised Focused group sustainability hub incorporating occupational health and safety, environmental, socio-ec
Slide 15: Financial Review
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Slide 16: Financial Overview
FINANCIAL OVERVIEW Analysis of attributable profit FINANCIAL REVIEW December December R million 2018 % 2017* 2018 2017 Income 16 420 7 15 351 Attributable profit 464 483 Adjusted EBITDA 4 357 5 4 143 Share of associates 8 2 Adjusted depreciation and Continuing adjusted amortisation (1 541) (7) (1 44
Slide 17: Earnings Reconciliation
EARNINGS RECONCILIATION R million 2018 2017* 1. Net impairment of Panama FINANCIAL REVIEW Loss attributable to ordinary shareholders (7) (243) assets of R31 million and Adjustments to basic earnings 253 68 impairment of R306 million on Sun City Net impairment of assets1 337 92 Net loss on disposal o
Slide 18: Segmental Review
SEGMENTAL REVIEW
Slide 19: Segmental Review
SEGMENTAL REVIEW SEGMENTAL REVIEW South Africa Latam Nigeria Group R million 2018 2017 2018 2017* 2018 2017 2018 2017 Income 11 254 10 882 5 018 4 326 148 143 16 420 15 351 EBITDA 2 985 2 920 1 363 1 215 9 8 4 357 4 143 Adjusted operating profit after PPA 1 926 1 919 906 801 (16) (22) 2 816 2 698 0.
Slide 20: South African Segmental Review
SOUTH AFRICAN SEGMENTAL REVIEW SEGMENTAL REVIEW Income Adjusted EBITDA Adjusted operating profit R million 2018 % 2017 2018 % 2017 2018 % 2017 GrandWest 2 214 3 2 155 868 2 850 727 1 721 Sun City 1 672 (3) 1 731 205 (14) 237 (8) <(100) 26 Sibaya 1 289 2 1 269 430 (2) 439 360 (6) 385 Carnival City 96
Slide 21: Latam Segmental Review
LATAM SEGMENTAL REVIEW SEGMENTAL REVIEW Adjusted Adjusted Income EBITDA Operating profit R million 2018 % 2017 2018 % 2017 2018 % 2017 Monticello 1 904 14 1 674 573 37 417 405 53 265 Sun Dreams SCJ licences 1 581 3 1 532 612 4 586 574 4 551 Sun Dreams municipal licences 823 (1) 834 287 (5) 303 250 (
Slide 22: Capital Investment
CAPITAL INVESTMENT (a
Slide 23: Capital Investment
CAPITAL INVESTMENT CAPITAL INVESTMENT December 2018 December 2017 R million Actual Actual South African operations Expansionary 126 1 672 Time Square 126 1 594 Sun City - 50 Other - 28 Refurbishment and ongoing 622 501 23 Sun City 134 71 GrandWest 110 128 Sibaya 72 81 SunSlots 105 95 Time Square 14
Slide 24: Borrowings and Cash Flow
BORROWINGS @ AND CASH FLOW
Slide 25: Borrowings
BORROWINGS BORROWINGS AND CASH FLOW Attributable to R million Total debt Minorities Sun International Proceeds from the rights offer South Africa was applied to reduce Operating subsidiaries* 2 586 588 1 998 South African debt Time Square 5 070 722 4 348 Central office 1 518 - 1 518 9 174 1 310 7 86
Slide 26: South African Cash Flow
SOUTH AFRICAN CASH FLOW BORROWINGS AND CASH FLOW R million 3 110 68 524 642 1 598 2 249 2 012 126 963 26 50 973 286 17 254 273 Generated Working Tax paid Capex Free cash Project Interest paid Other Cashflow Dividends to Acquisition Rights offer Borrowings Beginning of Cash at end of by operations ca
Slide 27: Latam Cash Flow
LATAM CASH FLOW BORROWINGS AND CASH FLOW R million 155 194 1 124 179 914 84 276 87 718 130 77 321 346 627 661 1 617 14 27 225 673 Generated Working Tax paid Capex Free cash Project Interest paid Interest Other Cashflow Dividends to Acquisition Acquisition Acquisition Shareholder Borrowings Effect of
Slide 28: Supplementary Information
SUPPLEMENTARY ~* INFORMATION
Slide 29: Latam Segmental (CLP)
LATAM SEGMENTAL (CLP) SUPPLEMENTARY INFORMATION Income Adjusted EBITDA Adjusted Operating profit CLP million 2018 % 2017 2018 % 2017 2018 % 2017 Iquique 20 256 (3) 20 906 6 218 (18) 7 558 5 793 (10) 6 415 Puerto Varas 19 851 1 19 745 7 743 7 7 210 6 383 6 6 033 Temuco 28 443 2 27 875 11 006 2 10 813
Slide 30: Comparing Group H2 2018 to H1 2018
COMPARING GROUP H2 2018 TO H1 2018 SUPPLEMENTARY INFORMATION Revenue EBITDA Margin R million H2 2018 % H1 2018 H2 2018 % H1 2018 H2 2018 % H1 2018 GrandWest 1 143 7 1 073 460 13 408 40.2% 6 38.0% Sun City* 888 13 783 124 53 81 14.0% 36 10.3% Sibaya 657 4 632 218 3 212 33.2% (1) 33.5% Carnival City 4
Slide 31: Comparing South Africa H1 2018 to H1 2017
COMPARING SOUTH AFRICA H1 2018 TO H1 2017 SUPPLEMENTARY INFORMATION Revenue EBITDA Margin R million H1 2018 % H1 2017 H1 2018 % H1 2017 H1 2018 % H1 2017 GrandWest 1 073 4 1 032 407 4 391 37.9% - 37.9% Sun City* 783 (3) 808 81 (15) 95 10.3% (13) 11.8% Sibaya 632 3 612 213 3 207 33.7% - 33.8% Carniva
Slide 32: Comparing South Africa H2 2018 to H2 2017
COMPARING SOUTH AFRICA H2 2018 TO H2 2017 SUPPLEMENTARY INFORMATION Revenue EBITDA Margin R million H2 2018 % H2 2017 H2 2018 % H2 2017 H2 2018 % H2 2017 GrandWest 1 143 2 1 123 460 - 459 40.2% (2) 40.9% Sun City* 888 (4) 922 124 (13) 142 14.0% (9) 15.4% Sibaya 657 - 656 218 (6) 232 33.2% (6) 35.4%
Slide 33: Group Effective Tax Rate (ETR)
GROUP EFFECTIVE TAX RATE (ETR) SUPPLEMENTARY INFORMATION South R million Africa Nigeria Latam Swaziland Panama Colombia Total Profit before tax – continuing operations 594 (60) 574 - - - 1 108 Profit before tax – discontinuing operations - - - (7) (59) (144) (210) Preference share funding 92 - - - -
Slide 34: Borrowings by Subsidiary
BORROWINGS BY SUBSIDIARY SUPPLEMENTARY INFORMATION Total Minority Attributable to Total Minority Attributable to Borrowings Share Sun International Borrowings share Sun International 2018 2017 R million South Africa 9 174 1 310 7 864 11 424 1 373 10 051 SunWest 728 256 472 869 305 564 Afrisun Gauten
Slide 35: Group Structure
GROUP STRUCTURE SUPPLEMENTARY INFORMATION Economic interest % * Slots Tables Rooms South Africa Gauteng Carnival City 91.2% 1 401 46 105 Maslow 100.0% - - 281 Time Square 82.3% 1 750 60 238 Western Cape GrandWest 61.0% 2 563 61 39 Table Bay 61.0% - - 329 Worcester 61.4% 220 6 98 Sun Bet 100.0% - - -
Slide 36: Analysis of Minority Shareholders
ANALYSIS OF MINORITY SHAREHOLDERS SUPPLEMENTARY INFORMATION Minority portion Profit after tax % Shareholding including SIEST R million 2018 2017 2018 2017 2018 2017 South Africa 540 611 (316) (314) SunWest 501 502 61.6% 61.6% (192) (193) Sibaya 234 255 63.3% 62.7% (88) (94) Carnival City 84 76 91.2%