Sun International Limited · JSE:SUI
Sun International — H1 2014 Earnings Presentation
27 slides from Sun International's earnings presentation, February 2014
Slide 1: Results Presentation for the six months ended 31 December 2013
RESULTS PRESENTATION i fort he six months ended 31 December 2013 ge Sun International Limited e) Sun International A Million Thrills. ¢
Slide 2: Overview: Group highlights
OVERVIEW Group highlights The Maslow Hotel 2
Slide 3: Key indicators
Key indicators R5 407m R1 489m 334 cps 90 cps GROUP REVENUE GROUP EBITDA ADJ DILUTED HEPS DPS +4% (5%) (18%) (18%) 3
Slide 4: Operating environment
Kalahari Sands Operating environment Pressure on consumer spending Inflationary pressure on costs Increasing forms of competition Currency weakness Regulatory changes 4
Slide 5: Strategic Review
STRATEGIC Group highlights REVIEW GrandWest 5
Slide 6: Key strategic focus areas
Gaborone Sun Key strategic focus areas Improve our Protect and Grow our existing leverage our business into new Governance Our People operations and existing asset areas and & Sustainability guest experience portfolio products EXISTING OPERATIONS GROWTH PEOPLE REPUTATION ASSETS 6
Slide 7: Operations: Improving existing operations and guest experience
Operations: Improving existing operations and guest experience • Improving marketing and sales capability: – Chief Marketing and Strategy Officer appointed – Overseas marketing offices closed/refocused – Local sales team/call centre etc. restructured – Web/digital offering being enhanced – New brand
Slide 8: Existing Assets: Protect and leverage existing asset portfolio
Lesotho Sun Existing Assets: Protect and leverage existing asset portfolio • GrandWest exclusivity: • Morula relocation: – Increased engagement with relevant stakeholders – Public hearings scheduled for first week of April 2014 – In depth studies done on economic and social impact • Federal Palace (
Slide 9: Growth: Growing our business into new areas & products
Growth: Growing our business into new areas & products • Online gaming and betting: – R30m Powerbet acquisition: operating online under Sunbet – Focus on developing our online gaming presence • EBTs and LPMs: – Market growing fast – Gaming boards licensing EBTs – Potential for growth in Africa and L
Slide 10: Growth: Allocating our capital
Monticello Growth: Allocating our capital Acceptable country risk Sound gaming legislation Ability to operate ethically Competitive advantage Growth opportunities are only pursued if they Capital is only allocated 5% EBITDA contribution pass our investment to projects where the filters and where the
Slide 11: People: Investing in our people
People: Investing in our people • S189 restructure: • Transformation goals: – Unsettling for all – Impact of new Black Economic Empowerment Codes of Good Practice (“BEE Codes”) being assessed – Still c. 3 months to go – Transformation and change manager appointed • High performance culture: • Union
Slide 12: Reputation: Governance and sustainability
Reputation: Governance and sustainability • Maintained inclusion in the JSE’s SRI Index • Stakeholder engagement significantly improved: – Gaming boards – Unions – Shareholders – Analysts • Environmental Manager appointed • CSI, SED and ED Initiatives: – Need to leverage spend – Changes to the BEE C
Slide 13: Financial Review
FINANCIAL REVIEW Sibaya 13
Slide 14: Income Statement
Income Statement Rm HY 2014 HY 2013 % change Revenue 5 407 5 221 3.6% EBITDA 1 489 1 570 (5.2%) Depreciation and amortisation (464) (412) Property and equipment rental (73) (36) Profit from operations 952 1 122 Foreign exchange profits - 8 Net interest paid (239) (228) Profit before tax 713 902 Tax
Slide 15: Revenue by category
Revenue by category Growth in group revenue by category Rm 6 000 Total gaming: (64) 5 500 98 45 107 101 5 000 (165) 4 500 4 000 3 500 5 221 5 407 3 000 HY 2013 Revenue Translation FX Gaming: Gaming: SA and Rooms F&B and Other HY 2014 Revenue Monticello Africa • Revenue up 4% on HY 2013 • Flat Casino
Slide 16: Revenue by geography
Revenue by geography Growth in group revenue by geography Rm 6 000 217 38 5 500 107 (176) 5 000 4 500 4 000 3 500 5 221 5 407 3 000 HY 2013 Revenue Translation FX South African African operations Monticello HY 2014 Revenue Operations • South African revenue increased 5.7% following a stronger Q2 • M
Slide 17: Group EBITDA
Group EBITDA Growth in group EBITDA by geography Rm 1 700 1 650 19 18 1 600 1 550 (31) 1 500 1 450 (87) 1 400 1 350 1 300 1 250 1 570 1 489 1 200 HY 2013 EBITDA Translation FX South African African operations Monticello HY 2014 EBITDA Operations • Group EBITDA at R1.5bn was down 5.2% on last year wi
Slide 18: South Africa: Trading in a tough environment
South Africa: Trading in a tough environment SA Revenue SA Gaming Revenue Rm Six months to First quarter Second quarter December 4 200 46 % % % 87 Rm CY change CY change CY change 4 100 South Africa 1 604 0.5% 1 767 4.5% 3 371 2.6% 85 GrandWest 476 7.7% 508 7.6% 984 7.7% 4 000 Sibaya 251 0.4% 290 12
Slide 19: Other African: Positive growth in gaming and rooms
Other African: Positive growth in gaming and rooms Other African revenue Occupancies for key properties Rm Occupancy % ADR 600 % % HY 2014 HY 2014 change change 550 14 16 9 Zambia 45.2% 5.1% R1 956 7.3% 34 500 Gaborone Sun 75.8% (2.5%) R855 14.9% Federal Palace 62.4% 1.5% R2 149 5.6% 450 476 549 Kal
Slide 20: Monticello: Showing positive signs of recovery
Monticello: Showing positive signs of recovery Monticello Revenue Month on month analysis Rm Rm 900 72 160 30% 800 25% 4 140 20% 700 (165) (16) 120 15% 600 10% 100 500 5% 807 702 400 80 0% HY 2013 Translation Gaming Rooms F&B and HY 2014 July Aug Sept Oct Nov Dec Jan Revenue FX Other Revenue HY 2013
Slide 21: Operating expenditure
Operating expenditure Operating expenditure split Key expenditure items Rm HY 2014 Casino taxes* 755 28 209 Cons & serv 10% HY 2013 Casino taxes* 718 25 246 13% Depreciation 6% 2% Emp costs 10% 9% HY 2014 Emp costs 961 140 144 Casino taxes* HY 2013 Emp costs 845 127 128 Promo & Marketing costs 22% 2
Slide 22: Group statement of financial position
Group statement of financial position Rm HY 2014 HY 2013 Movement Assets Property, plant and equipment 11 288 10 036 1 252 Intangible assets 525 490 35 Accounts receivable and other 583 518 65 Cash and cash equivalents 989 923 66 Other non-current assets 303 278 25 Other current assets 101 90 11 Tot
Slide 23: CAPEX
CAPEX CAPEX incurred Future CAPEX Rm Rm Spend 30 June Total to 2014 2015 Ongoing date 121 35 206 192 Ocean Club Casino 1 135 451 290 394 Sun City Vacation Club 300 21 126 153 Refurbishment 48 3 Enterprise Gaming System 680 353 250 77 ERP System 141 43 37 61 Expansionary 451 Total CAPEX 2 256 868 703
Slide 24: Capital funding
Capital funding slide Group net finance costs HY 2014 HY 2013 % change Interest expense 253 245 3.3 Less interest income 11 15 (26.7) Net finance costs 242 230 5.2 Weighted average interest rate 6.9 6.9 (0.0) Net financing cost: EBITDA (cover) 6.2 6.8 (9.9) Rm HY 2014 HY 2013 % change Fixed interest
Slide 25: Outlook
OUTLOOK Federal Palace 25
Slide 26: Medium term outlook
Boardwalk Medium term outlook GAMING ROOMS EFFICIENCIES GROWTH • Slowdown in consumer • Weak rand continues to • Restructuring • LATAM expansion spending negatively stimulate good growth announced • EBTs and LPMs impacting gaming in rooms revenue • Continued focus on • Sun City redevelopment • Gamin
Slide 27: Key strategic focus areas
Key strategic focus areas Improve our Protect and Growing our existing leveraging our business into new Governance & Our People operations and existing asset areas and Sustainability guest experience portfolio products Integrate gaming Overcome effect of Actively seek Create a high Maintai