Southern Sun Limited · JSE:SSU
Southern Sun — Investor Presentation (May 2022)
33 slides from Southern Sun's investor presentation, May 2022
Slide 1: Southern Sun Investor Presentation May 2022
F’22 • Full year occupancy at 30.6% (F’21: 12.2%) • Ebitdar at R590m (including R191m insurance proceeds) • Net debt reduced to R2.8bn • R1.3bn in liquidity maintained SOUTHERN SUN INVESTOR PRESENTATION May 2022 1
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% SOUTH AFRICA OFFSHORE • Owned, managed • Owned, managed and leased hotels and leased hotels • UK Investments - 26% • 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 Y Southern Sun Luxury Full Service Economy 54 Arabella ines ©WSouthernSun © SouthernSun Ostayeasy- N BATE ee woTels RESORTS een aA TERCONTINENTAL ou ¥ © hr SoU ane Garden, AD MOUNT ORACE PALAZZO ) THE SANDTON SUN SANDTON TOWERS EDWARD . . wo SUNCOAMT TOWERS ©) Southern Sun
Slide 6: Portfolio by Rooms
PORTFOLIO BY ROOMS PORTFOLIO BY NUMBER OF ROOMS, BRAND AND REGION (EXCLUDING RBH AND IHL IN THE UK) Land & Freehold & Building Owned Tsogo Sun 3rd party Brand Land lease Lease Total Gaming Owner Total Internally managed Luxury Portfolio 430 557 987 411 138 1 536 Southern Sun 3 956 366 4 322 723 22 5
Slide 7: Group Financial Structure – Hotel Ownership
GROUP FINANCIAL STRUCTURE – HOTEL OWNERSHIP Freehold title, Land lease or Land & building lease 75 hotel income statements contribute to group revenues and expenses – Garden Court Victoria Junction became internally managed from October 2021 Internal management fees are paid to Manco which elimi
Slide 8: Group Financial Structure – Hotel Ownership Continued
GROUP FINANCIAL STRUCTURE – HOTEL OWNERSHIP CONTINUED Leased by third-party management companies 4 hotels managed by external parties remain investment properties on the group balance sheet as at 31 March 2022 Rental income earned from these 4 hotels is reflected as rental income in the group co
Slide 9: 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 Southern Sun with the management fee income recognised in Manco 15 of these management agreements will be capable of termination if the proposed separation agr
Slide 10: Review of Operations
REVIEW OF OPERATIONS The first half of the year was marred by the third wave of Covid-19 infections during June and July 2021 which resulted in severe restrictions aimed at controlling further spread and managing hospitalisations The banning of alcohol sales as well as domestic leisure travel to
Slide 11: Review of Operations
REVIEW OF OPERATIONS A further positive impact on the results was the collection of gross insurance proceeds of R191 million in August 2021 These once-off gains played a vital role in improving the group’s liquidity position after the third wave & violent protests As the third wave subsided an
Slide 12: Review of Operations
REVIEW OF OPERATIONS As it became clear that Omicron was milder than previous variants, booking pace improved and the group sold 231 587 rooms in March 2022, marking the first month where the group achieved over 200 000 room sales in South Africa since February 2020 Contributing to this fourth q
Slide 13: Corporate Activity
CORPORATE ACTIVITY Proposed transaction with Tsogo Sun Gaming The company announced on SENS that it had concluded a Hotel Purchase Agreement with Tsogo Sun Gaming Limited and two of its subsidiaries (TSG) in terms of which the group will acquire the Southern Sun Emnotweni and StayEasy Emnotweni (E
Slide 14: Corporate Activity
CORPORATE ACTIVITY Proposed disposal of Southern Sun Ikoyi, Nigeria As announced on SENS, the group’s wholly owned subsidiary Southern Sun Africa (SSA) entered into a Sale Agreement on 26 May 2022 with Kasada Albatross Holding (the Purchaser), which is a subsidiary of Kasada Hospitality Fund LP. I
Slide 15: Financial Overview
Y FINANCIAL OVERVIEW Southern Sun
Slide 16: Quarterly Performance (Rm)
QUARTERLY PERFORMANCE (Rm) Q1 Q2 H1 Q3 Q4 H2 Total Revenue F’22 469 490 959 845 904 1 749 2 708 F’21 58 277 335 448 355 803 1 138 Change on F’21 411 213 624 397 549 946 1 570 F’22 Occupancy (SA & Offshore owned portfolio) 22.7% 21.1% 21.9% 38.0% 40.5% 39.2% 30.6% Ebitdar F’22 (39) *184 *145 *189 *25
Slide 17: South Africa System-Wide Portfolio – Rooms Sold Since 1994
SOUTH AFRICA SYSTEM-WIDE PORTFOLIO – ROOMS SOLD SINCE 1994 3,500,000 80% 3,000,000 70% 60% 2,500,000 50% 2,000,000 40% 1,500,000 30% 1,000,000 20% 500,000 10% 0 0% F'94 F'95 F'96 F'97 F'98 F'99 F'00 F'01 F'02 F'03 F'04 F'05 F'06 F'07 F'08 F'09 F'10 F'11 F'12 F'13 F'14 F'15 F'16 F'17 F'18 F'19 F'20 F
Slide 18: South Africa System-Wide Portfolio – Trend in Rooms Sold
SOUTH AFRICA SYSTEM-WIDE PORTFOLIO – TREND IN ROOMS SOLD 3rd wave 350,000 160% 300,000 140% 120% 250,000 100% Rooms sold 200,000 80% 150,000 60% 100,000 40% 50,000 20% 0 0% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar F'20 Actual 239,377 237,090 251,186 262,886 263,352 288,360 286,017 289,080 257
Slide 19: Income Statement (Rm)
INCOME STATEMENT (Rm) F’22 F’21 Change on Income 2 708 1 138 1 570 Rooms revenue 1 641 593 1 048 Food & beverage revenue 731 269 462 Property rental income 90 27 63 Other income 246 249 (3) Overheads (2 309) (1 315) (994) Owned stats F’22 F’21 Insurance proceeds 191 - 191 Occupancy (%)* 30.6 12.2 Av
Slide 20: Income Statement (Rm) Continued
INCOME STATEMENT (Rm) CONTINUED F’22 F’21 Change on Profit/(loss) before interest and taxation (b/f) 168 (656) 824 Finance costs (net) (358) (346) (12) Finance costs (net) (230) (218) (12) Finance costs – IFRS16 (128) (128) - Share of earnings/(loss) of associates & joint ventures 26 (128) 154 Incom
Slide 21: Reconciliation to Headline Earnings (Rm)
RECONCILIATION TO HEADLINE EARNINGS (Rm) F’22 F’21 Gross Net Gross Net Attributable loss(1) (156) (896) Loss on disposal of PPE 1 1 1 - Impairment of PPE 94 89 237 236 Fair value adjustment of investment property (55) (43) 99 83 Impairments of investments in associates - - 15 15 Impairment of goodwi
Slide 22: Reconciliation to Adjusted Headline Earnings (Rm)
RECONCILIATION TO ADJUSTED HEADLINE EARNINGS (Rm) F’22 F’21 Gross Net Gross Net Headline loss(1) (121) (783) Transaction costs - - 6 6 Restructuring costs (including termination benefits) 4 3 36 26 Pre-opening expenses - - 3 2 Impairment of inventory - - 8 8 Tax effects of HPF ceasing to be a REIT -
Slide 23: Segmental Analysis (Rm)
SEGMENTAL ANALYSIS (Rm) Income Ebitdar Ebitdar margin % F’22 F’21 F’22 F’21 F’22 F’21 Manco (1) 139 68 224 (27) 161 (40) Rental income – HPF (2) 68 27 68 27 100 100 Trading income – HPF 177 38 (7) (24) (4) (63) Internally managed 2 100 904 253 (131) 12 (14) Coastal 1 167 429 197 (92) 17 (21) Inland
Slide 24: Cash Flow (Rm)
CASH FLOW (Rm) F’22 F’21 Ebitdar per income statement 590 (177) Property rentals (146) (106) Move in working capital adjusted for non-cash and exceptional items 59 144 Dividend income from associate 5 - Cash generated/(utilised) from operations 508 (139) Net finance costs paid (excluding IFRS16 adju
Slide 25: Cash Flow (Rm) Continued
CASH FLOW (Rm) CONTINUED F’22 F’21 Free cash inflow/(outflow) (b/f) 223 (446) Disposal proceeds 1 - Investment activities – expansion capex - (16) Associates, joint ventures, loans and investments - 481 Net cash surplus 224 19 Currency (3) (13) Move in net IBD 221 6 Opening net IBD (3 069) (3 252) P
Slide 26: Investment Activities (Rm)
INVESTMENT ACTIVITIES (Rm) F’22 F’21 Investment activities - 16 Riverside Conference Centre - 16 Maintenance capex 43 46 Hotel major refurbishments: Garden Court Marine Parade 2 - Southern Sun Waterfront 1 - Arabella Hotel & Spa 2 - Southern Sun Elangeni & Maharani - 2 Southern Sun Cape Sun - 3 Reso
Slide 27: Interest Bearing Debt (Rm)
INTEREST BEARING DEBT (Rm) F’22 F’21 External debt – Offshore (US$ based) 667 750 External debt (Rand based) 2 831 2 730 Prepaid borrowing costs (3) (4) Gross IBD 3 495 3 476 Cash on hand – Hotels SA (584) (365) Cash on hand – Hotels Offshore (81) (42) Net IBD 2 830 3 069 Analysed as: Hotels SA 2 24
Slide 28: Financial Covenant Waivers and Facilities
FINANCIAL COVENANT WAIVERS AND FACILITIES The group has comfortably met revised Ebitdar and liquidity covenants for all quarterly measurement periods in the current financial year, including March 2022 Lenders have approved the covenant waivers for September 2022 on the basis that the revised co
Slide 29: Financial Covenant Waivers and Facilities
FINANCIAL COVENANT WAIVERS AND FACILITIES The company extended its R600 million facility, of which R200 million was utilised at 31 March 2022, on the same terms and conditions to 30 June 2023 Terms have also been agreed with lenders to refinance the US$2 million Mozambican Metical facilities (R2
Slide 30: Group Facility Profile
GROUP FACILITY PROFILE 800 399 600 500 300 270 360 20 300 230 320 201 200 187 93 27 SSA HPF TSI HPF HPF HPF HPF HPF SSA SS Moz SS Ikoyi SS Moz Feb 23 May 23 Jun 23 Aug 23 Dec 23 Mar 24 Mar 24 Sep 24 Feb 25 Mar 25 Dec 25 Jul 26 Utilised facility Facility headroom 30
Slide 31: Prospects
PROSPECTS While we are encouraged by the recent upward trend in trading, we are acutely aware that we are still trading at occupancies significantly below the group’s long-term average The group still faces several challenges, the most recent being the war in Ukraine, the flooding in KZN and the
Slide 32: Prospects
PROSPECTS What is clear is that Covid-19 will remain with us for the foreseeable future and the only way to return to some form of normality is to ensure that the majority of the South African adult population is vaccinated For the hospitality industry in particular, ease and affordability of tr
Slide 33: Follow the Sun – Thank You
Follow the Sun THANK YOU 33