Sun International Limited · JSE:SUI
Sun International — H1 2017 Earnings Presentation
32 slides from Sun International's earnings presentation, Jun 30, 2017
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017
Slide 2: Disclaimer
DISCLAIMER Certain statements in this document may statements speak only as at the date of this fairness, accuracy or completeness of the constitute ’forward looking statements’. document. You are cautioned not to place information (including data obtained from Such forward looking statements reflec
Slide 3: Group revenue, EBITDA, operating profit and HEPS
GROUP GROUP REVENUE EBITDA 19% to 15% to R7.6 billion R1.9 billion ADJUSTED ADJUSTED OPERATING DILUTED PROFIT HEPS 198 cents 8% to per share R1.1 billon 3
Slide 4: Operational Review
OPERATIONAL REVIEW Difficult trading conditions due to In Chile , with the exception of South Africa the macro-economic and political Latam Iquique and Monticello, trading has environment improved Consumers’ disposable income Iquique affected by strike action in impacted. Less to spend on the mining
Slide 5: Strategic Focus
un International
Slide 6: Strategic Focus
STRATEGIC FOCUS Improve existing • “Back to Basics” operations and guest - Focus on discipline and standard operating procedures experience - Driving operational efficiencies throughout the organisation - Integration of key systems • Set standards and agree guest proposition • Improve service levels
Slide 7: Strategic Focus | Continued
STRATEGIC FOCUS | CONTINUED • South Africa • Latam Protect and leverage existing - Opening of the Time Square arena in November - Acquired 50% of EDS equity interest in Sun asset portfolio 2017 and the hotel in March 2018 Dreams – implementation subject to outstanding regulatory approvals - Grow Tim
Slide 8: Strategic Focus | Continued
STRATEGIC FOCUS | CONTINUED Grow our • Capitalise on land development opportunities at: business into new areas and - Boardwalk - Retail redevelopment and expansion. Contribute land and existing retail for equity products - Carnival City - Large mixed use land development opportunity. Contribute lan
Slide 9: Strategic Focus | Continued
STRATEGIC FOCUS | CONTINUED • Improve organisation culture Our people • Continue integration of Dreams S.A and Sun culture in Latam • Carefully review relations with employees working for labour brokers and outsourced service providers • Address union issues • South African wage negotiations commenc
Slide 10: Update
UPDATE “TIMESQE AT MENLYN MAINE
Slide 11: Update on Time Square
UPDATE ON TIME SQUARE • Casino commenced operations on 1 April 2017 Gauteng • Gauteng gambling market not growing gambling market • Time Square captured 13.4% share of Gauteng's market, which is below expectation • 2 000 slots and 60 tables Operations • 8 500 seater arena (opening November 2017) • 2
Slide 12: Time Square Arena Line-Up
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Slide 13: Financial Review
FINANCIAL REVIEW International
Slide 14: Financial Overview
FINANCIAL OVERVIEW • Group revenue increased by Unaudited Pro forma 19% to R7.6 billion 30 June 30 June • Growth attributable to the R million 2017 % 2016 inclusion of: Revenue 7 560 19 6 349 - Sun Slots from 1 April 2016 EBITDA 1 894 15 1 647 - Sun Dreams from 1 June 2016 Adjusted operating profit
Slide 15: Adjustment to Headline Earnings
ADJUSTMENT TO HEADLINE EARNINGS • Impairment of R8 million attributed to goodwill in Grand Sports • Time Square pre-opening expenses of R40 million • IFRS 2 share based payment expense incurred with regards to the BEE preference share transaction relating to Time Square of R8 million • Interest of R
Slide 16: Segmental Review
SEGMENTAL REVIEW
Slide 17: Segmental Review
SEGMENTAL REVIEW South Africa Latam Nigeria Group 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June R million 2017 2016 2017 2016 2017 2016 2017 2016 Revenue 5 152 5 108 2 339 2 620 69 99 7 560 7 827 EBITDA 1 304 1 360 591 701 (1) (3) 1 894 2 058 Adjusted operating profit 804 905 368 4
Slide 18: Revenue Contribution by Category and Geography
REVENUE CONTRIBUTION BY CATEGORY AND GEOGRAPHY Category Geography (1.26%) (8.35%) 0.91% 9.32% (7.58%) 8.35% (33.47%) 30.94% (0.24%) 0.34% (3.73%) 6.88% (2.60%) 0.12% (65.26%) (73.95%) 68.15% 74.99% Casinos International Business South Africa Latam Nigeria Sun Slots Sun Bet Rooms Food and Beverage (
Slide 19: South Africa Segmental Review
SOUTH AFRICA SEGMENTAL REVIEW Revenue EBITDA Operating profit R million 30 June 2017 30 June 2016 30 June 2017 30 June 2016 30 June 2017 30 June 2016 GrandWest 1 031 1 049 391 426 316 363 Sun City 859 808 139 111 26 15 Sun City* (51) (72) (44) (61) (44) (61) Sibaya 612 576 207 192 175 157 Carnival C
Slide 20: Latam Segmental Review
LATAM SEGMENTAL REVIEW Revenue EBITDA Operating profit R million 30 June 2017 30 June 2016 30 Jun 2017 30 June 2016 30 June 2017 30 June 2016 Monticello 876 908 243 282 179 216 Dreams S.A. SCJ licences 785 750 303 290 286 273 Dreams S.A. municipal licences 417 417 158 156 135 136 Central office - -
Slide 21: Capital Investment
CAPITAL INVESTMENT igo Wer on” NS
Slide 22: Capex
CAPEX Capital expenditure incurred during the period Forecast 31 December R million 30 June 2017 2017 Expansionary Time Square 1 083 615 Meropa 38 44 Sun City 10 27 Latam 111 27 1 242 713 Refurbishment Sun City 3 59 GrandWest 9 20 Carnival City 7 4 Sibaya - 9 Latam 22 31 Other refurbishments 2 1 43
Slide 23: Borrowings and Cash Flow
BORROWINGS AND CASH FLOW
Slide 24: Borrowings
BORROWINGS Attributable to • Borrowings as at 30 Sun June 2017 were R15.1 R million Total debt Minorities International billion South Africa Operating subsidiaries* 3 127 913 2 214 - With R11.4 billion Time Square 4 175 1 044 3 131 attributable to the South Management and corporate 4 085 - 4 085 Afr
Slide 25: Covenants
COVENANTS Covenants South Africa Latam Covenant Actual Covenant Actual Debt to EBITDA 4.0x 3.9x 4.75x 1.4x * Interest cover 2.5x 3.4x * 2.6x prior to netting of cash Capital • The group generates strong cash flow and is carefully managing capital allocation and allocation managing cash flow • Follow
Slide 26: South African Cash Flow
SOUTH AFRICAN CASH FLOW R million 39 317 439 1.373 246 410 11 278 288 1.161 776 132 (619) 136 Generated Working Tax Interest Capex Free Project Other Cashflow Dividends Borrowings Other Beginning Cash at by capital paid paid cash capex investing prior to to financing of period end of operations acti
Slide 27: Latam Cash Flow
LATAM CASH FLOW R million 81 95 75 713 584 133 774 200 77 123 112 73 14 13 Generated Working Tax Interest Capex Free Project Cashflow Dividends Borrowings Other Effect of Beginning Cash at by capital paid paid cash capex prior to financing exchange of period end of operations funding activities rate
Slide 28: Supplementary Information
SUPPLEMENTARY INFORMATION
Slide 29: Group Structure
GROUP STRUCTURE Economic interest % Slots Tables Rooms South Africa Gauteng Carnival City 91 1 568 47 105 Maslow 100 - - 281 Time Square 75 2 000 60 - Western Cape GrandWest 61 2 563 64 39 Table Bay 61 - - 329 Worcester 61 220 6 98 Sunbet 100 - - - Kwa-Zulu-Natal Sibaya 63 1 214 48 154 Limpopo Merop
Slide 30: Analysis of Minority Shareholders
ANALYSIS OF MINORITY SHAREHOLDERS Profit after tax % Shareholding Minority portion including SIEST R million 30 June 2017 30 June 2016 30 June 2017 30 June 2016 30 June 2017 30 June 2016 South Africa 249 475 142 172 SunWest 218 244 64.90% 64.90% 84 82 Sibaya 115 100 66.15% 66.15% 43 36 Carnival City
Slide 31: Borrowings by Subsidiary
BORROWINGS BY SUBSIDIARY 30 June 2017 31 December 2016 Attributable Attributable Total Minority to Sun Total Minority to Sun R million Borrowings Share International Borrowings Share International South Africa 11 387 1 957 9 430 10 617 1 745 8 872 SunWest 938 361 577 931 358 573 Afrisun Gauteng 608
Slide 32: International
International