Southern Sun Limited · JSE:SSU

Southern Sun — H1 F2013 Earnings Presentation

38 slides from Southern Sun's earnings presentation, November 2012

  1. Slide 1: Presentation to Analysts and Investors

    Presentation to: Analysts and Investors November 2012

  2. Slide 2: Group Structure

    Group Structure Public 41.3% 39.7% 19.0% 100% 100% 2

  3. Slide 3: Gaming Portfolio

    Gaming Portfolio Gauteng KZN Western Cape Mpumalanga Eastern Cape Free State 3

  4. Slide 4: Hotel Portfolio

    Hotel Portfolio Ultra Deluxe Deluxe Premier Economy Plus/ Economy Budget 4

  5. Slide 5: Management and Board

    Management and Board  TSH Board of Directors ● Executive Directors  Marcel von Aulock– Group CEO  Rob Huddy – Group CFO ● Non-Executive Directors  Johnny Copelyn (Chairman)  Jabu Mabuza (Deputy Chairman)  Marcel Golding  Elias Mphande  Meyer Kahn  Graham Mackay  Malcolm Wyman  Rex Tomlins

  6. Slide 6: Management and Board

    Management and Board  Group Executive Committee ● Corporate ● Gaming  Marcel von Aulock – Group CEO  Jacques Booysen – MD Gaming  Rob Huddy – Group CFO  Greg Lunga – FD Gaming  Rob Collins – Chief Marketing Officer  Vusi Dlamini – Group HR Director ● Hotels  Laurelle Fick – Corporate Finance

  7. Slide 7: Segmental Analysis

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  8. Slide 8: Group – Revenue and Ebitdar (Rm)

    Group – Revenue and Ebitdar (Rm) H1 F’13 H1 F’12 % Change Revenue Gaming 3 718 3 439 8 Hotels SA 910 779 17 Hotels Offshore 179 153 17 Corporate (intra-group-elimination) (17) (15) * Total Group 4 790 4 356 10 EBITDAR Gaming 1 494 1 338 12 Hotels SA 272 214 27 Hotels Offshore 46 43 7 Corporate 4 4 *

  9. Slide 9: Tsogo Sun Segmental (Rm)

    Tsogo Sun Segmental (Rm) Income Ebitdar Ebitdar Margin H1 F’13 H1 F’12 % change H1 F’13 H1 F’12 % change H1 F’13 H1 F’12 Montecasino 1 109 1 029 8 495 427 16 44.6 41.5 Suncoast 688 627 10 324 292 11 47.1 46.6 Gold Reef City 597 558 7 231 210 10 38.7 37.6 Silverstar 292 275 6 113 98 15 38.8 35.6 The

  10. Slide 10: Gaming

    Key Strategic Issues Gaming 10

  11. Slide 11: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Montecasino ● Entertainment offerings continuously improved including tenant refurbishment ● Bok town, Teatro and events attracting strong footfall ● Efficient flow-through  Gold Reef City ● Integration of casino complex and Theme Park in progress ● Theme Park turnar

  12. Slide 12: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Suncoast ● Additional 120 slots and 14 tables approved ● 120 slots (96 during period) and 6 tables installed, balance on council approval of interior building plans ● Large scale expansion required in medium term  Hemingways ● New investment of R400m  Expand hotel b

  13. Slide 13: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Emnotweni ● Expansion programme with spend of R200m  Casino refurbishment including additional positions  Conference and events area  Additional parking  Other Units ● Good Ebitdar growth at The Ridge, Emnotweni, Golden Horse, Blackrock and Mykonos ● Western Cape

  14. Slide 14: Gauteng Gaming Tax Revenues

    Gauteng Gaming Tax Revenues Monte- Gold Reef Silver- Growth in Gaming win (%) Gauteng casino City star Calendar years 2000 Monte vs Sundome 25.0 (4.9) 2001 Other casinos opened 5.8 20.9 2002 13.9 16.5 2003 11.0 9.6 2004 18.9 15.5 2005 11.1 13.2 2006 14.9 14.5 2007 13.1 12.6 2008 7.8 (6.8) (1.0) * 20

  15. Slide 15: KZN Gaming Tax Revenues

    KZN Gaming Tax Revenues KwaZulu- Growth in Gaming win (%) Natal Suncoast Golden Horse Blackrock Calendar years 2004 24.5 37.3 2005 24.7 22.5 2006 16.2 15.1 2007 19.6 15.6 2008 6.9 8.3 2009 4.6 5.0 1.4 5.5 2010 4.4 4.6 4.1 10.1 2011 7.3 5.3 10.8 9.2 3 months to September 2012 13.7 15.3 9.1 19.7 6 mon

  16. Slide 16: Other Gaming Tax Revenues

    Other Gaming Tax Revenues Growth in Gaming win (%) Province Unit Unit Unit Mpumalanga Ridge Emnotweni 3 months to September 2012 13.3 14.1 12.5 6 months to September 2012 9.7 10.9 10.1 Western Cape Caledon Mykonos Garden Route 3 months to September 2012 9.4 9.2 9.1 14.1 6 months to September 2012 7.

  17. Slide 17: Hotels

    Key Strategic Issues Hotels 17

  18. Slide 18: Hotels – Portfolio Philosophy

    Hotels – Portfolio Philosophy Land Buildings Operations Management Brand  Ideally own all components ● Tsogo Sun Hotels strategic advantage in scale ● More capital intensive but allows substantially higher return on effort ● Retains control of the assets providing extended tenure and resilience  L

  19. Slide 19: Owned and Managed

    Owned and Managed Hotels Rooms Owned Managed Deluxe 6 1 113 410 703 Premier 20 4 153 3 475 678 Owned includes leased hotels and Economy/Economy Plus 29 5 110 3 814 1 296 associates Budget (F1) 23 1 690 1 690 - Timeshare & Resorts 7 1 161 307 854 South Africa 85 13 227 9 696 3 531 Offshore 8 1 072 74

  20. Slide 20: SA System-wide Rooms Sold Annual History

    SA System-wide Rooms Sold Annual History 76.0% 3 250 000 74.0% 3 050 000 72.0% 2 850 000 70.0% 2 650 000 68.0% 2 450 000 66.0% 2 250 000 64.0% 2 050 000 62.0% 1 850 000 60.0% 1 650 000 58.0% 56.0% 1 450 000 54.0% 1 250 000 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'

  21. Slide 21: Key Strategic Issues: Hotels – South Africa

    Key Strategic Issues : Hotels – South Africa  Transient Corporate and Group & Convention business remains weak  Good growth in Government and Leisure segments  Occupancy improvement of 3.7pp for the half year ● Occupancy growth particularly strong at 5.2pp for 1st quarter due to market improvemen

  22. Slide 22: Key Strategic Issues: Hotels – South Africa

    Key Strategic Issues : Hotels – South Africa  Distressed assets present an opportunity ● Principles when pursuing distressed assets  Must fit core group product  Must be a long-term viable business  Cheap relative to replacement cost is not good enough ● Hotel Formula 1  Occupancy improved to 6

  23. Slide 23: Key Strategic Issues: Hotels – Offshore

    Key Strategic Issues : Hotels – Offshore  Africa hotels strong in US$ (occupancies H1’13 : 73.0%, H1’12 : 71.6%)  Currency positive impact to trading due to Rand weakness against US$ and Euro exchange rates  Forex gain for H1 F’13 R13m (H1 F’12 R20m) on cash and monetary items denominated in US$

  24. Slide 24: Financial Overview

    Financial Overview @Y TSOGO SUN

  25. Slide 25: Group – Income Statement (Rm)

    Group – Income Statement (Rm) H1 F’13 H1 F’12 Actual Actual % Change Group income 4 790 4 356 10 Gaming win 3 186 2 963 8 Revenue Rooms 908 777 17 F&B 403 341 18 Other 293 275 7 Ebitdar 1 829 1 619 13 Gaming 1 494 1 338 12 Hotels – SA 272 214 27 – Offshore(1) 46 43 7 Forex 13 20 * Corporate 4 4 * Eb

  26. Slide 26: Group – Income Statement (Rm)

    Group – Income Statement (Rm) H1 F’13 H1 F’12 Actual Actual % Change Ebitdar 1 829 1 619 13 LTI costs (64) (33) * Rentals (94) (95) 1 Depreciation & amortisation (332) (321) (3) Exceptional items 1 4 * Net finance costs (213) (209) (2) Associates and JVs (1) 3 * Tax ― normal (325) (283) (15) – STC -

  27. Slide 27: Adjusted HEPS (Rm)

    Adjusted HEPS (Rm) H1 F’13 H1 F’12 % change Attributable earnings 743 553 34 Capital asset disposal profits (1) (3) Impairment of SSME goodwill 16 - Impairment of Emnotweni arena (PPE) 9 - Headline earnings 767 550 39 Pre-opening expenses 4 - SSME termination fees (28) - CBS loan impairment reversal

  28. Slide 28: Group Cash Flow (Rm)

    Group Cash Flow (Rm) H1 F’13 H1 F’12 Ebitdar per income statement 1 829 1 619 Rentals (94) (95) Ebitda 1 735 1 524 Move in working capital adjusted for non-cash items - (8) Dividends income from associates 3 5 Cash generated from operations 1 738 1 521 Interest paid (net) (214) (222) Taxation – norm

  29. Slide 29: Investment Activities

    Investment Activities H1 F’13 H1 F’12 Acquisitions Millennium contingency settlement (58) (24) Expansion Capex (228) (25) Hemingways bid/expansion (105) (14) Suncoast expansion (12) - Silverstar redevelopment (5) - Garden Route hotel acquisition (20) - SS Hyde Park (65) - Sun Cuisine (7) - 54 on Bat

  30. Slide 30: Interest Bearing Debt (Rm)

    Interest Bearing Debt (Rm) H1 F’13 H1 F’12 Non-controlling interests funding 33 99 Preference funding - 1 000 External debt (amortising and bullet) 5 218 3 900 Gross IBD 5 251 4 999 Cash on hand (1 125) (984) Net IBD 4 126 4 015 Dividend of R439m (40c per share) declared May 2012, paid June 2012 Div

  31. Slide 31: Strategic Priorities

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  32. Slide 32: Strategic Priorities

    Strategic Priorities  Sustainability ● Beneficiaries  Current shareholding and CSI programs are effective ● Financial stability  Strong cash flow, low gearing and adequate facilities  Own most of our assets ● Product relevance  Adequate maintenance capex provided  Strong development skills in

  33. Slide 33: Strategic Priorities

    Strategic Priorities  Growth ● Organic  Significant focus on getting more out of our existing businesses  Continued cost focus  CRM/BI focus ● Inorganic  New projects 33

  34. Slide 34: Future Prospects

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  35. Slide 35: Future Prospects

    Future Prospects  Group ● Strong cash generation ● Growth opportunities still being pursued  Gaming ● Gaming win growth – medium term outlook positive  Need consumers to get wealthier and, more importantly, feel wealthier  Regulatory issues remain a threat  Tax – national/provincial ● Site deve

  36. Slide 36: Future Prospects

    Future Prospects  Hotels ● Occupancy and rate still under pressure until corporate demand recovers ● Focus on customer satisfaction and brand awareness ● Opportunistic in SA – Land bank, acquire leases, new builds and acquisitions ● Continued pursuit of offshore expansion  Focus on the territories

  37. Slide 37: Thank you

    Y TSOGO SUN Thank you

  38. Slide 38: Y TSOGO SUN

    Y TSOGO SUN

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