Southern Sun Limited · JSE:SSU
Southern Sun — Tsogo Sun Hotels — Investor Presentation (May 2020)
28 slides from Southern Sun's investor presentation, May 2020
Slide 1: Tsogo Sun Hotels Investor Presentation May 2020
TSOGO SUN HOTELS INVESTOR PRESENTATION May 2020
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 49 % 51% 100% 59% HOTEL OPERATIONS Offshore South Africa • Owned and managed • Owned and leased • SA REIT hotels hotels • UK Investments • 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
ECONOMY FULL SERVICE LUXURY OPERATED PORTFOLIO 5
Slide 6: Portfolio by Rooms
PORTFOLIO BY ROOMS PORTFOLIO BY NUMBER OF ROOMS, BRAND AND REGION (EXCLUDING RBL AND IHL IN THE UK) Land / building Owned TsogoSun 3rd party Brand Freehold Leases HPF Total Gaming Owner Total Internally managed Luxury Portfolio 164 557 145 866 246 138 1 250 Southern Sun 301 1 468 2 221 3 990 714 - 4
Slide 7: Group Financial Structure
GROUP FINANCIAL STRUCTURE Hotel Ownership Freehold title or Land/building lease: • 29 hotels are run for the group’s account (Southern Sun Nairobi exited from 31 Jan 2020 and Sandton hotels included from 1 Nov 2019) • The 29 individual hotel income statements contribute to group revenues and expen
Slide 8: Group Financial Structure
GROUP FINANCIAL STRUCTURE Hotel Ownership Hospitality Property Fund • Managed by third-party owners − The 11 hotels managed by external parties remain investment properties on the group balance sheet − The rental income earned by HPF from these 11 hotels are reflected as rental income in the group
Slide 9: Group Financial Structure
GROUP FINANCIAL STRUCTURE Hotel Ownership Tsogo Sun Gaming • 17 hotels owned by Tsogo Sun Gaming and run for their account (includes hi Hotel effective 1 Feb 2020) • Managed by Tsogo Sun Hotels with the management fee income recognised in Manco Third-party owned • 11 hotels owned by third partie
Slide 10: Financial Overview
FINANCIAL OVERVIEW
Slide 11: F'20 Actual Quarterly Performance (Rm)
F’20 ACTUAL QUARTERLY PERFORMANCE (RM) 2020 Q1 Q2 Q3 Q4 Total Revenue 2020 Actual ex-Sandton hotels 961 1 112 1 229 943 4 245 Change on 2019 Pro forma 14 35 (30) (153) (134) % Change on 2019 Pro forma 1 3 (2) (14) (3) Ebitdar 2020 Actual ex-Sandton hotels 206 353 452 296 1 307 Change on 2019 Pro for
Slide 12: Income Statement | 2020 vs 2019 Pro Forma (Rm)
INCOME STATEMENT | 2020 VS 2019 PRO FORMA (RM) 2019 Pro % 2020 forma Change Income 4 475 4 389 2 Rooms revenue 2 791 2 732 2 Food & beverage revenue 1 063 990 7 Property rental income 331 357 (7) Other income 290 310 (7) Owned stats 2020 2019 Ebitdar 1 352 1 488 (9) Occupancy (%) 59.3 60.6 LTI expen
Slide 13: Income Statement | 2020 vs 2019 Pro Forma (Rm) Continued
INCOME STATEMENT | 2020 VS 2019 PRO FORMA (RM) CONTINUED 2019 Pro % 2020 forma Change Profit before interest and taxation (b/f) (766) 380 * Finance income 40 38 5 Finance costs (400) (269) (49) Finance costs (299) (269) (11) Finance costs – IFRS16 (101) - * Share of (loss)/profit of associates & joi
Slide 14: Reconciliation to Adjusted Headline Earnings (Rm)
RECONCILIATION TO ADJUSTED HEADLINE EARNINGS (RM) 2020 2019 % Pro-forma Gross Net Gross Net change Attributable earnings (896) 28 * Loss on disposal of PP&E 2 2 3 2 Fair value adjustment of investment property 888 888 445 445 Impairment of PP&E 716 664 94 67 Impairment relating to RBH (Associate) 17
Slide 15: Exceptional Items – FV Adjustment on HPF Properties (Rm)
EXCEPTIONAL ITEMS – FV ADJUSTMENT ON HPF PROPERTIES (RM) WACC 2019 2020 FV % Valuation Capex Valuation adjustment Westin Cape Town 13.5 1 712 70 1 528 (254) Birchwood Hotel and ORT Conference Centre 14.0 847 14 486 (375) Radisson Blu Waterfront 13.0 497 12 439 (70) Champagne Sports Resort 14.0 246 5
Slide 16: Exceptional Items – Impairment of PP&E & Investments (Rm)
EXCEPTIONAL ITEMS – IMPAIRMENT OF PP&E & INVESTMENTS (RM) WACC % Impairment Southern Sun Rosebank 14.0 (35) Holiday Inn Sandton 14.0 (40) Garden Court Eastgate 14.0 (114) Garden Court Hatfield 14.0 (86) StayEasy Eastgate 14.0 (63) Impairment of PP&E - Hotels SA (338) Minorities (40.8%) 138 Net of mi
Slide 17: Segmental Analysis (Rm)
SEGMENTAL ANALYSIS (RM) Income Ebitdar Ebitdar margin % 2020 2019 2020 2019 2020 2019 Manco 266 289 154 171 58 59 Rental income 310 337 310 337 100 100 Internally managed 3 501 3 329 787 839 22 25 Coastal 1 885 1 906 463 505 25 26 Inland 1 344 1 150 262 253 20 22 Other 272 273 62 81 23 30 Offshore 5
Slide 18: Cash Flow (Rm)
CASH FLOW (RM) 2020 2019 Ebitdar per income statement 1 352 1 491 Property & equipment rentals (excluding IFRS16) (210) (208) Move in working capital adjusted for non-cash and exceptional items 95 34 Dividend income from associates 22 11 Cash generated from operations 1 259 1 328 Net finance costs p
Slide 19: Cash Flow (Rm) Continued
CASH FLOW (RM) CONTINUED 2020 2019 Free cash flow (b/f) 484 414 Dividends paid to NCI (245) (296) Disposal proceeds 6 2 Investment activities – expansion capex (211) (62) Loans and investments (60) - Net cash surplus (26) 58 Currency 31 18 Move in net IBD 5 76 Opening net IBD (including group treasu
Slide 20: Investment Activities (Rm)
INVESTMENT ACTIVITIES (RM) 2020 2019 Investment activities 211 62 Southern Sun Pretoria HPF 200 - Riverside Conference Centre TGO 11 - StayEasy Maputo TGO - 52 Hi Hotels brand TGO - 10 Maintenance capex 366 384 Hotel major refurbishments: Southern Sun Ridgeway Lusaka TGO 73 27 Southern Sun Ikoyi TGO
Slide 21: Interest Bearing Debt (Rm)
INTEREST BEARING DEBT (RM) 2020 2019 External debt – Offshore (US$ based) TGO 1 430 1 224 Prepaid borrowing costs TGO (3) (5) External debt (Rand based)(1) HPF 2 550 1 959 Prepaid borrowing costs HPF (3) (3) Gross IBD 3 974 3 175 Cash on hand TGO (431) (117) Cash on hand HPF (291) (95) Net IBD 3 252
Slide 22: Financial Covenants
FINANCIAL COVENANTS Required 2020 TGO Interest cover >3.0x 12.2 Debt | Ebitda <2.5x 1.3 HPF Interest cover >2.0x 3.7 Debt | Ebitda <3.5x 3.2 LTV <40% 26% 22
Slide 23: COVID-19 Action Plans
COVID-19 ACTION PLANS With effect from 27 March 2020 to date, all of the group’s hotels have been deactivated with the exception of 17 hotels serving as quarantine facilities or providing accommodation to essential service providers The group implemented the following steps to reduce costs and prese
Slide 24: COVID-19 Action Plans
COVID-19 ACTION PLANS Rent relief For the period of the lockdown and subsequent low demand periods Negotiations in this regard continue Suppliers Contractual variable costs with suppliers reduced to nil until trading resumes by extending the period of the contracts Negotiated reduced or exte
Slide 25: COVID-19 Action Plans
COVID-19 ACTION PLANS Management is currently formulating a plan for the phased reopening of its portfolio Phase 1: Resume operations under Level 3 Phase 2: Resume operations based on anticipated demand Phase 3: Hotels reliant on international inbound travel and groups and conferencing not exp
Slide 26: COVID-19 Action Plans
COVID-19 ACTION PLANS Industry health protocols and control measures implemented on re-opening Access controls • Temperature & guest screening questionnaires at entrances of establishments • Mandatory use of masks for all guests Social distancing • Queuing systems, no less than 1.5m • No promoti
Slide 27: Sum of Parts Valuation
SUM OF PARTS VALUATION • R1.6bn market value @ R1.50 per TGO share 100% 59% HOTEL OPERATIONS Offshore South Africa • Valuable African assets • Valuable core assets • TGO owns 342m HPF shares • UK Investments plus land • R1.4bn market value @ • Maia • Manco R2.35 per HPF share • TNAV of R13.29 per HP
Slide 28: Thank You
THANK YOU companysecretaryTGO@tsogosun.com