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F11 – Results 30 November 2011 STRENGTHENING THE CORE FOR GROWTH.

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Presentation on theme: "F11 – Results 30 November 2011 STRENGTHENING THE CORE FOR GROWTH."— Presentation transcript:

1 F11 – Results 30 November 2011 STRENGTHENING THE CORE FOR GROWTH

2 STRENGTHENING THE CORE: OVERVIEW The following value recovery initiatives were implemented : Closure of loss making South Africa hotels Disposal of Hotelserve Staff rationalization Mutual termination of the Holiday Inn Gaborone lease Refurbishment of selected Zimbabwe hotels has commenced

3 STRATEGY Our strategy going forward : Dominating the Zimbabwean market which is proving to be profitable Continued growth in the region through management contracts There will be no underlying costs from regional growth

4 CONTINUING OPERATIONS – MARKET DEVELOPMENTS Zimbabwe recovery sustained, with foreign and domestic room nights up 14% and 12% respectively Ghana demand spurred by oil and gas, with RevPAR up 10% year on year Nigeria occupancies on the recovery, with RevPAR anticipated to improve in 2012

5 ACCESS– MARKET DEVELOPMENTS There are 43 flights weekly into Harare. Emirates will commence flights into Harare in February 2012 which increases capacity into Harare by 5 flights a week. Emirates will be operating an Airbus 330-200. SAA also introduced an Airbus 330-200 to increase seat capacity into Harare. There are 28 flights weekly into Victoria falls. Capacity increase of 300% is required in this area

6 Tourism growth is forecasted at 37.5% for 2012 ARRIVALS– AFRICAN SUN HOTELS 20102011Growth Local112 476126 11812% Regional27 44931 65115% International37 48046 08023% Total177 405203 84915%

7 BUSINESS COMPOSITION– AFRICAN SUN HOTELS 2010 bodies 2011 bodies Local68%67% Regional14%15% International18% Total100%

8 ZIMBABWE HOTELS – PERFORMANCE OUTLOOK PERFORMANCE RANKING HOTELREVPAR 2012 US $ COMMENTS 1The Victoria Falls Hotel 5 star95 Leisure business- free independent traveler,groups and series Refurbishment in progress 2Holiday Inn Harare 3 star65 Best performing city hotel 93% Occ in May, closed the year at 58% 3Crowne Plaza4 star64 Conferencing and corporate business 4Holiday inn Bulawayo 3 star62 Conferencing and corporate business 5Holiday inn Mutare 3 star55 Conference and corporate business Air conditioners and lift issues are being addressed 6The Kingdom at Victoria Falls 3 star43 Groups and series Soft refurbishment required

9 ZIMBABWE HOTELS – PERFORMANCE OUTLOOK PERFORMANCE RANKING HOTELREVPAR 2012 US$ COMMENTS 7Great Zimbabwe Hotel 3 star45 Best performing country hotel Conferencing and leisure business Central hub for NGO conferencing Major structural issues 8Troutbeck Resort3 star42 Conferencing and leisure business 9Elephant Hills Resort 4 star36 Regional conferencing e.g. Old Mutual, SADC, African Insurance Organization and leisure business November 2012 – 55% occupancy, $46 Revpar- best performance in last 3 years

10 ZIMBABWE HOTELS – PERFORMANCE OUTLOOK PERFORMANCE RANKING HOTELREVPAR 2012 US$ COMMENTS 10Express by Holiday Inn Bietbridge 3 star35 Conferencing and Transit business Air conditioning being attended to 11Carribea Bay resort 3 star33 Conferencing and Leisure Access issues 12Hwange Safari Lodge 3 star15 Access issues

11 MANAGEMENT CONTRACTS – PERFORMANCE OUTLOOK Total revenues from management contracts in 2011 was US$ 778k Growth in management contract revenues for 2012 will be 20% LOCATIONHOTEL Ghana, AccraHoliday Inn Airport Accra Nigeria, LagosBest Western Ikeja Nigeria, Benin CityBest Western Homeville Nigeria, EnuguNike Lake NigeriaObudu Mountain Resort

12 FINANCIAL HIGHLIGHTS F11 CONTINUING OPERATIONS Revenue 22% from same period last year RevPAR 21% from same period last year ADR 8% from same period last year Occupancy 11% to close at 51% EBITDA profit excluding restructuring costs 432% to $2.71m Loss from discontinued operations is $6.6 m

13 UPDATE ON REVPAR AND GROWTH OUTLOOK 20102011Growth*2012Forecast Growth RevPAR$33$4021%$5230% Growth of 21% was achieved in 2011 in comparison with SPLY RevPAR of $52, representing 30% growth from F11 is expected in F12 Performance Update to Nov 2012: Occupancy - 57%, up from 52% SPLY RevPAR - $50, 21% up on SPLY of $41 SPLY- same period last year. *Forecast

14 2012 FOCUS RevPAR growth leveraging on volumes growth at the Resorts and ADR growth in the City hotels Product refurbishment – relaunch of the Holiday Inns and repositioning of Holiday Inn Mutare and Holiday Inn Express Reduction of borrowing costs and gearing Further cost optimisation, especially in light of the NEC wage increases We expect a minimum 8% EBITDA from continuing operations going forward -up from 5.5%

15 FINANCIALS

16 IMPROVED PERFORMANCE FROM CONTINUING OPERATIONS US$ millions 30 Sept 2011 30 Sept 2010 % Revenue $48,839,9+22 Cost of Sales $(14,6)(11,4)+27 COS %3029+4 Gross Profit $34,228,5+20 Operating expenses $(exc Restructuring costs)(31,5)(28.0)+12.5 EBITDA $ (exc Restructuring costs)2,70.5+432 EBITDA margin %5.51.3 +420 bps Profit / (Loss) before non-recurring items $1,2(2,5) 148% Non-recurring items $(5,9)-- Loss before tax for the period from continuing ops $(4,7)(2,5)-88% Revenue up 22% as RevPAR and occupancy increased by 21% and 11% Operating expenses increase constrained at 12.5% Non recurring items include $3.28m - retrenchments and $2.68m - Impairment of Property, Plant and Equipment EBITDA up 432% to $2.7m( 5.5%margin) excluding restructuring costs of $3.28m Discontinued Operations(SA hotels and Hotelserve) however suffered a loss of $6.6m – IMPROVED PERFORMANCE FROM CONTINUING OPERATIONS

17 GROUP OUTLOOK POSITIVE FOLLOWING CLOSURE OF LOSS MAKING UNITS EBITDA loss $4.05m, with SA hotels contributing $3.77m Loss from discontinued operations of to $6.62m, includes $1.9m in impairment charges Working Capital pressure eases with the closures

18 OVERALL REVPAR PERFORMANCE TREND POSITIVE Overall RevPAR trend positive with Zimbabwe leading at 21% growth year on year.

19 REVPAR GROWTH LARGELY DRIVEN BY AN OCCUPANCY RECOVERY IN THE PAST! Occupancy growth mainly driven by the city hotels RevPAR growth continues, though slowing down as city hotels near optimum occupancies Future RevPAR growth expected from: ADR growth from the city hotels with the Refurbishment Occupancy recovery from the Resorts RevPAR growth to be driven by the recovery of the Resorts and the after effect of refurbishment on ADR in City Hotels Occupancy growth mainly driven by the city hotels RevPAR growth continues, though slowing down as city hotels near optimum occupancies Future RevPAR growth expected from: ADR growth from the city hotels with the Refurbishment Occupancy recovery from the Resorts RevPAR growth to be driven by the recovery of the Resorts and the after effect of refurbishment on ADR in City Hotels

20 OPERATIONAL BREAKEVEN IMPROVES WITH CLOSURE OF LOSS MAKING UNITS AND RESTRUCTURING Operational BE EBITDA worsened by 139% following poor performance by the SA hotels With closure of the SA hotels, disposal of Hotelserve and savings from the restructuring, BE EBITDA for F11 improves by 60% Break even RevPAR has consequently improved to $38 from $ 45 Operational BE EBITDA worsened by 139% following poor performance by the SA hotels With closure of the SA hotels, disposal of Hotelserve and savings from the restructuring, BE EBITDA for F11 improves by 60% Break even RevPAR has consequently improved to $38 from $ 45

21 OPERATING EXPENSES UP 12.5% WELL WITHIN INCREASE IN REVENUE AND RevPAR Costs mainly driven by turnover based costs: Rentals, franchise fees. Oversight costs to drop from 15% of revenue to less than 10% following the restructuring. Restructuring -head count reduced by 58%, minimum savings of $2.4m per year expected.

22 ZIMBABWE OPERATIONS CONTINUE ON AN UPWARD TREND Revenue 24% Occupancy from 46% to 51% Foreign room nights 14% Domestic room nights 13 % RevPAR 21% to $40 ADR 8% to $80 83% contribution to EBITDA by city hotels 50% contribution to Revenue by city hotels Elephant Hills EBIDTA loss improved to $0.367m from $1.04m prior period. Revenue 24% Occupancy from 46% to 51% Foreign room nights 14% Domestic room nights 13 % RevPAR 21% to $40 ADR 8% to $80 83% contribution to EBITDA by city hotels 50% contribution to Revenue by city hotels Elephant Hills EBIDTA loss improved to $0.367m from $1.04m prior period. 8% 6%

23 $2.1m CASH GENERATED FROM CONTINUING OPERATIONS $4.66m in cash and $1.5m in undrawn facilities Cash generated from operations improved to $2.1m from negative $5.1m driven by strong RevPAR growth Cash generation to improve following; – Restructuring with possible savings of at least $2.4million a year – Closure of loss making units – Disposal of non-core operations Financing Raised includes; – $3.47m drawn for Refurbishment – $1.2m drawn for furnishing the Botswana project – $1.2m Short term loans to fund loss making units Cashflow 30 Sept 2011 30 Sept 2010 US$m Cash generated/(used )in operations2,088(5,111) Cash used in investing(3,812)(1,947) Financing Financing Raised5,2259,983 Increase in cash1,7211,663 Exchange Difference0,1260,210 Cash at beginning of period2,8110,938 Cash at end of period4,6582,811

24 FINANCIAL POSITION & FUNDING: Balance sheet31 Sept 1130 Sep 10 US$m Assets Long term assets30,02931,449 Current assets16,44018,505 Total assets46,46949,954 Equity and liabilities Shareholders equity15,16325,003 Non-current liabilities7,3785,053 Current liabilities23,92819,898 Total equity and liabilities46,46949,954 Decrease in long-term assets due to discontinued operations and impairment of assets Current assets declined due reductions in inventory and trade and other receivables Shareholders equity impacted by losses arising from $6.45m non-recurring expenses Non current liabilities Refurb Loan Drawn( $3.47m) Botswana Project Loan( $1.2m) Deferred Tax Liability($2.46m) Current liabilities include $8.2m short-term loans, which will reduce with Hotelserve disposal. Long-term loans to reduce as the Botswana loan structure moves to the landlord following exit. Gearing, at 35.7% will not increase to improve with the positive cash generation and as working capital pressure eases with the initiatives implemented. Decrease in long-term assets due to discontinued operations and impairment of assets Current assets declined due reductions in inventory and trade and other receivables Shareholders equity impacted by losses arising from $6.45m non-recurring expenses Non current liabilities Refurb Loan Drawn( $3.47m) Botswana Project Loan( $1.2m) Deferred Tax Liability($2.46m) Current liabilities include $8.2m short-term loans, which will reduce with Hotelserve disposal. Long-term loans to reduce as the Botswana loan structure moves to the landlord following exit. Gearing, at 35.7% will not increase to improve with the positive cash generation and as working capital pressure eases with the initiatives implemented.

25 QUESTION & ANSWER


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