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2017 Full Year Results Presentation
SUSTAINING GROWTH
GROUP STRUCTURE
COMPANY PROFILE – UPDATE ON THE NEW BUSINESS MODEL
African Sun Limited is a leading hotel investment Company in Zimbabwe.
The Company currently leases and operates eleven hotels and two Casinos.
In 2015 the Group streamlined and exited all foreign operations for sustainability.
1 122 employees as at 31 December 2017 from 1 460 in 2015.
The hotels are operated under two divisions, which are:
Hotels under Management and; Owner Managed Operations.
Continuing with a quest to grow Shareholder Value, anchored on the following FOUR
PILLARS:
People
Product
Processes
Promotion
AFRICAN SUN LIMITED NEW BUSINESS MODEL
Ho
telU
nd
er
Ma
na
ge
me
nt The Kingdom
Victoria Falls
Hwange Safari
Lodge
Monomotapa Harare
Ho
tels
Un
de
rF
ran
ch
ise
Holiday Inn
Bulawayo
Ow
ne
r B
ran
de
dH
ote
ls
Carribea Bay
Resort
Great Zimbabwe
Hotel
Pa
rtn
ers
hip
Ho
tel
The Victoria
Falls Hotel
Su
nC
as
ino
Harare Charity
Casino
Holiday Inn
Mutare
Makasa Sun
Casino
Troutbeck
Resort
Elephant Hills Resort
Holiday Inn
Harare
Ow
ne
r M
an
ag
ed
Op
era
tio
ns
ENVIRONMENTAL OVERVIEW – MACRO ENVIRONMENTAL CHALLENGES
PERSIST IN ZIMBABWE
Shortages of foreign currency
Tax amnesty on penalties and interest proposed in the 2018 budget yet to
become law.
The liquidity and cash challenges though persistent, have been mitigated by use
of plastic money.
Export incentive at 5% is appreciated, however a higher percentage could
counter input driven inflation.
Local input costs on key basics have gone up 17% from 2015 levels.
International tourist arrivals grew by 7% in 2017, whilst Africa’s tourist arrivals
grew by 8%.
MARKET DEVELOPMENTS – ALL SET FOR INCREASED ARRIVALS
The Victoria Falls Airport now has the capacity to handle 1.5 million
passengers per annum, tripling its previous capacity.
R.G Mugabe International Airport will soon undergo an upgrade to increase
its capacity from the current 2.5 million passengers.
Construction of the Beitbridge – Chirundu Highway project will see business
travellers on the rise due to this economic activity. Post completion it will
rekindle Around Zimbabwe Bus Tours as well regional and domestic self
drive.
Eastern Highlands destination is increasingly becoming popular with new
activities of the Skyline and Skywalk in Nyanga.
2018 elections set to benefit all hotels particularly the city hotels.
Foreign Arrivals expected during and after the General Elections as the later
will coincide with our peak season.
MARKET DEVELOPMENT – OCUPANCIES TO BE SPURRED BY DOMESTIC
DEMAND
Anticipated growth from improved economic activities.
Kariba, Hwange and Victoria Falls pronounced Special Economic Zones as
Tourism hubs.
Additional 300 mega watts from Kariba now awaiting commissioning from
the President, this is set to improve productivity across all economic
sectors.
The Ministry of Hospitality and Tourism, Zimbabwe Tourism Authority and
industry are working on initiatives to boost domestic tourism.
FOREIGN ARRIVAL TRENDS – AMERICAS AND ASIA SHOW GOOD
POTENTIAL
Source Market 2013 2014 2015 2016 2017 2017/16
Variance
AFRICA 30,371 30,288 33,140 25,640 25,615 -
EUROPE 26,609 28,109 20,799 22,479 28,588 17%
AMERICA’S 14,823 17,875 11,329 10,241 14,894 45%
AUSTRALIA &
OCEANIA 4,162 3,733 2,589 3,694 4,547 27%
ASIA 14,053 15,930 8,162 14,675 20,180 38%
TOTAL 90,108 95,935 76,020 78,728 93,823 19%
Y.O.Y GROWTH 5% -21% 4% 19%
• An increase of 19% was recorded on foreign arrivals in line with the international tourism
trends.
• Initiatives pronounced by AU in respect of open skies is set to spur the growth in African
Arrivals
MARKET SEGMENT PERFOMANCE – THE DOMESTIC MARKET BASE
BUSINESS DRIVER
• Domestic room nights went up by 17% however the contribution was watered down by the
international which grew by 29%.
• The international market remain strong.
• Regional market depressed due to the weak rand during the better part of the year, however
situation reversing.
• To invest in foreign market representation to increase foreign revenue for the Victoria Falls
properties.
GREAT ZIMBABWE HOTEL
In consultation with our landlord, plans are at an advanced stage to rebuild and
refashion the hotel in the medium to long term.
To build a modern Conference Centre.
CARIBBEA BAY RESORT
The hotel has already undergone significant external refurbishments and
attention has now moved to the interior, Mock up Room concepts and artistic
impressions completed.
PRODUCT IMPROVEMENT PLANS – PROGRESSIVE PHASED REFURBISHMENT
OF HOTELS
CARIBBEA BAY RESORT REFURB IN PICTURES- REVAMPED EXTERIOR
BEFORE AFTER
HOLIDAY INN MUTARE
Hotel successfully rebranded effective 1 July 2017.
Hotel to be fully brand compliant by 1 July 2018.
Mock up rooms completed and refurbishment of one floor currently in progress.
Lifts should be commissioned by 1 July 2018.
We acknowledge the investment which the landlord has done on this property.
HOLIDAY INN HARARE AND BULAWAYO
Installation of new elevators at both hotels was completed in 2017.
We acknowledge the investment which the landlord has done on these properties.
The hotels remained brand compliant according to IHG brand standards and
assessments thereof in 2017, going forward brand updates will be undertaken to
maintain the same.
PRODUCT IMPROVEMENT PLAN – HOTELS UNDER FRANCHISE
HOLIDAY INN MUTARE - PROPOSED NEW LOOK AS PER CURRENT MOCK UP
ROOM
Increased conferencing capacity at The Kingdom at Victoria Falls by 400.
Exterior painting for Elephant Hills Resort and The Kingdom at Victoria
Falls.
Refurbishment of the public areas for Monomotapa Hotel.
Continuous brand upgrades in 2018.
LEGACY MANAGED HOTELS PRODUCT IMPROVEMENT PLANS
THE KINGDOM AT VICTORIA FALLS
MARKET SHARE ANALYSIS
Destinations Market Fair Share
Actual Market
Share Variance
Victoria Falls
Elephant Hills Resort 25% 18% -7%
The Kingdom 26% 23% -3%
The Victoria Falls Hotel 37% 39% 2%
Hwange
Hwange Safari Lodge 51% 56% 5%
Harare
Holiday Inn Harare 13% 16% 3%
Monomotapa Hotel 15% 14% -1%
Nyanga
Troutbeck Resort 43% 56% 13%
Mutare
Holiday Inn Mutare 41% 51% 10%
Kariba
Caribbea Bay Resort 17% 20% 3%
Masvingo
Great Zimbabwe Hotel 10% 11% 1%
Bulawayo
Holiday Inn Bulawayo 40% 45% 5%
.
FINANCIAL REVIEW
TROUTBECK RESORT
FULL YEAR 2017 PERFORMANCE HIGHLIGHTS – REVENUE UP 19%
INTEREST
$1.05M
[+ 39% ]
CASH
GENERATED
FROM
OPERATIONS
$7.47M
ABOUT TO TAKE OFF
GRIDLOCK
• Revenue increased by 19%
spurred by growth in occupancy
to 52% from 44%
• EBITDA up 53% to US$8.37
million (margin – 16%) from
US$5.48 million (margin 13%)
from improved revenues and cost
management.
• Operating profit grew by 20% to
US$6.91 million (margin- 13%)
impact of the improved EBITDA.
• Profit for the year marginally
increased to US$4.82 million.
US$ million 2017 2016 Var ▲
Revenue 51.82 43.60 8.22 19%
EBITDA 8.37 5.48 2.89 53%
EBITDA Margin16% 13% 3 pp
Operating profit 6.91 5.72 1.19 20%
Operating margin 13% 13% 0 pp
PBT from operations 5.86 4.96 0.90 18%
Finance costs (net) (1.05) (0.75) (0.40) 39%
Profit for the period 4.82 4.81 0.01 0%
INCOME STATEMENT – EBITDA UP 53%
ABOUT TO TAKE OFF
• Significant growth in profit before tax on a like for like as the lean
structure prove efficient
• Earnings from normal operations (excluding disposal of a subsidiary in
the prior year) up 106% to US$6.22 million from US$3.02 million
US$ million 2017 2016 ▲
Profit before tax 5.86 4.96 18%
Adjustment for non recurring items
Other once off - (0.36) -
Profit on disposal of a subsidiary - (1.18) -
FCTR recycled from other OCI - (0.76) -
Other expenses 0.36 0.36 -
Adjusted profit before tax 6.22 3.02 106%
PROFIT BEFORE TAX – SIGNIFICANT GROWTH
REVENUE ANALYSIS – FOREIGN REVENUE CONTRIBUTION
INCREASED 2 PERCENTAGE POINTS
• Foreign revenue expected to be on the increase in line with global tourism
and our initiatives
• Target is to increase foreign contribution to 50%, we still have capacity to
grow in our Victoria Falls properties
• Domestic revenue increased by 16% in 2017, however diluted by 23%
increase in foreign with high yields
REVENUE ANALYSIS – ROOMS REVENUE DOMINANCE
• Food and beverage set to benefit from 2018 activities which include improved
economic activities, increase of arrivals in the country and elections
• Casino business now responding positively to use of plastic money and other
electronic payment platforms
GROUP KEY STATISTICS – REVPAR IMPROVEMENT
•Occupancy grew by 8 percentage points
•ADR maintained at US$93 to stimulate domestic demand which then increased by 17%
•RevPAR responded to increase in occupancy to post US$48 from US$41 last year.
DiVISIONAL PERFOMANCE ANNALYSIS
• All divisions on a growth trajectory.
• Occupancy growth coming from both local and foreign arrivals.
• Franchised hotels and The Victoria Falls Hotel recorded real growth, whilst the improvement in Managed
Division and Own Brands was a mixture of recovery from 2016 and real growth.
• Casinos negatively affected by the liquidity challenges prevailing in the economy,
however we expect a response to new modes of payment.
REVENUE (US$000)PROFIT /(LOSS) BEFORE
TAX (US$000) EBITDA (US$000)Dec 17 Dec 16 Growth Dec 17 Dec 16 Growth Dec 17 Dec 16 Growth
Managed Division 26,172 21,119 24% 929 (1,118) 183% 1,594 (16) 9950%
Franchised Division 14,481 13,036 11% 1,168 740 58% 1,941 1,667 16%
Own Brands 3,542 2,767 28% 361 38 852% 475 156 204%
The Victoria Falls Hotel @50% 7,451 6,303 18% 2,982 1,959 52% 2,901 2,180 33%
Other business segments 181 379 -52% 419 3,345 -87% 1,353 1,449 -7%
Total hotels and casinos 51,827 43,604 19% 5,859 4,965 18% 8,264 5,437 52%
PERFOMANCE BY DIVISION – OVERALL REVPAR INCREASED BY 17%
•All hotels managed to grow RevPAR with
Elephant Hills Resort registering the highest
growth of 34% to US$40.
DIVIDEND DECLARATION
I
• On 8 March 2018, the Board declared a final dividend of US$600 655 being
US$0.000697 per share (0.0697 cents per share) for the year ended 31
December 2017.
• Declared from current year profits and also taking into account capital
commitments.
• Sign of predictability and sustainability going forward.
BALANCE SHEET AND CASHFLOW
KINGS CLUB – THE KINGDOM AT VICTORIA FALLS
STATEMENT OF FINANCIAL POSITION – SIGNIFICANT TURNAROUND ON THE
WORKING CAPITAL POSITION
FY17
Actual
FY16
Actual
US$m US$m
Assets
Non Current assets 21.87 21.62
Current assets 16.36 12.00
Total assets 38.74 33.62
Equity and liabilities
Shareholders equity 11.51 6.66
Non-current liabilities 9.51 8.36
Current liabilities 17.72 18.60
Equity and liabilities 41.15 33.62
Total Debt 6.21 8.27
Gearing -23% 34%
• Total assets grew by 15% mainly due to the
increase in cash and cash equivalents
• This is in response to strong performance
• Increase in non-current liabilities due to the
restructuring of borrowings.
• Bank borrowings declined by 25% due to
the repayments. All payments were made
from operating cashflows
• Net current liabilities improved to US$
0.84m from US$5.59m from prior year.
• Equity improved by 73% to US$11.51
million, impact of total comprehensive
income posted during the year.
BANK DEBT DOWN 72% FROM DECEMBER 2013
• 25% bank debt reduction
from December 2016
financed by cashflows
from operating activities.
• Financing costs expected
to reduce going forward
as the company makes
scheduled debt
repayments.
• The effective cost of
borrowings has declined
to 9.84% from 10.19% as
a result of the debt
restructuring.
ABOUT TO TAKE OFF
GRIDLOCK
• Improved cash flow before
working capital changes of
55% was impacted by a
53% increase in EBITDA.
• Increase in PPE investment
emanated from normal
replacements refurbishment
of CBR and HIM.
US$ million 2017 2016 ▲
Cash flows
Cash flow before working capital
changes9.65 6.24 55%
Change in working capital (1.20) (2.96) -59%
Finance costs (0.98) (1.11) -25%
Cash generated from operations 8.45 3.28 158%
Investments in PPE (net) (1.95) (0.91) 113%
Cash (used in) / generated from
financing activities
(2.06) 1.15 -279%
Net increase in cash and cash
equivalents 3.46 2.41 44%
Cash and cash equivalents at
the end of the year 8.36 4.88 71%
ABRIDGED CASHFLOW STATEMENT
OUTLOOK
Our hotel operations are expected to benefit from key activities in 2018,
which include elections, infrastructure development and other government
projects.
The Victoria Falls Airport completion has been a major boost to our
performance in 2017 and we expect further benefits in 2018 from increased
airline capacity into the destination
The other key factors expected to drive business in 2018 are;
• ICT improvements – improved revenue management and booking
platforms
• Product improvement through refurbishment of hotels.
• Training and service excellence will continue as people are our key
resource
Our traditional tour and series business will continue to grow international
arrivals augmented by the local conferencing and domestic tourism
initiatives.
PREMIER BRAND
UNDER MANAGEMENT
FRANCHISE BRAND
STAND-ALONE BRANDS
CASINO BRANDS
OUR BRANDS
QUESTION AND ANSWER