2017 Full Year Results Presentation SUSTAINING GROWTH
G ROUP S TRUCTURE
C OMPANY P ROFILE – U PDATE O N T HE N EW B USINESS M ODEL 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
A FRICAN S UN L IMITED N EW B USINESS M ODEL Elephant Hills Resort Owner Managed Operations The Kingdom Hotels Under Franchise Management Hotel Under Victoria Falls Owner Branded Hotels Hwange Safari Holiday Inn Lodge Harare Carribea Bay Monomotapa Holiday Inn Resort Harare Bulawayo Great Zimbabwe Troutbeck Holiday Inn Hotel Partnership Hotel Resort Mutare The Victoria Falls Hotel Sun Casino Harare Charity Casino Makasa Sun Casino
E NVIRONMENTAL O VERVIEW – 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%.
M ARKET D EVELOPMENTS – 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.
M ARKET D EVELOPMENT – O CUPANCIES 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.
F OREIGN A RRIVAL T RENDS – 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 - 26,609 28,109 20,799 22,479 28,588 EUROPE 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
M ARKET S EGMENT P ERFOMANCE – 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.
P RODUCT I MPROVEMENT P LANS – PROGRESSIVE PHASED REFURBISHMENT OF HOTELS 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.
C ARIBBEA B AY R ESORT R EFURB I N P ICTURES- REVAMPED EXTERIOR AFTER BEFORE
P RODUCT I MPROVEMENT P LAN – HOTELS UNDER FRANCHISE 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.
H OLIDAY I NN M UTARE - PROPOSED NEW LOOK AS PER CURRENT MOCK UP ROOM
L EGACY M ANAGED H OTELS P RODUCT I MPROVEMENT P LANS 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.
T HE K INGDOM AT V ICTORIA F ALLS
M ARKET S HARE A NALYSIS A ctual Market Destinations . Market Fair Share 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% 5% 45%
F INANCIAL R EVIEW TROUTBECK RESORT
F ULL Y EAR 2017 P ERFORMANCE H IGHLIGHTS – R EVENUE U P 19% CASH GENERATED FROM OPERATIONS $7.47M INTEREST $1.05M [+ 39% ]
I NCOME S TATEMENT – EBITDA UP 53% • Revenue increased by 19% ▲ US$ million 2017 2016 Var spurred by growth in occupancy to 52% from 44% ABOUT TO TAKE OFF Revenue 43.60 8.22 19% 51.82 • EBITDA up 53% to US$8.37 EBITDA 8.37 5.48 2.89 53% – million (margin 16%) from US$5.48 million (margin 13%) EBITDA Margin 16% 13% 3 pp from improved revenues and cost management. Operating profit 6.91 5.72 1.19 20% GRIDLOCK Operating margin 13% 13% 0 pp • Operating profit grew by 20% to US$6.91 million (margin- 13%) impact of the improved EBITDA. PBT from operations 5.86 4.96 0.90 18% • Profit for the year marginally Finance costs (net) (1.05) (0.75) (0.40) 39% increased to US$4.82 million. Profit for the period 4.82 4.81 0.01 0%
P ROFIT B EFORE T AX – SIGNIFICANT GROWTH ▲ US$ million 2017 2016 Profit before tax 4.96 18% 5.86 ABOUT TO TAKE OFF 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% • 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
R EVENUE A NALYSIS – 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
R EVENUE A NALYSIS – 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
G ROUP K EY S TATISTICS – 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.
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