results presentation 2015 · 2020. 3. 23. · • international tourist arrivals grew by 4.4% in...
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RESULTS PRESENTATION 2015
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DISSAPOINTING GLOBAL GROWTH
• Global economy showing sluggish growth at 0.1% to 2.6% in 2014 and 2.7% for Q1 2015
• Recent global market turmoil as a result of China economic slowdown and currency devaluation
• Commodity linked emerging markets have been particularly hard hit through global de-risking
and evaporation of global carry trade
ECONOMIC OVERVIEW
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2012 2013 2014 2015F 2016F 2017F
GDP Growth*
World High Income Developing* World Bank Forecasts July 2015
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OUTLOOK ON DOMESTIC ECONOMIC CONDITIONS
• GDP slowed to 1.5% in 2014; GDP growth flat for H1 2015. Downside risks:
› Increased pressure on output and exports due to continued structural constraints
› Protracted structural challenges limiting growth capacity
• Rand depreciation and consequent inflationary effects versus contracting economic growth
have brought into question the likelihood and timing of future interest rate hikes
ECONOMIC OVERVIEW
3.0% 3.2%
2.2% 2.2%1.5%
2.0% 1.8%2.4%
4.3%5.0%
5.7% 5.8% 6.1%
4.8%
6.2%5.4%
0.00%
2.00%
4.00%
6.00%
8.00%
2010 2011 2012 2013 2014 2015e 2016e 2017e
Real GDP CPISource: Nedbank August 2015
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GLOBAL TOURISM
• International tourist arrivals grew by 4.4% in 2014 (1,1billion)
• International tourist receipts, strongly correlated to arrivals, grew by 3.7% to $1 245 billion
• Top long haul source markets in 2014 were USA, UK, China, Canada, Japan and Germany
• Arrivals to Africa grew by 2% to 56 million and are forecast to grow by 3% - 5% in 2015
• European outbound travel is expected to rise 3% in 2015
• MICE market share continues to rise as traditional business trip segment declines due to
technological solutions
GLOBAL TOURISM
› lead by strong growth in the Americas (+8%),
Asia and the Pacific (+5%) and the Middle
East (+5%)
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AFRICAN HOTEL MARKET
• Africa showed 2% increase in arrivals to 56 million while receipts showed growth at 3% to
$36 billion
• Fear of Ebola outbreak in North Africa impacted arrivals to the entire African continent
• With African markets maturing, global hotel chains are shifting towards the multi-brand
approach
SOUTH AFRICAN HOTEL MARKET
• SA tourism contributes 9.4% to GDP employing around 1,7 million people
• Domestic tourists down by 4% to 12 million (2014) contributing about 57% to total tourism
expenditure
• New visa regulations and biometric requirements suggested to have caused 7% decline in
foreign arrivals in Q1 2015
AFRICAN & SA HOTEL MARKET
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SA HOTEL DEVELOPMENT PIPELINE – SHORT TO MEDIUM TERM
• High-end hotels trading at a discount to replacement costs reducing supply risk
• Long-lead time needed to develop competitive products, up to 36 months
• Development Pipeline:
› Upscale:
– Radisson Residence CT (214 keys)
– The Houghton Hotel (143 keys of which 55 rentable)
› Midscale:
– City Lodge Johannesburg CBD (148 keys)
– Radisson Red CT (V&A) (235 keys)
– SunSquare CT (200 keys)
› Economy:
– Road Lodge Pietermaritzburg (90 keys)
– CTICC Expansion
– StayEasy CT (300 keys)
SA HOTEL PIPELINE
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RISKS FACING SA HOTEL MARKET
• Stringent visa requirements
• Deterioration of infrastructure
• Airline capacity issues
• Reduced government spending
• Labour unrest – strikes
• Security concerns
• Xenophobia
• Competition from unregulated accommodation businesses such as AirBnB
• Terror impact on African markets
• African disease outbreak such as Ebola
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SOUTH AFRICAN TOURISM MARKET
• International tourist arrivals showed meagre growth of 0.1% to 9,5 million in 2014
SA TOURISM MARKET
2.1%-3.8%
6.4%4.6% 4.0%
5.0% 4.4%5.7%
3.8%
15.1%
3.3%
10.2%
4.7%
0.1%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
2008 2009 2010 2011 2012 2013 2014
International Tourist Arrivals (growth %)
Global South Africa
Sources: Stats SA & UNWTO
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MAY 2014 – APRIL 2015: SOURCE MARKET OVERSEAS ARRIVALS
SA TOURISM MARKET
-
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
500 000
2014 2015 Sources: Stats SA
Immigration & Biometric requirements
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MAY 2014 – APRIL 2015: SOURCE MARKET OVERSEAS & AFRICA ARRIVALS
SA TOURISM MARKET
-
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
7 000 000
8 000 000
Overseas Africa
2014 2015 Sources: Stats SA
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NOMINAL GDP AND REVPAR GROWTH RATES
NOMINAL GDP & REVPAR GROWTH
-20%
-10%
0%
10%
20%
30%
40%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Q1
% C
han
ge
GDP Growth RevPAR
FIFA World
Cup 2010
Global Recession
ZAR depreciation
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TRADING FIGURES OUTPERFORM THE OVERALL MARKET (JULY 2014 – JUNE 2015)
THE YEAR IN REVIEW
61.4% 62.3% 62.0% 62.8%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
HPF'14 STR'14 HPF'15 STR'15
Occupancy HPF* vs STR
R 1 162
R 992
R 1 237
R 1 051
R 0
R 200
R 400
R 600
R 800
R 1 000
R 1 200
R 1 400
HPF'14 STR'14 HPF'15 STR'15
ADR HPF* vs STR
* HPF YE June 2015 data for traditional F&V and Variable hotels (i.e. excluding conference hotels)
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HPF’S OCCUPANCY CYCLE*
THE YEAR IN REVIEW
66.3% 66.0% 68.3%
55.6%
53.4%51.4%
57.5% 60.1%61.4% 62.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Peak Occupancy
* HPF YE June 2015 data for traditional F&V and Variable hotels excluding conference hotels.
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YEAR END 30 JUNE 2015
THE YEAR IN REVIEW
YE2014 YE2015
Gross Rental Income
R 426 million 1.8% R 434 million
Portfolio Value
R 4,83 billion
6.8%R 5,16billion
Weighted Average Cost of Debt
9.14% -0.2% 9.12%
Total Debt
R 1,77 billion 5.1% R1,86 billion
YE2014 YE2015
Net Asset Value per Linked Unit
1 140cents
3.0%1 174cents
Distributable Debenture Interest
R240 million -2.8% R 233 million
Gearing (% of asset value)
36.7% -1.9% 36.0%
Interest Cover Ratio
2.64x -7.2% 2.45x
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YEAR END 30 JUNE 2015
THE YEAR IN REVIEW
-87%
129%
83%
-61%
-100%
-50%
0%
50%
100%
150%Y-on-Y Growth
-7%
19%
5% 5%
-20%
-10%
0%
10%
20%Y-on-Y Growth
7.91c18.08c
33.45c
13.15c
-
50
100
150
200
2012 2013 2014 2015
B Linked Unit Distribution
113.08c134.63c 141.35c 148.43c
-
50
100
150
200
2012 2013 2014 2015
A Linked Unit Distribution
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Q2 AND Q3 ARE THE STRONGEST PERFORMING MONTHS IN TERMS OF EBITDA
THE YEAR IN REVIEW
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
Q1 (Jul-Sep) Q2 (Oct-Dec) Q3 (Jan-Mar) Q4 (Apr-Jun)’12 ‘13 ‘14 ‘15 ’12 ‘13 ‘14 ‘15 ’12 ‘13 ‘14 ‘15 ’12 ‘13 ‘14 ‘15
EBIT
DA
R’m
illion
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LEASE EXPIRY PROFILE (CY) –WEIGHTED AVERAGE EXPIRY 12.1 YEARS
THE YEAR IN REVIEW
14 16 18 20 22 24 26 28 30 32 34 36 38
Protea Hotel - The Winkler
Protea Hotel - The Richards
The Bayshore Inn
Protea Hotel Imperial
Protea Hotel Hazyview
Protea Hotel Hluhluwe & Safaris
Premier Hotel King David
Holiday Inn Sandton - Rivonia Road
Kopanong Hotel & Conference Centre
Crowne Plaza Johannesburg - The Rosebank
Inn on the Square
Protea Hotel Edward
Champagne Sports Resort
Protea Hotel Marine
Protea Hotel Richards Bay
Arabella Hotel and Spa
Birchwood Executive Hotel & OR Tambo…
Mount Grace Country House & Spa
Protea Hotel Victoria Junction
Radisson Blu Gautrain Hotel
Radisson Blu Waterfront
Westin Cape Town
Initial Period Option Period(s)
Non-core
Non-core
Non-core
Sold
Sold
Under Offer
Under Offer
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DEBT MATURITY PROFILE AS AT 30 JUNE 2015 (R’MILLION)
STRATEGIC PLAN
-
100
200
300
400
500
600
700
Nedbank Secured Note Unsecured Note
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CAPEX SPENT IN 2015 (R53 MILLION)
• Birchwood - Soft refurbishment of 167 rooms relaunched as “The Silverbirch Hotel”; Capex
spent: R20,7 million
• Mount Grace Country House & Spa - Development of a Mountain Bike and a Kids Club
and Replacement of all thatched roofing across the resort; Capex spent R13,2 million
• Radisson Blu Gautrain Hotel - Refurbishment of the reception level including; Capex spent
R3 million
• Radisson BluWaterfront - Refurbishment of public and reception areas including the
conference rooms and business centre; Capex spent R9,0 million
• Westin Cape Town - Construction of outside swimming pool; Capex spent R7,3 million
PROPERTY PORTFOLIO
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ACQUISITIONS
• 25 additional units at Radisson BluWaterfront (R76 million)
• 4 additional units and 25 parking bays at Radisson Blu Gautrain Hotel (R12,4 million)
• 35% undivided share in 215 rooms at Birchwood (R60 million)
PROPERTY PORTFOLIO
Radisson BluWaterfront
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DISPOSALS
• Interests in 4 Courtyard properties (sold R80 million)
• PH The Richards (sold R46 million)
• PH Hluhluwe & Safaris (sold R14,5 million)
• Premier King David (under offer)
• PH Imperial (under offer)
• PH Richards Bay (under negotiation)
• Kopanong Hotel & Conference Centre (3 sold to date)
• Bayshore Inn
• PH Hazyview
• PH The Winkler
PROPERTY PORTFOLIO
PH Hluhluwe & Safaris
PH Imperial
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SA HOSPITALITY OUTLOOK
• Pessimistic market outlook driven by concerns relating to new visa regulations negatively
affecting the foreign leisure and foreign business segments
• International source markets to continue to decline amid visa regulation ‘crisis’ somewhat
offset by weaker Rand
• Government conferencing rate ceiling expected to be relaxed in the next 12 months
• Minimal occupancy growth expectation, RevPAR growth driven by inflationary rate growth
• SA hotel development pipeline focused on Cape Town, 4-5 new developments by 2018
• Continued above inflation pressure on salaries & wages and utility costs
• Weaker Rand lead to South African leisure traveller to remain local
MARKET OUTLOOK
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• Tough trading conditions to continue until the economy picks up
• Focus on:
› Driving revenues
› Operational efficiencies
› Value extraction
• Capital restructure
• Tsogo potential transaction
› Issue of shares for property
› Conversion to single share class
• REIT conversion
THE YEAR AHEAD
Mount Grace Country House & Spa – Kids Club
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DISTRIBUTION TIMEFRAME
November
S M T W T F S
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30
September
S M T W T F S
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
Last day to trade cum interest 11 September
Linked units trade ex-interest 14 September
Record date 18 September
Payment date 21 September
Annual general meeting 13 November
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RESULTS PRESENTATION 2015