Wrap Text
Reviewed condensed consolidated financial results for the year ended 31 March 2015
Tsogo Sun Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1989/002108/06)
Share code: TSH ISIN: ZAE000156238
(“Tsogo Sun” or “the company” or “the group”)
Reviewed Condensed Consolidated Financial Results for the year ended 31 March 2015
Income R11.3 billion up 5%
Ebitdar R4.2 billion unchanged from the prior year
Adjusted HEPS 175.0 cents down 1%
Final dividend per share 60.0 cents unchanged from the prior year
COMMENTARY
REVIEW OF OPERATIONS
Trading during the financial year reflected the continued pressure on the consumer due to the macro-economic environment
and weak consumer sentiment. Limited organic year-on-year growth was achieved in both casino and hotel revenues. Trading
results were impacted by a variety of mergers and acquisitions and development projects including the acquisition of
hotel businesses from Liberty, noted below, and the acquisition in the prior year of a stake in Southern Sun Ikoyi,
offset by the closure of Southern Sun Maputo and Garden Court De Waal for refurbishment and the sale of Garden Court
Sandton. In addition, the year saw the impact of the post-election and fiscal austerity consequences on government travel
in South Africa, the impact of the Ebola epidemic on hotel occupancies mainly outside South Africa and foreign exchange
losses in the current year vs. gains in the prior year.
Tsogo Sun has continued to allocate capital in terms of its growth strategy and accordingly has spent R5.9 billion
during the year as follows:
- concluded agreements with Liberty Group Limited (“Liberty”) for a 10% increase in the group’s equity interest in
The Cullinan Hotel Proprietary Limited (“Cullinan”) to 60% and the acquisition by Cullinan of various hotel businesses from
Liberty. The net investment by the group is R762 million and the effective date of the transaction was 30 April 2014;
- acquired a 25% interest in Redefine BDL Hotel Group Limited for R145 million, a leading independent hotel
management company in the United Kingdom with approximately 60 hotels under management, with effect from 1 May 2014;
- acquired the remaining 49% interest in Tsogo Sun One Monte Proprietary Limited, the Pivot office development, for
R144 million with effect from 19 May 2014;
- completed the R206 million expansion of Emnotweni Casino, which included the construction of an expanded casino
floor, additional gaming positions, additional covered parking, a conference and eventing area and restaurants.
R18 million was spent during the year;
- completed the US$30 million (R318 million) expansion of Southern Sun Maputo, including the addition of 111 rooms
and conference facilities, the expansion of the existing restaurant, lobby and back-of-house facilities and the
refurbishment of the existing 158 rooms. The hotel was closed from April 2014 and the refurbishment was completed
during August 2014. R207 million was spent during the year;
- completed the R560 million expansion and redevelopment of Silverstar Casino, which includes additional dining
options, an outdoor events area, cinemas, 10-pin bowling alley, laser tag games, an expanded and enhanced casino floor
and parking. R321 million was spent during the year and the project was completed during October 2014;
- acquired the remaining 15% minority shareholding in the Garden Route Casino for R51 million during October 2014;
- acquired the Garden Court Polokwane land and buildings for R80 million with effect from 31 March 2015;
- continued the R630 million refurbishment and expansion of Gold Reef City Casino and Theme Park which will include
an increased casino offering, cinemas and additional restaurants at the casino and additional food and beverage outlets
and improved access systems at the Theme Park with an improved linkage to the casino complex and an expansion of the
Apartheid Museum. R142 million was spent during the year;
- commenced the planning phase for the expansion of the Suncoast Casino and Entertainment World following receipt of
the requisite regulatory approvals. The expansion includes a destination retail mall, additional restaurants and
entertainment offerings, a 2 000-seat multipurpose venue, resort style roof-top swimming pools, additional parking, an
expansion of the casino floor to incorporate an additional 900 gaming machines and 16 gaming tables. Construction is
expected to commence in 2016 with three years to completion. R141 million was paid during the year including the
R100 million to the KwaZulu-Natal Gaming and Betting Board to be spent on charitable or social infrastructural
developments in the KwaZulu-Natal province;
- invested R749 million on maintenance capex group-wide, including gaming system replacements and major hotel
refurbishments, ensuring our assets remain best in class; and
- in addition to the capital invested in the growth strategy, the group managed the exit of SABMiller PLC (“SABMiller”)
from its long-term 39.6% shareholding in the group, including a specific repurchase of 133.6 million Tsogo Sun ordinary
shares for R2.8 billion on 28 August 2014. The shares were acquired at a price of R20.96 per share representing an 18.6%
discount to the final book build price achieved on the sale of the SABMiller investment of R25.75 per share.
The group opened the 353-roomed Southern Sun Abu Dhabi under management contract in the United Arab Emirates on
30 April 2014 and concluded a management agreement for a 150-room hotel in Tete Mozambique to be opened in the first
quarter of 2016.
Total income for the year of R11.3 billion ended 5% above the prior year with a 2% growth in gaming win assisted by a
10% growth in hotel rooms revenue and a 13% growth in food and beverage revenue. Earnings before interest, income tax,
depreciation, amortisation, property rentals, long-term incentives and exceptional items (“Ebitdar”) at R4.2 billion for
the year was unchanged from the prior year. The overall group Ebitdar margin of 37.2% is 1.9 percentage points (“pp”)
down on the prior year. The underlying operations of the group remain highly geared towards the South African consumer
(in gaming) and the corporate market (in hotels) with both sectors still experiencing difficult economic conditions and
increased administered costs. The high level of operational gearing still presents significant growth potential of the
group should these sectors of the South African economy improve.
Gaming win for the year in both slots and tables grew by a disappointing 2% on the prior year.
Gauteng recorded provincial growth in gaming win of 3.6% for the year. Gaming win growth of 4.3% was achieved at
Montecasino and 1.7% at Silverstar with Gold Reef City 4.6% down on the prior year. Silverstar and Gold Reef City were
adversely impacted by the disruptions as a result of the expansion and refurbishment programmes and the gaming system
changes.
KwaZulu-Natal provincial gaming win grew by 4.2% for the year. Gaming win growth of 4.2% was achieved at Suncoast
Casino and Entertainment World, 6.3% at Blackrock Casino and 0.6% at Golden Horse Casino.
Mpumalanga reported growth in provincial gaming win of 4.7% for the year. Gaming win growth of 3.5% was achieved at
The Ridge Casino in Emalahleni and 9.2% at Emnotweni Casino in Nelspruit following the expansion and redevelopment during
the prior year.
The Eastern Cape provincial gaming win grew by 2.2% for the year. Hemingways gaming win was 7.5% down on the prior
year due to the poor economic conditions in East London.
The Western Cape reported growth in provincial gaming win of 10.3% for the year. The Caledon Casino, Hotel and Spa,
Mykonos Casino in Langebaan and Garden Route Casino in Mossel Bay reported growth of 8.7%, 10.6% and 4.2% respectively.
The Goldfields Casino in Welkom in the Free State experienced difficult conditions with gaming win 2.1% down on the
prior year.
Other Gaming operations consisting of the Sandton Convention Centre and head office costs reflected a net Ebitdar loss
of R216 million, R5 million adverse to the prior year. The StayEasy Century City hotel, previously included in other
gaming operations, was transferred to the South African Hotels division during the year. The 2014 comparatives in the
segment analysis have been restated accordingly.
Overall revenue for the Gaming division increased 3% on the prior year to R8.3 billion. Ebitdar was unchanged on the
prior year at R3.3 billion at a margin of 39.2%, 1.2pp below the prior year due to the slow growth in gaming win and the
opening of additional profitable lower margin businesses.
The hotel industry in South Africa, excluding the government segment, continues to experience a recovery from the dual
impact of depressed demand and oversupply. Overall industry occupancies have improved marginally to 62.5% (2014: 62.0%)
for the year. As a result of the strong sales and distribution channels and the superior product and service quality
available within the group, Tsogo Sun Hotels continues to achieve an occupancy and rate premium in the segments in which
the group operates, albeit at a reduced level as a result of the high exposure of the group to government travel.
Trading for the group’s South African hotels for the year recorded a systemwide revenue per available room (“RevPar”)
growth of 4% on the prior year due mainly to an increase in average room rates by 6% to R953, with occupancies below the
prior year at 62.8% (2014: 63.9%) impacted by the post-election and fiscal austerity impacts on government travel.
Overall revenue for the South African Hotel division increased 15% on the prior year to R2.5 billion assisted by the
inclusion of the additional Cullinan hotels offset by the sale of Garden Court Sandton in December 2013 and the closure of
Garden Court De Waal for four months during the year for refurbishment. Ebitdar improved 10% to R830 million at a margin of
33.1% (2014: 34.4%).
The Offshore division of hotels achieved total revenue of R552 million, unchanged on the prior year due to the closure
of Southern Sun Maputo for five months during the year for refurbishment and particularly the impact of the Ebola
epidemic on trading and the uncertain political environment in certain countries. This was offset by the acquisition of
Southern Sun Ikoyi on 29 June 2013, giving a full 12 months trading in 2015, and the weakening of the Rand against both
the US$ and the Euro. Ebitdar (pre-foreign exchange losses/gains) decreased by 10% to R137 million. Foreign exchange losses
of R21 million (2014: R33 million gain) were incurred on the translation of offshore monetary items.
Combined South African and offshore hotel trading statistics, reflecting the Tsogo Sun group-owned hotels and
excluding hotels managed on behalf of third parties, are as follows:
for the year ended 31 March 2015 2014
Occupancy (%) 61.6 63.6
Average room rate (R) 945 897
RevPar (R) 583 570
Rooms available (’000) 4 209 3 892
Rooms sold (’000) 2 595 2 476
Rooms revenue (Rm) 2 453 2 221
The increase in average room rate is positively impacted by the inclusion of Southern Sun Ikoyi from 29 June 2013 and
the effect of the Rand weakness on the offshore portfolio.
Operating expenses including gaming levies and VAT and employee costs but excluding property rentals, exceptional
items and long-term incentives increased by 9% on the prior year mainly due to non-organic growth in the business and
increased offshore overheads as a result of the weakening of the Rand against both the US$ and the Euro offset by savings
initiatives.
Property rentals at R210 million are 5% down on the prior year mainly due to the acquisition of the Garden Court Kings
Beach property and the sale of Garden Court Sandton offset by contractual increases and straight-line lease provision
adjustments.
Amortisation and depreciation at R733 million is 13% up on the prior year due mainly to the capital spend during the
year and the inclusion of Southern Sun Ikoyi for 12 months and the hotels in Cullinan not in the prior year.
The long-term incentive expense at R95 million is R55 million below the prior year charge and reflects the effect of
the increased share price (including dividend adjustments) at 31 March 2015.
Exceptional losses for the year of R143 million relate mainly to the IFRS 2 Share-Based Payment charge on the
executive facility amounting to R118 million, pre-opening costs of R19 million during the closure period of the hotels
closed for refurbishment, property, plant and equipment and loan impairments of R17 million, a marketing fee income write off
of R16 million (refer associates and joint ventures below) and transaction and restructure costs of R11 million offset by
the gain recognised on the change in other long-term employee benefits of R38 million. Exceptional losses for the prior
year of R73 million relate mainly to property, plant and equipment and loan impairments, fair value adjustment to the value
of a previously held interest in an associate and transaction and retrenchments costs on the restructure of various departments
in the business offset by a lease termination recovery.
Net finance costs of R681 million are 83% above the prior year due to the increase in debt and reduction in net cash,
to fund the growth strategy and the share buyback offset by an adjustment to the Cullinan put option of R8 million.
The share of profit of associates and joint ventures of R25 million improved by R25 million on the prior year mainly
due to earnings from the Redefine BDL acquisition and the group’s share of a joint venture's marketing fee reversal of
R20 million.
The effective tax rate for the year at 28.8% is impacted by non-deductible expenditure such as casino building
depreciation and non-deductible foreign exchange losses offset by the tax holiday at Southern Sun Ikoyi. The comparative
effective tax rate of 28.2% is impacted by similar items.
Profit attributable to non-controlling interests of R34 million is 65% below the prior year mainly due to the acquisition
of the additional 10% of Suncoast, 15% of Garden Route Casino and 49% of One Monte and reduced profits at Southern
Sun Ikoyi, Southern Sun Maputo, Cullinan and Hemingways Casino offset by the Southern Sun Ikoyi acquisition in the prior
year.
Group adjusted headline earnings for the year ended 31 March 2015 at R1.8 billion are 8% below the prior year. The
adjustments include the reversal of the post tax impacts of the exceptional losses noted above in addition to the reversal
of the remeasurement of the Cullinan put option in net finance costs and the joint venture’s marketing fee reversal. The
number of shares in issue decreased due to the buyback of 133.6 million ordinary shares on 28 August 2014 and the resultant
adjusted headline earnings per share is 1% down on the prior period at 175.0 cents per share.
Cash generated from operations for the year improved by 3% on the prior year at R3.9 billion. Cash flows utilised for
investment activities of R2.9 billion, including the acquisition of non-controlling interests, consisted mainly of
maintenance capital expenditure and the acquisitions and investments described above.
Interest-bearing debt net of cash at 31 March 2015 totaled R9.2 billion, which is R4.8 billion above the
31 March 2014 balance of R4.4 billion, with R947 million paid in dividends to group and non-controlling shareholders
in addition to the investment activities during the year.
PROSPECTS
Trading is expected to remain under pressure due to the ongoing macro-economic conditions and weak consumer sentiment.
Nevertheless, the group remains highly cash generative and is confident in achieving attractive returns from the growth
strategy once the macro-economic environment improves.
The group continues to implement a variety of projects and acquisitions including:
- the group has entered into a transaction with Sun International Limited and Grand Parade Investments Limited for
the acquisition of a 40% equity interest in each of SunWest International Proprietary Limited and Worcester Casino
Proprietary Limited for an aggregate R2 185 million. The acquisition is subject to the fulfilment of conditions precedent,
which include the approvals of the provincial gambling and the competition authorities;
- the Mpumalanga Gaming Board has withdrawn the second request for proposal for the fourth licence. The group is
pursuing a legal challenge in this regard;
- the potential to bid for the relocation of one of the smaller casinos in the Western Cape to the Cape Metropole
remains an opportunity for the group should the provincial authorities allow such a process;
- the group has announced a new 500 room hotel complex in the Cape Town city centre, with the opening scheduled for
the third quarter of 2017; and
- the group is considering creating an entertainment and hospitality focused Real Estate Investment Trust (“REIT”),
into which it would transfer its extensive owned hotel, retail and office property portfolio. Evaluation of this
opportunity is at an early stage and no firm decision has been made in this regard.
The ability to continue to pursue these and other opportunities in line with the group’s investment strategy will
depend on the final outcome and impact of the variety of potential regulatory changes considered by government and will
require the successful interaction with various regulatory bodies including gaming boards, city councils, provincial
authorities and national departments. The group continues to constructively engage with the various spheres of government in
this regard.
DIVIDEND
Subsequent to year end, the board of directors has declared a final gross cash dividend in respect of the year ended
31 March 2015 of 60.0 (sixty) cents per share. The dividend has been declared in South African currency and is payable to
shareholders recorded in the register of the company at close of business Friday, 12 June 2015. The number of ordinary
shares in issue at the date of this declaration is 957 388 870 (excluding treasury shares). The dividend will be subject
to a local dividend tax rate of 15%, which will result in a net dividend of 51.0 cents per share to those shareholders
who are not exempt from paying dividend tax. The company’s tax reference number is 9250039717.
In compliance with the requirements of Strate, the electronic and custody system used by the JSE, the following dates
are applicable in 2015:
Last date to trade cum dividend Friday, 5 June
Shares trade ex dividend Monday, 8 June
Record date Friday, 12 June
Payment date Monday, 15 June
Share certificates may not be dematerialised or rematerialised during the period Monday, 8 June 2015 and Friday,
12 June 2015, both days inclusive. On Monday, 15 June 2015, the cash dividend will be electronically transferred to the
bank accounts of all certificated shareholders where this facility is available. Where electronic fund transfer is not
available or desired, cheques dated 15 June 2015 will be posted on that date. Shareholders who have dematerialised their
share certificates will have their accounts at their CSDP or broker credited on Monday, 15 June 2015.
SUBSEQUENT EVENTS
The directors are not aware of any matter or circumstance arising since the end of the financial year, not otherwise
dealt with within the condensed financial statements, that would affect the operations or results of the group
significantly.
PRESENTATION
Shareholders are advised that a presentation to various analysts and investors which provides additional
analysis and information will be available on the group’s website at www.tsogosun.com.
MN von Aulock RB Huddy
Chief Executive Officer Chief Financial Officer
21 May 2015
NOTES TO THE REVIEWED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 March 2015
1 BASIS OF PREPARATION
The condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings
Requirements for provisional reports and requirements of the Companies Act of South Africa. The Listings Requirements
require provisional reports to be prepared in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards (“IFRS”) and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.
Chief Financial Officer, RB Huddy CA(SA), supervised the preparation of the condensed consolidated financial statements.
The accounting policies applied in the preparation of the condensed consolidated financial statements are in terms of
IFRS and are consistent with those applied in the previous consolidated annual financial statements as at 31 March 2014
other than as mentioned below. The condensed consolidated financial statements should be read in conjunction with the
annual financial statements for the year ended 31 March 2014, which have been prepared in accordance with IFRS. These
condensed consolidated financial statements for the year ended 31 March 2015 have been reviewed by PricewaterhouseCoopers
Inc., who expressed an unmodified review conclusion. A copy of the auditor's review report is available for inspection at
the company's registered office together with the financial statements identified in the auditor's report.
2 CHANGE IN ACCOUNTING POLICIES AND INTERPRETATIONS
The group has adopted all the new, revised or amended accounting standards as issued by the IASB which were effective
for the group from 1 April 2014, none of which had a material impact on the group, except for the change noted below.
Amendments to IAS 32 Financial Instruments: Presentation clarify the meaning of “currently has a legally enforceable
right to set-off” and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting
and is applied retrospectively. The financial impact to the group to the 31 March 2014 balance sheet is to gross up cash
and cash equivalents by R247 million, which were previously reported net of bank overdrafts and to restate borrowings by
an additional R247 million. Likewise, the financial impact to the group to the 1 April 2013 balance sheet is to gross up
cash and cash equivalents and borrowings by an additional R1 088 million respectively. This change in accounting
interpretation has been applied retrospectively and has no impact on earnings per share.
Other than the abovementioned change in accounting interpretation, the accounting policies have been consistently applied
with those of the annual financial statements for the year ended 31 March 2014, as described in those annual financial
statements.
3 ACQUISITION OF BUSINESSES
The following business acquisition was concluded during the year under review:
Acquisition of businesses by The Cullinan Hotel Proprietary Limited
The Cullinan Hotel Proprietary Limited (“Cullinan”), a group subsidiary, concluded agreements with Liberty Group Limited
(“Liberty”) and Southern Sun Hotel Interests Proprietary Limited (“SSHI”), also a group subsidiary, for the acquisition
by Cullinan of various hotel assets from SSHI and Liberty. The net investment by the group is R762 million and the effective
date of the transaction was 30 April 2014.
The acquired hotels were previously managed by SSHI and the acquisition thereof is in line with management’s strategy to
own its operations. The fair values of the net assets acquired equate to the fair values of the considerations paid at
the date of acquisition, and therefore no goodwill has arisen and no intangible assets have been identified on these
acquisitions. In line with the group’s accounting policies, the fair value of the assets acquired was obtained by applying
a valuation technique performed on a discounted cash flow basis. The acquired businesses contributed incremental revenues
of R256 million and adjusted earnings of R33 million to the group for the period from acquisition to 31 March 2015. As part
of the agreements with Liberty, the Garden Court Kings Beach property was purchased by Cullinan and accounted for as an
asset purchase. Had the acquisition occurred on 1 April 2014, group income would have increased by an additional R22 million
and adjusted earnings would have increased by an additional R4 million. These amounts have been calculated excluding the
funding impact of the acquisition and using the group’s accounting policies.
The fair values of net assets acquired is as follows: Rm
Hotel property, plant and equipment 1 343
Current assets 16
Deferred tax liabilities (208)
Current liabilities (9)
Total identifiable net assets acquired 1 142
Asset purchase 128
Purchase consideration (R762 million paid in cash, R508 million loan) (1 270)
Goodwill -
4 FINANCIAL INSTRUMENTS
The group fair values its interest rate swaps as shown below. The fair values of all other financial assets and financial
liablities approximate their carrying amounts.
Interest rate swaps
The group has interest rate swaps, being level 2 fair value measurements. The fair value of the interest rate swap liability
of R90 million (2014: R48 million asset) is calculated as the present value of the estimated future cash flows based on
observable yield curves.
Put option
Together with the business acquisition referred to in note 3, the group entered into a call option over Liberty’s
40% shareholding in Cullinan and Liberty has a corresponding put option, both exercisable at the fair values of the
shares. A financial liability for the put option of R493 million and a corresponding debit to transactions with
non-controlling interest was recognised on initial recognition. At the end of each reporting period the liability is
remeasured and the increase or decrease recognised in the income statement. The non-current liability, included in
derivative financial instruments, has been remeasured to R485 million at the year end with the decrease of R8 million
recognised in finance costs. A discounted cash flow valuation was used to estimate the liability.
5 SEGMENT INFORMATION
In terms of IFRS 8 Operating Segments, the chief operating decision maker has been identified as the group’s Chief
Executive Officer (“CEO”) and the Group Executive Committee (“GEC”). Management has determined the operating segments
based on the reports reviewed by the chief operating decision maker.
There has been no change in the basis of segmentation or in the basis of measurement of segment profit or loss from the
last annual financial statements other than the reallocation of StayEasy Century City from other gaming operations to
the South African hotels division.
The group’s CEO and GEC assess the performance of the operating segments based on Ebitdar. The measure excludes the effects
of long-term incentives and the effects of non-recurring expenditure. The measures also excludes all headline adjustments,
impairments and fair value adjustments on non-current assets and liabilities. Interest income and finance costs are not
included in the result for each operating segment as this is driven by the group treasury function which manages the cash
and debt position of the group.
6 CAPITAL COMMITMENTS
The board has committed a total of R4.2 billion for maintenance and expansion capital items at its gaming and hotel
properties of which R2.0 billion is anticipated to be spent during the next financial year. R525 million of the
committed capital expenditure has been contracted for.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the year ended 31 March Change 2015 2014
% Reviewed Audited
Rm Rm
Net gaming win 2 6 976 6 819
Rooms revenue 10 2 453 2 221
Food and beverage revenue 13 1 203 1 063
Other revenue 711 664
Income 5 11 343 10 767
Gaming levies and Value Added Tax (1 450) (1 411)
Property and equipment rentals (276) (291)
Amortisation and depreciation (733) (648)
Employee costs (2 816) (2 604)
Other operating expenses (3 026) (2 691)
Operating profit (3) 3 042 3 122
Interest income 79 21
Finance costs (760) (394)
Share of profit of associates and joint ventures 25 -
Profit before income tax 2 386 2 749
Income tax expense (680) (776)
Profit for the year 1 706 1 973
Profit attributable to:
Equity holders of the company 1 672 1 877
Non-controlling interests 34 96
1 706 1 973
Number of shares in issue (million) 957 1 098
Weighted average number of shares in issue (million) 1 014 1 098
Basic and diluted earnings per share (cents) (4) 164.9 170.9
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2015 2014
Reviewed Audited
Rm Rm
Profit for the year 1 706 1 973
Other comprehensive income for the year, net of tax
Items that may be reclassified subsequently to profit or loss: (13) 178
Cash flow hedges (138) 128
Currency translation adjustments 86 86
Income tax relating to items that may subsequently be reclassified 39 (36)
Items that may not be reclassified subsequently to profit or loss: 1 4
Actuarial gains on post-employment benefit liability 1 5
Income tax relating to items that may not subsequently be reclassified - (1)
Total comprehensive income for the year 1 694 2 155
Total comprehensive income attributable to:
Equity holders of the company 1 660 2 059
Non-controlling interests 34 96
1 694 2 155
SUPPLEMENTARY INFORMATION
for the year ended 31 March Change 2015 2014
% Reviewed Audited
Rm Rm
Reconciliation of earnings attributable to equity holders of the
company to headline earnings and adjusted headline earnings(1)
Profit attributable to equity holders of the company 1 672 1 877
Loss on disposal of property, plant and equipment 3 2
Impairment of property, plant and equipment 7 14
Fair value loss on revaluation of previously held interest in associate - 6
Headline earnings (11) 1 682 1 899
IFRS 2 Share-Based Payment expense - equity settled 118 -
Other exceptional items (net) included in operating profit 1 39
Gain on remeasurement of put liability (6) -
Share of joint venture's exceptional item (20) -
Adjusted headline earnings (8) 1 775 1 938
Number of shares in issue (million) 957 1 098
Weighted average number of shares in issue (million) 1 014 1 098
Basic and diluted HEPS (cents) (4) 165.9 173.0
Basic and diluted adjusted HEPS (cents) (1) 175.0 176.5
(1) Net of tax and non-controlling interests
Reconciliation of operating profit to Ebitdar(2)
Ebitdar pre-exceptional items is made up as follows:
Operating profit 3 042 3 122
Add:
Property rentals 210 221
Amortisation and depreciation 733 648
Long-term incentive expense 95 150
4 080 4 141
Add: Exceptional losses 143 73
Loss on disposal of property, plant and equipment 4 3
Impairment of property, plant and equipment 10 16
Fair value loss on revaluation of previously held interest in associate - 6
Settlement fee received, net of expenses on termination of tenant leases 1 (21)
Transaction costs 2 9
Impairment of financial instruments, net of recoveries 3 2
Restructuring costs 8 58
Write off of marketing fee income raised previously from joint venture 16 -
Pre-opening expenses 19 -
IFRS 2 Share-Based Payment expense - equity settled 118 -
Gain recognised on the change in other long-term employee benefits (38) -
Ebitdar - 4 223 4 214
(2) The measure excludes the effects of long-term incentives, non-recurring expenditure, headline earnings adjustments
including impairments and fair value adjustments on non-current assets and liabilities and other exceptional items
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2015 2014
Reviewed Audited
Rm Rm
Cash flows from operating activities
Operating profit 3 042 3 122
Non-cash movements 1 312 1 139
Increase in working capital (488) (497)
Cash generated from operations 3 866 3 764
Interest received 74 20
Finance costs paid (789) (396)
3 151 3 388
Income tax paid (537) (756)
Dividends paid to shareholders (939) (878)
Dividends paid to non-controlling interests (8) (19)
Dividends received 7 3
Net cash generated from operations 1 674 1 738
Cash flows from investment activities
Purchase of property, plant and equipment (1 610) (1 337)
Proceeds from disposals of property, plant and equipment 5 11
Purchase of intangible assets (136) (37)
Development and purchase of investment property (7) (45)
Acquisition of subsidiaries, net of cash acquired - (507)
Acquisition of businesses (762) (67)
Acquisition of interest in associate (145) (6)
Other loans and investments repaid 4 3
Other loans and investments made (5) (21)
Net cash utilised for investment activities (2 656) (2 006)
Cash flows from financing activities
Borrowings raised 5 155 2 407
Borrowings repaid (1 810) (797)
Shares repurchased (2 819) -
Treasury shares acquired (200) -
Acquisition of non-controlling interests (196) (419)
Decrease in amounts due by share scheme participants 15 6
Net cash generated from financing activities 145 1 197
Net (decrease)/increase in cash and cash equivalents (837) 929
Cash and cash equivalents at beginning of year, net of bank overdrafts 1 715 750
Foreign currency translation 5 36
Cash and cash equivalents at end of year, net of bank overdrafts 883 1 715
CONDENSED CONSOLIDATED BALANCE SHEET
as at 31 March 2015 2014 2013
Reviewed Restated(1) Restated(1)
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 13 470 10 939 9 123
Investment property 109 102 7
Goodwill and other intangible assets 6 596 6 467 6 330
Investments in associates and joint ventures 311 149 171
Non-current receivables 88 91 79
Derivative financial instruments 22 67 -
Deferred income tax assets 180 120 179
20 776 17 935 15 889
Current assets
Inventories 108 103 85
Trade and other receivables 601 524 633
Current income tax assets 99 137 73
Cash and cash equivalents 3 048 1 962 1 838
3 856 2 726 2 629
Total assets 24 632 20 661 18 518
EQUITY
Capital and reserves attributable to equity holders of the company
Ordinary share capital and premium 4 576 4 771 4 768
Share-based payment reserve 121 3 3
Other reserves (563) 16 (453)
Retained earnings 2 917 5 000 3 997
Total shareholders’ equity 7 051 9 790 8 315
Non-controlling interests 635 732 807
Total equity 7 686 10 522 9 122
LIABILITIES
Non-current liabilities
Interest-bearing borrowings 8 559 5 062 3 386
Derivative financial instruments 538 - 45
Deferred income tax liabilities 1 868 1 603 1 449
Provisions and other liabilities 501 493 503
11 466 7 158 5 383
Current liabilities
Interest-bearing borrowings 3 700 1 339 2 032
Derivative financial instruments 59 19 37
Trade and other payables 1 144 1 044 984
Provisions and other liabilities 456 525 921
Current income tax liabilities 121 54 39
5 480 2 981 4 013
Total liabilities 16 946 10 139 9 396
Total equity and liabilities 24 632 20 661 18 518
(1) Restated for change in accounting policy - refer note 2
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the company
Ordinary share Share-based Other Retained Total Non- Total
capital and payment reserves earnings Rm controlling equity
premium reserve Rm Rm interests Rm
Rm Rm Rm
Balance at 1 April 2013 (audited) 4 768 3 (453) 3 997 8 315 807 9 122
Total comprehensive income - - 178 1 881 2 059 96 2 155
Profit for the year - - - 1 877 1 877 96 1 973
Other comprehensive income - - 178 4 182 - 182
Shares issued to share scheme participants 4 - - - 4 - 4
Share options lapsed (1) - - - (1) - (1)
Non-controlling interests arising on business combinations - - - - - 163 163
Transactions with non-controlling interests - - 291 - 291 (315) (24)
Ordinary dividends - - - (878) (878) (19) (897)
Balance at 31 March 2014 (audited) 4 771 3 16 5 000 9 790 732 10 522
Total comprehensive income - - (13) 1 673 1 660 34 1 694
Profit for the year - - - 1 672 1 672 34 1 706
Other comprehensive income - - (13) 1 (12) - (12)
Shares repurchased and cancelled (2) - - (2 817) (2 819) - (2 819)
Treasury shares acquired (200) - - - (200) - (200)
Shares issued to share scheme participants 8 - - - 8 - 8
Share options lapsed (1) - - - (1) - (1)
Recognition of share-based payments - 118 - - 118 - 118
Recognition of put liability with non-controlling interests - - (493) - (493) - (493)
Transactions with non-controlling interests - - (73) - (73) (123) (196)
Ordinary dividends - - - (939) (939) (8) (947)
Balance at 31 March 2015 (reviewed) 4 576 121 (563) 2 917 7 051 635 7 686
SEGMENTAL ANALYSIS Income(1) Ebitdar(2) Ebitdar margin Amortisation and depreciation
for the year ended 31 March 2015 2014(6) 2015 2014(6) 2015 2014(6) 2015 2014(6)
Rm Rm Rm Rm % % Rm Rm
Montecasino 2 510 2 415 1 133 1 088 45.1 45.1 100 95
Suncoast 1 581 1 517 732 717 46.3 47.2 109 104
Gold Reef City 1 270 1 298 479 514 37.7 39.6 73 65
Silverstar 676 648 248 263 36.7 40.6 58 39
The Ridge 415 400 188 186 45.2 46.5 19 25
Emnotweni 367 328 154 144 42.0 44.0 30 15
Golden Horse 334 318 148 146 44.3 46.1 31 34
Hemingways 310 336 109 138 35.1 41.1 40 45
Garden Route 188 179 79 78 42.0 43.7 14 14
Blackrock 152 139 58 54 38.1 38.8 11 9
The Caledon 149 135 38 35 25.5 25.7 6 6
Mykonos 145 132 64 57 44.1 43.1 7 6
Goldfields 138 142 51 57 37.1 40.3 9 9
Other gaming operations(3) 100 92 (216) (211) 9 7
Total gaming operations 8 335 8 079 3 265 3 266 39.2 40.4 516 473
South African hotels division(3)(4) 2 506 2 184 830 752 33.1 34.4 171 153
Offshore hotels division 552 550 116 186 21.0 33.8 40 18
Pre-foreign exchange losses/gains 137 153 24.8 27.8
Foreign exchange (losses)/gains (21) 33
Corporate(4)(5) (50) (46) 12 10 6 4
Group 11 343 10 767 4 223 4 214 37.2 39.1 733 648
(1) All revenue and income from gaming and hotel operations is derived from external customers. No one customer
contributes more than 10% to the group’s total revenue
(2) All casino units are reported pre-internal gaming management fees
(3) The StayEasy Century City hotel, previously included in other gaming operations, was transferred to the South
African Hotels division during the year and generated income of R35 million and Ebitdar of R16 million. (The 2014 comparatives
have been restated comprising income of R31 million and Ebitdar of R15 million being reallocated between segments.)
(4) Includes R50 million (2014: R48 million) intergroup management fees
(5) Includes the treasury and management function of the group
(6) Restated - refer to note (3) above and note 5 of the reviewed condensed consolidated financial statements
DIRECTORS: JA Copelyn (Chairman)* MN von Aulock (Chief Executive Officer) RB Huddy (Chief Financial Officer)
MJA Golding* BA Mabuza** VE Mphande* JG Ngcobo** Y Shaik* RG Tomlinson (Lead Independent)**
(*Non-executive Director **Independent Director)
COMPANY SECRETARY: GD Tyrrell
REGISTERED OFFICE: Palazzo Towers East, Montecasino Boulevard, Fourways, 2055 (Private Bag X200, Bryanston, 2021)
TRANSFER SECRETARIES: Link Market Services South Africa Proprietary Limited, 13th Floor, Rennie House, 19 Ameshoff
Street, Braamfontein, 2001 (PO Box 4844, Johannesburg, 2000)
SPONSOR: Deutsche Securities (SA) Proprietary Limited, 3 Exchange Square, 87 Maude Street, Sandton, 2196 (Private Bag
X9933, Sandton, 2146)
www.tsogosun.com
Date: 21/05/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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