Wrap Text
Reviewed Condensed Consolidated Financial results for the year ended 31 March 2016
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 2016
Income R12.3 billion up 8%
Ebitdar R4.5 billion up 8%
Adjusted HEPS 196.5 cents up 12%
Final dividend per share 67.0 cents up 12%
Commentary
Review of operations
Trading during the financial year reflected continued pressure on the consumer due to the weak macro-economic
environment and consumer sentiment, although revenues during the last quarter were significantly up on the prior year.
Year-on-year growth was achieved in both casino and hotel revenues and the trading results were positively impacted by various
expansionary projects, including the acquisition of hotel businesses from Liberty Group Limited (“Liberty”) by The
Cullinan Hotel Proprietary Limited (“Cullinan”), the expansion of Silverstar and the closure for refurbishment of Southern Sun
Maputo and Garden Court De Waal during the prior year, offset by the closure of the Riverside Sun and Sabi River Sun
hotels for refurbishment during the current year.
Tsogo Sun has continued to allocate capital in terms of its growth strategy and accordingly spent R2.0 billion during
the year as follows:
- continued the R640 million refurbishment and expansion of Gold Reef City Casino and Theme Park which includes 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. Phase one of the project, which excludes the Theme Park, was completed in November 2015. R256 million was
spent during the year;
- continued with the planning for the expansion of the Suncoast Casino and Entertainment World with construction
anticipated to commence in mid-2016 with two years to completion. The investment in the expansion has been decreased to
R2.1 billion and will include a 22 000m2 destination retail mall, additional restaurants and entertainment offerings,
additional parking, an expansion of the casino floor to incorporate an additional 900 gaming machines and 16 gaming tables.
An amount of R100 million made available to be spent on charitable or social infrastructural developments in the
KwaZulu-Natal province was paid in the prior year and forms part of the investment. R47 million was spent during the year;
- acquired 55% of the Hospitality Property Fund Limited (“HPF”) B-linked units for R252 million in August 2015;
- acquired a 25% interest in International Hotel Group Limited (an associate), along with the major shareholders of
Redefine BDL, for R315 million between September 2015 and March 2016. The property fund, which has a dual listing in
Luxembourg and on the Johannesburg Stock Exchange, will pursue hotel opportunities in the United Kingdom and Europe, the
hotels being managed by Redefine BDL; and
- invested R945 million on maintenance capex group-wide, including gaming system replacements and casino floor and
major hotel refurbishments, ensuring our assets remain best in class.
Total income for the year of R12.3 billion ended 8% above the prior year with a 6% growth in gaming win, assisted by a
13% growth in rooms revenue and a 12% growth in food and beverage revenue. Earnings before interest, income tax,
depreciation, amortisation, property rentals, long-term incentives and exceptional items (“Ebitdar”) at R4.5 billion for the
year was 8% up on the prior year. The overall group Ebitdar margin of 37.0% is 0.2 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 grew by 6% on the prior year with growth in slots win at 4% and tables win at 11%. Gaming win
for both slots and tables was impacted by lower win percentages with growth in slots handle at 7% and tables drop at 13%
on the prior year.
Gauteng recorded provincial growth in gaming win of 3.7% for the year. Gaming win growth of 5.1% was achieved at
Montecasino, 4.9% at Silverstar and 5.5% at Gold Reef City. Montecasino and Silverstar experienced reduced win percentages
during the year and Gold Reef City was impacted by the refurbishment and expansion work which was completed in October
2015. Administered costs (property rates and water) at Silverstar increased by R11 million post the redevelopment.
KwaZulu-Natal provincial gaming win grew by 7.3% for the year. Gaming win growth of 7.1% was achieved at Suncoast
Casino and Entertainment World, 8.8% at Blackrock Casino in Newcastle and 9.5% at Golden Horse Casino in Pietermaritzburg.
Provincial gaming win in Mpumalanga reduced 2.8% for the year. Gaming win growth of 2.2% was achieved at Emnotweni
Casino in Nelspruit with a reduction of 7.4% experienced at The Ridge Casino in Emalahleni impacted by significant economic
disruptions to the steel industry in that area. Emnotweni and The Ridge experienced reduced tables drop and reduced win
percentages during the year.
The Eastern Cape provincial gaming win grew by 1.9% for the year. Hemingways gaming win decreased by 0.7% on the prior
year, impacted by the poor economic conditions in the East London area.
The Western Cape reported growth in provincial gaming win of 3.8% for the year. The Caledon Casino, Hotel and Spa,
Garden Route Casino in Mossel Bay and Mykonos Casino in Langebaan reported growth of 10.0%, 18.2% and 6.7% respectively,
reflecting a strong performance of the leisure markets in these areas.
The Goldfields Casino in Welkom in the Free State experienced difficult conditions with gaming win 4.2% down on the
prior year.
Other Gaming operations consisting of the Sandton Convention Centre and head office costs reflected a net Ebitdar loss
of R233 million, R17 million adverse to the prior year.
Overall revenue for the Gaming division increased 7% on the prior year to R8.9 billion. Ebitdar increased 5% on the
prior year to R3.4 billion at a margin of 38.5%, 0.7pp below the prior year due to increased administered costs (property
rates, water and electricity) and the opening of additional profitable lower margin businesses.
The hotel industry in South Africa continues to experience a subdued recovery from the dual impact of depressed demand
and oversupply. Overall industry occupancies have improved to 63.8% (2015: 62.5%) for the year, but were adversely
impacted by visa regulations which constrained growth. As a result of the strong sales and distribution channels and the
superior product and service quality available within the group, Tsogo Sun hotels continue to achieve occupancy and rate
premiums in the segments in which the group operates.
Trading for the group’s South African hotels for the year recorded a system-wide revenue per available room (“RevPar”)
growth of 8% on the prior year due mainly to an increase in average room rates by 7% to R1 018, with occupancies above
the prior year at 63.5% (2015: 62.8%). Overall revenue for the South African Hotel division increased 9% on the prior
year to R2.7 billion, assisted by the inclusion of the additional Cullinan hotels for an additional month and the closure
of Garden Court De Waal for refurbishment during the prior year, offset by the closure of the Riverside Sun and Sabi
River Sun for refurbishment during the current year. Ebitdar improved 11% to R920 million at a margin of 33.5% (2015: 33.1%).
The Offshore division of hotels achieved total revenue of R691 million, representing a 25% increase on the prior year
due to a recovery from the impact of the Ebola epidemic on trading and the closure of Southern Sun Maputo for
refurbishment during the prior year. The result was further assisted by the weakening of the Rand against both the US Dollar
and the Euro. Ebitdar (pre-foreign exchange losses) increased by 40% to R192 million. Foreign exchange losses of R23 million
(2015: R21 million) 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 2016 2015
Occupancy (%) 62.5 61.6
Average room rate (R) 1 035 945
RevPar (R) 646 583
Rooms available (’000) 4 307 4 209
Rooms sold (’000) 2 691 2 595
Rooms revenue (Rm) 2 784 2 453
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. The increase was mainly due to non-organic growth in the
business as a result of acquisitions and expansions, increased marketing, promotional and administered costs (property
rates, water and electricity) and increased offshore overheads as a result of the weakening of the Rand against both the
US Dollar and the Euro, offset by savings initiatives.
Property rentals at R219 million are 4% up on the prior year mainly due to the inclusion of Holiday Inn Sandton and
Crowne Plaza Rosebank rentals effective 1 March 2016, contractual increases and the weakening of the Rand against the US
Dollar, offset by the acquisition of the Garden Court Polokwane hotel building.
Amortisation and depreciation at R812 million is 11% up on the prior year due mainly to the capital spend during the
current and the prior year and the acquisition of the hotels in Cullinan from Liberty.
The long-term incentive expense at R46 million is R49 million below the prior year charge and values the liability
(including dividend adjustments) by reference to the company’s share price which is adjusted for management’s best estimate
of the appreciation units expected to vest and future performance of the group.
Exceptional losses for the year of R58 million comprises the pre-opening costs of R12 million during the period hotels
were closed for refurbishment, capital asset disposals and impairments and loan impairments of R26 million, transaction
costs of R26 million and restructure costs of R2 million, net of the profit on disposal of an investment property of R8
million. Exceptional losses for the prior year of R143 million comprises the IFRS 2 Share-based Payment charge on the
executive facility amounting to R118 million, pre-opening costs of R19 million during the period hotels were closed for
refurbishment, capital asset disposals and impairments 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.
Net finance costs of R857 million are 26% above the prior year due to the increase in debt and reduction in net cash
to fund the growth strategy and the share buy-back in the prior year, and a charge in respect of the Cullinan put option
of R7 million (2015: R8 million credit).
The share of profit of associates and joint ventures of R29 million improved by R4 million on the prior year mainly
due to a full year’s earnings from Redefine BDL, offset by the group’s share of a joint venture’s marketing fee reversal
of R20 million in the prior year.
The effective tax rate for the year at 30.4% is impacted by the increase in the Capital Gains Tax (“CGT”) inclusion
rate on deferred tax of R54 million and non-deductible expenditure such as casino building depreciation, offset by foreign
exchange losses on the US Dollar denominated loans in the local currencies. The comparative effective tax rate of 28.8%
was impacted by non-deductible expenditure such as casino building depreciation, non-deductible foreign exchange losses
and the IFRS share-based payment charge, offset by the tax holiday at Southern Sun Ikoyi.
Profit attributable to non-controlling interests of R18 million is R16 million below the prior year mainly due to the
prior year acquisition of 15% of Garden Route Casino, 49% of One Monte and reduced profits at Southern Sun Maputo due to
local currency losses on the US Dollar denominated loans and at Cullinan due to an adjustment in the interest rate on
shareholders’ loans, and the increased deferred tax charge referred to above.
Group adjusted headline earnings for the year ended 31 March 2016 at R1.9 billion are 6% above 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 finance costs and the CGT inclusion rate deferred tax adjustment
referred to above, net of non-controlling interests. The weighted average number of shares in issue decreased due to the
buy-back of 133.6 million ordinary shares on 28 August 2014 and the resultant adjusted headline earnings per share is 12%
up on the prior year at 196.5 cents.
Cash generated from operations for the year improved by 13% on the prior year to R4.4 billion. Cash flows utilised for
investment activities of R2.0 billion consisted mainly of maintenance capital expenditure and the acquisitions and
investments described above.
Interest-bearing debt, net of cash, at 31 March 2016 totaled R9.2 billion, in line with 31 March 2015, with R878
million paid in dividends to shareholders in addition to the investment activities during the year.
PROSPECTS
Given the weak state of the South African economy and many of the commodity focused countries in which the group
operates, trading is expected to remain under pressure. However, the fourth quarter of the financial year was strong in both
the Gaming and particularly the SA hotel environment. The sustainability of this performance is uncertain and will
depend on how these economies perform going forward, including the impact of changes in commodity prices, and the level of
policy certainty that the government is able to instill in areas ranging from visa regulations to gaming taxes and
administered costs. 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 20% equity interest in each of SunWest International Proprietary Limited and Worcester Casino
Proprietary Limited for an aggregate R1.35 billion;
- as previously noted, agreement has been reached with HPF to acquire a controlling stake through the injection of
appropriate hotel assets having a value such that the issue of shares to the group at the time will result in the group
owning not less than 50% of the shares following the reconstitution of HPF’s capital into a single class of shares. All
resolutions required in order to approve the transaction were passed by the requisite majority of shareholders at the
general meeting of HPF shareholders held on Monday, 11 April 2016. The acquisition is subject to the fulfilment of
conditions precedent, which include the approvals of the competition authorities. The Competition Commission Tribunal hearing is
scheduled for August 2016;
- agreement has been reached for the further acquisition of two hotels from Liberty by Cullinan, being the Garden
Court Umhlanga and the StayEasy Pietermaritzburg for R310 million. Regulatory approval has been received and control will
follow transfer, expected in the next few months;
- 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; and
- the Mpumalanga Gambling Board withdrew the second request for proposal for the fourth licence. The group is
pursuing a legal challenge 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 2016 of 67.0 (sixty-seven) 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, 17 June 2016. The number of
ordinary shares in issue at the date of this declaration is 957 388 870 (excluding 91 792 519 treasury shares). The
dividend will be subject to a local dividend tax rate of 15%, which will result in a net dividend of 56.95 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 2016:
Last date to trade cum dividend Thursday, 9 June
Shares trade ex dividend Friday, 10 June
Record date Friday, 17 June
Payment date Monday, 20 June
Share certificates may not be dematerialised or rematerialised during the period Friday, 10 June 2016 and Friday, 17
June 2016, both days inclusive. On Monday, 20 June 2016, 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 20 June 2016 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, 20 June 2016.
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
25 May 2016
INDEPENDENT AUDITOR’S REVIEW REPORT ON CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
To the shareholders of Tsogo Sun Holdings Limited
Introduction
We have reviewed the condensed consolidated financial statements of Tsogo Sun Holdings Limited, set out on pages 1 to
7 and 9 to 18 of the provisional report, which comprise the condensed consolidated balance sheet as at 31 March 2016 and
the related condensed consolidated income statement, condensed consolidated statement of comprehensive income,
condensed consolidated statement of changes in equity and condensed consolidated cash flow statement for the year then ended,
and selected explanatory notes.
Directors’ Responsibility for the Condensed Consolidated Financial Statements
The directors are responsible for the preparation and presentation of these condensed consolidated financial
statements in accordance with the requirements of the JSE Limited Listings Requirements for provisional reports, as set out in
note 1 to the financial statements, and the requirements of the Companies Act of South Africa, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on these financial statements. We conducted our review in accordance
with International Standard on Review Engagements (“ISRE”) 2410, which applies to a review of historical financial
information performed by the independent auditor of the entity. ISRE 2410 requires us to conclude whether anything has come to
our attention that causes us to believe that the financial statements are not prepared in all material respects in
accordance with the applicable financial reporting framework. This standard also requires us to comply with relevant ethical
requirements.
A review of financial statements in accordance with ISRE 2410 is a limited assurance engagement. We perform
procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying
analytical procedures, and evaluate the evidence obtained. The procedures performed in a review are substantially less than
those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not
express an audit opinion on these financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated
financial statements of Tsogo Sun Holdings Limited for the year ended 31 March 2016 are not prepared, in all material
respects, in accordance with the requirements of the JSE Limited Listings Requirements for provisional reports, as set out in
note 1 to the financial statements, and the requirements of the Companies Act of South Africa.
PricewaterhouseCoopers Inc.
Director: P Calicchio
Registered Auditor
Johannesburg
25 May 2016
NOTES TO THE REVIEWED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 March 2016
1 BASIS OF PREPARATION
The condensed consolidated financial statements for the year ended 31 March 2016 have been prepared in
accordance with the requirements of the JSE Limited Listings Requirements for provisional reports and the
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 2015 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 2015, which have been prepared in accordance with IFRS. These condensed consolidated financial
statements for the year ended 31 March 2016 have been reviewed by PricewaterhouseCoopers Inc., and their unmodified
review conclusion is included on page 8.
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 2016 as noted below.
The adoption of the improvements made in the 2010 - 2012 Cycle and 2011 - 2013 Cycle will require additional disclosures
in the group’s annual financial statements. Other than that, the adoption of these amendments did not have any impact on
the current period or any prior period and is not likely to affect future periods. No other changes to accounting standards
had any impact on the current period or any prior period and are not likely to affect future periods.
3 FINANCIAL INSTRUMENTS
The group fair values its interest rate swaps as shown below, together with its available-for-sale listed investments. The
fair values of all other financial assets and financial liabilities 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 asset of
R72 million (2015: R90 million liability) is calculated as the present value of the estimated future cash flows based on
observable yield curves.
Available-for-sale investment
During August 2015, the group acquired 55% of HPF’s, a listed entity on the Johannesburg Stock Exchange, B-linked units for
R252 million (currently 27.3% of the voting rights) which equated to the investment’s fair value at 31 March 2016 based on
the entity’s listed share price at that date. This investment is classified as a level 1 fair value measurement. This
acquisition has been accounted for as an available-for-sale investment as the group currently has no significant influence
over the financial and operating decisions of HPF.
Put option
During the prior year 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 value of the shares. A financial liability for the put option 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 R492 million at 31 March 2016 (2015: R485 million)
with the increase of R7 million (2015: R8 million decrease) recognised in finance costs. A discounted cash flow valuation was
used to estimate the liability.
4 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.
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 measure also excludes all headline earnings adjustments,
impairments and fair value adjustments on non-current assets and liabilities and other exceptional items. 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.
5 BUSINESS COMBINATIONS
The group entered into management and lease agreements for the Holiday Inn Sandton and the Crowne Plaza Rosebank hotels currently
owned by HPF. The group acquired the shares in Majormatic 194 Proprietary Limited (the lessee) and the management contracts from
Extrabold Hotel Management Proprietary Limited for R15 million, being the fair value of the net assets acquired resulting in no
goodwill arising on the transaction. The effective date of the transaction was 1 March 2016.
6 CAPITAL COMMITMENTS
The board has committed a total of R4.9 billion for maintenance and expansion capital items at its gaming and hotel properties of
which R2.8 billion is anticipated to be spent during the next financial year. R506 million of the committed capital expenditure
has been contracted for.
CONDENSED CONSOLIDATED INCOME STATEMENT
for the year ended 31 March Change 2016 2015
% Reviewed Audited
Rm Rm
Net gaming win 6 7 361 6 976
Rooms revenue 13 2 784 2 453
Food and beverage revenue 12 1 353 1 203
Other revenue 785 711
Income 8 12 283 11 343
Gaming levies and Value Added Tax (1 531) (1 450)
Property and equipment rentals (287) (276)
Amortisation and depreciation (812) (733)
Employee costs (2 871) (2 816)
Other operating expenses (3 374) (3 026)
Operating profit 12 3 408 3 042
Interest income 35 79
Finance costs (892) (760)
Share of profit of associates and joint ventures 29 25
Profit before income tax 2 580 2 386
Income tax expense (774) (680)
Profit for the year 1 806 1 706
Profit attributable to:
Equity holders of the company 1 788 1 672
Non-controlling interests 18 34
1 806 1 706
Number of shares in issue (million) 957 957
Weighted average number of shares in issue (million) 957 1 014
Basic and diluted earnings per share (cents) 13 186.8 164.9
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2016 2015
Reviewed Audited
Rm Rm
Profit for the year 1 806 1 706
Other comprehensive income for the year, net of tax
Items that may be reclassified subsequently to profit or loss: 332 (13)
Cash flow hedges 162 (138)
Currency translation adjustments 215 86
Income tax relating to items that may subsequently be reclassified (45) 39
Items that may not be reclassified subsequently to profit or loss: 3 1
Actuarial gains on post-employment benefit liability 4 1
Income tax relating to items that may not subsequently be reclassified (1) -
Total comprehensive income for the year 2 141 1 694
Total comprehensive income attributable to:
Equity holders of the company 2 122 1 660
Non-controlling interests 19 34
2 141 1 694
SUPPLEMENTARY INFORMATION
for the year ended 31 March Change 2016 2015
% 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 1 788 1 672
Loss on disposal of property, plant and equipment 4 3
Impairment of property, plant and equipment 5 7
Impairment of intangibles 10 -
Gain on disposal of investment property (7) -
Headline earnings 7 1 800 1 682
Other exceptional items (net) included in operating profit 40 1
IFRS 2 Share-based Payment expense - equity settled - 118
Loss/(gain) on remeasurement of put liability 5 (6)
Change in capital gains tax inclusion rate on at acquisition assets
of subsidiaries 36 -
Share of joint venture's exceptional item - (20)
Adjusted headline earnings 6 1 881 1 775
Number of shares in issue (million) 957 957
Weighted average number of shares in issue (million) 957 1 014
Basic and diluted HEPS (cents) 188.1 165.9
Basic and diluted adjusted HEPS (cents) 12 196.5 175.0
(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 3 408 3 042
Add:
Property rentals 219 210
Amortisation and depreciation 812 733
Long-term incentive expense 46 95
4 485 4 080
Add: Exceptional losses, net of gains 58 143
Loss on disposal of property, plant and equipment 5 4
Impairment of property, plant and equipment 7 10
Impairment of intangibles 10 -
Gain on disposal of investment property (8) -
Transaction costs 26 2
Pre-opening expenses 12 19
Impairment of financial instruments, net of recoveries 4 3
Restructuring costs 2 8
IFRS 2 Share-based Payment expense - equity settled - 118
Write-off of marketing fee income raised previously from joint venture - 16
Settlement fee paid on termination of tenant leases - 1
Gain recognised on the change in other long-term employee benefits - (38)
Ebitdar 8 4 543 4 223
(2) The measure excludes the effects of long-term incentives, noncurring 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 2016 2015
Reviewed Audited
Rm Rm
Cash flows from operating activities
Operating profit 3 408 3 042
Adjust for non-cash movements and dividends received 1 265 1 312
Increase in working capital (297) (488)
Cash generated from operations 4 376 3 866
Interest received 31 74
Finance costs paid (832) (789)
3 575 3 151
Income tax paid (657) (537)
Dividends paid to shareholders (878) (939)
Dividends paid to non-controlling interests - (8)
Dividends received 51 7
Net cash generated from operations 2 091 1 674
Cash flows from investment activities
Purchase of property, plant and equipment (1 377) (1 610)
Proceeds from disposals of property, plant and equipment 9 5
Purchase of intangible assets (10) (136)
Development of investment property (27) (7)
Proceeds from disposal of investment property 19 -
Purchase of available-for-sale financial assets (252) -
Acquisition of subsidiary, net of cash acquired (12) -
Acquisition of businesses - (762)
Acquisition of interest in associate (315) (145)
Other loans and investments repaid 18 4
Other loans and investments made - (5)
Net cash utilised for investment activities (1 947) (2 656)
Cash flows from financing activities
Borrowings raised 485 5 155
Borrowings repaid (1 061) (1 810)
Shares repurchased - (2 819)
Treasury shares acquired - (200)
Acquisition of non-controlling interests - (196)
Decrease in amounts due by share scheme participants 9 15
Net cash (utilised for)/generated from financing activities (567) 145
Net decrease in cash and cash equivalents (423) (837)
Cash and cash equivalents at beginning of the year, net of bank overdrafts 883 1 715
Foreign currency translation 19 5
Cash and cash equivalents at end of the year, net of bank overdrafts 479 883
CONDENSED CONSOLIDATED BALANCE SHEET
as at 31 March 2016 2015
Reviewed Audited
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 14 370 13 470
Investment property 79 109
Goodwill and other intangible assets 6 582 6 596
Investments in associates and joint ventures 620 311
Available-for-sale financial assets 252 -
Non-current receivables 68 88
Derivative financial instruments 74 22
Deferred income tax assets 185 180
22 230 20 776
Current assets
Inventories 125 108
Trade and other receivables 654 601
Derivative financial instruments 15 -
Current income tax assets 122 99
Cash and cash equivalents 2 492 3 048
3 408 3 856
Total assets 25 638 24 632
EQUITY
Capital and reserves attributable to equity holders of the company
Ordinary share capital and premium 4 576 4 576
Other reserves (232) (442)
Retained earnings 3 951 2 917
Total shareholders’ equity 8 295 7 051
Non-controlling interests 654 635
Total equity 8 949 7 686
LIABILITIES
Non-current liabilities
Interest-bearing borrowings 8 346 8 559
Derivative financial instruments 492 538
Deferred income tax liabilities 2 053 1 868
Provisions and other liabilities 509 501
11 400 11 466
Current liabilities
Interest-bearing borrowings 3 394 3 700
Derivative financial instruments 17 59
Trade and other payables 1 240 1 144
Provisions and other liabilities 510 456
Current income tax liabilities 128 121
5 289 5 480
Total liabilities 16 689 16 946
Total equity and liabilities 25 638 24 632
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the company
Ordinary share Other Retained Total Non- Total
capital and reserves earnings Rm controlling equity
premium Rm Rm interests Rm
Rm Rm
Balance at 31 March 2014 (audited) 4 771 19 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 (audited) 4 576 (442) 2 917 7 051 635 7 686
Total comprehensive income - 331 1 791 2 122 19 2 141
Profit for the year - - 1 788 1 788 18 1 806
Other comprehensive income - 331 3 334 1 335
Transfer from share-based payment reserve to retained earnings - (121) 121 - - -
Ordinary dividends - - (878) (878) - (878)
Balance at 31 March 2016 (reviewed) 4 576 (232) 3 951 8 295 654 8 949
SEGMENTAL ANALYSIS Income(1) Ebitdar(2) Ebitdar margin Amortisation and depreciation
for the year ended 31 March 2016 2015 2016 2015 2016 2015 2016 2015
Rm Rm Rm Rm % % Rm Rm
Montecasino 2 674 2 510 1 194 1 133 44.7 45.1 95 100
Suncoast 1 701 1 581 791 732 46.5 46.3 91 109
Gold Reef City 1 380 1 270 525 479 38.1 37.7 96 73
Silverstar 735 676 254 248 34.6 36.7 86 58
The Ridge 391 415 160 188 40.9 45.2 26 19
Emnotweni 384 367 152 154 39.5 42.0 27 30
Golden Horse 369 334 163 148 44.2 44.3 33 31
Hemingways 318 310 113 109 35.4 35.1 42 40
Garden Route 218 188 92 79 42.3 42.0 14 14
Blackrock 168 152 63 58 37.7 38.1 11 11
The Caledon 163 149 43 38 26.2 25.5 8 6
Mykonos 156 145 68 64 44.0 44.1 9 7
Goldfields 134 138 44 51 32.4 37.1 10 9
Other gaming operations 109 100 (233) (216) 15 9
Total gaming operations 8 900 8 335 3 429 3 265 38.5 39.2 563 516
South African hotels division(3) 2 744 2 506 920 830 33.5 33.1 193 171
Offshore hotels division 691 552 169 116 24.5 21.0 50 40
Pre-foreign exchange losses 192 137 27.8 24.8
Foreign exchange losses (23) (21)
Corporate(3)(4) (52) (50) 25 12 6 6
Group 12 283 11 343 4 543 4 223 37.0 37.2 812 733
(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) Includes R53 million (2015: R50 million) intergroup management fees
(4) Includes the treasury and management function of the group
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: 25/05/2016 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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