Southern Sun Limited · JSE:SSU

Southern Sun — Tsogo Sun Holdings — Investor Presentation (November 2015)

52 slides from Southern Sun's investor presentation, November 2015

  1. Slide 1: Presentation to Analysts and Investors

    Presentation to: Analysts and Investors November 2015

  2. Slide 2: Disclaimer

    Disclaimer Certain statements in this document may constitute ’forward looking statements’. Such forward looking statements reflect the company’s beliefs and expectations and involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance o

  3. Slide 3: Group Structure

    Group Structure Public 47.6% 52.4% 100% 100% Under consideration 3

  4. Slide 4: Gaming Portfolio

    Gaming Portfolio 100% 100% 100% 100% 65% 100% 100% 100% 100% 100% 25% 100% 98% 70% 4

  5. Slide 5: Hotel Portfolio

    Hotel Portfolio Luxury Each hotel offers guests world-class style, unparalleled service and accommodation and signature touches that define luxury travel. Y TSOGO SUN HOTELS MAILA With products and services that meet the needs of tomorrow's savvy global travellers, whether 4 Delights the self-suffic

  6. Slide 6: Hospitality Property Fund

    Hospitality Property Fund  Acquire controlling stake through the introduction of a portfolio of hotel assets on a debt free basis  Tsogo Sun will be invested in a portfolio of multi-managed/multi-branded hotels  HPF will have ● Stable anchor shareholder ● Appropriate capital structure ● Growth pi

  7. Slide 7: Management and Board

    Management and Board  TSH Board of Directors ● Executive Directors  Marcel von Aulock – Group CEO  Rob Huddy – Group CFO ● Non-Executive Directors  Johnny Copelyn (Chairman)  Marcel Golding  Busi Mabuza  Elias Mphande  Rex Tomlinson  Jabu Ngcobo  Yunis Shaik 7

  8. Slide 8: Management and Board

    Management and Board  Group Executive Committee ● Corporate ● Gaming  Marcel von Aulock – Group CEO  Jacques Booysen – MD Gaming  Rob Huddy – Group CFO  Greg Lunga – FD Gaming  Noeleen Bruton – Marketing Director ● Hotels  Vusi Dlamini – Group HR Director  Richard Weilers – COO and MD Offsho

  9. Slide 9: Segmental Analysis

    Segmental Analysis ©MTSOGO SUN

  10. Slide 10: Group – Income and Ebitdar (Rm)

    Group – Income and Ebitdar (Rm) H1 F’16 H1 F’15 % Change Income Gaming 4 310 4 071 6 Net gaming win 3 562 3 428 4 Other 748 643(1) 16 Hotels SA 1 1 230 230 1 146(1) 7 Hotels Offshore 337 251 34 Corporate (intra-group-elimination) (26) (24) * Total Group 5 851 5 444 7 Ebitdar Gaming 1 616 1 581(1) 2

  11. Slide 11: Tsogo Sun Segmental (Rm)

    Tsogo Sun Segmental (Rm) Income Ebitdar(1) Ebitdar Margin % H1 F’16 H1 F’15 % Change H1 F’16 H1 F’15 % Change H1 F’16 H1 F’15 Montecasino 1 315 1 261 4 579 565 3 44.0 44.8 Suncoast 827 754 10 374 340 10 45.2 45.1 Gold Reef City 638 620 3 229 233 (2) 36.0 37.6 Silverstar 363 321 13 125 122 3 34.5 38.

  12. Slide 12: Key Strategic Issues: Gaming

    Key Strategic Issues Gaming 12

  13. Slide 13: Gaming Win (Rm)

    Gaming Win (Rm) H1 F’16 H1 F’15 % Change Gaming win 3 562 3 428 4 Tables 836 836 808 4 Slots 2 726 2 620 4 Drop/hold % – tables 21.6 22.6 (1.0)pp Handle/win % – slots 5.0 5.2 (0.2)pp H1 F’16 H1 F’15 % Change Gauteng 1 893 1 843 3 KwaZulu-Natal 976 898 9 Mpumalanga 285 301 (5) Western Cape 223 199 12

  14. Slide 14: Gauteng Gaming Tax Revenues

    Gauteng Gaming Tax Revenues Monte- Gold Reef Silver- Growth in Gaming win (%) Gauteng casino City star Calendar years 2000 Monte vs Sundome 25.0 (4.9) 2001 Other casinos opened 5.8 20.9 2002 13.9 16.5 2003 11.0 9.6 2004 18.9 15.5 2005 11.1 13.2 2006 14.9 14.5 2007 13.1 12.6 2008 7.8 (6.8) (1.0) * 20

  15. Slide 15: Gauteng Gaming Tax Revenues

    Gauteng Gaming Tax Revenues Relative Growth (2008 = 100) Gauteng Total Industry / Tsogo Sun vs Non Tsogo Sun 140 135 130 125 120 Total Industry 115 Tsogo Sun 110 105 Non-Tsogo 100 95 90 C'2009 C'2010 C'2011 C'2012 C'2013 C'2014 C'2015 Relative Growth (2008 = 100) Gauteng Total Industry / Montecasino

  16. Slide 16: Gauteng Gaming Tax Revenues

    Gauteng Gaming Tax Revenues Relative Growth (2008 = 100) Gauteng Total Industry / Goldreef vs Non Tsogo Sun 130 125 120 115 Total Industry 110 Non-Tsogo 105 Goldreef City 100 95 90 C'2009 C'2010 C'2011 C'2012 C'2013 C'2014 C'2015 Relative Growth (2008 = 100) Gauteng Total Industry / Silverstar vs No

  17. Slide 17: KZN Gaming Tax Revenues

    KZN Gaming Tax Revenues KwaZulu- Golden Growth in Gaming win (%) Natal Suncoast Horse Blackrock Calendar years 2004 24.5 37.3 2005 24.7 22.5 2006 16.2 15.1 2007 19.6 15.6 2008 6.9 8.3 2009 4.6 5.0 1.4 5.5 2010 4.4 4.6 4.1 10.1 2011 7.3 5.3 9.2 10.8 2012 10.0 10.8 8.9 11.6 2013 5.3 6.9 (1.6) 7.3 2014

  18. Slide 18: KZN Gaming Tax Revenues

    KZN Gaming Tax Revenues Relative Growth (2008 = 100) KZN Total Industry / Tsogo Sun vs Non Tsogo Sun 160 150 140 Total Industry 130 Tsogo Sun 120 Non-Tsogo 110 100 C'2009 C'2010 C'2011 C'2012 C'2013 C'2014 YTD C'2015 Relative Growth (2008 = 100) KZN Total Industry / Suncoast vs Non Tsogo Sun 160 150

  19. Slide 19: KZN Gaming Tax Revenues

    KZN Gaming Tax Revenues 160 150 140 Total Industry 130 Non-Tsogo 120 Golden Horse 110 100 C'2009 C'2010 C'2011 C'2012 C'2013 C'2014 YTD C'2015 180 170 160 150 Total Industry 140 Non-Tsogo 130 Blackrock 120 110 100 C'2009 C'2010 C'2011 C'2012 C'2013 C'2014 YTD C'2015 19

  20. Slide 20: Other Gaming Tax Revenues

    Other Gaming Tax Revenues Growth in Gaming win (%) Province Unit Unit Unit Mpumalanga Ridge Emnotweni 3 months to September 2015 (7.4) (14.5) 0.8 6 Months to September 2015 (5.0) (8.7) 0.7 Western Cape Caledon Mykonos Garden Route 3 months to September 2015 4.4 10.9 10.6 28.0 6 Months to September 2

  21. Slide 21: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Montecasino ● Additional 700 gaming positions approved. 106 slot machines and one baccarat table added in F’15  An additional approximately 100 slot machines can be added on the existing gaming floor of which 55 were added in October 2015 ● Construction continues on

  22. Slide 22: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Silverstar ● Redevelopment including additional 400 gaming positions (316 slot machines and 6 tables) completed during October 2014 ● Substantial increase in footfall ● Gaming win growth below expectations at 7.9% but impacted by poor win percentages ● Slots handle an

  23. Slide 23: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Gold Reef City ● R640m refurbishment and expansion including casino offering, Privé expansion, cinemas, additional food and beverage outlets, cinemas, ten pin bowling alley and improved access systems at the Theme Park with an improved linkage to the casino complex, u

  24. Slide 24: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Suncoast ● Additional 900 machines and 16 tables approved ● Following an assessment of the Durban retail market, the investment has increased to R3.5 billion and will include additional casino space and new Privé, 49 500sqm destination retail and additional restaurant

  25. Slide 25: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Golden Horse ● Refurbishments of the Privé and the Derby Lounge completed in May 2015 and the main floor refurbishment completed in October 2015  Mykonos ● Refurbishment of the casino floor completed in August 2015  Gaming Systems Changes ● All Aristocrat gaming sys

  26. Slide 26: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Mpumalanga B-BEEE condition of licence ● Regulators seek to impose the achievement and maintenance of a prescribed BBBEE rating as a condition of licence ● Given the nature of the recent revised draft codes whereas TSH could drop from Level 2 to Level 7, the issue is

  27. Slide 27: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Mpumalanga 4th licence ● Mpumalanga Gambling Board withdrew the RFP on 25 July 2013 on the basis that the RFP did not clearly stipulate the MGB’s intentions in respect of shareholding and profit entitlement by black persons within the province ● A revised bid was subm

  28. Slide 28: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Western Cape ● Potential to bid for the relocation of one of the smaller casino in the Western Cape to the Cape metropole remains an opportunity for the group should the provincial authorities allow such a process ● Sun International launched court action to set aside

  29. Slide 29: Key Strategic Issues: Hotels

    Key Strategic Issues Hotels 29

  30. Slide 30: Hotels – Portfolio Philosophy

    Hotels – Portfolio Philosophy Land Buildings Operations Management Brand PropCo OpCo  Ideally own all components ● Tsogo Sun Hotels strategic advantage in scale ● More capital intensive but allows substantially higher return on effort ● Retains control of the assets providing extended tenure and re

  31. Slide 31: Owned and Managed Portfolio and Statistics

    Owned and Managed Portfolio and Statistics Hotels Rooms Owned Managed Luxury 6 1 113 410 703 Owned includes leased hotels and Full Service 21 4 396 4 396 - associates Select Service 26 4 777 3 930 847 Portfolio as at 31 March 2015 Budget 23 1 728 1 728 - Excludes Redefine BDL portfolio Timeshare & R

  32. Slide 32: SA System-wide Rooms Sold Annual History

    SA System-wide Rooms Sold Annual History 76.0% 3 250 000 74.0% 3 050 000 72.0% 2 850 000 70.0% 2 650 000 68.0% 2 450 000 66.0% 2 250 000 64.0% 2 050 000 62.0% 1 850 000 60.0% 1 650 000 58.0% 56.0% 1 450 000 54.0% 1 250 000 F'94 F'95 F'96 F'97 F'98 F'99 F'00 F'01 F'02 F'03 F'04 F'05 F'06 F'07 F'08 F'

  33. Slide 33: Key Strategic Issues : Hotels – South Africa

    Key Strategic Issues : Hotels – South Africa  Occupancy increased 0.6pp to 62.4% for HY1 on the prior period ● Industry occupancies impacted by the visa regulations which constrained growth  Average room rate growth of 6% on the prior year  Group trading at RevPar premiums to the market in 3, 4 a

  34. Slide 34: Key Strategic Issues : Hotels – South Africa

    Key Strategic Issues : Hotels – South Africa  Major refurbishments ● Riverside Sun completed. Hotel closed from May 2015 to August 2015 ● Sabi River Sun completed. Hotel closed from June 2015 to September 2015 ● GC Marine Parade completed ● Sandton Sun completed ● GC Polokwane in progress ● GC King

  35. Slide 35: Key Strategic Issues : Hotels – Offshore

    Key Strategic Issues : Hotels – Offshore  Offshore hotels trading stronger (owned occupancies HY1 F’16 : 58.0%, HY1 F’15 : 50.7%) ● Prior year impacted by Ebola and closure of SS Maputo for refurbishment ● Remains impacted by security concerns and weaker market ● Currency positive impact on trading

  36. Slide 36: Financial Overview

    © TSOGO SUN Financial Overview

  37. Slide 37: Group – Income Statement (Rm)

    Group – Income Statement (Rm) H1 F’16 H1 F’15 % Change Income 5 851 5 444 7 Net gaming win 3 3 562 3 428 4 Revenue Rooms 1 290 1 126 15 F&B 640 558 15 Other 359 332 8 Ebitdar 2 065 1 954 6 Gaming 1 616 1 581(2) 2 Hotels – SA 349 334(2) 4 – Offshore(1) 98 51 92 Forex losses (6) (3) * Corporate 8 (9)

  38. Slide 38: Group – Income Statement

    Group – Income Statement Group Income by Nature % Slots 47 Tables 14 Rooms 22 F&B 11 Other 6 Total Hotel Ebitdar H1 F’16 H1 F’15 Hotels SA 349 334 Hotels Gaming 92 77 Hotels Offshore 98 51 Ebitdar 539 462 Group Ebitdar (%) 26 24 38

  39. Slide 39: Group – Income Statement (Rm)

    Group – Income Statement (Rm) H1 F’16 H1 F’15 % Change Ebitdar 2 065 1 954 6 LTI costs 41 (5) * Property rentals (106) (107) 1 Amortisation & depreciation (409) (332) (23) Exceptional items (19) (159) * Net finance costs (424) (268) (58) Associates and JVs 7 4 75 Taxation (326) (344) 5 Non-controlli

  40. Slide 40: Adjusted HEPS (Rm)

    Adjusted HEPS (Rm) H1 F’16 H1 F’15 % change Attributable earnings 824 719 15 Capital asset disposal losses - 1 Impairment of PPE 2 3 Profit on disposal of investment property (6) - Headline earnings 820 723 13 Transaction costs 9 7 CBS loan impairment reversal - (1) Impairment of loans (Masa/Queens)

  41. Slide 41: Group Cash Flow (Rm)

    Group Cash Flow (Rm) H1 F’16 H1 F’15 Ebitdar per income statement 2 065 1 954 Property rentals (106) (107) Ebitda 1 959 1 847 Working capital adjusted for non-cash and exceptional items 70 (107) Dividend income from associates 5 1 Cash generated from operations 2 2 034 1 741 Interest paid (net) (394

  42. Slide 42: Investment Activities (Rm)

    Investment Activities (Rm) H1 F’16 F’15 F’14 Investment activities 468 2 045 1 643 Acquisition of DAV/AWM/Suncoast minority - 1 406 Acquisition of Garden Route minorities - 51 - Acquisition of One Monte minorities - 144 - Acquisition of Affirmed Investments minorities - - 14 Investments in cinemas -

  43. Slide 43: Interest Bearing Debt (Rm)

    Interest Bearing Debt (Rm) H1 F’16 F’15 External debt (US$ based) 836 788 External debt (Rand based) 9 286 9 350 Bank overdrafts 2 449 2 165 Prepaid borrowing costs (40) (44) Gross IBD 12 531 12 259 Cash on hand (2 911) (3 048) Net IBD 9 620 9 211 Dividend of R579m (60c per share) declared May 2015,

  44. Slide 44: Strategic Priorities

    © TSOGO SUN Strategic Priorities

  45. Slide 45: Strategic Priorities

    Strategic Priorities  Sustainability ● Beneficiaries  Current shareholding and Corporate Social Investment and Enterprise Development programmes are effective ● Financial stability  Strong cash flow, judicious use of gearing and adequate facilities  Own most of our assets ● Product relevance  A

  46. Slide 46: Strategic Priorities

    Strategic Priorities  Growth ● Organic  Significant focus on getting more out of our existing businesses  Continued cost focus  Systems and values ● Inorganic  New projects 46

  47. Slide 47: Future Prospects

    — ©YTSOGO SUN Future Prospects

  48. Slide 48: Future Prospects

    Future Prospects  Group ● Strong cash generation ● Growth opportunities still being pursued but debt levels higher ● Upside potential from any economic recovery is significant ● Focus on costs remains to protect margins ● Reit structure aims to unlock third business segment for the group and enhanc

  49. Slide 49: Future Prospects

    Future Prospects  Gaming ● Gaming win growth – medium term outlook uncertain  Need consumers to get wealthier and, more importantly, feel wealthier  Regulatory issues remain a threat ● Western Cape metropole  Still an opportunity ● Mpumalanga fourth casino licence  Likely to be a protracted pro

  50. Slide 50: Future Prospects

    Future Prospects  Hotels ● Occupancy and rate still under pressure until transient Corporate demand recovers  Government austerity likely to continue to affect volumes – but is in the base ● Focus on customer satisfaction, brand awareness, distribution through channels and Web and enhancement of B

  51. Slide 51: Thank you

    Thank you © TSOGO SUN

  52. Slide 52: Y TSOGO SUN

    Y TSOGO SUN

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