Southern Sun Limited · JSE:SSU

Southern Sun — Tsogo Sun Holdings — H1 F2015 Earnings Presentation

52 slides from Southern Sun's earnings presentation, November 2014

1. Slide 1: Presentation to Analysts and Investors

   Presentation to: Analysts and Investors November 2014

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% 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

   Yy Hotel Portfolio 1s0cn SUN HOTELS Luxury Each hotel offers guests world-class style, unparalleled service and accommodation and signature touches that define luxury travel. \) AY A\ | A | BEVERLY HILLS With products and services that meet the needs of tomorrow's savvy global travellers, whether tr

6. Slide 6: 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 6

7. Slide 7: 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

8. Slide 8: Segmental Analysis

   @MTSOGO SUN Segmental Analysis

9. Slide 9: Group – Revenue and Ebitdar (Rm)

   Group – Revenue and Ebitdar (Rm) H1 F’15 H1 F’14 % Change Revenue Gaming 4 086 3 978 3 Net gaming win 3 428 3 364 2 Other 658 614 7 Hotels SA 1 131 1 010 12 Hotels Offshore 251 256 (2) Corporate (intra-group-elimination) (24) (20) * Total Group 5 444 5 224 4 Ebitdar Gaming 1 590 1 584 - Hotels SA 32

10. Slide 10: Tsogo Sun Segmental (Rm)

    Tsogo Sun Segmental (Rm) Income Ebitdar(1) Ebitdar Margin % H1 F’15 H1 F’14 % Change H1 F’15 H1 F’14 % Change H1 F’15 H1 F’14 Montecasino 1 261 1 185 6 565 524 8 44.8 44.3 Suncoast 754 737 2 340 344 (1) 45.1 46.7 Gold Reef City 620 639 (3) 233 251 (7) 37.6 39.3 Silverstar 321 316 2 122 127 (4) 38.1

11. Slide 11: Key Strategic Issues: Gaming

    Key Strategic Issues Gaming 11

12. Slide 12: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Montecasino ● Additional 700 gaming positions approved. 106 slot machines added ● Palazzo hotel R60m refurbishment complete ● Entertainment offerings continuously improved including tenant refurbishment ● Teatro and Events continue to attract footfall ● Acquisition of

13. Slide 13: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Montecasino ● Office development around Montecasino ● Planning for further office blocks and retail is continuing ● Construction has commenced on the first building Monte Circle ● Phased over 5 years Signature Square 13

14. Slide 14: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Silverstar ● Additional 400 gaming positions approved and installed ● R560m redevelopment including additional dining options, outdoor events area, cinemas, ten-pin bowling alley, laser tag games, expanded casino offering, parking, redecoration of the interior and Pri

15. Slide 15: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Gold Reef City ● Additional 400 gaming positions approved. 100 slot machines added and an additional 60 will be added during the development ● R630m refurbishment and expansion including casino offering, cinemas, additional food and beverage outlets, cinemas, ten pin

16. Slide 16: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Suncoast ● Application to KZN Gaming Board for an additional 900 machines and 16 tables ● R1.8bn expansion (including a R100m CSI contribution) including additional casino space and new Privé, 22 000sqm destination retail and additional restaurants, 2 000 pax multifun

17. Slide 17: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Emnotweni ● Expanded casino floor, additional covered parking and conference and events area completed in December 2013 ● Restaurants and link to mall completed during May 2014 ● Explorers refurbishment completed during August 2014 ● Tables win growth strong but main

18. Slide 18: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Western Cape ● 40% of the SunWest International Property Limited and Worcester Casino Proprietary Limited to be acquired (from Sun International Limited and Grand Parade Investments) for R2.185 million ● Subject to the fulfilment of conditions precedent which includes

19. Slide 19: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Gaming Systems Changes ● Golden Horse, Gold Reef City and Garden Route completed ● Silverstar and Goldfields scheduled during F’2015 ● Mykonos scheduled during F’2016 19

20. Slide 20: 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 ● Other gaming boards, including Western Cape, have indicated that they will take guidance from the outcome of the

21. Slide 21: Gaming Win (Rm)

    Gaming Win (Rm) H1 F’15 H1 F’14 % Change Gaming win 3 428 3 364 5 Tables 808 770 5 Slots 2 620 2 594 1 Drop/hold % – tables 22.6 22.1 0.5pp Handle/win % – slots 5.2 5.2 - H1 F’15 H1 F’14 % Change Gauteng 1 843 1 795 3 KwaZulu-Natal 898 884 2 Mpumalanga 301 295 2 Western Cape 199 188 6 Other 187 202

22. Slide 22: Gauteng Gaming Tax Revenues

    Gauteng Gaming Tax Revenues Gold Reef Silver- Growth in Gaming win (%) Gauteng Montecasino 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) * 2009

23. Slide 23: 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 2009 2010 2011 2012 2013 2014 Relative Growth (2008 = 100) Gauteng Total Industry / Montecasino vs Non Tsogo Sun 1

24. Slide 24: 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 2009 2010 2011 2012 2013 2014 Relative Growth (2008 = 100) Gauteng Total Industry / Silverstar vs Non Tsogo Sun 140 135

25. Slide 25: KZN Gaming Tax Revenues

    KZN Gaming Tax Revenues KwaZulu- Growth in Gaming win (%) Natal Suncoast Golden 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 3 mo

26. Slide 26: KZN Gaming Tax Revenues

    KZN Gaming Tax Revenues Relative Growth (2008 = 100) KZN Total Industry / Tsogo Sun vs Non Tsogo Sun 145 140 135 130 125 Total Industry 120 Tsogo Sun 115 Non-Tsogo 110 105 100 2009 2010 2011 2012 2013 2014 Relative Growth (2008 = 100) KZN Total Industry / Suncoast vs Non Tsogo Sun 145 140 135 130 12

27. Slide 27: KZN Gaming Tax Revenues

    KZN Gaming Tax Revenues Relative Growth (2008 = 100) KZN Total Industry / Golden Horse vs Non Tsogo Sun 145 140 135 130 125 Total Industry 120 Non-Tsogo 115 Golden Horse 110 105 100 2009 2010 2011 2012 2013 2014 Relative Growth (2008 = 100) KZN Total Industry / Blackrock vs Non Tsogo Sun 160 150 140

28. Slide 28: Other Gaming Tax Revenues

    Other Gaming Tax Revenues Growth in Gaming win (%) Province Unit Unit Unit Mpumalanga Ridge Emnotweni 3 months to September 2014 5.3 5.3 7.6 6 months to September 2014 2.3 1.1 4.6 Western Cape Caledon Mykonos Garden Route 3 months to September 2014 9.2 26.7 7.9 (5.8) 6 months to September 2014 11.5

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  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 resilience  L

31. Slide 31: Owned and Managed

    Owned and Managed Hotels Rooms Owned Managed Luxury 6 1 113 410 703 Owned includes leased hotels and Full Service 20 4 260 4 260 - associates Select Service 27 4 908 4 061 847 Portfolio as at 30 September 2014 Budget 23 1 690 1 690 - Timeshare & Resorts 7 1 161 307 854 Excludes Redefine BDL portfoli

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 reduced 0.7pp to 61.8% for H1 F’15 on the prior period ● Post elections and fiscal austerity impacts on government travel ● Trading in all other market segments up on the prior period  Average room rate growth of 5% for H1 F’15 on the prior p

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

    Key Strategic Issues : Hotels – South Africa  Major refurbishments ● SunSquare Cape Town (previously GC de Waal) completed. Hotel closed from April 2014 to August 2014 ● Palazzo completed ● SS Waterfront in progress ● GC Marine Parade in progress ● GC Kings Beach in progress ● Continued refurbishme

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

    Key Strategic Issues : Hotels – Offshore  Offshore hotels trading weaker in US$ (owned occupancies H1 F’15 : 55.1%, H1 F’14 : 68.9%) ● Impacted by Ebola, security concerns and a generally weaker market  Currency positive impact on trading due to Rand weakness against US$ and Euro exchange rates 

36. Slide 36: Financial Overview

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

    Group – Income Statement (Rm) H1 F’15 H1 F’14 % Change Group income 5 444 5 224 4 Net gaming win 3 428 3 364 2 2 Revenue Rooms 1 126 1 060 6 F&B 558 489 14 Other 332 311 7 Ebitdar 1 954 1 997 (2) Gaming 1 590 1 584 - Hotels – SA 325 314 4 – Offshore(1) 51 75 (32) Forex (losses)/gains (3) 29 * Corpor

38. Slide 38: Group – Income Statement

    Group – Income Statement Group Revenue by Nature % Slots 48 Tables 15 Rooms 21 F&B 10 Other 6 Total Hotel Ebitdar H1 F’15 H1 F’14 Hotels SA 325 314 Hotels Gaming 84 87 Hotels Offshore 51 75 Ebitdar 460 476 Group Ebitdar (%) 24 24 38

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

    Group – Income Statement (Rm) H1 F’15 H1 F’14 % Change Ebitdar 1 954 1 997 (2) LTI costs (5) (85) * Property rentals (107) (107) - Amortisation & depreciation (332) (322) (3) Exceptional items (159) (75) * Net finance costs (268) (182) (47) Associates and JVs 4 (3) * Taxation (344) (345) - Non-contr

40. Slide 40: Adjusted HEPS (Rm)

    Adjusted HEPS (Rm) H1 F’15 H1 F’14 % change Attributable earnings 719 833 (14) Capital asset disposal losses 1 - Impairment of PPE 3 7 FV adjustment to associate - 6 Headline earnings 723 846 (15) Transaction costs 7 8 CBS loan impairment reversal (1) (1) SSME termination fees - 2 Impairment of loan

41. Slide 41: Group Cash Flow (Rm)

    Group Cash Flow (Rm) H1 F’15 H1 F’14 Ebitdar per income statement 1 954 1 997 Property rentals (107) (107) Ebitda 1 847 1 890 Working capital adjusted for non-cash and exceptional items (107) (161) Dividend income from associates 1 3 Cash generated from operations 1 741 1 732 Interest paid (net) (28

42. Slide 42: Investment Activities (Rm)

    Investment Activities (Rm) H1 F’15 F’14 F’13 Investment activities 1 516 1 643 639 Acquisition of DAV/AWM/Suncoast minority - 406 - Acquisition of SS Ikoyi – equity - 505 - Acquisition of Redefine BDL Hotels 145 - - Acquisition of Affirmed Investments minorities - 14 - Acquisition of One Monte minor

43. Slide 43: Interest Bearing Debt (Rm)

    Interest Bearing Debt (Rm) H1 F’15 F’14 External debt (US$ based) 744 639 External debt (Rand based) 9 087 5 515 Gross IBD 9 831 6 154 Cash on hand (489) (1 715) Net IBD 9 342 4 439 Dividend of R659m (60c per share) declared May 2014, paid June 2014 Dividend of R280m (29c per share) declared Novembe

44. Slide 44: Strategic Priorities

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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

    Future Prospects @YTSOGO SUN

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 ● Re-launched loyalty programmes ● Maximise brand value ● Employee engagement programme ● Food and beverage focus 48

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  Tax – national/provincial  Total smoking ban remains a risk ● Western Cape metropole  Still an opportunity ● M

50. Slide 50: Future Prospects

    Future Prospects  Hotels ● Occupancy and rate still under pressure until transient Corporate demand recovers  Government austerity likely to affect volumes ● Focus on customer satisfaction, brand awareness and distribution ● Opportunistic in SA – land bank, acquire leases, new builds and acquisiti

51. Slide 51: Thank you

    Thank you YW TSOGO SUN

52. Slide 52: Y TSOGO SUN

    Y TSOGO SUN

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