Southern Sun Limited · JSE:SSU

Southern Sun — Tsogo Sun Holdings — H1 F2012 Earnings Presentation

34 slides from Southern Sun's earnings presentation, November 2011

  1. Slide 1: Presentation to Analysts and Investors, November 2011

    Presentation to:- Analysts and Investors November 2011

  2. Slide 2: Group Structure

    Group Structure Hosken Consolidated SABMiller plc Investments Ltd “SABM” Public “HCI” 41.3% 39.7% 19.0% Tsogo Sun Holdings Ltd “Tsogo Sun Group” Previously Gold Reef Resorts Ltd 100% 100% Southern Sun Tsogo Sun Hotels Gaming 2

  3. Slide 3: Gaming Portfolio

    Gaming Portfolio Tsogo Sun Gaming Gauteng KZN Western Cape Mpumalanga Eastern Cape Free State 100% 90%* (73.5%)* 100% 100% 65% (80%) 100% 100% 100% 85% 100% 25% 100% 100% 70% * Subject to Gaming Board approval. 3

  4. Slide 4: Hotels Structure

    Hotels Structure Southern Sun Hotels 100% 100% Southern Sun Southern Sun South Africa Offshore (All SA Hotel Operations) (All Offshore Hotel Operations) 50% 47% 80% 50% Cullinan Hotels Formula 1 Southern Sun United Resorts Consolidated (Pty) Ltd Middle East (Seychelles) From 1 April 2008 4

  5. Slide 5: Management & Board

    Management & Board  Group Executive Committee  TSH Board of Directors  Corporate  Executive Directors  Marcel von Aulock – Group CEO  Marcel von Aulock– Group CEO  Rob Huddy – Group CFO  Rob Huddy – Group CFO  Rob Collins – Chief Marketing Officer  Vusi Dlamini – Group HR Director  Non-Ex

  6. Slide 6: Accounting Issues

    Accounting Issues  Accounting  Current period results represent 6 months consolidated merge co  Prior period results represent 6 months Tsogo with GRR equity accounted  Deal closed on 24 February 2011  Exchange ratio 81% (TIH and SABSA) / 19% (Other GRR)  888.3m shares issued = number of share

  7. Slide 7: Segmental Analysis

    Segmental Analysis 7

  8. Slide 8: Group – Revenue and EBITDAR (Rm)

    Group – Revenue and EBITDAR (Rm) H1 F’12 H1 F’11 % Change Revenue Gaming 3 439 2 188 Hotels SA 779 859 Hotels Offshore 153 126 Corporate (intra-group-elimination) (15) (17) Total Group 4 356 3 156 38 GRR (management accounts) - 1 093 * Total Group adjusted 4 356 4 249 3 EBITDAR Gaming 1 338 869 Hote

  9. Slide 9: Tsogo Sun Segmental (Rm)

    Tsogo Sun Segmental (Rm) Income EBITDAR EBITDAR Margin H1 F’12 H1 F’11 H1 F’12 H1 F’11 H1 F’12 H1 F’11 Montecasino 1 029 993 427 403 41.5 40.6 Suncoast 627 606 292 277 46.6 45.7 Gold Reef City 558 n/a 210 n/a 37.6 n/a Silverstar 275 n/a 98 n/a 35.6 n/a The Ridge 172 162 79 75 45.9 46.3 Emnotweni 142

  10. Slide 10: Tsogo Sun Segmental Adjusted (Rm)

    Tsogo Sun Segmental Adjusted (Rm) Income Adjusted EBITDAR Adjusted EBITDAR Margin Adjusted H1 F’12 H1 F’11 H1 F’12 H1 F’11 H1 F’12 H1 F’11 Montecasino 1 029 993 427 403 41.5 40.6 Suncoast 627 606 292 277 46.6 45.7 Gold Reef City 558 507 210 179 37.6 35.3 Silverstar 275 278 98 101 35.6 36.3 The Ridge

  11. Slide 11: Key Strategic Issues: Gaming

    Key Strategic Issues Gaming 11

  12. Slide 12: Gauteng Gaming Tax

    Gauteng Gaming Tax Gold Reef Growth in Gaming win (%) Gauteng Montecasino Silverstar City 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 Silverstar opened 7.8 (6.8) (1.0)

  13. Slide 13: KZN Gaming Tax

    KZN Gaming Tax KwaZulu- Golden Growth in Gaming win (%) Natal Suncoast Horse Newcastle 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 12 months to March 2011 5.2 5.4 3.0 6.4 6 months to September 2011 8.0 5.1 12.7 11

  14. Slide 14: Other Gaming Tax

    Other Gaming Tax Growth in Gaming win (%) Province Unit Unit Unit 6 Months to September 2011 Mpumalanga Ridge Emnotweni 8.1 6.7 6.6 Western Garden Cape Caledon Mykonos Route 4.2 8.7 (1.0) 2.4 Eastern Cape Hemingways Queens 0.3 4.2 5.4 Free State Gold Fields 11.9 10.3 14

  15. Slide 15: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Montecasino  Suncoast  Satisfactory trading  Additional 120 slots and 14 tables approved  Good privé support  24 slots and 6 tables installed, balance  Bok town, Teatro and events attracting on council approval of interior building strong footfall plans  Gold R

  16. Slide 16: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Hemingways  New licence issued April 2011, effective September 2011  ONLY Eastern cape licences expire  Ownership diluted to 65%  New investment R400m  R150m from TS Emonti cash on hand  R250m from TSH treasury loan  Expand hotel by 41 rooms  New Pavilion conf

  17. Slide 17: Key Strategic Issues: Hotels

    Key Strategic Issues Hotels 17

  18. Slide 18: Hotels – Portfolio Philosophy

    Hotels – Portfolio Philosophy Land Building Operations Management Branding  Ideally own all components – Southern Sun strategic advantage in scale  Lease building on long term basis if Tsogo can’t own – but lose terminal value growth  In SA only manage if strategically important and no option to

  19. Slide 19: Portfolio of Brands

    Portfolio of Brands Economy/ Economy Timeshare & Deluxe Premier Plus Budget Resorts Offshore 19

  20. Slide 20: Owned and Managed

    Owned and Managed Hotels Rooms Owned Managed Deluxe 5 1 037 334 703 Premier 20 4 284 3 606 678 Owned includes leased Economy/Economy Plus 28 5 159 3 863 1 296 hotels, gaming hotels and Budget (F1) 24 1 668 1 668 - associates hotels Timeshare & Resorts 8 1 242 414 828 South Africa 85 13 390 9 885 3 5

  21. Slide 21: SA System-wide Rooms Sold Annual History

    SA System-wide Rooms Sold Annual History Rooms Sold Occupancy 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

  22. Slide 22: Key Strategic Issues: Hotels – South Africa

    Key Strategic Issues : Hotels – South Africa  Corporate business is still weak  Good growth in government and leisure segments  Comparative to prior period affected by SWC in 2010.  Stable occupancy  Lower Average Room Rate  Group trading at substantial RevPar premiums to the market in 3, 4 an

  23. Slide 23: Key Strategic Issues: Hotels – South Africa

    Key Strategic Issues : Hotels – South Africa  Distressed assets present an opportunity  Ex Grace Hotel  Purchased R85m  Office component R30m (10% yield)  73 Rooms  Principles when pursuing distressed assets  Must fit core group product  Must be a long-term viable business  Cheap relative t

  24. Slide 24: Key Strategic Issues: Hotels – Offshore

    Key Strategic Issues : Hotels – Offshore  Pursuit of management contracts continues – low risk entry to new markets  Africa hotels strong in US$ (occupancies H1 F’12 : 71.6%, H1 F’11 : 66.3%)  Currency positive impact to trading in H1 F’12, due to Rand weakness against US$ and Euro exchange rates

  25. Slide 25: Financial Overview

    Financial Overview 25

  26. Slide 26: Group – Income Statement (Rm)

    Group – Income Statement (Rm) H1 F’12 H1 F’11 H1 F’11 % Change Actual Actual Adjusted on Adjusted FY F’11 Group income 4 356 3 156 4 249 3 6 487 Revenue Rooms 777 850 861 (10) 1 591 F&B 341 321 340 - 677 Other 275 211 268 3 415 Gaming win 2 963 1 774 2 780 7 3 804 EBITDAR 1 619 1 212 1 602 1 2 510 G

  27. Slide 27: Group – Income Statement (Rm)

    Group – Income Statement (Rm) H1 F’12 H1 F’11 H1 F’11 % Change Actual Actual Adjusted on Adjusted FY F’11 EBITDAR 1 619 1 212 1 602 1 2 510 LTI costs (33) (3) (6) 13 Rentals (95) (82) (85) (12) (171) Depreciation & amortisation (321) (227) (328) 2 (447) Exceptional items 4 (17) (36) (420) Finance co

  28. Slide 28: Adjusted HEPS (Rm)

    Adjusted HEPS (Rm) H1 F’12 H1 F’11 % Change FY F’11 Attributable earnings 553 448 23 606 Capital asset disposal profits (3) (4) (5) FV adjustment of GRR - - 299 Impairment of PPE (Grayston) - - 8 Headline earnings 550 444 24 908 Pre-opening costs - 5 7 Debt break costs (Associate) - (3) (3) CBS loan

  29. Slide 29: Group Cash Flow (Rm)

    Group Cash Flow (Rm) H1 F’12 H1 F’11 FY F’11 Cash flow generated from operations 1 503 1 145 2 381 Merger costs - 11 (93) Dividends received 5 48 57 Cash flow from operations 1 508 1 204 2 345 Interest paid (net) (222) (165) (393) Taxation – normal (301) (282) (457) – STC (55) - (7) Maintenance cape

  30. Slide 30: Investment Activities

    Investment Activities H1 F’12 H1 F’11 FY F’11 Acquisitions Millennium contingency part settlement 24 - - Expansion Capex The Pivot development - 79 86 Hemingways bid/expansion 14 7 13 SE Pretoria 11 - - Other net investments (2) (2) 11 47 84 110 Maintenance Capex 195 131 233 Spend 242 215 343 30

  31. Slide 31: Interest Bearing Debt (Rm)

    Interest Bearing Debt (Rm) H1 F’12 H1 F’11 FY F’11 Non-controlling interests funding 99 99 99 Preference funding 1 000 1 000 1 000 External debt (amortising and bullet) 3 900 3 282 4 011 Gross IBD 4 999 4 381 5 110 Cash on hand (984) (418) (956) Net IBD 4 015 3 963 4 154 Dividend of R548m (50c per s

  32. Slide 32: Future Prospects

    Future Prospects 32

  33. Slide 33: Future Prospects

    Future Prospects  Group  Strong cash generation  Growth opportunities still being pursued  Gaming  Gaming win growth – medium term outlook positive  Need consumers to get wealthier and, more importantly, feel wealthier  Regulatory issues remain a threat  Site developments  Hemingways  Silv

  34. Slide 34: Thank you

    Thank you 34

Tsogo Sun Holdings — H1 F2012 Earnings Presentation on 6ix