Southern Sun Limited · JSE:SSU

Southern Sun — Tsogo Sun Holdings — Investor Presentation (2013)

42 slides from Southern Sun's investor presentation, 2013

  1. Slide 1: Shifting Perspectives

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  2. Slide 2: Disclaimer

    Disclaimer Certain statements in this document may constitute ’forward looking statements’. Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Tsogo Sun Holdings Limited and it

  3. Slide 3: Key questions on regulation and industry maturity

    Does the regulatory environment in South Africa make casinos unattractive investments? Is the casino industry in South Africa mature with limited growth prospects going forward?

  4. Slide 4: Does the regulatory environment make casinos unattractive investments?

    Does the regulatory environment in South Africa make casinos unattractive investments?  No more so than any other regulated industries  Telecoms  Financial services  Liquor  Mining  Etc

  5. Slide 5: Does the regulatory environment make casinos unattractive investments? However

    Does the regulatory environment in South Africa make casinos unattractive investments?  Government keeps re-visiting rules and regulations  Tendency to act first and consult later  However  Management’s job to deal with it  Lobby for the issues to be understood

  6. Slide 6: Regulatory environment of casinos

    Regulatory environment of casinos Advantages Disadvantages  Barriers to entry  Tax regime allows changes  Protection from illegal traders targeted at gaming only  Recourse to law and courts  Slow decision making on  Operational certainty applications  Quality of regulator = quality of decisio

  7. Slide 7: Casino landscape in South Africa

    Casino landscape in South Africa Tsogo SI Pmt LCI Other Unallocated Total Eastern Cape 2 2 1 5 Free State 1 2/1 1 0/1 4 Gauteng 3 2 1 1 7 KZN 3 1 1 5 Limpopo - 1 1 1 3 Mpumalanga 2 - 1 1 4 North West - 2 2 4 Northern Cape - 1 1 1 3 Western Cape 3 2 5 14 13 7 1 2 3 40

  8. Slide 8: Who are our competitors?

    Who are our competitors?  Industry was designed to maximise investment in defined catchment areas  Competition comes from other leisure and entertainment options  Compete for leisure spend  Compete for leisure time

  9. Slide 9: Economic analysis of casino competition

    Economic analysis of casino competition  Casinos have no pricing power  Operate at +/- 95% RTP despite only 80% legislative requirement  RTP in isolated casinos – same as the urban areas  Set based on guest experience – set RTP too low and people stop gaming because its not fun  Observed RTP va

  10. Slide 10: Gold Reef City, Montecasino, Silverstar

    Gold Reef City Montecasino Silverstar

  11. Slide 11: Tsogo's strategy

    Tsogo’s strategy  Make sure we get the licences  Acquired Century Casinos  Acquired Gold Reef  Buy out minorities where possible and viable  TS-KZN - 43.5% to 99%

  12. Slide 12: Tsogo's strategy

    Tsogo’s strategy  Maximise the potential of each licence though investment and expansion  Montecasino  The Ridge  Gold Reef City  Hemingways  Silverstar  Garden Route  Suncoast  Emnotweni  Blackrock

  13. Slide 13: Montecasino

    Montecasino  Phase 1 – 2000  Casino  Complex – restaurant and entertainment  Palazzo hotel 246 rooms  Bird Gardens  Phase 2 – 2002  Palazzo Towers East & West (8’000sqm offices)

  14. Slide 14: Montecasino Phase 3 – 2006

    Montecasino  Phase 3 – 2006  East End Piazza – with 7  SunSquare hotel – 198 rooms additional restaurants  Ballroom – 500 seats  Teatro – 1900 seat  Outdoor event area

  15. Slide 15: Montecasino Phase 4 – 2009

    Montecasino  Phase 4 – 2009  Pivot office and conference centre – 16,000sqm  Southern Sun Montecasino – 198 rooms

  16. Slide 16: Montecasino Phase 5 onwards – TBA

    Montecasino  Phase 5 onwards – TBA  700 additional gaming positions secured  2 additional hotels possible  Office and other development on surrounding land recently acquired  2000 seat multi purpose venue  Additional parking  Internal refresh

  17. Slide 17: Gold Reef City future plans

    Gold Reef City  Acquired 2011  Stabilise operations  Integrate Theme Park  Future plans – over the next 2 years  400 additional gaming positions  Refurbish Theme Park  Cinemas  Activate night time trade  Ten Pin bowling  Additional F & B  Tag laser games

  18. Slide 18: Silverstar

    Silverstar  Acquired 2011  Stabilise trading  Plan redevelopment  In progress  Outdoor area  Refurbish casino  Additional restaurants  400 additional positions  Cinema complex  Bowling alley’s  3000 pax amphitheatre

  19. Slide 19: Silverstar before

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  20. Slide 20: Silverstar In progress

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  21. Slide 21: Suncoast

    Suncoast  Planning and applications in progress  Additional gaming positions and floor space  Destination retail and restaurants  2000 seat banqueting and conference MPV  Resort swimming pools and sky deck

  22. Slide 22: Suncoast

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  23. Slide 23: Suncoast

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  24. Slide 24: Emnotweni

    Emnotweni  Construction in progress  Additional gaming positions and floor space  Multi storey parkade  Banqueting and conference MPV  Introducing natural light and views into the casino

  25. Slide 25: Emnotweni

    Emnotweni @TSOGO SUN

  26. Slide 26: Is the casino industry mature with limited growth prospects?

    Is the casino industry in South Africa mature with limited growth prospects  Basic strategy – take what we’ve got and make the most of it  Assumes people will continue to enjoy casinos as a leisure activity  Assumes people’s ability to allocate leisure spend to casinos will continue to grow as th

  27. Slide 27: The (very) short history of gaming

    The (very) short history of gaming  Betting and dice go back to ancient Rome and probably before  Loaded dice found in Pompeii …  Card games and table games largely unchanged since invented  Limited scope for rule/odds changes – e.g perfect pairs, double zero  Regional /cultural preferences e.g

  28. Slide 28: Slots: The Liberty Bell, invented in 1895

    Slots The Liberty Bell, invented in 1895 by car mechanic, Charles Fey (1862–1944) of San Francisco

  29. Slide 29: The casino floor

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  30. Slide 30: SWIPEMTHERSEREEN

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  31. Slide 31: EEL SLD: 8-88 OSES,

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  32. Slide 32: Clark County – Las Vegas, Nevada

    Clark County – Las Vegas, Nevada Sources: Las Vegas Convention and Visitors Authority; McCarran International Airport; Nevada Gaming Control Board; NV Dept of Transportation; CA Dept of Agriculture, Yermo

  33. Slide 33: Gauteng Gaming Tax Revenues

    Gauteng Gaming Tax Revenues 650.0 600.0 8.9% 550.0 8.2% 5.6% 11.0% 1.6% 5.5% 4.6% 500.0 450.0 Rm 400.0 350.0 300.0 250.0 1 2 3 4 5 6 7 8 9 10 11 12 13 4 week period Jan to Dec - Gauteng 2007 2008 2009 2010 2011 2012 2013 Percentage growth on prior year

  34. Slide 34: Gauteng Gaming Tax Revenues

    Gauteng Gaming Tax Revenues Growth in Gaming win (%) Gauteng Montecasino Gold Reef City Silverstar 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 (

  35. Slide 35: KZN Gaming Tax Revenues

    KZN Gaming Tax Revenues 350.0 300.0 13.7% 7.1% 7.4% 250.0 2.5% 2.9% 2.9% 200.0 150.0 100.0 50.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2007 2008 2009 2010 2011 2012 2013 Percentage growth on prior year

  36. Slide 36: 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 10.8 9.2 2012 10.0 10.8 8.9 11.6 6 months to June 2013 5.5 N

  37. Slide 37: The Customer

    The Customer Plat Gold Red Total # of Active members 34 304 86 232 270 770 391 306 Revenue (Rm) 2 782 970 392 4 145 Vists per year 67 29 6 16 Visits per month 6 2 0 1 Average spend (R) 1 203 381 246 642 % of total Win 43 15 6 64

  38. Slide 38: The Customer

    The Customer Age Total Plat Gender Total Plat Male 45% 51% 18-24 6% 1% Female 47% 46% 25-34 18% 7% Not recorded 9% 3% 35-44 21% 21% 100% 100% 45-54 23% 30% 55-59 10% 15% Ethnic origin Total Plat >60 22% 26% Black 30% 28% Not recorded 0% 0% Asian 27% 23% White 38% 46% Total 100% 100% Not recorded 6%

  39. Slide 39: Conclusion

    Conclusion  Gambling is not a fad – its been around for millennia  Casinos target middle and upper income customers, with:  Disposable income  Leisure time  Gambling is affordable entertainment for our target market

  40. Slide 40: Conclusion

    Conclusion  Therefore  As the pool of upper/middle income consumers grow  The pool available for gambling and other entertainment will grow  Position our properties to be the most attractive leisure destinations  Make the most of our licenses

  41. Slide 41: Thank you

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  42. Slide 42: Tsogo Sun

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Tsogo Sun Holdings — Investor Presentation (2013) on 6ix