Southern Sun Limited · JSE:SSU

Southern Sun — Tsogo Sun Holdings — Investor Presentation (May 2018)

63 slides from Southern Sun's investor presentation, May 2018

1. Slide 1: Analysts & Fund Managers Presentation

   TSOGO SUN HOLDINGS ANALYSTS & FUND MANAGERS PRESENTATION May 2018

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 50.9 % 49.1% 100% 100% 100% 100% 100% 50+% 25+% CASINOS ALTERNATIVE GAMING HOTEL OPERATIONS HOSPITALITY EUROPE PROPERTY FUND 3

4. Slide 4: Management and Board

   MANAGEMENT AND BOARD  TSH Board of Directors ● Executive Directors  Jacques Booysen – Group CEO  Rob Huddy – Group CFO ● Non-Executive Directors  Johnny Copelyn – Chairman  Marcel Golding  Mac Gani – Audit & Risk and Social & Ethics Chairman  Busi Mabuza – Lead Independent  Elias Mphande  J

5. Slide 5: Management and Board

   MANAGEMENT AND BOARD  Group Executive Committee ● Corporate ● Gaming  Jacques Booysen – Group CEO  Glenn Joseph – COO Gaming  Rob Huddy – Group CFO  Greg Lunga – FD Gaming  Noeleen Bruton – Marketing Director ● Hotels  Vusi Dlamini – Group HR Director  Ravi Nadasen – COO Hotels SA  Laurelle

6. Slide 6: Financial Overview

   FINANCIAL OVERVIEW

7. Slide 7: Financial Overview – Segmental (Rm)

   FINANCIAL OVERVIEW – SEGMENTAL (Rm) Income Ebitdar(1) Ebitdar Margin % F’18 F’17 % Change F’18 F’17 % Change F’18 F’17 Casino gaming Montecasino 2 625 2 694 (2.6) 1 135 1 196 (5.1) 43.3 44.4 Suncoast 1 681 1 732 (2.9) 752 810 (7.2) 44.7 46.8 Gold Reef City 1 497 1 450 3.3 569 549 3.5 38.0 37.9 Silve

8. Slide 8: Financial Overview – Income Statement (Rm)

   FINANCIAL OVERVIEW – INCOME STATEMENT (Rm) F’18 F’17 % Change Income 13 975 13 222 6 Net gaming win 7 940 7 483 6 Revenue Rooms 3 160 3 078 3 F&B 1 561 1 434 9 Rental income 549 445 23 Other 765 782 (2) Ebitdar 5 271 5 049 4 LTI expense 24 (49) * Property rentals (282) (242) (17) Amortisation & depr

9. Slide 9: Financial Overview – Supplementary Info

   FINANCIAL OVERVIEW – SUPPLEMENTARY INFO Total Hotel Ebitdar (Rm) Group Income by Nature % F’18 F’17 F’18 F’17 Hotels SA 1 470 1 359 Slots Core business 1 108 1 082 44 43 HPF 362 277(1) Tables 13 14 Hotels Gaming 186 190 (2) Rooms 23 23 Hotels Offshore 119 146 F&B Ebitdar 1 775 1 695 11 11 Rental inc

10. Slide 10: Financial Overview – Adjusted HEPS (Rm)

    FINANCIAL OVERVIEW – ADJUSTED HEPS (Rm) F’18 F’17 % Gross Net Gross Net change Attributable earnings 1 971 2 507 (21) PP&E disposal losses 2 2 12 9 Impairment of PP&E 68 63 77 45 Fair value of HPF shares on acquisition - - (46) (46) Gain on bargain purchase price - - (82) (82) Profit on sale of inve

11. Slide 11: Financial Overview – Group Cash Flow (Rm)

    FINANCIAL OVERVIEW – GROUP CASH FLOW (Rm) F’18 F’17 Ebitdar (incl. LTI) per income statement 5 295 5 000 Property rentals (282) (242) Ebitda 5 013 4 758 Working capital adjusted for non-cash and exceptional items (533) 102 Dividend income 24 50 Cash generated from operations 4 504 4 910 Interest pai

12. Slide 12: Financial Overview – Investment Activities (Rm)

    FINANCIAL OVERVIEW – INVESTMENT ACTIVITIES (Rm) F’18 F’17 Investment activities 2 576 2 590 SunWest and Worcester - 1 272 Gold Reef City redevelopment 19 34 Suncoast expansion 291 112 Mykonos land 30 - Monte Circle and Monte Place 26 16 SunSquare and SE Cape Town FF&E 34 53 Cape Town land - 79 Sun 1

13. Slide 13: Financial Overview – Interest Bearing Debt (Rm)

    FINANCIAL OVERVIEW – INTEREST BEARING DEBT (Rm) F’18 F’17 External debt (US$ based) 969 986 External debt (Rand based) 10 714 10 160 External debt HPF (Rand based) 1 952 1 725 Bank overdrafts 1 736 1 699 Prepaid borrowing costs (27) (33) Gross IBD 15 344 14 537 Cash on hand (2 807) (2 424) Net IBD 1

14. Slide 14: Tsogo Sun Casino Gaming

    TSOGO SUN CASINO GAMING

15. Slide 15: Gaming: Casinos, Alternative Gaming

    GAMING CASINOS ALTERNATIVE GAMING 15

16. Slide 16: Casino Gaming Portfolio

    CASINO GAMING PORTFOLIO Gauteng KZN Western Cape Mpumalanga Eastern Cape Free State 100% 100% 100% 100% 65% 100% 100% 100% 100% 100% 100% 100% 100% Note: TSH sold its 25% interest in Queens on expiry of the casino licence in December 2017 16

17. Slide 17: Casino Gaming Win (Rm)

    CASINO GAMING WIN (Rm) F’18 F’17 % Change Gaming win 7 357 7 483 (2) Tables 1 822 1 891 (4) Slots 5 535 5 592 (1) Win/drop % – tables 20.9 21.8 (0.9)pp Hold/handle % – slots 5.0 5.0 - F’18 F’17 % Change Gauteng 3 878 3 985 (3) KwaZulu-Natal 2 022 2 068 (2) Mpumalanga 572 573 - Western Cape 529 504 5

18. Slide 18: Gauteng Casino Gaming Tax Revenues

    GAUTENG CASINO GAMING TAX REVENUES Growth in Gaming Win (%) Gauteng Montecasino Gold Reef City Silverstar Calendar years 2000 25.0 (4.9) 2001 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 (0.9) 0.5 (1.3) 7.4 2010 1.1 2.0

19. Slide 19: Gauteng Casino Gaming Tax Revenues

    GAUTENG CASINO GAMING TAX REVENUES  Time Square Impact on F’18 F’18 F’17 % Rm Rm Change Market 7 937 7 410 7.1 Tsogo Sun 3 886 4 002 (2.8) Rest of Gauteng 3 059 3 198 (4.3) Time Square (estimate) 992 - 100.0 Morula - 210 (100.0) 19

20. Slide 20: KZN Casino Gaming Tax Revenues

    KZN CASINO GAMING TAX REVENUES Growth in Gaming Win (%) KwaZulu-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.

21. Slide 21: Other Casino Gaming Tax Revenues

    OTHER CASINO GAMING TAX REVENUES Growth in Gaming win (%) Province Unit Unit Unit Mpumalanga Ridge Emnotweni 6 months to September 2017 (0.2) (3.4) 0.7 6 months to March 2018 0.2 1.5 (0.3) 12 months to March 2018 - (0.9) 0.2 Western Cape Caledon Mykonos Garden Route 6 months to September 2017 0.2 2.

22. Slide 22: Casino Gaming – Regulatory Matters

    CASINO GAMING – REGULATORY MATTERS  B-BBEE condition of licence  Regulation regarding the maximum number of casino licences nationally  Gauteng gaming taxes  Smoking regulations 22

23. Slide 23: Casino Gaming – Future Opportunities

    CASINO GAMING – FUTURE OPPORTUNITIES  Suncoast redevelopment ● Expansion comprises a new Privé, refurbishment of the existing main floor, new restaurants, structured parking, a Barnyard theatre and the Dome venue at a cost estimated at R1.6bn ● Construction continues with the Privé scheduled to ope

24. Slide 24: Casino Gaming – Future Opportunities

    CASINO GAMING – FUTURE OPPORTUNITIES  Western Cape Metropole ● The Sun International and Tsogo Sun legal proceedings were stayed pending the publication of legislation permitting relocation ● The Western Cape Provincial Treasury published a draft Bill and Curtesy Google regulations to permit the re

25. Slide 25: Casino Gaming – Future Opportunities

    CASINO GAMING – FUTURE OPPORTUNITIES  Monte Circle and Monte Place ● Construction of building C at Monte Circle completed and construction of building K at Monte Place will commence during April 2018 ● R26m spent during F’18 with R10m to be spent on building C and R32m to be spent on Building K dur

26. Slide 26: Casino Gaming – Future Opportunities

    CASINO GAMING – FUTURE OPPORTUNITIES  Gaming positions licensed but not currently displayed Slots Tables Montecasino 574 6 Gold Reef City 330 4 Suncoast 750 13 Silverstar 200 - The Ridge 64 2 Golden Horse - 1 Hemingways 43 - Emnotweni 75 1 Mykonos - 3 Caledon 52 - 2 088 30 26

27. Slide 27: Gaming: Casinos, Alternative Gaming

    GAMING CASINOS ALTERNATIVE GAMING 27

28. Slide 28: Alternative Gaming

    ALTERNATIVE GAMING  Vukani and Galaxy acquisition ● The acquisition of Niveus’ alternative gaming interests, excluding sports betting, was implemented effective 20 November 2017 ● The group invoked §124 of the Companies Act to compulsorily acquire all the Gameco shares from minorities ● The purchas

29. Slide 29: Alternative Gaming - Vukani

    ALTERNATIVE GAMING - VUKANI  Income statement F’18 F’18 Illustrative Actual full year Revenue 362 961 Ebitdar 169 425 Rent (3) (8) Depreciation (34) (94) Exceptional items (2) (16) Finance costs (8) (16) Taxation (35) (75) Non-controlling interests (3) (11) Adjustments 2 16 Adjusted earnings 86 221

30. Slide 30: Alternative Gaming - Vukani

    ALTERNATIVE GAMING - VUKANI  Gaming win by province F’18 F’18 Illustrative Actual full year Mpumalanga 31 87 Eastern Cape 46 120 Kwa-Zulu Natal 70 182 Limpopo 44 116 Western Cape 98 265 Gauteng 31 83 North West 12 32 Free State 11 32 Northern Cape 6 13 349 930 30

31. Slide 31: Alternative Gaming - Vukani

    ALTERNATIVE GAMING - VUKANI  Footprint as at 31 March 2018 Sites Machines Mpumalanga 102 546 Eastern Cape 113 963 Kwa-Zulu Natal 228 1 030 Limpopo 136 775 Western Cape 191 891 Gauteng 151 698 North West 77 498 Free State 82 333 Northern Cape 33 160 1 113 5 894 31

32. Slide 32: Alternative Gaming - Galaxy

    ALTERNATIVE GAMING - GALAXY  Income Statement F’18 F’18 Illustrative Actual full year Revenue 263 647 Ebitdar 69 162 LTI expense - (6) Rent (17) (45) Depreciation (12) (33) Exceptional items (2) (13) Taxation (10) (28) Non-controlling interests (5) (3) Adjustments 2 13 Adjusted earnings 25 47 32

33. Slide 33: Alternative Gaming - Galaxy

    ALTERNATIVE GAMING - GALAXY  Gaming win by province F’18 F’18 Illustrative Actual full year Gauteng 98 272 North West 19 51 Limpopo 15 26 Mpumalanga 13 19 Eastern Cape 63 147 Kwa-Zulu Natal 26 65 234 580(1)(2) Notes: (1) Full year gaming win grew by 28% on F’17 (2) Gaming win growth of 11% on F’17

34. Slide 34: Alternative Gaming - Galaxy

    ALTERNATIVE GAMING - GALAXY  Footprint as at 31 March 2018 Bingo ISO (40 licenses not Bingo Casino LPM site) yet rolled out Gauteng 4 Eastern Cape 6(1) North West 2 Limpopo 2(2)(4) Mpumalanga 2(3) 1 Kwa-Zulu Natal 4(5) 3 Northern Cape 1(6) 20 1 1 3 Number of machines 3 060 168 40 Notes: (1) New sit

35. Slide 35: Alternative Gaming – Regulatory/Legal Matters

    ALTERNATIVE GAMING – REGULARTORY/LEGAL MATTERS  Galaxy ● Litigation against Electronic Bingo  KwaZulu-Natal  Eastern Cape  North West ● Litigation relating to the validity of bingo licenses  KwaZulu-Natal ● Smoking regulations 35

36. Slide 36: Alternative Gaming – Future Opportunities

    ALTERNATIVE GAMING – FUTURE OPPORTUNITIES  Vukani ● Growth dependent on continued rollout of LPM sites (net of sites closed) and improved gaming offering (product and sites) ● Limited number of licences per province with significant barriers to entry  Galaxy ● Additional site opened during April 2

37. Slide 37: Tsogo Sun Hotels

    TSOGO SUN HOTELS

38. Slide 38: Hotel Operations, Hospitality Property Fund, Europe

    HOTEL OPERATIONS HOSPITALITY EUROPE PROPERTY FUND 38

39. Slide 39: Group Operated Hotel Portfolio

    GROUP OPERATED HOTEL PORTFOLIO Luxury Full Service Select Service Budget 39

40. Slide 40: Group Operated Hotels Portfolio and Statistics

    GROUP OPERATED HOTELS PORTFOLIO AND STATISTICS Hotels Rooms Owned Managed Luxury 6 1 105 410 695  Portfolio as at 31 March 2018 Full Service 25 5 386 5 386 -  Owned includes leased hotels Select Service 27 5 079 4 563 516 and associates Budget 22 1 741 1 741 - Timeshare & Resorts 6 992 138 854  E

41. Slide 41: South African Hotels Trading

    SOUTH AFRICAN HOTELS TRADING  Occupancy increased 0.4pp to 64.7% on the prior year  Average room rate ended flat on the prior period  The majority of the portfolio has been refurbished and is in very good condition 41

42. Slide 42: South African Hotels – Cape Town Water

    SOUTH AFRICAN HOTELS – CAPE TOWN WATER  Westin, SS Cullinan and SS Waterfront (R3.9m) ● Reverse osmosis plant to make brackish water pumped from Westin basement (1.2m l/d) potable ● Completed April 2018  Radisson Waterfront and SE Century City (R4.1m) ● Boreholes and reverse osmosis ● Completed Ap

43. Slide 43: South African Hotels – Cape Town Water

    SOUTH AFRICAN HOTELS – CAPE TOWN WATER  GC Nelson Mandela Boulevard (R2.5m) ● Borehole and filtration ● Anticipated completion May 2018  Sun 1 Parrow, Sun1 Milnerton, Sun 1 Foreshore (R900k) ● Additional storage tanks  Protea Victoria Junction ● Additional storage tanks as borehole unsuccessful 

44. Slide 44: Offshore Hotels Trading

    OFFSHORE HOTELS TRADING  Offshore hotels trading remains under pressure with occupancies up 0.9pp on the prior year to 56.8% and average room rates down 3% in US$ and 11% in Rand ● Remains impacted by weaker corporate markets attributable to the negative impact of commodity prices  Forex gain for

45. Slide 45: Offshore Hotels – Future Opportunities

    OFFSHORE HOTELS – FUTURE OPPORTUNITIES  StayEasy Maputo ● Capital cost of 125 key hotel US$16.5m ● 50 year land lease on a shopping development at zero cost ● Construction completed and hotel opened  SS Nairobi ● Existing lease terminates November 2020 ● Landlord has agreed to a 12.5% reduction in

46. Slide 46: Offshore Hotels – Future Opportunities

    OFFSHORE HOTELS ––FUTURE OFFSHORE HOTELS FUTUREOPPORTUNITIES OPPORTUNITIES § Expansion Expansion in in the the territories territories the group group already already operates operates inin ●● Management Management agreements agreements for for a 150 150 key key Southern Southern Sun Sun in Accra,

47. Slide 47: Hotel Operations, Hospitality Property Fund, Europe

    HOTEL OPERATIONS HOSPITALITY EUROPE PROPERTY FUND 47

48. Slide 48: HPF Group Structure

    HPF GROUP STRUCTURE Public 59.2% 40.8% Leases TENANT/ HOTEL PROPERTY OWNER HOTEL OPERATOR 48

49. Slide 49: HPF Hotel Portfolio

    HPFHOTEL HPF HOTELPORTFOLIO PORTFOLIO Luxury Luxury Upscale Upscale Midscale Midscale Economy Economy 3 49

50. Slide 50: HPF Hotels Portfolio and Statistics

    HPF HOTELS PORTFOLIO AND STATISTICS Hotels Rooms  Portfolio as at 31 March 2018 Luxury 3 749 Upscale 12 3 227 Midscale 19 3 519 Budget 19 1 508 Total 53 9 003 Statistics F’18 F’17 % Change  On a like-for-like basis for the year Occupancy (%) 63.0 63.6 0.6pp ended 31 March 2018, including Average r

51. Slide 51: HPF Indicative Consolidation of HPF into TSH

    HPF INDICATIVE CONSOLIDATION OF HPF INTO TSH HPF Tsogo Sun Statutory Group Rooms revenue - 1 167 Food & beverage revenue - 275 Other revenue - 53 Rental income 866 410 3rd party 402 402 Tsogo Sun 464 8 Overheads (40) (987) Hotel trading related - (947) HPF central (40) (40) Ebitdar 826 918 Depreciat

52. Slide 52: HPF Completed Projects

    HPF COMPLETED PROJECTS  2nd Tsogo Sun transaction ● HPF acquired 29 hotels (3 771 rooms) from TSH effective 1 July 2017 ● Purchase consideration of R3.6bn was settled R2.6bn in shares and R1.0bn in cash  Rights Issue ● Rights Issue of R1.0bn undertaken in July/August at market price of R14.00 ● Un

53. Slide 53: HPF Completed Projects

    HPF COMPLETED PROJECTS  Sandton Eye ● Acquired various additional sections and exclusive use over Sectional Title Scheme (Radisson Blu Gautrain) in Sandton Eye, including real right of expansion by ± 10 000 bulk square metres or additional 7 floors ● Aggregate purchase consideration of R302m : R271

54. Slide 54: Hotel Operations, Hospitality Property Fund, Europe

    HOTEL OPERATIONS HOSPITALITY EUROPE PROPERTY FUND 54

55. Slide 55: Europe – RBH (previously Redefine BDL)

    EUROPE – RBH (PREVIOUSLY REDEFINE BDL)  TSH owns 25% plus board and committee representation  Manages 67 hotels (9 384 rooms) in the UK ● includes new contract for the Best Western Beamish House management of 26 hotels from September 2017  Manages under multi brands including Crowne Plaza, Holida

56. Slide 56: Europe – International Hotel Properties

    EUROPE – INTERNATIONAL HOTEL PROPERTIES  TSH owns 25.9% plus board representation  RDI Reit (previously Redefine International) own 74.1%  TSH intends to increase stake to 50%  Currently has GBP118m (R2.0bn) in hotel assets (1 135 rooms) ● 4 Travel Lodges – leased to Travel Lodge Hampton by Hilt

57. Slide 57: Future Prospects

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58. Slide 58: Future Prospects

    FUTURE PROSPECTS  Group ● Strong cash generation ● Growth opportunities will be pursued if compelling but debt levels higher ● Upside potential from any economic recovery is significant ● Focus on driving revenue and cost control remain to protect margins ● REIT structure for gaming assets and unbu

59. Slide 59: Future Prospects – Tsogo Sun Post REIT and Unbundling (Rm)

    FUTURE PROSPECTS – TSOGO SUN POST REIT AND UNBUNDLING (Rm) HPF Gaming F’18 Deconsoli- leases and F’18 Reported daton debt Illustrative Income 13 975 (402) - 13 573 Net gaming win 7 940 - - 7 940 Revenue - - Rooms 3 160 - - 3 160 F&B 1 561 - - 1 561 Rental income 550 (402) - 148 Other 764 - - 764 Ebi

60. Slide 60: Future Prospects

    FUTURE PROSPECTS  Casino 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 ● Mpumalanga fourth casino licence ● Complete development activity  Suncoast is t

61. Slide 61: Future Prospects

    FUTURE PROSPECTS  Alternative Gaming ● Continued rollout of licensed sites ● Potential for new site licenses ● Electronic bingo in KwaZulu-Natal ● Expansion and redevelopment of existing sites ● Regulatory/legal issues remain a threat 61

62. Slide 62: Future Prospects

    FUTURE PROSPECTS  Hotels ● Occupancy and rate still under pressure until transient Corporate demand recovers ● Focus on customer satisfaction, brand awareness, distribution through channels and Web and yield enhancement ● Opportunistic in SA – land bank, acquire leases, new builds and acquisitions

63. Slide 63: Thank You

    THANK YOU

Tsogo Sun Holdings — Investor Presentation (May 2018) on 6ix