Southern Sun Limited · JSE:SSU

Southern Sun — FY2011 Earnings Presentation

46 slides from Southern Sun's earnings presentation, May 2011

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

   Presentation to:- Analysts and Investors May 2011

2. Slide 2: Group Structure

   Group Structure Hosken Consolidated SABMiller plc Investments Ltd “SABM” Public “HCI” 41.3% 39.7% 19.0% Gold Reef Resorts Ltd To be renamed Tsogo Sun Holdings Ltd “Tsogo Sun Group” 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% 73.5% 100% 100% 80% 100% 100% 100% 85% 100% 25% 100% 100% 70% 3

4. Slide 4: Reverse acquisition

   Reverse acquisition  Gold Reef Resorts  Deal closed on 24 February 2011  Exchange ratio 81% (TIH and SABSA) / 19% (Other GRR)  888.3m shares issued  1096.9m shares in issue at 31 March 2011  Adds 7 casinos, R823m EBITDAR and R0.9bn debt (December 2010) 4

5. Slide 5: 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 5

6. Slide 6: Management & Board

   Management & Board  Group Executive Committee  TSH Board of Directors  Corporate  Executive Directors  Jabu Mabuza – Group CEO  Jabu Mabuza – Group CEO  Marcel von Aulock – Group CFO  Marcel von Aulock – Group CFO  Graham Tyrrell – Group Legal Director  Rob Collins – MD Gaming  Vusi Dlami

7. Slide 7: TSH Strategy

   TSH Strategy @

8. Slide 8: Growth Strategy

   Growth Strategy  Gaming – SA  Hotels - SA  Gold Reef  Existing hotel expansions  Century SA  New builds  Licences Gaming Hotels  StayEasy brand SA SA  Existing expansions  Land banking  Minorities  On – Line JV RESOURCES  Other gaming  Hotels Offshore  Gaming - Offshore  Management c

9. Slide 9: Growth Strategy

   Growth Strategy  Gaming – SA  Hotels - SA Gold Reef Existing hotel expansions Century SA Gaming Hotels New builds SA SA Licences StayEasy brand Existing expansions Land banking RESOURCES Minorities On – Line JV Other gaming Gaming Hotels  Hotels Offshore Offshore Offshore  Gaming - Offshore Mana

10. Slide 10: Gaming: Key Strategic Issues

    Key Strategic Issues Gaming €

11. Slide 11: Gauteng Gaming Tax

    Gauteng Gaming Tax 50 45 40 35 Rm 30 25 20 15 10 1 2 3 4 5 6 7 8 9 10 11 12 13 4 week period Jan to Dec - Gauteng 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 11

12. Slide 12: Gauteng Gaming Tax – Calendar years

    Gauteng Gaming Tax –Calendar years 600 550 500 450 400 Rm 350 300 250 200 150 100 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12

13. Slide 13: Gauteng Gaming Tax

    Gauteng Gaming Tax 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 Silverstar opened 7.8 (6.8) (

14. Slide 14: KZN Gaming Tax - Monthly

    KZN Gaming Tax - Monthly 300.0 250.0 200.0 150.0 100.0 50.0 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2003 2004 2005 2006 2007 2008 2009 2010 2011 14

15. Slide 15: KZN Gaming Tax – Calendar year

    KZN Gaming Tax – Calendar year 3 000 2 500 2 000 1 500 1 000 500 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 15

16. Slide 16: 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 Year to March 5.2 5.4 3.0 6.4 16

17. Slide 17: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Montecasino  Suncoast  High levels of Privé play  Additional 120 slots and 14 tables approved  Precinct includes 3 hotels (650 rooms) Teatro, 65 F&B outlets, largest  Additional effective 30% acquired for cinema in SA, etc R1bn from Johnnic in 2009  Pivot develo

18. Slide 18: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  The Ridge  Casino expansion including Privé, additional slots and tables, F&B and additional cinemas showing benefits – 9% income and 7% EBITDARM growth  135 room StayEasy opened July 2009  Hemingways  Hemingways – shopping center completed November 2009  Licence

19. Slide 19: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Caledon Casino, Hotel and Spa  14 rooms reclaimed by relocating the spa  Minor refurbishment done  450 acres surplus land  Completing golf course approvals to ROD stage  Potential for a Southern Sun Lifestyle Resort (Timeshare)  Only resort / destination casino

20. Slide 20: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Gold Reef City  15% of Gauteng market  Low denomination play and spend per visit  Stable casino in established area  Fully refurbished in 2009  Silverstar  9% of Gauteng market  Growth potential due to the catchment area  Refreshment of entertainment offering

21. Slide 21: Key Strategic Issues - Gaming

    Key Strategic Issues - Gaming  Goldfields casino  Only group casino in the Free State  Refurbished in 2010  Adjacent shopping mall should boost footfall  Mykonos  70% owned by group  Trading stable  Mossel Bay  85% owned by group  Non-controlling interests have option to buy up to 25% (fro

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

    Key Strategic Issues Hotels – South Africa

23. Slide 23: Hotels SA – Portfolio Philosophy

    Hotels SA – Portfolio Philosophy Land Building Operations Management Branding  Own everything – Southern Sun strategic advantage in scale  Lease building on long term basis if we can‟t own – but lose terminal value  Only manage if strategically important and no option to own – low capital – low r

24. Slide 24: Portfolio of Brands

    Portfolio of Brands Economy/ Economy Timeshare & Deluxe Premier Plus Budget Resorts Offshore 24

25. Slide 25: Owned and Managed

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

26. Slide 26: Key Strategic Issues : Hotels – South Africa

    Key Strategic Issues : Hotels – South Africa  Core strategy remains:––  Focus on room rates (System-wide)  SA ARR F‟07/F‟06 – 18% growth  SA ARR F‟08/F‟07 – 20% growth  SA ARR F‟09/F‟08 – 16% growth  SA ARR F‟10/F‟09 – Nil growth  SA ARR F‟11/F‟10 – 4% growth (SWC)  Occupancy under pressure

27. Slide 27: System-wide rooms sold history

    System-wide rooms sold 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'05 F'06 F

28. Slide 28: Hotels – Offshore: Key Strategic Issues

    Key Strategic Issues Hotels – Offshore

29. Slide 29: Key Strategic Issues - Hotels – Offshore

    Key Strategic Issues - Hotels – Offshore  Pursuit of management contracts continues – low risk entry to new markets  Africa hotels reasonably strong in US$  Seychelles – impacted by economic slowdown in Europe and over supply but recovering  Currency negative impact to trading in F‟11, due to lo

30. Slide 30: Segmental Analysis

    Segmental Analysis ¢

31. Slide 31: Tsogo Sun Segmental

    Tsogo Sun Segmental Income EBITDAR(M) Margin 2011 2010 2011 2010 2011 2010 Rm Rm Rm Rm % % Montecasino 1 964 1 796 792 760 40.3 42.3 Suncoast 1 261 1 195 609 588 48.3 49.2 The Ridge 332 305 161 151 48.4 49.4 Hemingways 269 256 117 116 43.4 45.2 Emnotweni 268 264 114 120 42.6 45.6 Other gaming operat

32. Slide 32: Financial Overview

    Financial Overview 4%

33. Slide 33: Gaming - Income and EBITDAR margin

    Gaming - Income and EBITDAR margin 52.0 4600 50.0 4200 46.5 48.0 46.4 3800 4630 46.0 EBITDAR Margin (%) 44.2 44.6 4056 3400 44.0 Income (Rm) 42.4 42.2 3000 42.0 40.2 39.6 38.9 40.0 2600 3886 3833 38.0 2200 3348 2913 36.0 1800 2503 34.0 2097 1400 31.0 32.0 1581 1000 1171 30.0 F'02 F'03 F'04 F'05 F'06

34. Slide 34: Hotels – Revpar and EBITDAR

    Hotels – Revpar and EBITDAR 1000 640 889 900 590 764 637 800 540 627 490 700 EBITDAR (Rm) Revpar (R) 440 551 600 390 597 500 401 543 527 509 400 340 342 349 339 439 290 300 358 240 305 301 320 200 190 100 F'03 F'04 F'05 F'06 F'07 F'08 F'09 F'10 F'11 Revpar 34 EBITDAR (pre forex)

35. Slide 35: Group – Income and EBITDAR margin

    Group – Income and EBITDAR margin 60 6700 6487 6200 5920 55 5810 5700 EBITDAR Margin (%) 5499 50 5200 Income (Rm) 4747 4700 45 4075 46.6 4200 44.5 44.3 40 3700 3553 41.4 3149 39.7 3200 39.4 38.7 35 2713 37.0 2700 34.9 30 2200 1700 25 F'03 F'04 F'05 F'06 F'07 F'08 F'09 F'10 F'11 Income EBITDAR margin

36. Slide 36: Group – Income statement (Rm)

    Group – Income statement (Rm) Year to March F’11 F’10 % Actual Actual Change Group income 6 487 5 810 12 Gaming 4 435 4 056 9 GRR 195 - * Hotels – SA 1 617 1 549 4 – Offshore 271 237 14 Corporate (31) (32) * EBITDAR 2 510 2 309 9 Gaming 1 796 1 713 5 GRR 67 - * Hotels – SA 562 555 1 – Offshore 75 72

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

    Group – Income statement (Rm) Year to March F’11 F’10 % Actual Actual Change EBITDAR 2 510 2 309 9 LTI costs 13 (23) * Rentals (171) (154) (11) Depreciation (447) (423) (6) Exceptional items (420) (1) * Finance costs (391) (367) (7) Associates and JVs 79 87 (9) Tax ― normal (428) (357) (20) – STC (1

38. Slide 38: Adjusted HEPS (Rm)

    Adjusted HEPS (Rm) Year to March F’11 F’10 % Actual Actual Change Attributable earnings 606 857 (29) Excess of fair value of assets acquired - (2) Capital asset disposal profits (5) - FV adjustment of GRR 299 - Impairment of PPE (Grayston) 8 1 Headline earnings 908 856 6 Termination of capex project

39. Slide 39: 12 Months to March Merge Co (Rm)

    12 Months to March Merge Co (Rm) TSH TSH 31 March’11 31 March’11 TSH GRR Eliminate Eliminate TSH Merge Co 31 March’11 31 March’11 equity earnings March month 31 March’11 Income 6 487 2 328 - (195) 8 620 EBITDAR 2 510 851 - (67) 3 294 Adjusted headline 1 006 319 (67) (25) 1 233 earnings Number of sha

40. Slide 40: Group Cash Flow (Rm)

    Group Cash Flow (Rm) F’11 F’10 Actual Actual Cash flow generated from operations 2 381 2 285 Merger costs (93) - Dividends received 57 52 Cash flow from operations 2 345 2 337 Interest paid (net) (393) (358) Taxation – normal (457) (406) – STC (7) (43) Maintenance capex (233) (427) Free cash flow 1

41. Slide 41: Investment Activities

    Investment Activities F’11 F’10 Actual Actual Acquisitions Suncoast additional 30% - 994 Century - 434 GRR - 333 Expansion Capex The Pivot 86 344 The Ridge - 16 SE Emalahleni - 48 Hemingways 13 - SSME additional 30% - 19 Suncoast bid & parking - 24 Maia - 32 Other 11 (5) 110 2 239 Maintenance Capex

42. Slide 42: Interest Bearing Debt (Rm)

    Interest Bearing Debt (Rm) F’11 F’10 Non-controlling interests funding 99 99 Preference funding 1 000 1 000 External debt (Amortizing and bullet) 4 011 3 882 Gross IBD 5 110 4 981 Cash on hand (956) (514) Net IBD 4 154 4 467 Dividend of R549m (50c per share) declared post year end 42

43. Slide 43: New Debt Package - WIP

    New Debt Package - WIP Term Funding Repayments 2000 1800 1600 1400 1200 1600 (Rm) 1000 800 1000 600 500 400 106 118 130 141 153 167 182 200 200 200 200 200 200 200 200 94 0 F'12 F'13 F'14 F'15 F'16 F'17 F'18 F'19 Term A Silverstar Pref A Pref B Term B (Full Facility) Facility shown - not usage 40% o

44. Slide 44: Future Prospects

    Future Prospects 4@

45. Slide 45: Future Prospects

    Future Prospects  Group  Strong cash generation set to continue  Growth opportunities still being pursued  Gaming  Gaming win growth – pressure in the short term, medium term outlook positive  Need consumers to get wealthier and, more importantly, feel wealthier  Regulatory issues are a threa

46. Slide 46: Questions

    Questions 4

Southern Sun — FY2011 Earnings Presentation on 6ix