CIRCULAR TO SHAREHOLDERS

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION The definitions and interpretations commencing on page 4 of this Circular apply throughout this Circular, including this front cover. Sun International does not accept responsibility, and will not be held liable, for any action of, or omission by, any CSDP or Broker including, without limitation, any failure on the part of the CSDP or Broker of any beneficial owner of Sun International to notify such beneficial owner of the details set out in this Circular. Sun International Limited (Incorporated in the Republic of South Africa) Registration number 1967/007528/06 Share code: SUI ISIN: ZAE CIRCULAR TO SHAREHOLDERS relating to: the proposed acquisition of an additional effective 54.7% interest in San Francisco Investments S.A. trading as Monticello Grand Casino & Entertainment World, part of which is a related party transaction in terms of the JSE Limited Listings Requirements and incorporating: a Notice of the General Meeting; and a Form of Proxy (blue) in respect of the General Meeting (for use by Certificated Shareholders and own-name Dematerialised Shareholders only). Date of issue: Friday, 29 August 2014 Sponsor Independent expert Reporting accountant Legal advisor Copies of this Circular, in English only, may be obtained from the Company s website, or at the Company s registered office or at the offices of the Transfer Secretaries, during normal business hours on Business Days from Friday, 29 August 2014 until Monday, 29 September The addresses of Sun International and the Transfer Secretaries are set out in the Corporate Information section.

2 CORPORATE INFORMATION Company secretary and registered office Sun International Limited (Registration number 1967/007528/06) Company secretary: C A Reddiar 6 Sandown Valley Crescent Sandown Sandton, 2196 (PO Box , Sandton, 2146) Legal advisor CorreaGubbins Apoquindo 3500, 11th Floor Las Condes Santiago, Chile Sponsor Rand Merchant Bank (a division of FirstRand Bank Limited) (Registration number 1929/001225/06) 1 Merchant Place, Corner Fredman Drive and Rivonia Road Sandton, 2196 (PO Box , Sandton, 2146) Date of incorporation Place of incorporation Transfer Secretaries Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07) 70 Marshall Street Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) Reporting accountant PricewaterhouseCoopers Inc. (Registration number 1998/012055/21) 2 Eglin Road Sunninghill, 2157 (Private Bag X36, Sunninghill, 2157) Independent expert Investec Bank Limited (Registration number 1969/004763/06) 2nd Floor 100 Grayston Drive Sandton, 2196 (PO Box , Sandton, 2146) 11 July 1967 South Africa

3 TABLE OF CONTENTS CORPORATE INFORMATION IFC ACTION REQUIRED BY SHAREHOLDERS 2 SALIENT DATES AND TIMES 3 DEFINITIONS AND INTERPRETATIONS 4 CIRCULAR TO SHAREHOLDERS 1. INTRODUCTION AND PURPOSE OF THIS CIRCULAR 7 2. BACKGROUND TO MONTICELLO 7 3. RATIONALE FOR THE TRANSACTION 8 4. SALIENT TERMS OF THE TRANSACTION 8 5. FAIRNESS OPINION MAJOR SHAREHOLDERS COSTS IN RELATION TO THE TRANSACTION LITIGATION MATERIAL CHANGES MATERIAL CONTRACTS CONSENTS DIRECTORS RESPONSIBILITY STATEMENT AND RECOMMENDATION VOTING RIGHTS GENERAL MEETING ELECTRONIC PARTICIPATION IN THE GENERAL MEETING DOCUMENTS AVAILABLE FOR INSPECTION 12 ANNEXURE I INDEPENDENT FAIRNESS OPINION 13 ANNEXURE II PRO FORMA STATEMENT OF COMPREHENSIVE INCOME AND STATEMENT OF FINANCIAL POSITION 18 NOTICE OF GENERAL MEETING 2 3 FORM OF PROXY GENERAL MEETING (BLUE) Attached 1

4 ACTION REQUIRED BY SHAREHOLDERS Please take careful note of the following provisions regarding the action to be taken by Shareholders: If you are in any doubt as to what action you should take arising from this Circular, please consult your CSDP, Broker, banker, attorney, accountant or other professional adviser immediately. If you have disposed of all of your Sun International Shares, please forward this Circular to the purchaser of such shares or the CSDP, Broker, banker, attorney or other agent through whom the disposal was effected. The General Meeting convened in terms of the notice to Shareholders incorporated in this Circular will be held at The Table Bay Hotel, Quay 6, Victoria & Alfred Waterfront, Cape Town 8001 on Monday, 29 September 2014 at 09:00. A notice convening the General Meeting is attached to and forms part of this Circular. Sun International does not accept responsibility, and will not be held liable, for any action of, or omission by, any CSDP or Broker including, without limitation, any failure on the part of the CSDP or Broker of any beneficial owner of Sun International to notify such beneficial owner of the details set out in this Circular. 1. If you have dematerialised your Sun International Shares and have elected Own-name Registration or if you hold certificated Sun International Shares: 1.1 You are entitled to attend in person, or be represented by proxy, at the General Meeting. 1.2 If you are unable to attend the General Meeting but wish to be represented thereat, you must complete and return the attached form of proxy (blue) in accordance with the instructions contained therein, to be received by the Transfer Secretaries, Computershare Investor Services Proprietary Limited, (Registration number 2004/003647/07), 70 Marshall Street, Johannesburg, 2001, PO Box 61051, Marshalltown, 2107) by no later than 09:00 on Thursday, 25 September If you have dematerialised your Sun International Shares and have elected registration other than Own-name Registration: 2.1 If you wish to attend or be represented at the General Meeting, you must advise your CSDP or Broker timeously that you wish to attend or be represented at the General Meeting, in the manner stipulated in the custody agreement governing the relationship between you and your CSDP or Broker. These instructions must be provided to your CSDP or Broker by the cut-off date and time advised by your CSDP or Broker for instructions of this nature. Your CSDP or Broker will be required to issue the necessary letter of representation to you to enable you to attend or to be represented at the General Meeting. 2.2 If you do not wish to attend or be represented at the General Meeting but wish to vote, and your CSDP or Broker has not contacted you, you are advised to contact your CSDP or Broker and provide them with your voting instructions, in the manner stipulated in the custody agreement governing the relationship between you and your CSDP or Broker. These instructions must be provided to your CSDP or Broker by the cut-off date and time advised by your CSDP or Broker for instructions of this nature. If your CSDP or Broker does not obtain instructions from you, they will be obliged to act in terms of your mandate furnished to them. 2.3 You must not complete the attached form of proxy (blue). General: Dematerialisation If you wish to dematerialise your Sun International Shares, please contact your Broker. Electronic participation Shareholders or their proxies may participate in (but not vote at) the General Meeting by way of a teleconference call. If you wish to do so, you must contact Sun International s company secretary, Chantel Reddiar, on or chantel.reddiar@suninternational.com by no later than Thursday, 25 September 2014 and identify yourself to the satisfaction of the company secretary to obtain the dialing code and pin number. Shareholders participating in this manner will still have to appoint a proxy to vote on their behalf at the General Meeting. 2

5 SALIENT DATES AND TIMES Record date to receive the Circular and notice of General Meeting on Friday, 22 August 2014 Circular and notice of General Meeting posted to Shareholders on Friday, 29 August 2014 Last day to trade in order to be eligible to vote at the General Meeting on Friday, 12 September 2014 Record date to participate in and vote at the General Meeting on Friday, 19 September 2014 Forms of Proxy for the General Meeting to be lodged with Sun International or the Transfer Secretaries by no later than 09:00 on Thursday, 25 September 2014 General Meeting held at 09:00 on Monday, 29 September 2014 Results of the General Meeting to be released on SENS on Monday, 29 September 2014 Results of General Meeting published in the press on Tuesday, 30 September 2014 Notes: a) All dates and times may be changed by Sun International and/or may be subject to the obtaining of certain regulatory approvals. Any change will be published on SENS. b) Shareholders should note that as transactions in Sun International Shares are settled in the electronic settlement system used by Strate, settlement of trades takes place 5 Business Days after such trade. c) All times given in this Circular are local times in South Africa. d) If the General Meeting is adjourned or postponed, forms of proxy submitted for the initial General Meeting will remain valid in respect of any adjournment or postponement of the General Meeting. 3

6 DEFINITIONS AND INTERPRETATIONS In this Circular and its annexures, unless otherwise stated or the context indicates otherwise, the words and expressions in the first column shall have the meanings stated opposite them in the second column, and words and expressions in the singular shall include the plural and vice versa, words importing natural persons shall include juristic persons and unincorporated associations of persons and vice versa, and any reference to one gender shall include the other gender. Adjusted HEPS Board or Directors Broker Business Day Certificated Shareholders adjusted headline earnings per share include adjustments made for certain items of income or expense. These adjustments include pre-opening expenses, earnings and results from discontinuing operations and material items considered to be outside of the normal operating activities of the Sun International Group and/or of a nonrecurring nature; the board of directors of Sun International, as set out on page 7 of this Circular; any person registered as a broking member (equities) in terms of the rules of the JSE made in accordance with the provisions of the Financial Markets Act; any day other than a Saturday, Sunday or official public holiday in South Africa; all registered holders of Certificated Shares; Certificated Shares Sun International Shares, which have not been surrendered for dematerialisation in terms of the requirements of Strate, and title to which is evidenced by a Document of Title; CE Transaction Chilean Enterprises Circular Companies Act Conditions Precedent CSDP the proposed acquisition of a 10.5% interest in Monticello held by a minority shareholder, Chilean Enterprises, to be paid in accordance with paragraph 4.1 of this Circular and which is not a category transaction in terms of the JSE Listings Requirements; Chilean Enterprises SpA. a corporation established under the laws of Chile, under tax identification number , which is 0.71% held by Novomatic Holdings Chile Ltda; 9.93% held by Rudolf Binder and 89.36% held by Taimage International S.A.; this bound document, dated Friday, 29 August 2014, including the annexures hereto, the notice of General Meeting and the form of proxy (blue) in respect of the General Meeting; the South African Companies Act, No. 71 of 2008, as amended or varied from time to time; the conditions precedent to the Transaction contemplated in paragraph 4.2 of this Circular; a Central Securities Depository Participant, being a participant as defined in section 1 of the Financial Markets Act; Dematerialised Shareholders all registered holders of Dematerialised Shares; Dematerialised Shares Documents of Title Dollar or US$ or US Dollar EBITDA EBITDAM Sun International Shares that have been dematerialised through a CSDP or Broker and are recorded in an uncertificated securities register forming part of Sun International s securities register; securities certificates, certified transfer deeds, balance receipts or other documents of title to Sun International Shares, acceptable to Sun International; the official currency of the United States of America; Earnings before interest, tax, depreciation and amortisation; consolidated earnings before interest, taxes, depreciation and amortisation of SFI Resorts S.A., excluding any provisions made for items of an extraordinary nature, and which shall exclude any and all management fees; 4

7 EPS Enterprise Value Exchange Rate Financial Markets Act Form of Proxy General Meeting Group HEPS IFRS Independent Expert or Investec Bank earnings per share; the fair valuation of SFI Resorts S.A., including San Francisco Investment S.A. on a consolidated basis, done by the Parties in terms of the Transaction Agreements; an average exchange rate of US$:ZAR = as at Signature Date; the Financial Markets Act, No. 19 of 2012, as amended, which has replaced the Securities Services Act, 2004 (Act 36 of 2004); the form of proxy (blue) for use by Certificated Shareholders and own-name Dematerialised Shareholders, as attached to and forming part of this Circular; the meeting of Shareholders to be held at The Table Bay Hotel, Quay 6, Victoria & Alfred Waterfront, Cape Town 8001 at 09:00 on Monday, 29 September 2014; Sun International and its Subsidiaries as at the Last Practicable Date; headline earnings per share; International Financial Reporting Standards; the Corporate Finance division of Investec Bank Limited (registration number (1969/004763/06), a public company incorporated in South Africa, the independent professional expert to the Related Party Transaction; Issued Shares the total number of Sun International ordinary shares in issue (being ) as at the Last Practicable Date, excluding treasury shares (being ); JSE Last Practicable Date Lasud Chile S.A. Listings Requirements Material Shareholder MOI Monticello NAV Novomatic or Novomatic Group Novomatic Holdings Chile Ltda Novomatic Investments Chile S.A. the JSE Limited (registration number 2005/022939/06), a public company duly registered and incorporated in South Africa and licensed as an exchange under the Financial Markets Act; Wednesday, 13 August 2014 being the last practicable date prior to the finalisation of this Circular; a corporation established under the laws of Chile with tax identification number , of which 99.99% is held by Lasud Federal Corp and the balance is held by Gustavo Ranucci. Lasud Chile S.A. owns shares in SFI Resorts S.A. representing a shareholding of 1.14%. the Listings Requirements of the JSE, as amended from time to time; any person who is, or within the 12 months preceding the date of the Related Party Transaction was, entitled to exercise or control the exercise of 10% or more of the votes able to be cast on all or substantially all matters at general meetings or annual general meetings of a listed company, or any other company that is its Subsidiary or holding company or is a fellow Subsidiary of its holding company; Memorandum of Incorporation; San Francisco Investment S.A. trading as Monticello Grand Casino & Entertainment World (tax identification number ) of which 99.99% is held by SFI Resorts S.A. and the balance is held by Chilean Enterprises SpA; net asset value; Novomatic AG, a corporation established under the laws of Austria with tax identification number K and its subsidiaries of which 92% is held by Novo Invest GmbH and the balance by Gryphon Invest A.G; a corporation established under the laws of Chile with tax identification number and a wholly owned subsidiary of Novomatic Investments Chile S.A.; a corporation established under the laws of Chile with tax identification number and a subsidiary of Novomatic of which 100% is held by Novomatic; 5

8 NovoSun S.A. Own-name Registration Parties Pesos or Clp R or Rand Related Party Transaction San Francisco Investment S.A. SFI Resorts S.A. SENS SCJ Shareholders or Sun International Shareholders Signature Date South Africa Strate Subsidiaries Sun International or the Company Sun International Shares Transfer Secretaries Transaction Transaction Agreements a corporation established under the laws of Chile with tax identification number of which 50% is held by Sun International Chile Ltda; % is held by Novomatic Holdings Chile Ltda and % is held by Novomatic Investment Chile S.A.; Dematerialised Shareholders who have instructed their CSDP to hold their Sun International Shares in their own name on the uncertificated securities registers of Sun International; Sun International and Novomatic collectively; Chilean pesos, the official currency of Chile; South African Rand, the official currency of South Africa; the proposed acquisition of an effective 44.2% interest in Monticello from Novomatic to be paid for in accordance with paragraph 4.1 of this Circular, which is deemed a category 2 transaction and a related party transaction per the Listings Requirements; a corporation established under the laws of Chile with tax identification number , of which 99.99% is held by SFI Resorts S.A. and the balance is held by Chilean Enterprises SpA; a corporation established under the laws of Chile with tax identification number K, which is the majority controlling shareholder of San Francisco Investments S.A., which is a casino concession company regulated by the SCJ; the Stock Exchange News Service operated by the JSE; Superintendencia de Casinos de Juego, the Chilean Superintendency of Gambling Casinos; all Certificated Shareholders and Dematerialised Shareholders of Sun International; the date of last signature of the Transaction Agreements; the Republic of South Africa; Strate (Pty) Limited (registration number 1998/022242/07), a private company incorporated in South Africa, which is a registered central securities depository and which is responsible for the electronic settlement system used by the JSE; has the meaning determined in accordance with the Companies Act; Sun International Limited (registration number 1967/007528/06), a public company incorporated in South Africa and listed on the JSE; issued ordinary shares in Sun International; Computershare Investor Services Proprietary Limited (registration number 2004/003647/07), a private company incorporated according to the company laws of South Africa; the proposed CE Transaction and Related Party Transaction, giving the Company an effective 98.8% of Monticello, for a maximum possible total payment of approximately US$163.5 million as outlined in paragraph 4.1 of this Circular; and the agreements entered into by, inter alia, Sun International Novomatic and Chilean Enterprises governing the Transaction. 6

9 Sun International Limited (Incorporated in the Republic of South Africa) Registration number 1967/007528/06 Share code: SUI ISIN: ZAE CIRCULAR TO SHAREHOLDERS Directors of Sun International Executive Directors GE Stephens AM Leeming KH Mazwai *Independent # Appointed to the Board on 22 August 2014 Non-executive Directors PDS Bacon* ZBM Bassa* PL Campher* NN Gwagwa BLM Makgabo-Fiskerstrand* IN Matthews* B Modise* LM Mojela* MV Moosa GR Rosenthal* E Cibie # 1. INTRODUCTION AND PURPOSE OF THIS CIRCULAR Sun International currently owns an effective 44.2% in Monticello through a holding company, NovoSun S.A. which is 50/50 jointly held with Austrian partners, Novomatic, and which controls 88.4% of Monticello. As announced on SENS on 2 July 2014, Sun International has on 30 June 2014 reached agreement with Novomatic and Chilean Enterprises to acquire an effective 98.9% of Monticello as well as shareholder loans and cash, as set out in paragraph 4.1 of this Circular. As Novomatic is a material shareholder in a Sun International subsidiary namely Novosun S.A., Novomatic is deemed to be a related party to Sun International. Accordingly, the proposed acquisition from Novomatic is deemed a Related Party Transaction in terms of the Listings Requirements. The purpose of this Circular is to provide information to Shareholders as regards the Transaction in order to enable them to make an informed decision as to whether or not they should vote in favour of the ordinary resolutions to be proposed at the General Meeting. 2. BACKGROUND TO MONTICELLO Monticello, which was developed at a cost of US$262 million, was opened in 2008 and is equipped with slot machines, 80 tables and 300 bingo positions. Monticello also includes a 155-room five star hotel and spa, a conference centre and extensive retail and entertainment areas. It was, at the time of opening, the largest ever private investment in South America s leisure sector. Situated in Mostazal, 57 kilometres from the heart of Santiago, Monticello is one of two casinos that service the Santiago market. Sun International has been responsible for the development and management of Monticello since inception, for which it receives management fees. Since opening, the property has established itself as the pre-eminent casino resort in the country. It achieved EBITDAM of around US$40 million in the year to 30 June 2013, despite being significantly impacted by anti-smoking legislation introduced in March

10 As a result of the anti-smoking legislation revenue at the half year to 31 December 2013 was down by 22%. However, due to corrective action taken the second half was significantly improved with casino revenue up 10%. The revenue recovery is partly due to customers getting use to the new laws but primarily due to the construction and opening of four new smoking decks in September and October of last year. Overall for the 30 June 2014 financial year revenue was down 8% on last year at Clp74.2 billion but despite the significant drop in revenue the reduction in EBITDA for the year was contained to 8.8% (Clp15.7 billion). The recovery in revenues in recent months and a comprehensive restructure of the business undertaken in the first half resulted in EBITDA in the second half of the year increasing by 56% to Clp9.5 billion at an EBITDA margin of 24.8%, which creates a positive outlook for the year ahead. Overall for the 30 June 2014 financial year revenue was down 8% on last year at Clp74.2 billion but despite the significant drop in revenue the reduction in EBITDA for the year was contained to 8.8% (Clp15.7 billion). Management fees received in the same period amounted to Clp3.7 billion such that EBITDAM was CLP18.4 billion (around $35.4 million). 3. RATIONALE FOR THE TRANSACTION Sun International has previously stated its strategic intention to grow its Latin American ( Latam ) portfolio of assets which currently consists of Monticello and the soon to be opened Ocean Club Casino in Panama. In addition Sun International has recently received a casino licence for a project in Cartagena, Colombia. The success of Monticello has given Sun International the track record and confidence to look for more opportunities in the region, including other opportunities in Chile. Chile, with a strong growth rate and stable, business orientated economy, is a compelling investment destination. Fitch Ratings has issued Chile with an A+ sovereign credit rating which is supported by the World Bank s real GDP growth forecasts of between 4.1% and 4.5% in the short to medium term. Chile has well-established gambling laws and a robust and well regulated gambling industry and Sun International has invested a significant amount of its intellectual property, systems and effort in Monticello. Whilst Sun International s strategy for growth in the region has been gaining momentum, in recent months it has become apparent that the Company s strategic intentions for Monticello and the creation of a Latam portfolio differ from the strategic intentions of the other shareholders in Monticello, who are content to remain with a single asset. Furthermore, the other shareholders have expressed a desire to make the property more autonomous, and this is not in line with Sun International s investment philosophy, which considers management control a strategic imperative. The Transaction provides the Company with the opportunity to positively leverage its investment in Monticello, which is well entrenched as the leading gaming and entertainment destination in Chile. It provides the opportunity for Sun International to acquire an increased economic interest in, and gain strategic control over, what is regarded as one of Latam s best casinos. The Transaction acts as a catalyst for the establishment of a portfolio of premier assets in the region as well as providing the platform for further growth and consolidation of Sun International s strategic position in the casino industry. 4. SALIENT TERMS OF THE TRANSACTION After the implementation of the Transaction, Monticello will be a subsidiary of Sun International and will continue to be consolidated in the Company s results. The MOI of Monticello will not frustrate nor relieve the Company in any way from compliance with its obligations in terms of the Listings Requirements. 4.1 Purchase consideration The Transaction is based in Pesos but for ease of understanding is described in US$ per the Exchange Rate. It has been structured as follows: In respect of the Transaction, the total consideration of US$163.5 million (approximately R1 725 million at the Exchange Rate) consists of the following: a primary payment of US$114 million (approximately R1 200 million at the Exchange Rate), which is based on an Enterprise Value equating to US$318 million, derived from a multiple of 8x applied to the 2013 year end EBITDAM. The primary payment of US$114 million comprises a payment of US$92.1 million (approximately R972 million) to be paid to Novomatic for the acquisition of its effective 44.2% interest in Monticello and US$21.9 million (approximately R231 million) to be paid to Chilean Enterprises for the acquisition of its 10.5% interest in Monticello. This payment will be due within 10 days of the fulfilment of all conditions precedent as outlined in paragraph 4.2 below. a further payment of US$32 million (approximately R338 million) in respect of estimated shareholder loans acquired from Novomatic and Novomatic s share of estimated cash on hand within NovoSun S.A.; 8

11 a potential top-up payment of US$17.5 million (R185 million of which R149 million would be paid to Novomatic and R36 million would be paid to Chilean Enterprises), which will be calculated with reference to the EBITDAM actually achieved for the 12 month period ending 31 December 2015 (at an EBITDAM multiple of 8x). Given the recent strong recovery of the property from the smoking ban the top-up payment allows the existing shareholders a once off benefit from any incremental profit achieved above the 2013 levels of profitability. If earned, this payment will be due by not later than 31 March The maximum top up payment has been capped at a level which caps the Enterprise Value for the Transaction to US$350 million. This effectively allows the existing shareholders of Novomatic and Chilean Enterprises to benefit from their share of the first US$4 million of incremental EBITDAM above the 2013 profit level of the business. The Enterprise Value for the top-up payment will be adjusted with the normal adjustments to determine the equity value and will also be reduced by certain identified contingent liabilities as referred to in the Transaction Agreements and relating primarily to gaming levies and tax, if these materialise in the manner agreed to by the Parties. The maximum consideration in respect of the Related Party Transaction, calculated at the Exchange Rate, is therefore R1 458 million. The maximum consideration in respect of the CE Transaction is therefore R267 million. The Transaction Consideration will be funded by a combination of cash, which is available in the Monticello holding company structure, as well as available third-party debt. 4.2 Conditions precedent The Transaction is conditional upon the fulfilment of the following conditions precedent: the unconditional approval of the Chilean gambling board (Superintendencia de Casinos de Juegos); and approval from Sun International shareholders in accordance with the Listings Requirements. The effective date of the Transaction will be once all conditions precedent have been met. 4.3 The pro forma financial effects of the Transaction The pro forma financial effects of the Transaction have been prepared for illustrative purposes only and due to the nature thereof, may not fairly present Sun International s financial position, changes in equity, results of operations or cash flows after completion of the Transaction. The pro forma financial effects are the responsibility of the Directors and are based on the published reviewed profit and cash dividend announcement of Sun International for the year ended 30 June The purpose of the pro forma financial effects is to illustrate the impact of the Transaction had it been implemented on the dates and on the assumptions set out below. It does not purport to be indicative of what the financial results would have been had the Transaction been implemented on a different date. Pro forma financial effects on the reviewed results of Sun International for the year ended 30 June 2014 Cents Before the Transaction 1 Pro Forma after the Transaction % change basic earnings per share (5.0) headline earnings per share (4.9) adjusted headline earnings per share (3.3) net asset value per share (5.3) net tangible asset value per share (10.2) Notes: 1. Extracted from the published reviewed profit and cash dividend announcement of the Company for the year ended 30 June The results and financial position of Monticello are consolidated within Sun International s results for the year ended 30 June In terms of IAS27: Consolidated and Separate Financial Statements, the acquisition of the further 54.7% in Monticello is accounted for within equity as a transaction with minorities. 3. As a consequence of the probability of the Transaction being implemented at 30 June 2014, the liability for the estimated likely consideration for the Transaction has been accrued within the statement of financial position at such date. 4. Pro forma financial effects on EPS, headline EPS and adjusted headline EPS are based on the following principal assumptions: 9

12 (ii) the Transaction was effective 1 July 2013; (iii) the primary payment of US$114 million and the further initial payment of US$32 million was financed from existing US$ cash reserves, an existing US$ long-term facility and a new Pesos facility, incurring interest at an average effective interest rate of 6.2% pa before taxation; (iv) the maximum potential top-up payment is payable, with the unwinding of the imputed interest charged to the statement of comprehensive income; and (v) estimated transaction costs of R1.2 million. 5. Pro forma financial effects on NAV and NTAV per share are based on the following principal assumptions: (vi) the Transaction was effective 30 June 2014; (vii) accrual for an additional R78 million (in addition to the R101 million already accrued for) to account for the maximum potential top-up payment of US$17.5 million, being 54.7% of US$32 million, present valued to the balance sheet date; and (viii) estimated once off transaction costs of R1.2 million are charged to retained income. 6. All effects are of a recurring nature except where otherwise stated. The pro forma statement of comprehensive income showing the effects of the Transaction on Sun International s published reviewed profit and dividend announcement for the year ended 30 June 2014, are set out in Annexure II to this Circular. The Reporting accountants report on the pro forma financial information is set out in Annexure III to this Circular. 5. FAIRNESS OPINION As the proposed acquisition of the effective 44.2% interest in Monticello from Novomatic is a Related Party Transaction in terms of the Listings Requirements, a fairness opinion from an Independent Expert is required to be obtained. Investec, acting as Independent Expert, has considered the terms and conditions of the Related Party Transaction and is of the opinion that, as at the date of the issue of the fairness opinion, the Related Party Transaction is fair. This fairness opinion is set out in Annexure I to this Circular. 6. MAJOR SHAREHOLDERS As at the Last Practicable Date, insofar as is known to Sun International, the following Shareholders (other than Directors) had greater than a 5% indirect and/or direct beneficial shareholding in Sun International: Shareholder Direct interest Indirect interest Total number of shares % of total shareholding Allan Gray (Pty) Ltd Investment Solutions Ltd Sanlam Ltd Dinokana Investments (Pty) Ltd Old Mutual Plc Total COSTS IN RELATION TO THE TRANSACTION The following expenses and provisions are expected, or have been provided for, by Sun International in connection with the Transaction. All the fees payable to the parties below are exclusive of value-added tax. These expenses are once off in nature. Service Service provider R 000 Reporting accountant PricewaterhouseCoopers Inc. 100 Independent Expert Investec Bank Limited 500 Legal advisor CorreaGubbins. 317 Sponsor Rand Merchant Bank 170 Printing and publication costs Ince Pty Ltd 50 JSE documentation fees JSE Limited 16 Estimated total expenses and fees

13 8. LITIGATION There are currently no legal or arbitration proceedings, including any such proceedings that are pending or threatened, which may have, or have had, a material effect on the Group s financial position during the 12 months preceding the date of this Circular, of which the Company is aware. 9. MATERIAL CHANGES The Board is not aware of any material changes in the financial or trading position of the Group subsequent to the latest reviewed profit and cash dividend announcement for the year ended 30 June 2014 as released on SENS on Monday, 25 August MATERIAL CONTRACTS Save for the Transaction Agreements relating to the Transaction as described in this Circular, neither Sun International nor any of its Subsidiaries have entered into, either verbally or in writing any restrictive funding arrangements and/or material contract, other than in the ordinary course of business, within the two years prior to the Last Practicable Date, or at any time, and containing an obligation or settlement that is material to the Group at the Last Practicable Date. 11. CONSENTS All parties as detailed on the cover of this Circular have consented in writing to the inclusion of their names and reports, where applicable, in this Circular in the form and context in which they appear and have not withdrawn their consents prior to the publication of this Circular. 12. DIRECTORS RESPONSIBILITY STATEMENT AND RECOMMENDATION The Directors as at 21 August 2014, whose names are set out on page 7 of this Circular, accept full responsibility for the accuracy of the information given and certify that, to the best of their knowledge and belief, there are no other facts that have been omitted which would make the contents of this Circular false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this Circular contains all information required by the Listings Requirements. The Directors as at 21 August 2014 have considered the solvency and liquidity assessment, as set out in section 4 read with section 45 of the Companies Act and are satisfied that the Company satisfies the solvency and liquidity assessment. Having regard to the background information and the Independent Expert s opinion, the Board is of the opinion that the Related Party Transaction is fair insofar as the Sun International Shareholders are concerned and that the Related Party Transaction would be of future benefit to Sun International Shareholders. Accordingly, the Board recommends that Shareholders vote in favour of the ordinary resolutions necessary to implement the Transaction, including the Related Party Transaction. The Directors who hold Sun International Shares are permitted to vote and intend to vote in favour of the ordinary resolutions, as set out in the notice of General Meeting. 13. VOTING RIGHTS All the issued Sun International Shares rank pari passu with each other. At the General Meeting, every Shareholder present or represented by proxy at the General Meeting shall have one vote on a show of hands, and on a poll shall have that number of votes determined in accordance with the voting rights associated with the Sun International ordinary shares held by that Shareholder. 14. GENERAL MEETING A General Meeting of Shareholders will be held at The Table Bay Hotel, Quay 6, Victoria & Alfred Waterfront, Cape Town 8001 on Monday, 29 September 2014 at 09:00 in order to consider, and, if deemed fit, pass, with or without modification, the resolutions as set out in the notice of General Meeting attached and forming part of this Circular. Shareholders are referred to the notice of General Meeting attached to this Circular for detail on the resolution to be proposed at the General Meeting and to the Action required by Shareholders section of this Circular for information on the procedure to be followed by Shareholders in order to exercise their votes at the General Meeting. 11

14 15. ELECTRONIC PARTICIPATION IN THE GENERAL MEETING Sun International intends to make provision for Shareholders, or their proxies, to participate in the General Meeting by way of electronic communication. In this regard, Sun International intends making a dial-in facility available that will be linked to the venue at which the General Meeting will take place, on the date of, and from the time of commencement of, the General Meeting. The dial-in facility will enable all persons to participate electronically in the General Meeting in this manner and to communicate concurrently with each other without an intermediary, and to participate reasonably effectively in the General Meeting. Shareholders wishing to participate electronically in the General Meeting are required to deliver written notice as outlined in the notice to General Meeting attached to this Circular. Please note that the cost of the dial in facilities described above will be for the account of Sun International. 16. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection during normal business hours at the registered office of Sun International at 6 Sandown Valley Crescent, Sandown, Sandton, 2196, from Friday, 29 August 2014 up to and including the date of the General Meeting: the MOI of Sun International and its Subsidiaries; the Transaction Agreements; the annual reports of Sun International for the three years ended 30 June 2011, 30 June 2012 and 30 June 2013; the reviewed profit and cash dividend announcement for the year ended 30 June 2014; a summary of service agreements with directors entered into during the last three years; the written consent of each of the advisers set out in paragraph 11 of this Circular; the signed fairness opinion set out in Annexure 1; the reporting accountants report on the pro forma financial information set out in Annexure 3; and a signed copy of this Circular. By order of the Board CA Reddiar Company secretary Friday, 29 August 2014 Registered office: 6 Sandown Valley Crescent Sandown Sandton, 2196 (PO Box , Sandton, 2146) 12

15 ANNEXURE I INDEPENDENT FAIRNESS OPINION The Directors Sun International Limited 6 Sandown Valley Crescent Sandown 2196 Dear Sirs 25 August 2014 Fairness opinion on the related party acquisition by Sun International of an effective 44.2% shareholding in San Francisco Investments S.A., trading as Monticello Grand Casino and Entertainment World ( Monticello ) from Novomatic AG ( Novomatic ) ( the Related Party Transaction ) Full details of the Related Party Transaction are contained in the circular to Sun International Shareholders ( the Circular ) to be dated on or about 29 August Unless stated otherwise, all terms contained herein have the same meaning as ascribed to them in the definitions and interpretations section of the Circular. INTRODUCTION As announced on SENS on 2 July 2014, Sun International has on 30 June 2014 reached an agreement to increase its stake in Monticello by acquiring Novomatic s effective 44.2% in Monticello held via Novosun S.A. which is jointly held by Sun International and Novomatic. Sun International will also acquire a further 10.5% interest in Monticello, which is held by Chilean Enterprises S.p.A, a minority shareholder. As a result, Sun International will hold an effective 98.9% of the interest in Monticello post implementation of the Transaction. The Transaction consideration is based in Chilean pesos but for ease of understanding is described in US$, translated using a rate of CLP per 1.00 USD which is the closing rate per the Transaction Agreement dated 30 June It has been structured as follows: a primary payment of US$114 million (R1 200 million at the Exchange Rate), which is based on an Enterprise Value equating to US$318 million, derived from a multiple of 8x applied to the 2013 year end EBITDAM. This payment will be due within 10 days of the fulfilment of all conditions precedent; a potential top-up payment, which will be calculated with reference to the EBITDAM actually achieved for the 12-month period ending 31 December 2015 (at an EBITDAM multiple of 8x). Given the recent strong recovery of the property profits from the smoking ban instituted in 2013 the top-up payment allows the existing shareholders a once off benefit from any incremental profit achieved above the 2013 levels of profitability. If earned, this payment will be due by not later than 31 March The primary payment of US$114 million comprises a payment of US$92.1 million to be paid to Novomatic for the acquisition of their effective 44.2% interest in Monticello and US$21.9 million to be paid to Chilean Enterprises for the acquisition of their 10.5% interest in Monticello. The maximum top up payment of US$17.5 million has been capped at a level which caps the enterprise value for the Transaction to US$350 million (i.e. an incremental US$32 million). This effectively allows the existing shareholders to benefit from their share of the first US$4 million of incremental EBITDAM above the 2013 profit level of the business. Sun International will also acquire, from Novomatic, shareholder loans and cash of approximately US$32 million. FAIRNESS OPINION REQUIRED IN TERMS OF THE JSE LISTINGS REQUIREMENTS In terms of the listings requirements of the JSE Limited ( the JSE ) (the Listings Requirements ), as Novomatic is a major shareholder in a Sun International subsidiary being Monticello, it is deemed to be a related party to Sun International. As a result of Novomatic being a related party, the Transaction is categorised as a related party transaction in terms of Section 10(1)(b)(i) of the Listings Requirements. 13

16 In terms of Section 10.4(f) of the Listings Requirements, a fairness opinion is required from an independent professional expert, acceptable to the securities exchange operated by the JSE, indicating whether or not the terms and conditions of the transaction are fair to the shareholders of Sun International ( the Fairness Opinion ). As a consequence of the above, the board of directors of Sun International has appointed the Corporate Finance division of Investec Bank Limited ( Investec ) to act as the professional Independent Expert to provide the required opinion, indicating whether the terms of the Transaction are fair to the shareholders of Sun International. As Chilean Enterprises is not a related party to Sun International this fairness opinion is provided on the Related Party Transaction only and does not take into consideration the acquisition of the 10.5% interest in Monticello from Chilean Enterprises forming part of the overall Transaction. RESPONSIBILITY Compliance with the JSE Listings Requirements is the responsibility of the directors. Our responsibility is to report to the Directors and shareholders of Sun International on the fairness of the terms of the Transaction. EXPLANATION AS TO HOW THE TERM FAIR APPLIES IN THE CONTEXT OF THE TRANSACTION Schedule 5.7 of the Listings Requirements states that the fairness of a transaction is based on quantitative issues. In the case of the acquisition of an asset from a related party, a transaction may be said to be fair if the value of the consideration payable is less than or equal to the market value of the asset that is the subject of the transaction. DETAILS AND SOURCES OF INFORMATION In arriving at our opinion we have considered the following information: Information on Monticello, including the history, nature of business, services, customer profiles and competitor activity; Historic financial information of Monticello for the years ending 30 June 2011 to 30 June 2014 ( as the financial year end of Monticello is December historical financial information has been based on the audited management accounts as at 30 June used for inclusion in Sun International s Annual Financial Statements); Forecasted financial information of Monticello for the 5 years ending 30 June 2019, prepared by the management of Sun International; Financial information on Novosun for the 12 month period ended 30 June 2014; The Transaction Agreements entered into by, inter alia, Sun International, Novomatic and Chilean Enterprises governing the Transaction, dated 30 June 2014; Information and explanations obtained in discussions with key management of Sun International involved in the Transaction; the Sun International 2014 Strategy Proposal on Monticello; Trading multiples of comparable companies to Sun International and Monticello; Publicly available information regarding the pricing of recent transactions in significant equity interests in unlisted companies with operations similar to those of Monticello; Recent share prices and other publicly available information on listed companies with operations similar to Monticello; Prevailing market, economic, legal and other conditions which may affect the underlying value of Monticello; Publicly available information relating to the gaming sector in general; The SENS announcement on 2 July 2014; and The Circular to Sun International Shareholders of which this report forms part. The information above was secured from: Directors and management of Sun International (being the current management of Monticello by virtue of the management contract between Sun International Management Limited and Monticello); and Third-party sources, including information related to publicly available economic, market and other data which we considered applicable to, or potentially influencing Monticello. 14

17 We have reviewed or analysed, as appropriate, the above information and where practical, we have corroborated the reasonability of the information provided to us for the purpose of our opinion, including publicly available information, whether in writing or obtained in discussion with management of Sun International. We have analysed the above information by comparing forecast performance for Monticello, to historic performance and obtained reasons for differences in performance from discussions with Sun International management as well as considering the reasonableness of the significant assumptions by discussing the basis for the assumptions with Sun International management and comparing the growth assumptions to macroeconomic research resources. PROCEDURES In arriving at our opinion we have undertaken the following procedures and taken into account the following factors in evaluating the fairness of the Related Party Transaction: reviewed the sale terms and conditions as set out in the Transaction Agreements; held discussions with management of Sun International, and considered such other matters as we consider necessary, including assessing the prevailing economic and market conditions and trends; reviewed and obtained an understanding as to the forecast financial information of Monticello; considered the rationale of the Transaction and potential benefits of the Transaction for Sun International; compiled forecast cash flows by using the forecast financial information as detailed above. Investec s assumptions of cost of capital were applied to the forecast cash flows to produce a discounted cash flow valuation of Monticello; considered the impact of the cancellation of the management fee payable by Monticello on the profitability and cost base of Monticello. considered the effect of the expiration of the casino license in 2023 on the future cash flows, assuming three scenarios: 1. the casino license is not renewed in 2023, 2. the casino license is renewed and the entity continues to operate into perpetuity, and 3. the casino license is renewed in 2023 and the entity continues to operate for a further 15 years : compiled a capitalisation of maintainable earnings valuation of Monticello by using historical and forecast financial information and applied Investec s calculated EBITDA multiples based on similar market and other transactions comparable to Monticello; and evaluated the relative risks associated with Monticello and the gaming sector in Chile, including assessing prevailing economic and market conditions, trends and company specific matters. ASSUMPTIONS We arrived at our opinion based on the following assumptions: that all agreements that are to be entered into in terms of the Transaction will be legally enforceable; that the Transaction will have the legal, accounting and taxation consequences described in discussions with, and materials furnished to us by representatives and advisors of Sun International; and that reliance can be placed on the financial information in respect of Monticello. LIMITING CONDITIONS This opinion is provided to the directors and shareholders of Sun International in connection with and for the purposes of the Related Party Transaction. The opinion does not purport to cater for each individual shareholder s perspective, but rather that of the general body of Sun International shareholders. Individual shareholders decisions regarding the Related Party Transaction may be influenced by such shareholders particular circumstances and accordingly individual shareholders should consult an independent advisor if in any doubt as to the merits or otherwise of the Related Party Transaction. We have relied upon and assumed the accuracy of the information provided to us in deriving our opinion. Where practical, we have corroborated the reasonableness of the information provided to us for the purpose of our opinion, whether in writing or obtained in discussion with management, by reference to publicly available or independently obtained information. While our work has involved an analysis of, inter alia, the financial information, and other information provided to us, our engagement does not constitute an audit conducted in accordance with generally accepted auditing standards. Where relevant, forward-looking information of Monticello relates to future events and is based on assumptions that may or may not remain valid for the whole of the forecast period. Consequently, such information cannot be relied upon to the same extent as that derived from audited financial statements for completed accounting periods. We express no opinion as to how closely the actual future results of Monticello will correspond to those projected. We have however compared the budget and forecast financial information to past trends as well as considering the assumptions inherent therein. 15