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SunWest Plans in GrandWest Casino Makeover

31 October 2005

SOUTH AFRICA – (PRESS RELEASE) -- Responding to positive growth in demand in the Cape's leisure market and continuing consumer confidence, SunWest is to invest approximately R320-million in new entertainment amenities and facilities at GrandWest in Cape Town. This brings to more than R2-billion the company's investments in the Western Cape since 1999. SunWest, which also owns the Table Bay Hotel, is owned by Sun International, Grand Parade Investments and Afrileisure Investments.

Making the announcement today, SunWest chairman, Peter Swartz, said that the expansion would include a 5 000-seater indoor multi-purpose arena, new family entertainment amenities, 510 additional slot machines in a dedicated smoking casino, nearly 400 new undercover parking bays, as well as new restaurants and other facilities.

"Our present product offering at GrandWest is based on market feasibility studies undertaken in 1996 at a time when real and projected growth rates were well below the 4% and more that is being achieved at present in the Western Cape economy.

"The tourism and leisure sector in particular has performed above expectations, and this is reflected in GrandWest's recent results. In the year ended June 2005, for example, the complex achieved a 19% growth in revenues, and a 25% improvement in EBITDA, over the previous year.

"In less than five years, GrandWest has received more than 17 million visitors, and especially at peak holiday periods, we have been at capacity".

Since opening in December 2000, GrandWest had established itself as the industry leader in the gambling and entertainment sector, said Swartz, and its positive influence in the local economy vindicated those in government who saw the potential of the industry to contribute meaningfully to socio-economic development, and advance the public interest through new investment, employment creation, empowerment, and the provision of new tourism infrastructure.

"Government's share of the value generated by GrandWest has steadily risen from 14 % in 2001 to 34 % today. SunWest has made a cumulative contribution of R9 billion to GDP over the past five years; and paid R2.8-billion in all taxes, including R481-million in provincial casino levies. With the expansion, we anticipate contributing R931-million in additional tax revenue up to 2015 over and above what was projected".

Sun International CE, Peter Bacon, said that GrandWest's positive and growing contribution to the Western Cape economy was also manifest in a number of important ways other than taxation.

"It was estimated by UCT economists in 1999 that GrandWest would contribute R11-billion to GDP up to 2009, and it is clear that this was a very conservative projection. With the expansion, in fact we expect SunWest to add R22.1-billion to GDP between now and 2015.

"We are also a major employer in the province. Each day nearly 2 400 people, of whom 875 are directly employed by GrandWest, come to work at the complex. The balance consists of jobs created among our concessionaires, contractors and others doing business at GrandWest. And the expansion is likely to create an additional 1661 jobs".

GrandWest makes 1.5 % of its after tax profit available for corporate social investment spending, amounting to R9.1-million since 2001, excluding R2.3-million allocated since then to responsible gambling initiatives through the NRGP. With the expansion, GrandWest has undertaken to increase this figure to 2 %, in addition to a further investment of R3-million in annual social responsibility spending over the next five years.

As part of its original bid commitments, GrandWest funded R140-million to kickstart the development of the Cape Town International Convention Centre, which has delivered thousands of new bed nights and over 870 000 visitor days in its first year; R35-million for the creation of the Roggebaai Canal which links downtown and the Waterfront; as well as R135-million paid as a licence fee which was used by the provincial government for spending on roads, health and public safety services.

"More than half of our new investment will be spent in developing non-gambling tourism and leisure infrastructure at GrandWest. Greater Cape Town has an acknowledged need for a multi-purpose venue which has the capacity, technical specifications, parking, ambience and acoustic qualities to stage major national and international indoor events. Many of the existing venues are too small, too large or inconveniently configured for concerts featuring international artists or global sporting events.

"The GrandWest Arena will thus complement the existing stock of Cape Town locations by providing the region with its most modern, best equipped and most appropriate custom-designed venue. As demand for suitable venues exceeds adequate supply, the creation of a new facility at GrandWest will fill a meaningful void in greater Cape Town's leisure, recreation and entertainment infrastructure.

"This will augment our range of non-gambling attractions at GrandWest and serve to enhance tourism footfall".

Mr Swartz, who is also chairman of empowerment partner Grand Parade Investments (GPI), said that the expansion would add to the considerable value already derived by SunWest's local and national empowerment partners, as well as the pre-dominantly PDI employees who benefit from the Sun International Employee Share Trust.

"Our projections of improved revenues at the complex suggest a meaningful increase in our dividend stream going forward for GPI shareholders, in particular following the recent increase in our effective stake in SunWest from 8.5 % to 19.12%. Together with AfriSun Leisure Investments, the total effective economic interest in empowerment hands is now over 40 %, and obviously we will benefit from investments like this which will consolidate and improve GrandWest's performance.

"This past year, we spent R180-million in purchasing goods and services largely in the local economy, R109-million of which was placed in the BEE sector. Since a significant proportion of the R320-million spent will also find its way to contractors, suppliers and service-providers from the disadvantaged sector, this investment will do much for transformation".

Mr Bacon said that it had become obvious that GrandWest was anything but a purely gambling destination, but one which instead was able to offer a wide range of recreational and leisure attractions in a safe and integrated environment. This was why, he said, more than 60 % of the complex's four million customers a year visited GrandWest for reasons other than gambling.

"And while there is a clear need to enhance our gambling product offering, especially as regards the needs of smoking customers, this new investment will provide a more comprehensive range of facilities and amenities overall that will leverage GrandWest's status as Cape Town's most desirable recreational destination not just for the gambling public, but for local tourists, families, and international visitors", he said.

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