Sun International Ltd

SETTLEMENT WIPES AWAY SUN'S PROFIT Sun International recorded a R503 million loss for the year ended June 30, 2016, despite revenue growing 15% to R12 billion. The group said in a statement that increased depreciation from new businesses and refurbishments had led to operating profit remaining almost flat year on year. In an announcement to shareholders, the group also said a settlement payment of R675 million had been paid to Peermont in May. The settlement was paid in exchange for Peermont lifting its objection to the Morula casino licence being transferred to a new casino currently under construction – Time Square in Pretoria.

Rooms revenue was up by 14%, benefiting from the weak rand, with strong growth in international business in particular at The Table Bay and Sun City. Food and beverage revenue at R807m was up 67% on last year as a result of the insourcing of these operations. However, according to the group, growth in its core casino gambling market in South Africa was fairly static, reflecting persistent economic challenges. “In South Africa, the economic environment remains a serious concern,” said Group Chief Executive, Graeme Stephens. “We do not anticipate any meaningful growth in gaming revenue until there is a recovery in the economy and renewed consumer confidence.” He added that, while rooms and food and beverage were expected to achieve growth, these were relatively small components of the overall business.

During the period, the group disposed of a 10% interest in SunWest and also concluded agreements for disposal of its remaining interests in Southern Africa. The group was optimistic about the future, suggesting that a change in the composition of the group but it has laid the foundation for future growth. During the period under review, the group acquired a further 25% interest in Grand Parade Investment’s slots business, giving it a controlling stake, and also completed a merger with Latin American casino operator Dreams, giving it a 55% stake in the merged entity. The group attributed its 15% growth in revenue to R12.2 billion to the acquisitions in Latin America as well as revenue generated by insourcing of food and beverage.