The group, which is currently building the R4 billion Time Square casino and hotel development in Menlyn Maine, Tshwane, decided against paying the dividend despite a 31 percent increase in revenue to R7.7 billion for the period.
The company said its South African businesses, which contribute 67 percent of the company's revenue, took a strain from the uncertain macro-economic environment and reduced spending which reduced casino revenues.
Chief executive Anthony Leeming on Monday said the company took various steps such as cutting costs and improving efficiencies in order to mitigate the risks in South Africa.
Leeming said the company also wanted to reduce its debt from the current R14 billion.
Revenue for the period increased on the back of the inclusion of Chile-based gaming and entertainment company, Dreams and Grand Parade Investments (GPI) Slots, a business focused on limited payout machines. Sun International said, without the inclusion of Dreams and GPI, its revenue was flat.
Sun International announced its decision to change its year end to December 31 to align with Chilean operations’ regulatory requirements.
The results announced yesterday covered the period between July 1 and December 31.
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“We have made good progress with some key initiatives during the past six months. In particular, the country's second largest casino, Time Square, will open on time and in line with its R4.2 billion budget in April. The Arena will open in September this year and the hotel and conference centre in April 2018. Time Square will be key to our portfolio and to our growth in South Africa.
“We increased our interest in GPI Slots to 70 percent during the period and completed the upgrade of the entertainment and conference centre at Sun City in November 2016,” said Leeming.
He said the Time Square casino, once fully operational, would be the company's largest contributor to revenue after GrandWest Casino and Entertainment World, which he said contributed R2.2 billion to revenue.
Commenting on the uncertain macro-economic environment in South Africa, De Wet Schutte, an analyst for beverages, hotels, gaming and leisure at Avior Capital Markets, said there was little that a casino could do to drive revenue.
Schutte said Sun International’s foray into the Latin American market and the relocation to better locations were among the active measures the company had taken to mitigate the weak economic conditions in South Africa. Pointing to the Time Square Project in Pretoria, he said there was reason to be optimistic.
Sun International’s adjusted headline earnings of R233 million for the period were down 35 percent.
Total revenue at Sun City increased 7 percent with gaming revenue up 3 percent and rooms revenue up 10 percent. Earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 48 percent.
Sun International said the environment in Nigeria continued to deteriorate, saying revenue for the period decreased by 39 percent.
Sun International shares dropped 0.39 percent on the JSE to close at R76.70.