DURBAN – Sun International felt the impact of the slow economic growth in the country, as well as a subdued performance in Chile.
As a result, the group yesterday reported a 47 percent decline in diluted adjusted headline earnings per share for the six months to end June to 105 cents a share, down from 198c during the same period last year.
The group said the board decided not to declare an interim dividend as it wanted to reduce its high debt levels.
The group also suffered one-off costs of R12 million restructuring costs relating to the closing of Sun Nao in Colombia during the period.
However, it said its recent acquisitions in Peru and Argentina were expected to contribute positively to its earnings in the future as it diversified its portfolio in Latin America.
Its subsidiary Sun Dreams finalised the acquisition in Peru of Thunderbird Resorts on April 11, for a purchase consideration of $26 million (R381.2m) including premises valued at $12.5m.
The group said Thunderbird Resorts included four gambling operations, which generated earnings before interest, tax, depreciation and amortisation (Ebitda) of $4.2m. “The acquisition presents an opportunity for Sun Dreams to strengthen its position in Peru and diversify its asset base in Latin America (Latam),” the group said.
Sun Dreams also entered into an agreement to acquire 100 percent of the issued share capital of the Park Hyatt Hotel and Casino for $22.5m in Argentina on June 29.
“The acquisition of this hotel and casino is aligned with the board’s strategy of diversifying the group’s assets across Latam and extending the average length of the licences of the group. The casino licence is for a 20-year period,” Sun International said.
Chief executive Anthony Leeming said both acquisitions were concluded at attractive valuations and would contribute positively to the group’s performance in future.
“We expect our new operations in Peru and Argentina to contribute positively in the second half, although interest costs in Latam will increase following these acquisitions and the acquisition of the minority interest in Sun Dreams,” Leeming said.
Income from continuing operations increased by 3.85 percent to R7.85 billion, from R7.56bn compared with last year. Profit attributable to ordinary shareholders was R137m, improving on last year’s loss of R58m. Headline earnings per share from continuing operations increased to 128 cents a share compared with a headline loss of 79c.
In South Africa, income increased by 5 percent, with Ebitda up by 6 percent, both primarily driven by Times Square. South Africa contributes 69 percent of the group’s income, followed by Latam with 30 percent and Nigeria with 1 percent.
Gaming is the primary contributor to group income, at 73 percent, alternate gaming contributes 7 percent, food and beverages 9 percent, rooms 8 percent and other income 3 percent.
Leeming said decisive steps taken to control costs, increase efficiencies and get back to basics had proven the right strategy. “We have held Ebitda steady in South Africa, despite the weak economic environment plus an increase in VAT,” he said.
The group said the casino business felt the pressure of a stagnant economy, with comparable casino income increasing by 2 percent, but Sun Slots increased its income by 12 percent, and Ebitda was up by 11 percent.
- BUSINESS REPORT