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Business Update for the Quarter and nine months to 31 March 2013
Sun International Limited
(Incorporated in the Republic of South Africa)
(Registration number 1967/007528/06)
Share code: SUI ISIN: ZAE000097580
Business Update for the Quarter and nine months to 31 March 2013
Trading
Quarter to 31 March Nine months to 31 March
2013 Change 2012 2013 Change 2012
Rm % Rm Rm % Rm
Net revenue 2,551 10 2,326 7,772 10 7,074
Casino 2,017 7 1,883 6,225 9 5,692
Rooms 268 31 204 712 13 631
Food,beverage and other 266 11 239 835 11 751
EBITDA 730 12 651 2,300 17 1,962
EBITDA margin (%) 28.6 0.6 28.0 29.6 1.9 27.7
The third quarter reflected a slowing in the growth of casino revenues. Excluding Monticello, casino
revenue was up by only 3% on the same quarter last year (“last year”) compared to 7% in the first
half of the financial year. Monticello revenues in Chilean Pesos were down 2% for the quarter due
to anti-smoking laws introduced in Chile on 1 March 2013 which resulted in the March revenues in
Chilean Pesos being 18% below March 2012. While the smoking ban has had a significant impact
on the business (which will reflect more fully in the final quarter of the financial year) past precedent
in countries where smoking has been banned is that revenues recover within a 12-24 month
period.
The low revenue growth experienced by GrandWest in the first half of the financial year continued
with revenues up 4% in the quarter. Growth in Sibaya and Carnival City’s revenues slowed in the
quarter with revenues up 5% and 2% respectively. The decline is partly attributed to the normal
volatility in gaming win percentages and activity. The Boardwalk, with revenues up 12%, benefitted
from the opening of the new hotel and the completion of all construction activities in the prior
quarter. The Carousel and Morula have been significantly impacted by the roll out of a number of
slot route and electronic bingo sites in and around Pretoria and as a result revenues were down 6%
and 12% on last year respectively.
The group’s Resorts and Hotels division had an excellent quarter which was partly assisted by
Easter which fell in March this year and April last year. Occupancies at 60% were up 2% on last
year, at an average daily rate (“ADR”) of R1 425, 13% ahead of last year. Sun City, Wild Coast,
Table Bay, Federal Palace and Zambia all had an exceptional quarter with revenues up 17%, 29%,
25%, 41% and 23% respectively. The new Maslow hotel opened successfully and is well positioned
to achieve its fair share of the Sandton market having already been rated by TripAdvisor as the
number two hotel in Sandton.
The strong growth in room’s revenue and continued focus on costs resulted in the group increasing
the EBITDA margin by 0.6% to 28.6%. The Resorts and Hotels division increased its margin by
7.6% due to the overall growth in revenues and good cost control. The Monticello EBITDA margin
was in line with last year whilst the Gaming division EBITDA margin excluding Monticello declined
by 0.8%, a reflection of the low revenue growth in the quarter.
GrandWest exclusivity
In his budget speech to the Western Cape legislature MEC Alan Winde announced that he was
shelving the concept of exclusivity as this had in any event expired for all but one of the casinos in
the Western Cape (Golden Valley). He also announced a 2% increase in gambling tax, anticipated
to be implemented 1 July 2013. With regard to the proposed relocation of a casino licence to the
Cape Metropole MEC Winde stated that he would come back to this in the near future.
The increase in gambling tax comes at a time when both GrandWest and Golden Valley are
already being affected by low revenue growth in the Western Cape and the group has lodged an
objection thereto. The period for public comment has closed and the Bill is now being processed by
the Provincial Legislature.
Panama
The rezoning of the casino component of the Trump Towers that the group is acquiring is expected
to be completed shortly. Thereafter the group will apply for the casino licence. The fit out of the
casino and related facilities will take approximately 9 months with the opening of the casino still
expected towards the end of the 2014 financial year.
Online Sports Betting
The group has identified online sports betting as a fast growing sector within the gaming industry
and believes that there are synergistic opportunities between this form of gaming, its existing
business and the possibility of online gaming in the future. To this end, the group is pleased to
announce its proposed acquisition of Powerbet Gaming (Pty) Ltd (“Powerbet”) which owns and
operates Voltbet.com.
Powerbet provides the group with the ideal platform to accelerate the group’s entry into the online
gaming market.
The proposed acquisition is subject to a number of conditions precedent. Shareholders are referred
to the announcement published on SENS this morning by Purple Capital Limited.
Outlook
Growth in gaming revenues is expected to follow the trend of the past few months and will be
further impacted by a full quarter’s trading under the smoking ban in Chile. The strong growth in
hospitality revenue experienced in the quarter to 31 March 2013 is expected to slow mainly due to
Easter being in March versus April 2012, coupled with subdued trading in the winter months.
The outlook has not been reviewed or reported on by the company’s auditors.
10 May 2013
Sponsor: Investec Bank Limited
Johannesburg
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