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Business Update for the Quarter to 30 September 2013
Sun International Limited
(Incorporated in the Republic of South Africa)
(Registration number 1967/007528/06)
Share code: SUI ISIN: ZAE000097580
("the company" or "the group")
Business Update for the Quarter to 30 September 2013
Trading
R million Quarter to 30 September
2013 % 2012
Revenue 2 544 3 2 464
Casino 2 018 (1) 2 037
Rooms 246 34 184
Food, beverage and other 280 15 243
EBITDA 621 (9) 680
EBITDA margin (%) 24.4 (3.2) 27.6
The 2012 September quarter was an exceptionally strong quarter for the groups casinos which
makes comparisons less meaningful. Of more relevance, the slowdown in casino revenue
experienced in the second half of the previous financial year has continued in the quarter to
September 2013. Casino revenue from the core South African operations is showing almost no
growth while at Monticello casino revenue was down 11% (23% in local currency) as a result of the
anti-smoking laws introduced in Chile on 1 March 2013. In contrast to the gaming side of the
business, hospitality revenues grew strongly for the quarter with room revenue up 34% and food,
beverage and other revenue up 15%. The African operations delivered strong growth in both
gaming and hospitality, in particular Namibia, Nigeria, and Zambia.
Revenue segmental analysis
R million Casino Rooms F&B & other Total
2013 % 2012 2013 % 2012 2013 % 2012 2013 % 2012
South Africa 1 604 1 1 596 152 38 110 193 33 145 1 949 5 1 851
Rest of Africa 106 14 93 94 27 74 64 5 61 264 16 228
Monticello 308 (11) 348 - - - 23 (38) 37 331 (14) 385
2 018 (1) 2 037 246 34 184 280 15 243 2 544 3 2 464
In South Africa, the groups Cape operations have performed well, a reflection of increased tourism
to the region, at least in part as a consequence of the weakening Rand. These strong
performances were however largely offset by Carnival City, Meropa, Windmill, Morula, and
Flamingo where revenues were down quarter on quarter.
Room occupancy for the quarter improved by 3.5% to 63.5% with the average daily rate improving
9% to R1 034.
Towards the end of September two smoking decks were opened at Monticello, with another two
opened in late October. The decks are expected to make the property more attractive to its
smoking guests and should lead to a recovery in revenues in the medium term.
At an EBITDA level, higher IT costs relating to the implementation of the groups enterprise gaming
system (EGS) and general inflationary cost increases (above the level of revenue growth)
resulted in EBITDA being 9% below last year at R621 million with the group EBITDA margin
declining 3.2 percentage points to 24.4%. The implementation of EGS across all properties is a two
year process which should be complete by December 2014. The roll out of this system has been
highly successful to date.
Outlook
Given the current low growth in the South African economy the group anticipates that trading in its
core casino properties will be subdued. Year on year comparisons of gaming revenue will continue
to be impacted by the negative consequences of the smoking ban in Chile. Hospitality revenues
are, however, expected to continue to grow strongly, in part benefitting from the weak Rand.
Good progress is being made with regard to the implementation of the groups strategic objectives
as set out in its 2013 Integrated Annual Report, both with respect to operational issues as well as
strategic initiatives in South Africa and Latin America. The benefits from these will however only
flow through in the 2015 financial year.
The outlook has not been reviewed or reported on by the companys auditors.
31 October 2013
Sponsor: Rand Merchant Bank (a division of FirstRand Bank Limited)
Johannesburg
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