Wrap Text
Reviewed Condensed Consolidated Financial Results
for the year ended 31 December 2017
SUN INTERNATIONAL LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 1967/007528/06 Share Code: SUI ISIN: ZAE 000097580
("Sun International" or "the company")
REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS
for the year ended 31 December 2017
REVIEW CONCLUSION
These condensed consolidated financial statements for the year ended 31 December 2017 have been reviewed by PricewaterhouseCoopers Inc., who
expressed an unmodified review conclusion. A copy of the auditor's review report is available for inspection at the company's registered office together
with the financial statements identified in the auditor's report.
ACCOUNTING POLICY
The condensed consolidated financial information for the year ended 31 December 2017 has been prepared in accordance with the requirements of
the JSE Limited Listings Requirements and the South African Companies Act No 71 of 2008. The Listings Requirements require provisional reports to be
prepared in accordance with the framework concepts, the measurement and recognition requirements of International Financial Reporting Standards
(IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and must also, as a minimum, contain the information
required by IAS 34 "Interim Financial Reporting". The accounting policies applied are consistent with those adopted in the financial statements for the
year ended 31 December 2016.
CONDENSED GROUP STATEMENTS OF COMPREHENSIVE INCOME
Reviewed Pro forma Restated
Year Year Year ended
ended ended 6 months
31 December 31 December 31 December
R million 2017 2016 2016
Revenue 15 609 13 884 7 700
Other income - 18 -
Consumables and services (1 678) (1 669) (920)
Depreciation and amortisation (1 705) (1 388) (788)
Employee costs (3 023) (2 712) (1 474)
Impairment of assets (92) (269) (269)
Levies and VAT on casino revenue (3 157) (2 672) (1 431)
LPM site owners commission (299) (212) (146)
Promotional and marketing costs (1 071) (826) (485)
Property and equipment rentals (215) (239) (117)
Property costs (733) (771) (380)
Monticello purchase price differential - (48) -
Other operational costs (1 705) (1 328) (813)
Operating profit 1 931 1 768 877
Foreign exchange losses (115) (563) (82)
Interest income 34 33 20
Interest expense (1 094) (949) (542)
Fair value adjustment to put liability (223) 247 247
Share of profit of investments accounted for using the equity method 2 6 1
Profit before tax 535 542 521
Tax (497) (480) (256)
Profit for the period from continuing operations 38 62 265
Loss for the period from discontinued operations (50) (24) (51)
(Loss)/profit for the year (12) 38 214
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of post employment benefit obligations 51 4 -
Tax on remeasurements of post employment benefit obligations (14) - -
Net loss on Time Square hedge 66 (1) -
Items that may be reclassified to profit or loss
Net loss on cash flow hedges (27) (72) (50)
Currency translation reserve (78) (136) (151)
Total comprehensive (loss)/profit for the period (14) (167) 13
Minorities 231 (98) 109
Ordinary shareholders (243) 136 105
(Loss)/profit for the period (12) 38 214
Minorities 209 (442) (235)
Ordinary shareholders (223) 275 248
Total comprehensive (loss)/profit for the period attributable to (14) (167) 13
Discontinued operations (50) (24) (51)
Continuing operations (173) 299 299
Total comprehensive (loss)/profit attributable to ordinary shareholders arising from (223) 275 248
HEADLINE EARNINGS AND ADJUSTED HEADLINE EARNINGS RECONCILIATION
Reviewed Pro forma** Restated
Year Year Year ended
ended ended 6 months
31 December 31 December 31 December
R million 2017 2016 2016
(Loss)/profit attributable to ordinary shareholders (243) 136 105
Net profit/(loss) on disposal of property, plant and equipment 13 12 (9)
Profit on disposal of shares in joint venture and subsidiaries (27) (18) -
Fair value adjustment on investment held for sale 43 - -
Impairment of assets 92 269 269
Tax (relief)/expense on the above items (13) 5 (48)
Minorities' interests on the above items (41) (30) (28)
Headline (loss)/earnings (176) 374 289
Straight-line adjustment for rentals 20 21 10
Pre-opening expenses 48 19 4
Bid and transaction costs 43 37 4
Restructuring costs 43 48 -
Amortisation of Dreams intangible assets raised as part of the PPA 149 122 104
Fair value adjustment on put option liabilities 223 (247) (247)
Interest on Time Square Note 22 43 43
Additional Goldrush payment 6 21 20
Foreign exchange losses on intercompany loans 27 547 80
Onerous contract - Colombia 50 - -
Provision for remaining license conditions - Fish River 20 - -
Fair value of debenture 6 - -
Reversal of Employee Share Trust consolidation(i) 6 5 3
Other 18 8 (7)
Tax (relief)/expense on the above items (89) (10) 42
Minorities' interests on the above items (106) (464) (113)
Adjusted headline earnings 310 524 232
(i) The consolidation of the Employee Share Trust is reversed in the calculation of adjusted headline earnings as the group
does not receive the economic benefits of the trust.
Reviewed Pro forma** Restated
Year Year Year ended
ended ended 6 months
31 December 31 December 31 December
2017 2016 2016
Cents Cents Cents
per share per share per share
(Loss)/earnings per share
basic (248) 139 107
diluted (248) 139 107
Dividends per share - 135 -
Diluted adjusted headline earnings per share 298 503 223
Pro forma information
** Shareholders are reminded that in terms of announcements released by the company on SENS on 22 August 2016 and 24 February 2017, Sun
International has changed its financial year end from 30 June to 31 December, in order to align with its Chilean operations. Accordingly, the earnings
per share ranges for the twelve month period from 1 January 2017 to 31 December 2017 are compared against the pro forma results for the prior
corresponding period from 1 January 2016 to 31 December 2016. The group pro forma income statement was derived by deducting the unaudited,
published results for the six months ended 31 December 2015 from the audited results for the year June 2016, to get to six months ended 30 June
2016 figures. The audited six months ended 31 December 2016 results were added to the six months ended 30 June 2016 to derive the pro forma
results for the year ended 31 December 2016. Where information reported in published results for the six months ended 31 December 2015 was not
appropriately disaggregated, the pro forma comparative information for the six months ended 30 June 2016 included in the published results for the six
months ended 30 June 2017 was utilised as the results for the six months ended 30 June 2016. An assurance report issued in respect of the pro forma
financial information by the group's external auditor, is available at the registered office of the company.
Correction of Dreams PPA
Subsequent to the audited 30 June 2016 comparable balance sheet, but before the expiry of the measurement period on 31 May 2017 (one year from
the acquisition date), new information was obtained about the assets and liabilities acquired that was in existence at the acquisition date. Adjustments
to the provisional amounts, and the recognition of newly identified assets and liabilities, must be made within the measurement period where they
reflect new information obtained about facts and circumstances that were in existence at the acquisition date [IFRS 3.45]. An amount of R235 million
relating to the non-controlling reserve was in error allocated to minorities in the provisional PPA workings. This has been corrected by restating the
opening balances of minorities' interest and the reserve for non-controlling interest.
CONDENSED GROUP STATEMENTS OF FINANCIAL POSITION
Reviewed at Restated at Restated at
31 December 31 December 30 June
R million 2017 2016 2016
Non-current assets
Property, plant and equipment 18 196 17 329 16 942
Intangible assets 2 695 2 987 3 279
Equity accounted investments 18 16 15
Available-for-sale investment - 48 48
Loans and receivables 214 24 23
Pension fund asset 32 33 36
Deferred tax 912 863 350
22 067 21 300 20 693
Current assets
Accounts receivable and other 1 503 1 472 2 073
Cash and cash equivalents 696 1 123 1 301
2 199 2 595 3 374
Non-current assets held for sale 170 170 170
Total assets 24 436 24 065 24 237
Capital and reserves
Ordinary shareholders' equity before put option reserve 2 058 2 379 3 070
Put option reserve (4 651) (4 651) (5 252)
Ordinary shareholders' equity (2 593) (2 272) (2 182)
Minorities' interests 2 899 2 936 3 436
306 664 1 254
Non-current liabilities
Deferred tax 950 820 343
Borrowings 11 735 10 731 9 980
Other non-current liabilities 1 009 916 876
Put option liability 4 838 4 651 5 252
18 532 17 118 16 451
Current liabilities
Accounts payable and other 2 206 2 451 2 402
Borrowings 3 259 3 786 4 082
5 465 6 237 6 484
Non-current liabilities held for sale 133 46 48
Total liabilities 24 130 23 401 22 983
Total equity and liabilities 24 436 24 065 24 237
GROUP STATEMENT OF CHANGES IN EQUITY
for the period ended 31 December 2017
Ordinary
share-
Treasury holders'
Share shares Foreign Share Reserve Hedging equity Ordinary
capital and currency based Available- for non- and before put Put share-
and share translation payment for-sale controlling other Retained option option holders' Minorities' Total
R million premium options reserve reserve reserve interests reserve earnings reserve reserve equity interests equity
Reviewed
FOR THE YEAR ENDED 31 DECEMBER 2017
Balance at 31 December 2016 295 (604) 165 116 4 (2 411) (54) 4 502 2 013 (4 651) (2 638) 3 171 533
Correction of PPA misallocation - - - - - 235 - - 235 - 235 (235) -
Dreams merger PPA finalisation adjustment - - - - - 131 - - 131 - 131 - 131
295 (604) 165 116 4 (2 045) (54) 4 502 2 379 (4 651) (2 272) 2 936 664
Total comprehensive income for the year - - (39) - - - 59 (243) (223) - (223) 209 (14)
Treasury share options purchased - (11) - - - - - - (11) - (11) - (11)
Employee share schemes - 27 - (27) - - - 1 1 - 1 - 1
Time Square SPV - - - - - (84) - - (84) - (84) 84 -
Fair value adjustment on investment held for sale - - - - (4) - - - (4) - (4) - (4)
Disposal of interest in Botswana, Namibia and Lesotho - - - - - (257) - 257 - - - - -
Release of share option reserve - 164 - - - - - (164) - - - - -
Dividends paid - - - - - - - - - - - (330) (330)
Balance at 31 December 2017 295 (424) 126 89 - (2 386) 5 4 353 2 058 (4 651) (2 593) 2 899 306
Pro forma
FOR THE YEAR ENDED 31 DECEMBER 2016
Balance at 31 December 2015 295 (590) 340 118 4 (3 136) 1 4 825 1 857 - 1 857 434 2 291
Total comprehensive income for the year - - 180 - - - (55) 150 275 - 275 (442) (167)
Treasury share options purchased - 1 - - - - - - 1 - 1 - 1
Net deemed treasury shares sold - (54) - - - - - - (54) - (54) - (54)
Employee share schemes - 39 - (2) - - - - 37 - 37 - 37
Dreams merger transaction - - (1) - - 304 - - 303 - 303 3 451 3 754
Currency translation differences - - (354) - - - - (354) 354 - -
SunWest option - - - - - - - 14 14 (1 286) (1 272) - (1 272)
Dreams option - - - - - - - (261) (261) (3 719) (3 980) - (3 980)
Acquisition of minorities' interests - - - - - 421 - - 421 - 421 27 448
Dividends paid - - - - - - - (226) (226) - (226) (299) (525)
Balance at 31 December 2016 295 (604) 165 116 4 (2 411) (54) 4 502 2 013 (4 651) (2 638) 3 171 533
Ordinary
share-
Treasury holders'
Share shares Foreign Share Reserve Hedging equity Ordinary
capital and currency based Available- for non- and before put Put share-
and share translation payment for-sale controlling other Retained option option holders' Minorities' Total
R million premium options reserve reserve reserve interests reserve earnings reserve reserve equity interests equity
Restated
FOR THE YEAR ENDED 31 DECEMBER 2016
Balance at 30 June 2016 295 (598) 337 129 4 (2 228) (15) 4 779 2 703 (5 252) (2 549) 3 671 1 122
Total comprehensive income for the year - - 182 - - - (39) 105 248 - 248 (235) 13
Net deemed treasury shares sold - (36) - - - - - - (36) - (36) - (36)
Employee share schemes - 30 - (13) - - - - 17 - 17 - 17
Increase in SunWest option - - - - - - - 14 14 (14) - - -
Decrease in Dreams option - - - - - - - (261) (261) 261 - - -
Currency translation differences - - (354) - - - - - (354) 354 - - -
Acquisition of minorities' interests - - - - - (183) - - (183) - (183) (79) (262)
Dividends paid - - - - - - - (135) (135) - (135) (186) (321)
Balance at 31 December 2016 295 (604) 165 116 4 (2 411) (54) 4 502 2 013 (4 651) (2 638) 3 171 533
SUPPLEMENTARY INFORMATION
Reviewed Pro forma Restated
Year Year Year ended
ended ended 6 months
31 December 31 December 31 December
R million 2017 2016 2016
EBITDA RECONCILIATION
Operating profit 1 931 1 768 877
Depreciation and amortisation 1 705 1 388 788
Net loss/(profit) on disposal of property, plant and equipment* 13 12 (9)
Straightline adjustment for rentals* 20 21 10
Impairment of assets* 92 269 269
Pre-opening expenses* 48 19 4
Transaction costs* 43 37 4
Onerous lease provision 50 - -
Restructuring cost 43 48 -
Provision for Fish River licensing conditions 20 - -
Profit on disposal of shares in associates* (27) (18) -
Fair value adjustment on investment held for sale 43 - -
Additional Goldrush payment* 6 21 20
Other* 38 12 (11)
Reversal of Employee Share Trust consolidation(i) 6 5 3
EBITDA 4 031 3 582 1 955
EBITDA margin (%) 26 26 25
Number of shares ('000)
- in issue after excluding deemed treasury shares 98 000 97 903 97 903
- for HEPS calculation 97 850 97 925 97 925
- for diluted EPS calculation 97 850 97 932 97 932
- for adjusted headline EPS calculation(i) 104 132 104 140 104 140
- for diluted adjusted headline EPS calculation(i) 104 132 104 147 104 147
(Loss)/earnings per share (cents)
- basic (loss)/earnings per share (248) 139 107
- headline (loss)/earnings per share (180) 382 295
- adjusted headline earnings per share 298 503 223
- diluted basic (loss)/earnings per share (248) 139 107
- diluted headline (loss)/earnings per share (180) 382 295
- diluted adjusted headline earnings per share 298 503 223
Continued - (loss)/earnings per share (cents)
- basic (loss)/earnings per share (197) 163 103
- headline (loss)/earnings per share (129) 406 291
- adjusted headline earnings per share 346 526 219
- diluted basic (loss)/earnings per share (197) 163 103
- diluted headline (loss)/earnings per share (129) 406 291
- diluted adjusted headline earnings per share 346 528 219
Reviewed Pro forma Restated
Year Year Year ended
ended ended 6 months
31 December 31 December 31 December
R million 2017 2016 2016
Discontinued - (loss)/earnings per share (cents)
- basic (loss)/earnings per share (51) (24) 4
- headline (loss)/earnings per share (51) (24) 4
- adjusted headline (loss)/earnings per share (48) (23) 4
- diluted basic (loss)/earnings per share (51) (24) 4
- diluted headline (loss)/earnings per share (51) (24) 4
- diluted adjusted headline (loss)/earnings per share (48) (25) 4
TAX RATE RECONCILIATION
Profit before tax 535 542 521
Share of associates' profits (2) 14 (1)
Adjusted profit before tax 533 556 520
% % %
Effective tax rate (excluding Time Square settlements) 93 86 49
Preference share dividends (5) (7) (4)
Prior year over/(under) provisions 3 (1) 1
Withholding taxes 1 1 -
Foreign tax rate variation - 3 1
Exempt income 2 (2) 15
Exempt income - capital gains 2 28 -
Foreign monetary adjustments and government incentives 1 (24) 1
Monticello purchase price adjustment - (14) -
Reversal of deferred tax assets - (4) (20)
Capital and disallowed expenditure (69) (38) (15)
28 28 28
KEY METRICS
EBITDA to interest (times) 3.3 3.9 3.6
Borrowings to EBITDA (times) 3.7 4.1 3.8
Net asset value per share (Rand) 18.86 21.45 21.45
Capital expenditure 2 591 3 747 2 218
Capital commitments 1 036 7 789 3 385
* Items identified above are included as headline and adjusted headline adjustments impacting operating profit in segmental analysis.
(i) The consolidation of the Employee Share Trust is reversed in the calculation of adjusted headline earnings as the group does not
receive the economic benefits of the trust.
CONDENSED GROUP STATEMENTS OF CASH FLOW
Reviewed Restated
Year Year ended
ended 6 months
31 December 31 December
R million 2017 2016
Cash generated by operations before: 3 733 1 780
Vacation Club timeshare sales 158 83
Working capital changes (136) 509
Cash generated by operations 3 755 2 372
Tax paid (769) (139)
Cash generated by operating activities 2 986 2 233
Purchase of property, plant and equipment (2 558) (2 185)
Purchase of intangible assets (43) (52)
Proceeds on disposal of PPE and intangibles 33 33
Proceeds on disposal of investment in joint venture 121 -
Loan and investment income 35 20
Net cash outflows from investing activities (2 412) (2 184)
Purchase of treasury shares and share options (11) (36)
Purchase of additional shareholding in subsidiaries - (262)
Dividends paid (330) (321)
Interest paid (1 204) (508)
Movement in other non-current liabilities 93 -
Movement in borrowings 487 994
Net cash outflow from financing activities (965) (133)
Effect of exchange rates upon cash and cash equivalents (34) (91)
Decrease in cash and cash equivalents (425) (175)
Cash and cash equivalents at beginning of the period 1 134 1 309
Cash and cash equivalents at end of the period 709 1 134
Assets held for sale (13) (11)
Cash and cash equivalents at end of the year excluding non-current assets held for sale 696 1 123
COMMENTARY
INTRODUCTION
Over the past few years, the Sun International group (group) has made significant investments including, developing the Ocean Sun Casino and the Sun
Nao Casino in Latin America (Latam), refurbishing Sun City, developing Time Square and acquiring a 70% interest in Sun Slots. While the refurbishment
of Sun City and the acquisition of Sun Slots have produced pleasing results, the other developments have fallen well short, increasing the group's debt
levels and debt ratios significantly. Over this period, economic growth in South Africa and Latam has slowed, political uncertainty has increased and
social challenges, particularly in South Africa, are at an all-time high. Together, this has pressured consumer discretionary spending and slowed gaming
revenue growth.
Given the challenging environment and high debt levels, we have shifted our focus, realigned our strategy and are committed to getting the basics right
and operating as efficiently and optimally as possible. At the same time, we are increasing our efforts to deliver outstanding service and creating lasting
memories for our guests. Despite difficult trading conditions, our business has remained resilient, cash generative and is adapting to the ever-changing
environment.
In this regard, we have taken action on loss making operations including the closure of the Fish River, Sun Nao Casino in Colombia and the
International VIP Businesses in both South Africa and Panama, as well as downscaled the Ocean Sun Casino by closing the 66th floor casino and
significantly reducing staff. We have applied to the Eastern Cape Gaming Board to restructure the Boardwalk and are in the process of addressing the
performances of the Carousel and Naledi.
With the focus on getting back to basics and reducing costs, we have seen a significantly improved comparative operating result in South Africa in the
second half of 2017. During this period, revenue and EBITDA for comparable operations were up 2% and 15% respectively on the prior year period
following the first half decline of 1% and 9% in revenue and EBITDA respectively. Trading at our new property Time Square, that opened in April 2017,
remains well below expectations.
BASIS FOR ACCOUNTING AND DISCLOSURE
Shareholders are reminded that in terms of announcements released by the company on SENS on 22 August 2016 and 24 February 2017, Sun
International has changed its financial year end from 30 June to 31 December, in order to align with its Latam operations. Accordingly, the earnings per
share ranges for the year ended 31 December 2017 are compared against the pro forma results for the prior corresponding year ended 31 December
2016. The group pro forma income statement was derived by deducting the unaudited, published results for the six months ended 31 December 2015
from the audited results for the year ended 30 June 2016, to get to the six months ended 30 June 2016 figures. The audited six months ended 31
December 2016 results were added to the six months ended 30 June 2016 to derive the pro forma results for the year ended 31 December 2016.
Where information reported in published results for the six months ended 31 December 2015 was not appropriately disaggregated, the pro forma
comparative information for the six months ended 30 June 2016, included in the published results for the six months ended 30 June 2017, was utilised
as the results for the six months ended 30 June 2016. An assurance report issued in respect of the pro forma financial information by the group's
external auditor, is available at the registered office of the company.
FINANCIAL OVERVIEW
The income statement below includes adjusted headline earnings adjustments.
Year Pro forma
ended 12 months
31 December % 31 December
R million 2017 movement 2016
Revenue 15 609 12 13 884
EBITDA 4 031 13 3 582
Adjusted operating profit 2 475 7 2 315
Foreign exchange loss (82) (332) (19)
Net interest (1 039) (21) (856)
Profit before tax 1 354 (6) 1 440
Tax (597) (28) (468)
Profit after tax 757 (22) 972
Minorities (397) 6 (423)
Attributable profit 360 (34) 549
Share of associates 2 (87) 15
Continued adjusted headline earnings 362 (36) 564
Discontinued operations (52) (30) (40)
Adjusted headline earnings 310 (41) 524
For the year, group revenue increased by 12% to R15.6 billion, with the growth attributable to the inclusion of the results of Sun Dreams (from 1 June
2016), Sun Slots (from 1 April 2016) and Time Square (from 1 April 2017).
Revenue generated by the comparable South African operations (excluding alternative gaming, International VIP Business, Time Square and Morula) was
flat when compared to the prior year. Sibaya, Sun City, Sun Slots and Table Bay produced encouraging results with growth in revenue and EBITDA.
The performance of the Latam operations has remained subdued. The Chilean operations, and in particular Monticello, were impacted by the shooting
incident at half-year. Due to the continued underperformance of the Ocean Sun Casino, its operations have been scaled down and the International
VIP Business closed while the Sun Nao Casino in Colombia, which has continued to incur losses, was closed in December 2017.
Group EBITDA increased by 13% from R3.6 billion to R4.0 billion. Through a focus on costs and efficiency, EBITDA generated on a comparable basis by
the South African operations increased by 3%. Interest charges were well up on the prior year due to the inclusion of Sun Dreams for the full year and
the borrowings relating to Time Square. Minorities' share of earnings has increased with the disposal of the 10% interest in SunWest and Golden Valley
in April 2016 and the consolidation of Sun Dreams for the full year.
Adjusted headline earnings of R310 million are 41% below the prior year, with adjusted headline earnings per share down 41% to 298 cents.
HEADLINE AND ADJUSTED HEADLINE EARNINGS ADJUSTMENTS
The group has incurred a number of once-off or abnormal items that have been adjusted for in headline and adjusted headline earnings, the most
significant of which are described below.
Headline earnings adjustments include the following:
- profit on disposals of shares in subsidiaries of R27 million;
- impairment of assets of R92 million; and
- fair value adjustment on a held for sale investment of R43 million.
Adjusted headline earnings adjustments include the following:
- an onerous lease contract provision in Colombia of R50 million relating to the Sun Nao Casino;
- bid and transaction costs of R43 million relating to the Latam operations' municipal bids and Sun Dreams merger;
- restructuring costs of R43 million relating to Sun Nao Casino, Morula and Fish River closures;
- expensing of the remaining bid commitment of R20 million relating to the Fish River ;
- foreign exchange loss on intercompany loans of R27 million;
- pre-opening expenses of R48 million;
- interest of R22 million incurred up to the opening of the Time Square casino which related to the payment made to Peermont;
- the straightlining of the Maslow and head office building lease expense of R20 million;
- amortisation of R149 million of the Sun Dreams intangible assets raised as part of a purchase price adjustment;
- an increase in the value of the Sun Dreams and Tsogo put options of R223 million;
- tax on the above items of R102 million; and minorities' interest on the above items of R147 million.
DIVIDEND
Given the need to reduce the high debt levels, the board has decided not to declare a dividend for the year ended 31 December 2017.
REVENUE BY NATURE AND GEOGRAPHICAL SEGMENT
South Africa Latam Nigeria Group
R million 2017 2016 2017 2016 2017 2016 2017 2016
Casinos 7 411 6 918 3 983 3 277 57 80 11 451 10 275
LPM 1 060 753 - - - - 1 060 753
SunBet 49 40 - - - - 49 40
Rooms 976 921 224 131 41 39 1 241 1 091
Food and Beverage 921 828 368 404 41 38 1 330 1 270
Other 465 434 9 15 4 6 478 455
Total operating segments 10 882 9 894 4 584 3 827 143 163 15 609 13 884
International VIP Business 4 135 - - - - 4 135
Group operations 10 886 10 029 4 584 3 827 143 163 15 613 14 019
South Africa continues to contribute the majority of group revenue at 70%, with Latam contributing 29% and Nigeria 1%. Gaming is the primary contributor to group revenue at 73%, alternate gaming contributes 7%, food and
beverage 9%, rooms 8% and other revenues 3%.
The table below sets out the consolidated revenue, EBITDA and operating profit by geographical region and the reconciliation between operating profit as reflected in the statement of comprehensive income and the
income statement above which includes headline and adjusted headline earnings adjustments.
Revenue EBITDA Operating profit
R million 2017 2016 2017 2016 2017 2016
South Africa 10 882 9 894 2 926 2 622 1 926 1 784
Sun International comparable operations 8 908 8 888 2 495 2 411 1 739 1 630
Time Square (consolidated from 1 April 2017) 827 - 184 - 26 -
Sun Slots (consolidated from 1 April 2016) 1 060 753 249 182 166 123
Morula 38 213 (4) 29 (5) 34
SunBet 49 40 2 - - (3)
Latam 4 584 3 827 1 097 964 571 574
Nigeria 143 163 8 (4) (22) (43)
Total operating segments 15 609 13 884 4 031 3 582 2 475 2 315
Headline and adjusted headline earnings adjustments impacting operating profit - - - - (544) (547)
Unadjusted group operating profit 15 609 13 884 4 031 3 582 1 931 1 768
SEGMENTAL REVIEW
The implementation of strategic initiatives makes the current period difficult to analyse and therefore a segmental review with the full comparable trading of Sun Dreams and Sun Slots is provided. The review is based on
actual historic performance as if the acquisitions had been implemented with effect from 1 January 2016. The segmental review throughout includes all headline and adjusted headline earnings adjustments.
The table below sets out the operating performance of the group's geographic segments
South Africa Latam Nigeria Group
R million 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 10 882 9 894 4 584 4 794 143 163 15 609 14 851
EBITDA 2 926 2 622 1 097 1 271 8 (4) 4 031 3 889
Adjusted operating profit 1 926 1 784 590 837 (19) (38) 2 497 2 583
PPA adjustment - - (19) (14) (3) (5) (22) (19)
Operating profit after PPA 1 926 1 784 571 823 (22) (43) 2 475 2 564
South Africa
On a comparable basis, revenue for the first half of 2017 decreased by 1% while revenue grew by 2% in the second half, resulting in revenue remaining
flat for the year. Comparable EBITDA for the first half of the year was down 9%. However, through a focus on costs and efficiencies, EBITDA in the
second half of the year was up 15%, resulting in an increase in EBITDA of 3% for the year.
The group's core casino operations continued to be impacted by the current economic climate in South Africa, with comparable casino revenue down
1% while the hospitality operations performed well with 6% growth in rooms revenue and food and beverage revenue improving by 4%.
The International VIP Business struggled to achieve the required volumes to mitigate against volatility and we experienced legal challenges in collecting
outstanding debts. Consequently, we suspended the International VIP Business operations in April 2017.
South African segment review set out below
Revenue EBITDA Operating profit
R million 2017 % 2016 2017 % 2016 2017 % 2016
GrandWest 2 155 - 2 154 850 (2) 866 721 (2) 733
Sun City 1 831 7 1 708 318 58 201 115 >100 12
Vacation Club adjustment (100) 26 (136) (81) 28 (112) (89) 25 (118)
Sibaya 1 269 10 1 157 439 16 378 385 22 315
Carnival City 980 (9) 1 074 254 (19) 314 162 (31) 235
Boardwalk 552 (6) 585 95 (14) 110 27 4 26
Wild Coast 481 2 473 93 4 89 46 28 36
Meropa 302 (7) 325 96 (18) 117 75 (22) 96
Windmill 255 (9) 279 79 (18) 96 57 (24) 75
Flamingo 172 (4) 180 47 (11) 53 33 (13) 38
Golden Valley 176 5 167 39 11 35 23 35 17
Carousel 246 (22) 315 28 (53) 60 10 (69) 32
Table Bay 354 6 333 89 19 75 70 19 59
The Maslow 148 1 147 (22) (16) (19) (40) 7 (43)
Naledi 21 (13) 24 (7) <(100) (3) (8) (100) (4)
Fish River 21 (19) 26 (21) 5 (22) (23) 4 (24)
8 863 1 8 811 2 296 3 2 238 1 564 5 1 485
Sun Slots 1 060 41 753 249 37 182 166 35 123
Time Square 827 100 - 184 100 - 26 100 -
Morula 38 (82) 213 (4) <(100) 29 (5) <(100) 34
SunBet 49 23 40 2 100 - - 100 (3)
Management companies 593 3 578 199 15 173 175 21 145
Inter-company management fees (548) (9) (501) - - - - - -
10 882 10 9 894 2 926 12 2 622 1 926 8 1 784
GrandWest's revenue remained flat at R2.2 billion while EBITDA decreased by 2%. Strong growth in tables' revenue was achieved while slots revenue
came under pressure with a slowdown in top end play. Overall footfall was up, however average spend was down.
Despite tough trading conditions, Sun City had an exceptional year benefiting from the extensive refurbishments completed in prior periods. Casino
revenue increased by 11%, rooms revenue by 11% and food and beverage by 3%. Hotel occupancy increased from 68% to 72% assisted by the
refurbished conference facility. The average room rate increased by 4%. EBITDAR (pre the vacation club adjustment) increased by 22% reflecting the
focus on controlling costs. EBITDA (pre the vacation club adjustment) however increased by 58% as the temporary conference facility rental in 2016 of
R57.8 million was no longer incurred.
Sibaya delivered pleasing results with revenue up 10% and EBITDA up 16%. The property continues to show growth in market share, which for the year
was at 35.1%, up 1.6% on the prior year. The food and beverage offering and Prive will be upgraded in 2018.
Following a soft opening of the casino to the public on 1 April 2017, Time Square achieved total revenue of R827 million for the nine months of trading
with R744 million derived from casino revenue and EBITDA of R184 million. The loss after tax and interest incurred was R345.2 million of which R296.0
million was attributable to the group.
The Gauteng gaming market grew strongly in the second half of the year and achieved growth of 4.4% for the year. Time Square captured
approximately 13% share of the Gauteng market, which is below initial expectations. Recent trading has reflected growth in activity and visitation
following the opening of the arena in November 2017 but unfortunately, due to a lower win ratio, the growth has not translated into revenue. With the
opening of the hotel in March, we anticipate growth in gaming revenue.
Carnival City continued to deliver disappointing results with revenue and EBITDA down 9% and 19% respectively. However, the second half of the year
showed a marked improvement compared to the first half with revenue down by 3% compared to the 14% decline in the first half. The improvement
can partly be attributed to a refresh of the retail as well as food and beverage offering, walk ways and restrooms. Carnival City continues to focus on
driving footfall through events and entertainment to counter the effects of lower average spend.
Boardwalk's overall revenue decreased by 6% with casino revenue down by 5%. With the drop in revenue, EBITDA decreased by 14% from R110 million
to R95 million. Of further concern is the opening of an EBT outlet in Uitenhage in September 2017, which will likely impact the Boardwalk's revenues
further. An application to restructure the Boardwalk has been submitted to the Eastern Cape Gaming Board. The shopping mall development is
progressing, having received gaming board approval and we have secured an anchor tenant for the premises. The Boardwalk's sole contribution to the
development will be the inclusion of the existing retail and land in return for a 50% equity interest in a joint venture.
Wild Coast revenue and EBITDA increased by 2% and 4% respectively while maintaining the EBITDA margin. The casino licence expires in 2019 and the
Eastern Cape Gambling and Betting Board has issued a request for proposal (RFP), which the company has responded to. We now await the final RFP to
be issued.
The Table Bay continues to perform well with revenue up 6% and EBITDA up 19%. Occupancy was down two percent to 75% while the average room
rate increased by 9% resulting in a REVPAR growth of 7%. Our international mix increased by one percent to 82% of room revenue.
The Maslow Hotel increased revenue by 1% due to higher occupancy, which was up from 70% to 72%. With the increased competition and a slowdown
in business travel, the room rate was in line with the prior year.
The other small urban casinos which include Meropa (Limpopo), Windmill (Free State), Flamingo (Northern Cape), Carousel (North West) and Golden
Valley (Western Cape) were impacted by depressed trading conditions with aggregated revenue down 9% and aggregated EBITDA down 20%. A new 60
room hotel was opened at Meropa in July 2017.
Sun Slots revenue exceeded R1 billion for the first time with an increase of 8% on the comparable prior year.
Management fees and related income of R593 million, was 3% higher than the prior year. EBITDA increased 15% to R199 million.
Nigeria
The trading conditions in Nigeria have not improved during the last six months and as a result revenue decreased by 12%. However an EBITDA of R10
million was achieved partly due to provision reversals.
Latam
Sun International's Latam operations have been successfully integrated with those of Dreams. The table below includes the historic trading of Sun
Dreams for the year ended 31 December 2016, with the conversion at the average exchange rate for the year ended 31 December 2017, to enable
comparison in Rands.
Presentation of constant currency information and pre-acquisition adjustment
Revenue EBITDA Operating profit
R million 2017 2016 2017 2016 2017 2016
Monticello 1 674 1 861 417 562 265 427
Dreams SCJ licences 1 532 1 547 586 590 551 559
Dreams municipal licences 834 853 303 319 256 270
Sun Chile office 9 - 8 - 8 -
Central Office - - (132) (170) (277) (254)
Chile operations 4 049 4 261 1 182 1 301 803 1 002
Ocean Sun 223 231 (80) (38) (162) (121)
Sun Nao 35 40 (38) (37) (67) (62)
Peru 277 262 33 45 (3) 4
Latam total 4 584 4 794 1 097 1 271 571 823
Constant currency adjustment - 113 - 31 - 19
Pre-acquisition adjustment - (1 081) - (338) - (268)
4 584 3 827 1 097 964 571 574
The 31 December 2016 segmental comparative pro forma results set out in the segmental tables relating to our Latam businesses have been translated
at the 31 December 2017 average exchange rate of 48.7 Chilean Pesos (CLP) to the Rand (47.6 for 31 December 2016). The adjustment has been
disclosed as a constant currency adjustment. The presentation of financial information on a constant currency basis and in relation to the pre-
acquisition adjustment falls into the category of non-application of a specific IFRS requirement and is therefore regarded as pro forma information, per
the JSE Listings Requirements. The effective date of the merger with Dreams was 1 June 2016. In order to present a meaningful comparative, the
pre-acquisition adjustment includes the 5 months prior to the merger. The pro forma information has been prepared for illustrative purposes only and
because of its nature, it may not fairly present the group's financial position, changes in equity, results of operations or cash flow. The pro forma
information has been extracted from management accounts. Shareholders are further advised that the above information has not been reviewed or
reported on by our auditors.
Overall, revenue from Chile decreased by 5% to CLP197 billion (R4.1 billion) while EBITDA decreased by 9% to CLP57 billion (R1.2 billion). Iquique, which
is located in a copper mining region was impacted by strikes early in the year, while Monticello's revenue was down 10% with gaming revenue down
6%. The property was negatively impacted by the relocation of the toll road in September 2016 and the unfortunate shooting incident that took place in
July 2017. In June 2017, Monticello opened a new smoking deck, a 4 000-seat arena and a new bar. However, due to the arena start-up costs,
additional security measures being put in place post the shooting incident and an increase in marketing spend to attract guests back to the casino,
EBITDA was down 26%.
The performance of the Panama operation continues to disappoint. Revenue decreased by 4% from R231 million to R223 million while the EBITDA loss
increased from R38 million to R80 million due to bad debts and high marketing, promotion and tournament costs which did not drive the expected
revenues. With the closure of the International VIP Business and the 66th floor casino, the cost structure has been reduced significantly.
The Sun Nao Casino in Colombia continued to incur an EBITDAR loss and consequently the business was closed in December 2017. Some of the slot
machines have been redeployed to smaller outlets in Cartagena with significantly less overhead costs and we are in negotiations to early exit the
current property lease.
Revenue in Peru increased by 6% while EBITDA decreased from R45 million to R33 million due to higher promotional and marketing expenditure in the
region.
GROUP BORROWINGS
Sun International's borrowings as at 31 December 2017 were R15.0 billion of which R11.4 billion can be attributable to the South African balance sheet.
Group debt increased by approximately R480 million from 31 December 2016, due primarily to the capital expenditure at Time Square. The group's
balance sheet remains resilient and the operations continue to generate strong cash flows. Following negotiations with the group's lenders, the debt
covenant levels were adjusted and the group continues to trade within these levels.
The group has unutilised borrowing facilities of R730 million and available cash balances of R700 million.
Minorities Sun
R million Total debt share International
South Africa 11 424 1 373 10 051
SunWest 869 305 564
Afrisun Gauteng 580 31 549
Afrisun KZN 284 96 188
Emfuleni 610 91 519
Wild Coast 280 84 196
Meropa 131 38 93
Teemane 75 19 56
Windmill 102 27 75
Golden Valley (11) (4) (7)
Sun Slots 70 21 49
Time Square 4 669 665 4 004
Management and corporate 3 765 - 3 765
Nigeria 493 250 243
Shareholder loans 761 386 375
Sun International inter-company (268) (136) (132)
Latam 3 078 1 031 2 047
Sun Dreams 2 267 1 031 1 236
Sun Chile 811 - 811
31 December 2017 14 995 2 654 12 341
31 December 2016 14 517 3 134 11 383
Debt covenants
The bank debt covenants per the funding agreements in South Africa and Chile at 31 December 2017 are set out below.
South Africa Chile
Covenant Actual Covenant Actual
Debt to EBITDA 4.0x 3.7x 4.75x 2.8x
Interest cover 2.5x 3.3x
RIGHTS OFFER
Due to difficult trading conditions and Time Square producing disappointing results, the group renegotiated its South African debt covenant levels for
June 2017 and December 2017. Although trading has improved marginally at Time Square and the group met its debt covenants at 31 December 2017,
the board has deemed it prudent to embark on a capital raise exercise to de-risk the balance sheet. Accordingly, the proceeds from the rights offer will
be used to repay debt, thereby creating head room in relation to relevant debt covenants. A stronger balance sheet and capital structure will also afford
management more operational freedom to focus on the back to basics strategy. In addition, the rights offer will reduce Sun International's interest
charge as rates are based on Sun International's prevailing debt metrics.
CASH FLOW
The group continues to generate strong cash flow from operations, which has resulted in the group trading within the debt covenant levels.
CAPITAL EXPENDITURE
R million Total
South African operations
Expansionary
Time Square 1 594
Meropa 50
Sun City 28
1 672
Refurbishment and ongoing
Sun City 71
GrandWest 128
Sibaya 81
Sun Slots 95
Other 127
502
Total South African capital expenditure 2 174
Latam operations
Expansionary 230
Refurbishment and ongoing 178
Total Latam capital expenditure 408
Nigerian operations
Expansionary 10
Total Nigerian capital expenditure 10
Total Group capital expenditure 2 592
Project capital expenditure
Sun International has outstanding capital commitments of approximately R230 million to be incurred in 2018 to complete Time Square development.
UPDATE ON STRATEGIC INITIATIVES
The Time Square casino was completed and opened on 1 April 2017. The arena opened in November 2017 and the hotel will open in March.
We believe that these facilities will have a significant impact on visitation to the property and an increase in casino revenue. To date, the cost of
the development equals R4.2 billion.
The board of the Tourist Company of Nigeria (TCN) - Federal Palace has been reconstituted with the Securities Exchange Commission appointing two
directors thereto. Deloitte has been mandated to investigate the shareholder disputes. Once the Deloitte investigation has been completed it will pave
the way for Sun International to exit its investment in Nigeria.
Proposed acquisition by Sun International of 50% of Entretenimientos Del Sur Limitada's (EDS) equity interest in Sun Dreams and put options
Shareholders are referred to the announcements released by the company on SENS on 30 May 2017 and 15 November 2017 which provided details
regarding Sun International's intention to increase its shareholding in Sun Dreams from approximately 55% to approximately 65%.
As part of the transaction, the put options previously exercisable by Nueva Inversiones Pacifico Sur Limitada and EDS on Sun International will fall away.
The implementation of this transaction (which is now unconditional) is pending finalisation of an underwritten 10-year bond issue which is expected to
be implemented by the end of March 2018, after which the put option liability and reserve will be derecognised from the balance sheet.
Chile municipal licence bidding process
The Superintendencia de Casinos de Juego (SCJ) opened the bidding process for the seven Chilean municipal licences in September 2017. Sun Dreams
submitted bids for the two municipal licences that it currently holds and for an additional three licences. It is anticipated that the results of the process
will be announced during or about June 2018.
Peru acquisition
Sun Dreams has finalised an acquisition in Peru of Thunderbird Resorts, which comprises of 4 gambling operations generating EBITDA of US$4.2
million. The purchase consideration is approximately US$27 million and includes premises valued at US$11 million. The acquisition presents an
opportunity for Sun Dreams to strengthen its position in Peru and diversify its asset base in Latam. The proposed transaction is still awaiting the relevant
gambling board approvals which are anticipated to be received in the near future.
SUNWEST EXCLUSIVITY
The Western Cape Government gazetted draft legislation on 28 February 2018 to establish 3 zones for casinos in the Cape Metropole and to allow for
the relocation of casino licences proposed. The legislation includes changes to the gaming tax tables and conditions for relocation, which will entail
additional taxes and fees, obligations to mitigate any negative impacts which relocating a casino may have on the area from where the casino relocates
and provides for economic opportunities for designated groups that reside in the area to which the casino will relocate. We are still assessing the draft
legislation and will respond at the appropriate time.
INCREASE IN VAT RATE
The 1% increase in the VAT rate in South Africa will result in a direct cost for the business as the increase cannot be passed on to our gaming
customers. The additional cost will equate to an approximate 5% increase in the VAT currently payable on gaming revenue. Based on the 2017 gaming
revenue, this would have amounted to approximately R54 million from which corporate tax will be deducted.
CHANGES TO THE BOARD OF DIRECTORS AND COMMITTEES
Shareholders are referred to the unaudited interim results announcement released by the company on SENS on 29 September 2017, when several
changes to the board of directors and board committees were communicated.
In terms of the aforesaid announcement, shareholders were advised that Sun International's then lead independent director, Mr IN Matthews, would be
retiring from the company's board on 31 December 2017 and would be succeeded by Mr PL Campher as the new lead independent director of the
company and chairman of the remuneration committee, with effect from 1 January 2018.
Furthermore, Mr GR Rosenthal, the current chairman of the company's audit committee, will be retiring as a director of Sun International on 15 May
2018 and will be succeeded by Ms CM Henry as the new chairman of the audit committee. Dr NN Gwagwa was also appointed as a member of the
company's nomination committee and Mr EAMMG Cibie as a member of the audit and remuneration committees, with effect from 13 June and 14
June 2017 respectively.
On 6 October 2017, Mr GW Dempster was appointed as an independent non-executive director of Sun International with immediate effect.
Shareholders are further advised that with effect from 12 February 2018, Ms ZBM Bassa resigned as an independent non-executive director of Sun
International and as a member of certain statutory and board committees of the company.
OUTLOOK
While the South African outlook has improved and the economy is showing signs of a recovery, we do not anticipate that it will be immediately felt in
discretionary expenditure and in particular discretionary consumer spending on gaming. In response to disappointing revenue growth and the uncertain
economic outlook, management has taken further steps to reduce the cost of doing business and continues to drive and implement its "back to basics"
strategy across the group with a specific focus on improving operating efficiencies and margins and improving the guest experience.
The closure of loss making entities such as the Fish River, the International VIP Businesses (in South Africa and Panama) and the Sun Nao Casino will
result in these losses no longer recurring. In addition, the interventions that have and are taking place in respect of the Ocean Sun Casino, the
Boardwalk and the Carousel are expected to result in much improved performance from these operations.
The opening of the arena at Time Square in November 2017 and the hotel in March 2018 will increase footfall to the property with a commensurate
increase in revenue and EBITDA. In addition, Sun City will continue to benefit from the significant refurbishment of the resort while The Table Bay Hotel
is likely to come under some pressure from the stronger Rand and the water crisis facing the Western Cape, which is deterring tourists from visiting
Cape Town.
The Chilean economy is showing signs of recovery, assisted by the recent change in government. Gaming revenues have stabilised and Monticello is
starting to reflect revenue growth compared to the prior year. The addition of Thunderbird Resorts in Peru will contribute positively and we look
forward to the outcome of the municipal licence bidding process, which could significantly change our position in Chile.
With the proceeds from the rights offer, we will settle debt and capitalise Time Square which will significantly reduce our interest cost.
ANNUAL GENERAL MEETING
Sun International's 34th annual general meeting will be held at The Maslow Hotel, corner of Grayston Drive and Rivonia Road, Sandton, Johannesburg,
on Tuesday, 15 May 2018 at 09h00 (South African time). Further details of the company's annual general meeting will be contained in Sun
International's annual statutory report to be posted to shareholders on or about Thursday, 29 March 2018.
DIRECTORS' RESPONSIBILITY STATEMENT
The pro forma financial information for the year ended 31 December 2017 as well as to account for the purchase price allocation adjustments and the
constant currency adjustments, is the responsibility of the directors and has been prepared for illustrative purposes only to show what the results may
have looked like had Sun International's previous reporting period been for the year ended 31 December 2016 and had the currency been the same in
both periods. Accordingly, the pro forma information contained in this announcement may not fairly present Sun International's financial position,
changes in equity, results of operations or cash flows.
For and on behalf of the board
MV Moosa AM Leeming N Basthdaw
Chairman Chief Executive Chief Financial Officer
Registered office:
6 Sandown Valley Crescent, Sandown, Sandton 2196
Sponsor:
Investec Bank Limited
Transfer secretaries:
Computershare Investor Services (Pty) Ltd, 1st Floor, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
The report was prepared under the supervision of the Chief Financial Officer, N Basthdaw; B Compt (Hons), CTA, CA(SA), M Com, HDip Company Law.
Directors:
MV Moosa (Chairman), PL Campher (Lead Independent Director), AM Leeming (Chief Executive)*, PD Bacon (British), N Basthdaw (Chief Financial
Officer)*, EAMMG Cibie (Chilean), GW Dempster, CM Henry, Dr NN Gwagwa, BLM Makgabo-Fiskerstrand, DR Mokhobo*, GR Rosenthal
* Executive
Group Company Secretary
AG Johnston
16 March 2018
ANNEXURE
Pro forma Group statements of comprehensive income
A B C=A-B D C+D E C+D+E
International
Audited Unaudited Pro forma Audited Pro forma Business Pro forma
12 months 6 months 6 months 6 months 12 months 12 months 12 months
ended ended ended ended ended ended ended
30 June 31 December 30 June 31 December 31 December 31 December 31 December
Rm 2016 2015 2016 2016 2016 2016 2016
Continuing operations
Revenue 12 186 5 837 6 349 7 670 14 019 (135) 13 884
Other income 18 - 18 - 18 - 18
Consumables and services (1 473) (724) (749) (920) (1 669) - (1 669)
Depreciation and amortisation (1 131) (531) (600) (788) (1 388) - (1 388)
Employee costs (2 464) (1 226) (1 238) (1 474) (2 712) - (2 712)
Impairment of assets - - - (269) (269) - (269)
Levies and VAT on casino revenue (2 388) (1 121) (1 267) (1 446) (2 713) 41 (2 672)
LPM site owners commission (66) - (66) (146) (212) - (212)
Promotional and marketing costs (723) (355) (368) (485) (853) 27 (826)
Property and equipment rentals (202) (80) (122) (117) (239) - (239)
Property costs (776) (385) (391) (380) (771) - (771)
Time Square settlements (748) (747) (1) - (1) - (1)
Monticello purchase price differential (243) (195) (48) - (48) - (48)
Other operational costs (1 064) (458) (606) (823) (1 429) 102 (1 327)
Operating profit 926 15 911 822 1 733 35 1 768
Foreign exchange (losses)/profit (227) 254 (481) (82) (563) - (563)
Interest income 33 20 13 20 33 - 33
Fair value adjustment to put liability - - - 247 247 - 247
Interest expense (756) (349) (407) (542) (949) - (949)
Share of equity accounted profits 18 13 5 1 6 - 6
Profit before tax (6) (47) 41 466 507 35 542
Tax (533) (303) (230) (256) (486) 6 (480)
(Loss)/profit for the period from continuing operations (539) (350) (189) 210 21 41 62
Profit for the period from discontinued operations 36 23 13 4 17 (41) (24)
(Loss)/profit for the year (503) (327) (176) 214 38 - 38
Other comprehensive income:
Items that will not be reclassified to profit or loss - - - - -
Remeasurements of post employment benefit obligations 4 - 4 - 4 - 4
Tax on remeasurements of post employment benefit obligations (1) - (1) - (1) - (1)
Items that may be reclassified to profit or loss
Gross loss on cash flow hedges (21) 1 (22) (50) (72) - (72)
Fair value adjustment to put liability - - - - -
Currency translation on the put liability - - - - -
Currency translation reserve 220 205 15 (151) (136) - (136)
Total comprehensive (loss)/profit for the period (301) (121) (180) 13 (167) - (167)
Minorities (89) 118 (207) 109 (98) - (98)
Ordinary shareholders (414) (445) 31 105 136 - 136
(Loss)/profit for the period attributable to (503) (327) (176) 214 38 - 38
Minorities (60) 147 (207) (235) (442) - (442)
Ordinary shareholders (241) (268) 27 248 275 - 275
Total comprehensive (loss)/profit for the period attributable to (301) (121) (180) 13 (167) - (167)
Discontinued operations 36 23 13 4 17 (41) (24)
Continuing operations (277) (291) 14 244 258 41 299
Total comprehensive profit attributable to ordinary shareholders (241) (268) 27 248 275 - 275
A B C=A-B D C+D E C+D+E
Audited Unaudited Pro forma Audited Pro forma Unaudited Pro forma
12 months 6 months 6 months 6 months 12 months 6 months 12 months
ended ended ended ended ended ended ended
30 June 31 December 30 June 31 December 31 December 31 December 31 December
Rm 2016 2015 2016 2016 2016 2016 2016
HEADLINE EARNINGS AND ADJUSTED HEADLINE EARNINGS RECONCILIATION
Profit attributable to ordinary shareholders (414) (445) 31 105 136 - 136
Net (profit)/loss on disposal of property, plant and equipment (3) (24) 21 (9) 12 - 12
Profit on disposal of shares in subsidiaries (18) - (18) - (18) - (18)
Impairment of assets - - - 269 269 - 269
Tax (relief)/expense on the above items 57 4 53 (48) 5 - 5
Minorities' interests on the above items (2) - (2) (28) (30) - (30)
Headline earnings (380) (465) 85 289 374 - 374
Straightline adjustment for rentals 27 16 11 10 21 - 21
Pre-opening expenses 28 13 15 4 19 - 19
Time Square settlements 748 747 1 - 1 - 1
Transaction costs 52 19 33 4 37 - 37
Monticello purchase price adjustment 243 195 48 - 48 - 48
Amortisation of Dreams intangible assets raised as part of the PPA 18 - 18 104 122 - 122
Foreign exchange losses/(profits) on intercompany and minority loans 233 (234) 467 80 547 - 547
Interest on Time Square Note - - - 43 43 - 43
Discount on Tsogo settlement - - - 20 20 - 20
Fair value adjustment on put options - - - (247) (247) - (247)
Reversal of Employee Share Trust consolidation(i) 7 5 2 3 5 - 5
Other 18 1 17 (9) 8 - 8
Tax on the above items 13 65 (52) 42 (10) - (10)
Minorities' interests on the above items (353) - (353) (111) (464) - (464)
Adjusted headline earnings 654 362 292 232 524 - 524
(i) The consolidation of the Employee Share Trust is reversed in the calculation of adjusted headline earnings as the group does not receive the economic benefits of the trust.
Date: 19/03/2018 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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