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SUN INTERNATIONAL LIMITED - Audited summary group financial results announcement for the year ended 31 December 2020

Release Date: 15/03/2021 08:00
Code(s): SUI     PDF:  
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Audited summary group financial results announcement for the year ended 31 December 2020

Sun International Limited
Registration number: 1967/007528/06
Share code: SUI
ISIN: ZAE 000097580
LEI 378900835F180983C60

Audited summary group financial results announcement for
the year ended 31 December 2020

KEY HIGHLIGHTS


GROUP INCOME
down 49%
to R6.1 billion

GROUP BASIC LOSS
down >100%
to 1 045 cents loss

GROUP HEADLINE LOSS
down >100%
to 234 cents loss

GROUP ADJUSTED HEADLINE LOSS
down >100%
to 633 cents loss


INTRODUCTION

The Covid-19 pandemic had a significant impact on the group, its people and the results for the year ended 31 December 2020. Sun International responded quickly
to the crisis, taking decisive action to protect liquidity and minimise cash outflow. Key to our response was our engagement andcommunication strategy with
government, regulators, lenders, customers, suppliers and staff.

During the year, we focused on cost reductions, optimising working capital, prioritising capital investment and negotiating with lenders, service
providers and suppliers for either a waiver, reduction or deferment of payments. We formulated and implemented plans to achieve operational
efficiencies and restructured certain parts of the business. Critical actions taken included:

-   pro-actively engaging with lenders in respect of debt service and covenant waivers;
    addressing the short-term liquidity risks, including up to a 60% reduction in payroll costs, deferring all capital investment other than critical spend,
-   reducing operating costs and negotiating with service providers and suppliers for either a waiver, reduction or deferment of payments;
-   engaging and communicating on an ongoing basis with government, regulators, customers, suppliers and staff;
-   formulating start-up post lockdown operational plans, including detailed safety protocols for staff and customers;
-   announcing the closure of both Naledi Sun and Carousel;
    focusing on cost reductions, optimising working capital, prioritising capital investment, formulating plans to achieve operational efficiencies and
-   articulating plans to restructure certain parts of the group's business;
-   accelerating the disposal of certain non-core assets;
-   successful conclusion of the R1.2 billion rights offer; and
-   disposal of the group's interest in Sun Dreams.


COVID-19 AND CLOSURE OF OPERATIONS

On 15 March 2020, President Cyril Ramaphosa declared a National State of Disaster under the Disaster Management Act Regulations Alert Level Framework,
following which the gaming, leisure and hospitality sector in South Africa went into a full lockdown. In response to South Africa's lockdownrestrictions which
commenced on 27 March 2020, all our group's operations were closed from late March 2020 to 30 June 2020. With the easing of thelockdown restrictions, our South
African casino operations were able to resume trading with effect from 1 July 2020, with Sun City having re- commenced trading in September once the restrictions
on inter-provincial travel were lifted and The Maslow Sandton and The Table Bay hotels having resumed operating in October and November respectively. Our
operations in eSwatini remain closed while our operations in Nigeria resumed trading inSeptember 2020. Casino operations were able to resume operating, subject
to strict operational protocols being put in place and limitations on the number of guests permitted in the casinos of up to 50% of normal guest capacity.

The South African lockdown regulations which, were amended several times, materially impacted our operations. As at the date of this report, ourcasinos
continue to be impacted by the curfew and are trading at reduced capacity.


FINANCIAL OVERVIEW

GROUP

The Covid-19 pandemic had a significant impact on the group, with all operations being closed for 3 months or longer and the March 2020 trading significantly
disrupted. Income from continuing operations declined by 49% from R11.8 billion to R6.1 billion and adjusted EBITDA reduced by 72% fromR3.2 billion to R897
million. Our total group adjusted headline earnings declined from R763 million to a loss of R1.1 billion with an adjusted headline loss of 633 cents per share.


SOUTH AFRICA

For the first six months of the year income declined by 55% from the comparative period to R2.5 billion with adjusted EBITDA down by 95% to R80
million. With the resumption of trading of most operations from 1 July 2020, income and adjusted EBITDA improved steadily throughout the remaining 6
months until the move to an adjusted level 3 lockdown, coupled with the imposition of the 8pm curfew and alcohol sales ban in mid-
December 2020. This led to a significant drop in activity and cancellation of bookings for the second half of December and into January 2021. Overallincome from
the South African operations declined by 48% from the prior year to R6 billion with adjusted EBITDA down by 70% to R984 million.

As a result of the extended lockdown and anticipated slow recovery we incurred impairment charges of R1.3 billion being Sun City (R900 million),Boardwalk (R180
million), the Maslow Sandton (R96 million), intangible assets of R72 million.
LATIN AMERICA

Following the group's exit from its investment in Sun Dreams, the results of Sun Dreams have been accounted for until the effective date of the transaction being
31 October 2020 and disclosed as discontinued operations, and assets held for sale since 30 June 2020. Income of R1.2 billion and anadjusted EBITDA loss of R160
million have been accounted for. Impairments of individual assets in accordance with IAS 36 totaling R118 million were accounted for during the period up to 31
October 2020. At the date of the above noted remeasurement, being 1 July 2020, and in accordance with IFRS 5, management recognised a remeasurement to fair
value less cost to sell impairment of R612 million relating to the disposal group. A subsequent profit on disposal of Sun International's interest in Sun Dreams of
R25 million has been accounted for at the effective date of the disposal being
31 October 2020.


NIGERIA AND ESWATINI

The Federal Palace in Nigeria went into lockdown in April 2020 as a result of the Covid-19 pandemic. Although it has resumed trading, occupancy remain muted
due to the ongoing nature of the pandemic. It remains unclear as to when our operations in eSwatini will be re-opened. We continue toactively consider
expressions of interest and pursue the disposal of our equity interest in both of these businesses.


BORROWINGS

In order to mitigate against the impact of the pandemic on the group's liquidity, we pro-actively engaged with the South African lending group whoagreed to
suspend Sun International's debt repayments, waived covenant measures and rescheduled debt service cost.

Our lender group has been extremely supportive of the group during this period and we are currently engaging with them on the optimal restructuringof our
debt and covenant measures for the longer term. We anticipate this is to be finalised by June 2021.

The South African debt (excluding IFRS 16 lease liabilities and IFRS 9 debt modification adjustments) decreased by 21% to R7 billion.


STANDARDS IMPLEMENTED

A number of other new standards were effective from 1 January 2020 although they do not have a material effect on the group's financial statements.


OUTLOOK

The Covid-19 pandemic coupled with the ongoing restrictions imposed on business and its activities in terms of the Disaster Management Act will continue to
have a significant impact on the South African economy, which will take some time to recover and which will impact our trading results. Our gaming side of the
business has proven its resilience and we anticipate that we will continue to see improvement in revenues and adjusted EBITDAas the restrictions are eased and
ultimately lifted. The hotel and resort side while benefitting from growth in local leisure will continue to be impacted by the lack of demand in the business,
conference, meetings and international market segments.

The capital raise as a result of the rights offer and the proceeds from the disposal of Sun Dreams has improved our liquidity position and significantly
strengthened the group's balance sheet. These actions and the various operational initiatives which we have undertaken and implemented in the last twelve
months have ensured that the group remains well placed to be able to deal with the current and future Covid-19 challenges and has strongly positioned the
group to recover and grow into the future.


INDEPENDENT AUDIT

The summary audited consolidated financial statements of Sun International Limited contained in Sun International Limited's audited summary groupfinancial
statements, which comprise the summary consolidated statement of financial position as at 31 December 2020, the summary consolidated statements of
comprehensive income, changes in equity and cash flows for the year then ended, and related notes, are derived from the audited consolidated financial statements
of Sun International Limited for the year ended 31 December 2020.

In our opinion, the accompanying summary consolidated financial statements are consistent, in all material respects, with the audited consolidated financial
statements, in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports, as set out in note 2 to the summary consolidated
financial statements, and the requirements of the Companies Act of South Africa as applicable to summary financial statements.The group's audited consolidated
financial statements will be available on the company's website www.suninternational.com/investors, on or about 15 March 2021.


FINANCIAL OVERVIEW
                                                                                                                                DISCONTINUED
                                                       NIGERIA AND            SUN LATAM             TOTAL CONTINUING            OPERATIONS -              TOTAL GROUP
                              SOUTH AFRICA               ESWATINI           AND SUN CHILE              OPERATIONS               SUN DREAMS                 OPERATIONS


R million                   2020        %    2019    2020      %    2019   2020          %    2019   2020      %       2019    2020     %      2019     2020     %     2019

Income                       6 003    (48)  11 481      86   (76)    355      -         -      -     6 089    (49)   11 836    1 210     78    5 527    7 299     (58) 17 363
Adjusted EBITDA               984     (70)   3 237    (77) <(100)     12    (10)      (11)    (9)     897     (72)    3 240    (160) <(100)    1 283      737     (84)  4 523
Depreciation and
amortisation                 (902)    11   (1 012)    (27)     16  (32)     -           -      -     (929)    11     (1 044)   (287)     44    (517)  (1 216)      22  (1 561)
Adjusted operating
profit                         82     (96)   2 225   (104) <(100)    (20)   (10)      (11)    (9)     (32)  <(100)    2 196    (447) <(100)     766     (479)   <(100)   2 962
Foreign exchange profit        11    >100     (16)    (56)      -      -    (13)       27    (18)     (58)    (71)     (34)     (13) <(100)      34      (71)   <(100)      -
Net interest                 (908)     (5)   (861)     (9)     80    (46)   (24)       (4)   (23)    (941)     (1)    (930)    (201)     12    (228)  (1 142)        4 (1 158)
Net external interest        (699)     14    (812)     (9)     80    (46)   (24)       (4)   (23)    (732)     17     (881)    (182)     13    (209)    (914)       16 (1 090)
Hedge interest               (135) <(100)      27        -      -      -     -          -      -     (135)  <(100)       27         -    -        -     (135)   <(100)      27
IFRS 16 interest              (74)      3     (76)       -      -      -     -          -      -      (74)      3      (76)     (19)     -      (19)     (93)        2    (95)
Adjusted profit before
tax                          (815) <(100)   1 348    (169) <(100)    (66)   (47)        6    (50)  (1 031)  <(100)    1 232     (661) <(100)     572    (1 692) <(100)   1 804
Adjusted tax                   33    >100    (376)    (40) <(100)     (1)    13      >100     (1)       6    >100     (378)     248    >100    (220)     254     >100    (598)
Adjusted profit after tax    (782) <(100)     972    (209) <(100)    (67)   (34)       33    (51) (1 025)   <(100)      854     (413) <(100)     352    (1 438) <(100)   1 206
Minorities                     57    >100    (350)   105     >100     33     25      >100      -      187    >100     (317)     143    >100    (129)     330     >100    (446)
Attributable profit          (725) <(100)     622    (104) <(100)    (34)    (9)       82    (51)   (838)   <(100)      537     (270) <(100)     223    (1 108) <(100)     760
Share of associates             2       -       2        -      -      -         -      -      -       2        -         2        -   (100)      1         2     (33)       3
Group adjusted headline
earnings                     (723) <(100)     624    (104) <(100)    (34)    (9)       82    (51)    (836)  <(100)      539     (270) <(100)     224    (1 106) <(100)     763
Dividends                                                                                                                                                   -                -

FURTHER INFORMATION

This short-form announcement is the responsibility of the directors and is only a summary of the information contained in the full announcement. Anyinvestment
decision should be based on the full announcement published on Sun International's website and on the SENS link below. Only the short form announcement will
be available on SENS. The full announcement will be available on the link www.suninternational.com/investors or through thislink
https://senspdf.jse.co.za/documents/2021/jse/isse/SUI/FY2020.pdf

While this report, in itself, is not audited, the group audited consolidated annual financial statements from which the audited summary group financial results were
derived have been audited by the group's auditors, PWC. Their unmodified audit report, including key audit matters, along with the audited consolidated annual
financial statements are available for inspection at the Company's registered office and also available on Sun International's website at
www.suninternational.com/investors.

15 March 2021


www.suninternational.com Sponsor:

Investec Bank Limited

Date: 15-03-2021 08:00:00
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