Sun International reported strong results for the first half of this year, as record online betting and robust hotel performance boosted the company’s balance sheet.
Sun International released its results for the six months ended 30 June 2023 today, which revealed a solid performance.
The company’s income was up 11.7% to R5.8 billion, as gaming income, which makes up 78.0% of group income, showed continued sustained growth, with income up 6.6%.
Sun International’s adjusted operating profit was R1.15 billion, a 10% increase from H1 2022.
However, the company’s profit growth was hampered by forex losses due to the Nigerian naira float during the period, which saw the company’s forex losses more than double.
Headline earnings increased by 83% to R422 million, while basic earnings increased by 80% to R418 million.
However, Sun International also reported adjusted earnings as it had incurred certain once-off or unusual items in the interim period, the most significant of which were:
- An increase in the estimated redemption value of the SunWest put option liability of R21 million; and
- Foreign exchange and monetary losses, net of minority interest, of R39 million relating to US dollar-denominated Nigeria minority loans.
Therefore, adjusted headline earnings increased by 9% to R482 million.
The company’s EBITDA margin was also impacted by an increase in net diesel costs of R60 million.
Were it not for these increased costs, the company would have achieved an EBITDA margin of 28.2%.
“Our net external interest increased by 40.3% from the prior comparative period as a result of JIBAR increasing by approximately 3.5%,” Sun International said.
“The reduction in minorities’ share of earnings is attributable to the strong performance of our wholly owned subsidiaries, namely Sun City and SunBet.”
The company said that despite a difficult economic climate and increased competition, casino income proved resilient and increased by 3.2%.
Sun Slots’ operations were impacted by load-shedding, with income slightly behind the prior comparative period.
However, SunBet generated record income during the review period, up 138.4% in the first half of 2022 and “is well on its way to achieving the aggressive growth targets set for this business”, the company said.
In its resorts and hotels segment, income increased by 26.9% in H1.
In particular, the company said Sun City continues to achieve exceptional performance following the restructuring and streamlining of its operations, along with the resort’s strong appeal to the South African market.
Sun City’s income increased by 26% in H1 to R890 million.
“Additionally, The Table Bay Hotel experienced a significant surge in demand from international
markets, leading to robust growth in both occupancies and room rates,” the company said.
The company also provided an update on the expansion of the Sun Vacation Club development at Sun City which commenced in 2022.
The construction of 58 units (48 three-bedroom and 10 four-bedroom units) will cost R295 million, of which R45 million was incurred during the 2022 financial year, with the balance to be incurred in 2023.
“Gross sales generated since inception to the end of July 2023 amount to R166 million, which is well ahead of our feasibility study,” the company said.
Sun International declared an interim dividend of 148 cents – a 68.2% increase from the prior period.