Gambling cools as economy bites

Revenue was up 10% at R7.618bn, while operating profit was flat at R1.95bn from R1.94bn before.

Gaming revenue improved 9% to R5.8bn with slot and table revenues up 9% and 12% respectively. The rate of revenue growth has slowed compared to recent years mainly as a result of the prevailing economic conditions, it said.

Rooms revenue of R881m was 14% ahead of the previous year with overall occupancy of 76% (74%) and the average room rate achieved of R850 ahead by 7%.

The good revenue performance by the hotels and resorts was attributable to strong growth in international visitor numbers across all major market segments, the group said.

A final dividend of 258c per share was declared, bringing the total dividends for the year to 480c per share - 20% ahead of last year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) at R2.8bn was 11% up on last year.

The results include a BEE transaction charge of R182m which reflects the difference between the price at which Grand Parade Investments was granted an option over 5% of the equity in SunWest International and the estimated fair value.

Rand weakness during the year resulted in an exchange gain of R69m, compared with a loss of R10m in the previous year.

The group said adjusted headline earnings of R720m were 12% below the previous year due primarily to the increased interest charge. However, the diluted adjusted headline earnings per share of 739c were 3% ahead of last year due to the lower number of shares in issue as a result of the share buy back.

The R450m GrandWest expansion was completed in the first half of the year, with the multipurpose arena and the refurbished non-smoking casino opened in October and December 2007 respectively. The R65m 98-room Golden Valley Lodge in Worcester was successfully opened in March 2008 and trading at the casino has improved markedly as a result.

The 1 000-vehicle multi-level parkade at Carnival City was opened in June 2008 and the improved access was completed two months later, at a total cost of R85m.

Chile and Nigeria

The construction of the Monticello casino project located to the south of Santiago in Chile is progressing well with the casino scheduled to open in October 2008. The total estimated project cost has been revised to $236m, principally due to the significant strengthening of the Chilean peso against the US dollar.

The existing Federal Palace Towers hotel on Victoria Island, Lagos has been under the group's management since October 2007. The refurbished 150 room Federal Palace Hotel was officially opened on August 1 2008. Sun International provided a loan of $10m to complete this refurbishment.

The terms of the gaming licence have been finalised with the Lagos state authorities and the enabling regulations are in the process of being approved by the state legislature. The licence is expected to be issued shortly, following which the group will acquire a 49.5% equity interest in the operation. It is now planned to establish a temporary casino of 200 slots and 10 tables within the Federal Palace hotel to open early in 2009.

Looking ahead, the group said trading conditions in the group's South African casino operations are anticipated to remain challenging in the year ahead. With the international tourism market remaining relatively buoyant, the group should however benefit from an expected improved contribution from hotels and resorts.

The Chilean and Nigerian operations are expected to contribute in the year ahead to significant growth in revenue and EBITDA. The increased capital charges relating to these investments will however temper growth in adjusted headline earnings per share for the year ahead, it said.

- I-Net Bridge