Johannesburg - Hotels and gaming group
Sun International [JSE:SUI] said on Wednesday that revenue for the quarter ended March 2010 was down 1% to R1.969bn from R1.995bn a year ago. For the nine months ended March 2010 revenue was up 1% to R6.072bn from R6.017bn for the same period in 2009.
The group said for the March quarter, gaming revenue and food, beverage and other revenue was in line with last year, while rooms revenue was 8% down on last year due to lower occupancies. Excluding Monticello, comparable revenue was 2% down on last year.
Due to the Chile earthquake in February, the group results only include trading for Monticello up to that date which was revenue of R139m and Ebitda of R8m.
The impact on February was further affected by missing the closing day of the quarterly promotion.
Comparable gaming revenue was in line with last year, the group said. Boardwalk and Sibaya achieved revenue growth of 7% and 4% respectively, while GrandWest and Carnival City achieved revenue growth of 1%. The group's share of the Gauteng market increased by 0.9 percentage points to 21.4% over the same quarter last year. Sibaya's share of the gaming market in Kwazulu-Natal for the quarter was marginally down on last year at 35.8% from 35.9%.
Sun City's revenue declined by 4%, while achieving room occupancy of 68%, 6 percentage points lower than last year. The Table Bay achieved occupancy of 62% (76%) resulting in a decline in revenue of 14%. The Zambian properties achieved an aggregate occupancy of 45% (49%) at an average room rate of $204. The overall occupancy for the quarter at 65% was 6 percentage points below last year.
The group achieved an Ebitda margin of 30.2% which was 2.3 percentage points lower than the comparative quarter last year. The lower margin is due to the decline in comparable revenue and inflationary increases in operating costs. Excluding Monticello, the Ebitda margin was 32.1% for the quarter, 3.1 percentage points lower than last year.
The group said in South Africa the upgrade and enhancement of the Wild Coast Sun is well under way. The upgrade and expansion of the casino floor was completed in December 2009 and the rooms refurbishment commenced in January 2010. The project will be completed in phases through to mid-2012 in order to minimise disruption to the business. Due to the delays in awarding the licence and this approach, the costs have escalated to an estimated R40m.
In Chile, property damage due to the earthquake is currently estimated at $10m. Repair works have already commenced and the facilities are expected to re-open early July 2010.
The business interruption claim is currently being negotiated with insurers, and together with the property damage claim is subject to an $8m deductable.
In Nigeria, the 200-slot and 8-table casino at the Federal Palace hotel was opened during December 2009 and the conference facility during January 2010 at a cost of $19m. Casino revenue of R12m was achieved in the quarter.
The process of acquiring the balance of the shares and ultimately owning a 49% interest is nearing completion.
The Boardwalk's casino licence in Port Elizabeth expires in October 2010. The Boardwalk was announced as the preferred bidder during September 2009. The conditions attached to the licence are still awaited from the Eastern Cape Gambling and Betting Board. The project includes plans for a five star hotel and conference centre, expanded gaming facilities and a new parkade at an estimated cost of one billion rand. The project is likely to be completed in late 2012.
Looking ahead, the group said trading conditions have stabilised and together with the anticipated benefits of the 2010 World Cup, growth in comparable revenue is expected for the remainder of the year. Comparable revenues for April 2010 were 2% above April 2009, a slight improvement on the decline experienced for the quarter to March.
- I-Net Bridge