Sun International wary over economy.

Posted On Monday, 25 August 2003 02:00 Published by eProp Commercial Property News
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Although the year to June may have been a good one for hotel and leisure group Sun International, it expects the current one to be "challenging".

Peter BaconGroup MD Peter Bacon said the performance of its operations was directly related to how well the SA economy performed. He said he was "a little bit" concerned about the local economy, which has projections of only a 2,2% growth in gross domestic product.

Despite the recent reduction in interest rates, the group said real interest rates were still high. This put disposable income under pressure and would affect Sun International's performance in the first half of the year.

Another aspect worrying the group was certain clauses in the proposed National Gambling Bill.

According to the bill, casinos will not be allowed to have ATM's, will be forced to close for six hours a day.

These new requirements, he said, would adversely affect the group's gaming subsidiaries which raked in R1,16bn in revenue in the period under review.

Bacon said Sun International would be making its proposals on the bill to government through the Casino Association of SA, the casino representative body.

While the group's short term outlook was dim, Bacon was optimistic about the way the international tourism was developing in SA.

He said this country was now seen by foreign visitors as a relatively safe destination which offered good value for money.

The growth in foreign tourism was part of the reason the group's room occupancy was up to 74%.

The increase in occupancy came despite the global spread of the deadly flu like virus, the severe acute respiratory syndrome.

Sun International said foreign visitor numbers to SA remained strong and forward bookings currently exceeded levels of the previous year.

The group said it was very likely that the room occupancy levels could be sustained. It said it enjoyed improved trading conditions compared with the previous year, particularly in the first half of the year.

Attributable earnings was up 160% at R143m, with earnings before interest, tax, depreciation and amortisation rising 27% to R1bn. Revenue rose 14% to R3,76bn.

Its Sun City resort saw revenue rising by almost R100m to R790m. The upgrade of the slot floor at this resort was now complete.

Revenue from its GrandWest operation in Cape Town rose to R865m from R741m. Earlier this year Sun International disposed of an 12% interest in SunWest to empowerment group, Grand Parade Investments.

This disposal effectively increased empowerment body's holding in SunWest to 20%.

Total debt for Sun International was down to R1,42bn from R1,59bn.

Although Bacon did not give a target, he wanted to see a further reduction in the group's gearing.

Construction of Sibaya, its new R650m casino has commenced at Umdloti.

Sun International has applied to the Free State Gambling Board to relocate its licence from Thaba Nchu to Bloemfontein. If granted, construction of the new facility will commence in the second half of the financial year. Capital spend is estimated at R138m.

 

Last modified on Saturday, 10 May 2014 11:51

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