Stronger rand keeps foreign visitors away

Posted On Monday, 23 February 2004 02:00 Published by
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Revenues strained

 KwaZulu-Natal Correspondent

DURBAN Hotel and leisure group Sun International SA (Sisa) saw gaming revenue in the six months to December limited to 3% growth as the arrival of Durban-based competitor Suncoast Casino and Entertainment World wreaked havoc with income.

Sisa also fell victim to the strong rand, with the international corporate demand in the meetings, incentives, conferences and exhibitions market waning in line with the appreciation.

Hospitality revenue was strained at the Palace, Sun City and Table Bay hotel in Cape Town.

Revenue grew only 2% to R1,95bn. The effect of Suncoast Casino on Sisa's temporary casino, Sugar Mill, shaved three percentage points off total revenues and twice that off gaming revenues.

However, CEO Peter Bacon said that construction of the R650m Sibaya casino at Umdloti was progressing well and on schedule for a November opening.

Headline earnings a share rose 2% to 8,7c and a 3,5c (2002: 2,5c) interim dividend was declared.

Strong operating cash flow and lower interest rates lowered net interest charges 22% to R107m.

Bacon said lower table revenue in the gaming division was offset by solid growth in slot machine revenue.

He attributed the growth to a greater enthusiasm for new products and the success of the Most Valued Guest programme and Mystery Jackpots.

The Carousel and Morula Sun traded in line with the previous year, while Wild Coast Sun exceeded expectations with casino revenue growing 16%.

Bacon said the average occupancy of Sisa's hotels and resorts at 73% and the average room rate of R761 were respectively three percentage points below and 2% more than in 2002.

Sun City and Table Bay had average occupancies of 73% and 65% last year, translating into five and six percentage point falls on the corresponding period.

Bacon said the Free State Gambling and Racing Board had not yet granted permission to switch the casino licence from ThabaNchu to Bloemfontein, delaying the proposed R138m project.

At Sun City, Sisa plans to build 150 twobedroom units for the Vacation Club timeshare, with the cost funded via the sale of new memberships.

Sisa invested R180m (R84m) in capital expenditure during the six months with another R310m scheduled by June. This related to the Sibaya development and the Palace and Cascades bedroom refurbishments at Sun City.

In October empowerment partner African Leisure Investments paid R267m to boost its holdings in Afrisun Gauteng and SunWest International 17,2% and 9,5% respectively.

The move has reduced Sisa's holdings in these investments to 69,9% and 60,3% with the proceeds used to reduce debt.

The employee share trust also made its first income distribution of R2,2m to nearly 6000 employees.


Feb 23 2004 07:40:16:000AM Nicola Jenvey Business Day 1st Edition

Publisher: Business Day
Source: Business Day

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