April 28, 2004

By Neesa Moodley

Durban - Sun International expected its headline earnings to be at least 30 percent higher than last year's 54c a share headline loss, the company said in a trading statement this week.

However, favourable trading at the group's casinos over the past five months had been off-set by poor profits at its premier hotels, The Palace at Sun City and Table Bay in Cape Town.

The launch of Tsogo Sun's Suncoast Casino and Entertainment World in December 2002 had severely affected Sun International's Sugarmill Casino, although this had shown improvement over the past year, the group said

In a further development, the group announced that Afrisun KwaZulu-Natal, a subsidiary in which it had a 44 percent stake, had sold Zimbali Lodge for R77 million.

The luxury KwaZulu-Natal north coast hotel was sold to Kuwaiti-based International Financial Advisors (IFA) Hotels and Resorts.

Sun International has been retained on a 15-year contract to continue managing the hotel, along with other projects the IFA plans to develop on the property. 

These include a 25-room expansion of Zimbali Lodge, as well as the construction of Beach Vacation Club - a 25-luxury suite resort incorporating spa and restaurant facilities.

James Wilson, the president of IFA Hotels and Resorts, said the new developments would include a 250-room, five-star hotel on the beach.

"Plans are still in the feasibility study phase. However, our Sheraton Algarve Hotel in Portugal has 215 rooms and the staff complement is 450, so we expect to generate about 500 jobs with the new hotel and golf course," he said.

Plans are already under way to start construction on the international hotel, Zimbali Lakes Hotel and Beach Resort, in the first quarter of next year. A contractor is to be announced in the next four weeks.

Property sales on the 700ha owned by IFA Hotels and Resorts kicked off last year and have already realised R140 million, exceeding the company's expectations by 60 percent.

A prospective beach house owner bought the most expensive 1 600m2 plot for R4.5 million.

Sun International's communications manager for resorts, Ian Trigger, said the loss of earnings from Zimbali Lodge would be negligible.

"We were made a lucrative offer which made good commercial sense to accept," he said.