The company declared a final dividend of 110 cents per share, bringing the total dividend for the year to 200 cents per share, representing a 60% increase over the 125 cents declared in 2004.
Announcing its annual results, Sun International said revenue had risen 15% during the year to 5.14 billion rand from 4.48 billion rand the previous year, with casino revenues recording a substantial 18% increase to 3.86 billion rand.
However, hotel room revenue was mostly flat at 623 million rand versus 621 million rand previously, with business at Sun International's hotels and resorts under pressure, particularly in the upper end of the market, the group said.
Revenue from food, beverage and other activities, meanwhile, was up at 659 million rand from 594 million rand.
The result was in line with market expectations. The I-Net Bridge consensus had forecast HEPS of 425 cents and a total dividend of 202 cents per share for the year.
Sun International announced that CEO Peter Bacon would be retiring at the end of the 2005-2006 financial year after 33 years working with the company.
David Coutts-Trotter had been appointed CEO-designate with effect from September 1.
Looking ahead, the company said it expected "good growth" in adjusted HEPS for the new year, and would again increase the level of dividends at a rate above that of earnings growth.
Turning to its performance for the past financial year, Sun International's earnings before interest, tax, depreciation and amortization (EBITDA) improved by 19% to 1.7 billion rand, helped by a 1 percentage point increase in the group's EBITDA margin to 32.5% during the year.
Net exceptional income totaled 253 million rand, including an 86 million rand mark-to-market write up of the group's shareholding in Kerzner International, and 104 million rand on the partial realisation of the foreign currency translation reserve.
Adjusted headline earnings jumped 87% to 435 million rand, while fully diluted adjusted HEPS were only 45% higher due to the increase in the number of shares in issue following the company's issue of shares for the acquisition of Sun International South Africa (Sisa) minority interests in August 2004.
Sun International said its income from slot and table gaming had risen 19% and 16%, respectively, during the year, thanks primarily to a continuing improvement in disposable income and consumer confidence in South Africa. The group operates major casinos including Cape Town's Grand West, Carnival City in Johannesburg, Sibaya in Durban, and Boardwalk in Port Elizabeth.
It also owns the Table Bay Hotel in Cape Town, Sun City and a resort at Victoria Falls in Zambia, amongst others. The company said that, after adjusting for the disposal of Zimbali Lodge and Mpekweni during the year, room revenue would have been 4% higher.
Sun City's overall occupancy rate of 76% was 4 percentage points higher than that of the previous year, while Table Bay's occupancy rate fell 3 percentage points to 63%. The Zambian resort had continued to enjoy increased demand, with room occupancy at 62%, 9 percentage points ahead of that in 2004.
The contributions to earnings from Sun International's operations in Botswana, Namibia and Swaziland was well down on the previous year, the company revealed, due to the generally weaker economic conditions in those countries and the introduction of VAT in Botswana.
Earnings from management fees and related incomes rose 26% to 316 million rand, Sun International said, mainly as a result of favourable trading conditions enjoyed by its major group operations.
The group had yet to resolve the challenge from the South African Revenue Service (SARS) regarding the deductibility of pre-opening expenditure, with its potential exposure amounting to up to 60 million rand across the group, of which 36 million would be attributable to Sun International. However, it remained confident it could successfully defend the matter.
Internationally, Sun said it continued to investigate a number of expansion opportunities. It was well positioned to compete for two of the up to eight regional casinos set to be licensed in the UK, and it was also investigating a number of opportunities in Africa and Asia.
I-Net Bridge
Publisher: I-Net Bridge
Source: I-Net Bridge
