Sun International was positive on the year ahead, despite two recent rate increases by the Reserve Bank, the leisure and resorts group said on Monday.

In its results for the year to June, Sun International reported a 16% increase in revenue - buoyed by an 18% increase in gaming revenue to R4,5bn.

The group recorded a 33% increase in adjusted headline earnings a share to R5,46.

Group CE David Coutts- Trotter said gaming revenue remained fairly robust.

Coronation portfolio man-ager Pallavi Ambekar said it was a strong set of results and that all the group's casino operations had performed well.

The group attributed some of the gaming revenue growth to its new Bloemfontein operation, Windmill, which opened its doors in September last year.

Coutts-Trotter said the casino's performance had exceeded expectations. "It's early days yet, but in terms of future prospects we are reasonably positive," he said.

Revenue in Sun International's Western Cape gaming operation, GrandWest, increased 17% to R1,4bn, while earnings before income tax and depreciation (ebitda) rose 20% to R600m.

Coutts-Trotter said the problem the group faced with GrandWest was its lack of capacity to cater for the market.

The casino is undergoing a R425m expansion programme to increase the number of slot machines from 1846 to 2500.

Gauteng's Carnival City brought in revenue of R786m, up from R697m previously, while ebitda was 18% better at R268m.

In its first full year of operations, the group's KwaZulu-Natal casino, Sibaya, posted a revenue increase of 21% while ebitda increased by 18%.

The group said that its overall share of the KwaZulu-Natal market had increased by 1,2 percentage points to 35,5%.

Hotel revenue rose to R681m, an increase of 9%. Room occupancy increased to 71% - 2,3 percentage points up on the comparable period.

Coutts-Trotter said significant pressure associated with the strong rand had abated, as a result of "smart" marketing and new international markets.

"We have also continued to focus on the costs," he said.

Sun City's room occupancy rate of 75% was in line with last year's and generated ebitda of R160m - an increase of 15% which corresponded with the 5% increase in room rates.

Occupancy at The Table Bay rose to 70%, up from 63% previously while occupancy at The Royal Livingstone and Zambezi Sun resort was 68% (62%).

Ambekar said the improvement in occupancy at the resorts gave scope to further increase prices but he speculated that "they would rather look at increasing volumes".

Before its year end, Sun International increased its offer for Real Africa Holdings to R5,30 a share and revised the closing date to September 15.

The shareholders of 53% of Real Africa Holdings had by yesterday accepted the offer.

Sun International now owns 55% of the group.

"If we cannot achieve total ownership right upfront, we will have to live with some minorities in the business, for a while."

The group declared a final dividend of R1,55, a 41% increase on the previous period. The share closed at R92,50, up 1,6%.

Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge