JSE-listed Sun International delivered a credible result for the half-year ended June 30, demonstrating the benefits of achieved cost savings, efficiencies and continued deleveraging, the group said in a statement of its unaudited results for the period.
It noted that this performance was achieved despite the extremely challenging South African trading environment which saw its businesses either locked down or operating under significant and varied restrictions as a result of the Covid-19 pandemic.
During the period under review, Sun International continued to focus on ensuring the group remained in a strong position to trade through the lockdown periods and related restrictions imposed on its operations, it said.
Its core casino business, which contributes about 70% of earnings, has proven its resilience and the group anticipates that it will continue to see improvements in income and adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) as restrictions are eased further and, ultimately, lifted.
Further, its Alternate Gaming operations remain a notable growth platform and are now contributing meaningfully to the group.
Management has performed extensive work on its cost base and has realised considerable sustainable savings of R650-million in the company's cost structure going forward.
Sun International has successfully completed Covid-19 business interruption claims for R235-million. It anticipates that the remaining claims of about R260-million will be settled shortly.
Income from continuing operations increased by 51% from R2.5-billion in the six months ended June 30, 2020, to R3.8-billion in the six months under review, while continuing adjusted Ebitda increased from R60-million to R739-million.
Group adjusted headline earnings improved from a loss of R885-million in the prior comparable period to a loss of R7-million, with an adjusted headline loss a share of 3c.
Overall, income from the South African operations improved by 52% year-on-year to R3.7-billion, with adjusted Ebitda up from R89-million in the prior comparable period to R749-million.
Group debt (excluding IFRS 16 lease liabilities) was considerably reduced from R11.1-billion as at June 30, 2020, to R7.6-billion, following the successful completion of Sun International's R1.2-billion rights offer in July 2020 and its 99.2%-owned subsidiary Sun Latam's disposal of its 64.94% equity interest in Sun Dreams for $160-million in November 2020.
This amount excludes any further amount that may be received if certain earn-outs are met.
OUTLOOK
The Covid-19 pandemic coupled with the ongoing restrictions imposed on business and its activities will continue to have a significant impact on the South African economy, which will take some time to recover and which will impact the group’s trading results.
However, the South African vaccination programme is now gaining much-needed momentum and infection rates hopefully reducing over time, bode well for Sun International’s business, the group stated.
“We are optimistic that, with the various cost saving and efficiency initiatives implemented and a dedicated focus on improving the customer experience, the group will recover and resume delivering strong returns for shareholders.
“Our online business SunBet, as well as Sun Slots, are anticipated to continue their strong growth trajectories and are key focus areas for the group,” it added.