South African gaming group Sun International is to pay out its first dividend to shareholders in six years after announcing strong results for the six months to 30 June.
Sun achieved what it described as “exceptional results” with considerable growth in gaming income and adjusted EBITDA despite a trading environment which was impacted by the ongoing
effects of the Covid-19 pandemic, power outages, increasing fuel prices, high inflation and
international supply chain disruptions.
The group, which operates nine urban casinos and four resorts in South Africa, including SunCity as well as its SunSlots slot machine and SunBet sportsbook brands, said gaming income was up 37% year-on-year to a record ZAR5.2bn ($306.5m/£262.5m/€306.0m) with adjusted EBITDA rising by 99% to ZAR1.5bn.
Sun said it was able to successfully defend and grow market share in most provinces across South Africa, while income generated from Sun Slots recovered to exceed pre-pandemic levels.
“As a result of the significantly stronger financial position and the strong cash generation, the board has resolved to resume dividend payments,” the group said in its trading statement. It has declared a gross interim cash dividend of 88 cents per share (70.4 cents net after deducting withholding tax), representing a dividend cover of two times on an adjusted headline earnings per share of 177 cents per share.
Sun said its core Urban Casinos business in South Africa was able to grow market share due to improved use of data and analytics combined with a selective focus on certain market segments. For the year to date, its market share compared to the prior comparative period, in the competitive Gauteng market increased 0.6% to 27.8%, in the Eastern Cape it increased 4% to 80.4%, in KwaZulu-Natal it increased 3.1% to 38.6%, and in the Western Cape it increased 0.5% to 78.1%.
Overall, urban casino operations generated ZAR3.14bn in revenue during the period, which was up 35% year-on-year. Within that, casino income was up 34% to ZAR2.94bn, with rooms and food & beverage revenue also up considerably. Adjusted EBITDA of ZAR1.14bn was up 70% for the period under review. Despite Urban Casinos income being 13% below levels achieved in 2019, the adjusted
EBITDA margin of 36.3% was up 3.6% on the 2019 adjusted EBITDA margin of 32.7%.
Sun said its Resorts and Hotels division income was up 63% to ZAR1.12bn on the prior comparative period. Domestic leisure, conferencing and sports and events revenues exceeded 2019 levels while transient corporate and international leisure revenues remain behind 2019. Although total income remained 6% below 2019 levels, casino income exceeded 2019 as a result of it leveraging the Sun City Resort and Wild Coast Sun for its MVG and SunBet customers.
Overall, its Resorts and Hotels generated an adjusted EBITDA of ZAR152m, which is an improvement from the loss of ZAR88m posted in the prior comparative period and adjusted EBITDA of ZAR120m in the 2019 comparative period.
Sun Slots saw a strong recovery in trading as closed sites were reactivated following the softening of Covid restrictions. Sun Slots income increased from ZAR608m to ZAR717m, with adjusted EBITDA up from ZAR152m to ZAR178m for the period under review.
SunBet saw income of ZAR125m, which was up 37% on 2021. The group said the sports betting division is looking to grow its current operating market and launch into new markets. This will be assisted by the June 2022 decision to conclude a 70% investment in an unnamed Mauritian company, which has online sports betting and casino licences to operate in Ghana, Zambia and Kenya.
“Our operations improved significantly during the first six months of 2022, due to the last
pandemic-related restrictions having been lifted and we anticipate that this trend will continue
for the remainder of the year,” the group said.
“Our overall July 2022 income was in line with 2019 and ahead of the run rate achieved in the first six months. With our ongoing focus on costs and efficiencies, we anticipate a significant improvement in the second half of the year compared to the prior comparative period and consequently strong growth in adjusted EBITDA and earnings per share.
“We anticipate that SunBet will continue with its strong income growth which will be aided by the introduction of the recently launched slots offering. Our omni-channel offering with Sun International’s premium hotel and casino portfolio and integrated MVG programme will also assist in increasing our share of the online gaming market.”
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