| Mon 24 Feb 2003, 15:35 | | Sun International - Profit And Dividend Announceme |
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SUN INTERNATIONAL - Profit and Dividend Announcement FOR THE SIX MONTHS ENDED 31
DECEMBER 2002
Sun International (South Africa) Limited
Registration number: 1977/071333/06
Share code: SIS
ISIN: ZAE000010104
Highlights
* Group revenues up 23% to R1,9 billion
* Gaming revenues up 25%
* Group occupancy up significantly to 76%
* EBITDA up 48% to R515 million
* Adjusted headline earnings per share of 8,5 cents up from 1,8 cents
Profit and Dividend Announcement FOR THE SIX MONTHS ENDED 31 DECEMBER 2002
Group Income Statements
Six months ended Year ended
31 December 31 December 30 June
2002 % 2001 2002
Rm change Rm Rm
Revenue 1 921 23 1 560 3 294
Casino 1 430 1 146 2 417
Rooms 248 179 415
Food, beverage and other 243 235 462
Direct costs (828) (741) (1 508)
Gross profit 1 093 819 1 786
Indirect costs (578) (470) (999)
EBITDA 515 48 349 787
Depreciation (180) (167) (340)
Property rentals (33) (28) (63)
Exceptional items (18) (3) (19)
Operating profits 284 151 365
Interest income 14 34 11
Interest expense (151) (152) (257)
Profit before taxation 147 33 119
Taxation (59) (20) (63)
Profit after taxation 88 13 56
Minority interest (2) 5 (1)
Earnings attributable to ordinary
shareholders 86 378 18 55
Number of ordinary shares in issue
(million) 1 175 1 175 1 175
Average number of ordinary shares in
issue (million) 1 175 1 175 1 175
Basic earnings per ordinary share
(cents) 7,3 1,5 4,7
Headline earnings per share (cents) 7,4 1,4 5,7
Adjusted headline earnings per share
(cents) 8,5 1,8 7,2
EBITDA as a percentage of revenue (%) 27 22 24
Interest cover (times) 2,0 1,2 1,5
Determination of headline earnings
Earnings attributable to ordinary
shareholders 86 18 55
Headline earnings adjustments: 1 (1) 18
Loss on sale and write-down of assets - - 17
Other items 1 (1) 1
Taxation relief on above items - - (5)
Minority interest - - (2)
Goodwill amortised
(included in depreciation) - - 1
Headline earnings 87 412 17 67
Adjusted headline earnings adjustments: 17 4 18
Pre-opening expenditure written-off - 4 18
Provision for gaming levies relating
to prior periods 17 - -
Taxation relief on above items (4)
Adjusted headline earnings 100 376 21 85
Analysis of exceptional items:
Pre-opening expenditure written-off - (4) (18)
Provision for gaming levies
relating to prior periods (17) - -
Other items (1) 1 (1)
(18) (3) (19)
Group Balance Sheets
Six months ended Year ended
31 December 31 December 30 June
2002 2001 2002
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 4 026 4 142 4 132
Intangible assets 458 401 452
Investment and loans 142 124 142
4 626 4 667 4 726
Current assets
Accounts receivables and other 313 324 272
Cash and cash equivalents 101 87 128
414 411 400
Total assets 5 040 5 078 5 126
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shares and share premium 1 223 1 223 1 223
Retained earnings 788 640 677
Ordinary shareholders` equity 2 011 1 863 1 900
Minority interests 93 93 98
Total shareholders` equity 2 104 1 956 1 998
Non-current liabilities
Borrowings 1 564 1 823 1 975
Deferred taxation 391 362 370
1 955 2 185 2 345
Current liabilities
Borrowings 343 415 217
Other liabilities 638 522 566
981 937 783
Total liabilities 2 936 3 122 3 128
Total equity and liabilities 5 040 5 078 5 126
Interest-bearing borrowings to total
shareholders` equity (%) 91 114 110
Net asset value per share (Rand) 1,71 1,59 1,62
Capital expenditure 84 195 423
Capital commitments
- contracted 20 148 10
- authorised but not contracted 756 642 826
Six months ended Year ended
31 December 31 December 30 June
2002 2001 2002
Rm Rm Rm
Cash flows from operating activities
Cash generated from operations 548 350 811
Property rentals (36) (28) (63)
Exceptional items (18) (3) (19)
Net movement in working capital 5 48 113
Net interest expense (137) (118) (246)
Taxation paid (45) (53) (81)
Dividends paid (5) - (2)
Net cash inflow from operating activities 312 196 513
Cash flows from investing activities
Purchase of property, plant and equipment (84) (195) (423)
Proceeds on disposal of property,
plant and equipment - - 10
New investments and loans made - (91) (105)
Investments and loans realised - - -
Net cash outflow from investing activities (84) (286) (518)
Cash inflow from financing activities
Increase in shareholders` funding - - 1
(Decrease)/increase in borrowings (255) 92 47
Net cash (outflow)/inflow from financing
activities (255) 92 48
(Decrease)/increase in cash and cash
equivalents (27) 2 43
Cash and cash equivalents at beginning
of period 128 85 85
Cash and cash equivalents at end of period 101 87 128
Consolidated Statement of Changes in Equity
Ordinary shares Retained
and share premium earnings Total
Rm Rm Rm
Balances at 1 July 2002 1 223 677 1 900
Effect of adopting AC133 - 25 25
Restated balances at 1 July 2002 1 223 702 1 925
Earnings for the period - 86 86
Balances at 31 December 2002 1 223 788 2 011
Segmental Analysis
Revenues EBITDA Segment result
Six Six Six
months Year months Year months Year
ended ended ended ended ended ended
31 Dec 30 June 31 Dec 30 June 31 Dec 30June
2002 2001 2002 2002 2001 2002 2002 2001 2002
Rm Rm Rm Rm Rm Rm Rm Rm Rm
GrandWest 421 345 741 156 95 236 108 48 141
Sun City 408 339 694 52 34 74 24 9 25
Carnival City 272 233 488 87 63 130 56 30 69
Sugarmill 232 201 421 83 77 164 54 48 105
Boardwalk 128 104 214 45 28 60 34 11 22
Wild Coast 85 85 173 8 13 32 (12) 4 13
Carousel 81 86 158 9 12 16 4 6 5
Morula 73 72 140 16 19 33 13 15 27
Table Bay 71 43 110 22 9 31 7 3 4
Thaba`Nchu/Naledi 36 34 66 3 2 3 (2) (4) (10)
Zimbali 15 13 26 1 1 3 - (1) (1)
Flamingo 37 - 25 12 - 7 6 - (2)
Meropa 53 - 24 18 - 8 11 - (5)
Corporate/other 9 5 14 3 (4) (10) (19) (18) (28)
Group 1 921 1 560 3 294 515 349 787 284 151 365
Comments
Reporting
Consistent with prior periods, the group has prepared the results for the
period under review on a consolidated basis, including the consolidation of
associates, which reflects the group`s economic interests in certain of its
major casino operations. The consolidated results show the gross revenues and
costs as well as the total assets and liabilities of the group. The board of
directors is of the opinion that this gives shareholders a more complete
presentation of the overall financial position of the group. The accounting
policies used are consistent with those used in the annual financial statements
at 30 June 2002, with exception of the adoption of AC133, which became effective
in the current financial year. The impact of these adjustments has been to
reduce borrowings by R36 million and a notional interest charge of R4 million
was effected in the period under review.
The calculation of headline earnings has been based upon the Interpretation
of Statement of Investment Practice No. 1, issued by the South African Institute
of Chartered Accountants in December 2002. In terms of this circular the prior
year figures have been re-stated where applicable.
The group has decided to present "adjusted headline earnings" to assist users
of the group`s financial statements to better interpret the operating
performance of the group for the period under review. Adjusted headline earnings
exclude certain items of income or expense so as to enable users to obtain a
more meaningful comparison of the group`s performance with prior periods. These
adjustments include pre-opening expenses and material items considered to be
outside of the normal operating activities of the group and/or of a non-
recurring nature.
Commentary
The overall improvement in the local economy has benefited the group`s
casinos which experienced good growth in revenues over the corresponding period
last year. In comparing the results of the first half of the financial year with
the corresponding previous six months, it should be recalled that the events of
11 September 2001 had a significant impact on the group`s hotels and resorts, in
particular the Table Bay in Cape Town. South Africa as a destination has
recovered strongly and the group`s hotels and resorts have benefited from the
continued increase in foreign tourism, which took place in the period under
review.
Earnings and dividend
Group revenues of R1,92 billion were 23% up on the previous year. The group`s
hotels, resorts and casinos performed well, benefiting from the increase in
foreign tourism to South Africa, and the improved local trading conditions.
EBITDA at R515 million was 48% up on the previous year and the EBITDA margin at
27% was 5 percentage points above last year. The depreciation charge for the
half year at R180 million was 8% up on the previous year due to the opening of
the Flamingo (Kimberley) and Meropa (Polokwane) casinos in March and April 2002
respectively. The net interest charge at R137 million was marginally higher than
the prior year, whereas taxation at R59 million was R39 million up on the
previous year reflecting the increase in profitability.
Adjusted headline earnings of R100 million were R79 million up on the previous
year and adjusted headline earnings per share increased by 6,7 cents to 8,5
cents. Headline earnings per share at 7,4 cents were 6 cents up on the previous
year.
Uncertainty has arisen in some of the provinces regarding the basis of
computation of the levies on gambling revenues relating to prior periods. The
issues include the interpretation of the respective provincial gambling
legislation regarding the computation of levies, the effective dates of certain
elements of the legislation and the applicability of interest and penalties, if
any, on the principal. The group is obtaining legal advice on these issues and
will then endeavour to resolve the matters with the relevant gambling boards.
Taking into account all the facts and advice currently at its disposal, the
group has raised a provision in the half year in respect of certain of these
exposures.
In view of the group`s strong performance, the board has declared an interim
dividend of 2,5 cents per share (2002: nil).
Gaming
Gaming revenues rose by 25% to R1,4 billion compared to the previous year.
This growth can be attributed to the excellent performance of the group`s new
operations, notably GrandWest, as well as the opening of the Flamingo and Meropa
casinos in March and April 2002 respectively.
Certain of the group`s non-urban casinos, namely the Carousel, Morula Sun,
Thaba`Nchu Sun and Wild Coast Sun, continued to be impacted by competition from
the more conveniently located casinos, albeit to a lesser extent than in the
past. The Wild Coast Sun was also impacted by the closure of the Umtamvuna
bridge for repairs, following an explosion in late November 2002.
The launch of the group`s "Mystery Jackpots" and other new product releases
also contributed to the growth in revenues as did the establishment of smoking
facilities at all the group`s casinos.
The Sugarmill temporary casino at Mount Edgecombe was impacted by the opening
of the new casino at Village Green, Durban, which opened at the end of November
2002. A strong December tourist season in the Durban area, resulted in
displacement of revenue being less than anticipated.
Hotels and Resorts
Average group occupancy rose by 11 percentage points to 76% for the period.
Sun City achieved an average room occupancy of 78% and Table Bay 71%, 6 and 20
percentage points up on the previous year respectively. The group`s average room
rate at R748 was 24% ahead of last year.
New Developments
Construction of the Sibaya permanent casino at Umdloti will commence shortly
and is scheduled for completion in December 2004. Consideration is being given
to the relocation of the Thaba`Nchu casino licence to Bloemfontein.
Capital Expenditure and Borrowings
A smoking casino was established at Sun City in November 2002. The Sun City
Hotel slots floor will be upgraded to accommodate the group`s smart card
technology in the third quarter and refurbishment of the Cascades rooms will
commence in the last quarter of the financial year.
Capital expenditure for the six months totalled R84 million (2002: R195
million) and it is estimated a further R120 million (2002: R303 million) will be
spent in the six months to 30 June 2003.
Cash flows during the period under review were strong and the group reduced
borrowings by R255 million in the six months to date.
Prospects
The economic outlook is much improved and forward bookings remain strong. A
conflict in the Middle East, however, would have an adverse impact on foreign
tourism. Of more concern from a South African perspective, is the slowdown in
economic growth of certain primary markets such as Germany, the United Kingdom
and the United States of America.
The Sugarmill temporary casino and Wild Coast Sun will continue to be
impacted by the new competitor facility in Durban and as a consequence, their
contribution to the group earnings will be lower in the second half. Against
this background, the growth in earnings in the second half will not be
comparable to the first half of the financial year.
Employee Share Scheme
In terms of the licence conditions for the group`s new casino operations, the
SISA group, subject to shareholder approval, is required to establish a share
scheme which will enable eligible employees, other than management, to
participate, through a trust, in the benefits of share ownership. A circular
setting out the salient features of the scheme and including a notice of general
meeting, at which the adoption of the scheme will be considered, will be posted
to shareholders during March 2003.
For and on behalf of the board
D M J Ncube P D Bacon
Chairman Managing Director
21 February 2003
Registered office: Transfer office:
27 Fredman Drive Computershare Investor Services Limited
Sandown 70 Marshall Street
Sandton Johannesburg
2031 2001
DECLARATION OF INTERIM DIVIDEND
Notice is hereby given that an interim dividend of 2,5 cents per share (2002:
nil) for the six months ended 31 December 2002 has been declared, payable to
shareholders recorded in the books of the company at the close of business on
the record date appearing below. The salient dates applicable to the interim
dividend are as follows:
2003
Last day to trade cum interim dividend Thursday, 13 March
First day to trade ex interim dividend Friday, 14 March
Record date Thursday, 20 March
Payment date Monday, 24 March
No share certificates may be de-materialised or re-materialised between
Friday, 14 March 2003 and Thursday, 20 March 2003, both days inclusive.
Dividend cheques will be posted and electronic payments made, where applicable,
to certificated shareholders on the payment date. Dematerialised shareholders
will have their accounts with their Central Securities Depository Participant or
brokers credited on the payment date.
21 February 2003
Directorate: D M J Ncube (Chairman), P D Bacon (Managing) (British)*,B P Botha,
D C Coutts-Trotter*, G A Macmillan, T B Mparutsa, K O Omar,
K D Wienand (alt).
*Executive Group Secretary: S A Bailes
Sun International (South Africa) Limited
Registration number: 1977/071333/06
Share code: SIS
ISIN: ZAE000010104
www.suninternational.com
Date: 24/02/2003 03:00:00 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
