Sun International cuts Sun City valuation by R306m after loss
Increased drop hits tables, while opening of a third electronic bingo terminal outlet in Rustenburg keeps slots under pressure in the local market
Sun International has reduced the value of its flagship asset, Sun City, by R306m after that unit slipped into an operating loss in 2018.
Sun City’s income fell 3% to R1.7bn in the year ended December, while that asset made an adjusted operating loss of R8m, from a profit of R26m in 2017.
The resort is Sun International’s third largest by income, after GrandWest and Monticello.
“Tables were impacted by a lower drop, while slots continued to come under pressure in the local market following the opening of a third electronic bingo terminal outlet in Rustenburg in October 2017,” the group said of its Sun City asset.
Revenue from rooms there declined 1% as occupancies fell, partly because of the severe hailstorm in mid-December 2018, which resulted in the resort temporarily losing a number of rooms.
Included in Sun City’s results was a “business interruption claim” of R25m relating to the storm.
Sun International CEO Anthony Leeming, speaks to Business Day TV about their latest results and what it means for the company's growth trajectory.
Sun International said group income in 2018 rose 7% to R16.4bn, while attributable profit fell 4% to R464m.
“Trading in SA remained subdued with continued downward pressure on the consumer due to the economic environment, the 1% VAT increase and a weakening rand,” it said.
The VAT increase cost the group R44m.
In Chile, trading improved in the second half of the year, Sun International said.
However, the group said it only secured one of the five municipal licences it had bid for in that country. On the others, it lost out to a competitor whose bid was “substantially above ours, and at levels which would not generate satisfactory returns for us”.
“We continue to deal with loss-making entities and in this regard have commenced with the restructure of the Boardwalk and Carousel operations,” the group said.
The company said it will look at new growth opportunities in Latin America, including in the online space, where a number of countries are taking steps to regulate that industry.