Two of South Africa’s biggest gaming companies – Sun International (SI) and Gold Reef Resorts (GRR) – published financial results yesterday. In the six months ended 30 June 2009 GRR reports a 3% increase in total revenue and a 4% rise in EBITDAR due to an active focus on cost controls. SI, in its full year report, says revenue was up 6% but EBITDA was down 3%, affected in part by the company’s Chilean casino resort.

SI lifted revenue in ‘extremely tough economic conditions’ and, according to CEO David Coutts-Trotter, ““The loss at Monticello in the first quarter of the year was equal to the loss in the remaining three quarters, while in the final quarter the property broke even. So, despite the tough trading conditions, Monticello is moving towards making a profit and it is reasonable to assume it will break even again in the first quarter of the new financial year.”

GRR CEO Steven Joffe commented on his company’s half year figures showing performance was up in spite of tough trading conditions. “We are delighted with these results which were achieved despite a deterioration in footfall as consumers continued to feel the pressure of high interest rates and the inflationary environment. In particular we are pleased with the performance in Gauteng which managed to grow its market share from 24.5% to 25.6%.”

SI’s Carnival City property in Gauteng achieved 5% growth and the group’s share of the market remained constant at 20.9% despite the opening of a seventh casino in the region. Given prevailing economic conditions, funding requirements for developments in Chile, Nigeria and the Eastern Cape and the lower gearing levels required generally from funding institutions in the current market, the company has elected to preserve cash flows and strengthen the balance sheet of the group and therefore has not declared a final dividend for 2009.

Both GRR and SI agree that consumer activity remains subdued and that little improvement in current economic conditions is anticipated. Joffe concluded, “While we have not yet seen any uptick in consumer activity, which remains subdued, Gold Reef is well placed to benefit from an improvement in economic conditions. Going forward our priorities will remain focused on cost controls and enhancing our current strong portfolio of casinos.”

Coutts-Trotter summed up, “Contributions are expected from the operations in Chile and Nigeria which should result in growth in revenue and EBITDA in the year ahead. The increased capital charges relating to these investments will however offset any contribution to adjusted headline earnings per share.” (E-08.28.09)

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