According to Sun International CEO David Coutts-Trotter, revenue growth has slowed from rates achieved previously because of the impact on disposable income and consumer confidence from interest rate increases and higher inflation. In announcing results for the six months ended 31 December 2007, Sun International reported a 12% increase in revenue and a 14% increase in EBITDA. Gaming revenues grew by 13% and hospitality and other revenues by 10%, but revenue growth had slowed by the end of the period.

Revenue growth at the Boardwalk Casino was particularly slow due to a local labour strike but was strong at Sibaya, where the unit improved its share of the KwaZulu-Natal market to 36%. There was an increase in international visitors at the group’s Zambian properties and trading conditions improved in Botswana as a result of a higher market share following refurbishment of the property and an improved economy in the country.

GrandWest grew revenue 13% and EBITDA 8% to R363 million. The additional costs associated with the significantly enlarged casino and entertainment facilities resulted in an EBITDA margin decline of 1.9 percentage points to 41.3%. Carnival City grew revenue 11% and EBITDA of R165 million was up 7% with margins declining 1.2 percentage points to 34.0% due to higher marketing and promotional expenditure, although margin improvement is foreseen for the full year. The group’s share of the Gauteng market improved marginally to 22%.

Construction of the casino project located south of Santiago in Chile is said to be progressing well, with the casino component anticipated to open to the public in October 2008. The retail and entertainment components are scheduled for completion at the end of calendar 2008 and the hotel is due to open in May 2009. The US$200 million development will comprise a casino with 1,500 slot machines and 80 tables, a large conference centre, a 150-room hotel, bars and restaurants, and other entertainment facilities.

In Nigeria, Sun International assumed operational responsibility for the existing Federal Palace Towers hotel on Victoria Island in October 2007 and having provided bridging finance of US$10 million has commenced the furnishing of the 150-room Federal Palace Hotel. The terms of the gaming licence are being finalised with the Nigerian authorities. Once the licence is issued the refurbishment of the 230-room Federal Palace Towers hotel and the building of a new casino with 24 tables and an initial 300 slot machines will commence. The cost of the project is now estimated at US$150 million.

Looking ahead, David Coutts-Trotter said that current trading, particularly in the group’s casinos in South Africa, reflected a significant slowdown in the rate of revenue growth. “The group is projecting a lower rate of revenue and EBITDA growth in the second half that will impact adjusted headline earnings per share for the full year. However, the intention is to increase the final dividend by a similar percentage to the increase in the declared interim dividend.” (E-03.07.08)

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