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Sun International Limited
Registration number: 1967/007528/06
Share code: SUI
ISIN: ZAE000097580
LEI 378900835F180983C60
AUDITED summary group financial results
AND CASH DIVIDEND DECLARATION announcement
for the year ended 31 December 2022
Key highlights
GROUP INCOME
up 44%
to R11.3 billion
GROUP BASIC EARNINGS
up >100%
to 224 cents earnings
GROUP HEADLINE EARNINGS
up >100%
to 226 cents earnings
GROUP ADJUSTED HEADLINE EARNINGS
up >100%
to 439 cents earnings
DIVIDENDS
Interim
Up to 88 cents per share
Final
Up to 241 cents per share
Introduction
On the back of an excellent performance in the first half of 2022, Sun International continued to deliver outstanding results in the second half of the
year. Income for the year was up 44% from the prior year to R11.3 billion. Sustainable cost savings contributed to the South African adjusted EBITDA
being up by 96% to R3.3 billion. Adjusted headline earnings improved from R110 million to earnings of R1.1 billion with adjusted headline earnings of
439 cents per share up from 44 cents per share, in the prior year. Sun International's performance reflects the quality of its operating businesses and
disciplined execution on strategy which continues to drive shareholder value.
Gaming income from casinos, Sun Slots and SunBet which make up 80% of group income, showed a significant recovery with income up 36%. The
group was able to successfully defend and grow market share in all provinces, while income generated from Sun Slots recovered to pre-Covid-19
levels. SunBet generated record income during the year under review and is well on its way to achieving our aggressive growth targets for this business.
As a result of sustainable cost savings, the South African operations' adjusted EBITDA margin improved from 28.2% in 2019 to 29.7% in 2022. Without
the impact of the net diesel costs of R53 million, due to load shedding, the group would have achieved its targeted 30% adjusted EBITDA margin.
Operational highlights
Urban Casinos
Our urban casino strategy is anchored on three core focus areas being customer acquisition and retention, customer experience and margin
improvement.
Our improved use of data and analytics combined with a selective focus on certain market segments enabled us to grow market share in key provinces.
Income has proven resilient and is swiftly recovering from the effects of the pandemic. Overall, urban casino operations generated adjusted EBITDA of
R2 445 million for the year under review, up 71% from R1 433 million in 2021 with adjusted EBITDA margin at 36.4%, reflecting a 200 basis point
improvement on 2019 margins.
Sun Slots
The Sun Slots business proved remarkably resilient, with a strong recovery in trading. It swiftly reactivated closed sites, resulting in 5 160 of the Limited
Payout Machines (LPM) being active for play during the year under review, and an increase of 508 machines relative to 2021. We continue to engage
with the regulators to increase the roll out of LPMs to the 6 500 LPM positions that have been allocated.
Sun Slots income increased 20% from R1 242 million to R1 491 million with adjusted EBITDA up 17% from R313 million to R367 million for the year
under review, notwithstanding the impact that escalated load shedding had on LPM operations in the last quarter of the year.
SunBet
SunBet has continued its strong growth trajectory and remains an exciting prospect, with long-term transformational growth potential for the group.
Overall, income was up 86% on the same period in 2021 with growth of 135% in the second half of the financial year. Active players on our rapidly
expanding online sports betting and gaming platform continued to grow with additional games being offered and the overall player experience being
enhanced.
At the end of the year under review, we achieved substantial growth in our key performance indicators against 2021 which included:
- active players up 50%;
- sports turnover up 23%; and
- deposits up 130%.
SunBet offers the group significant and exciting growth potential and with this in mind, we continue to invest in people, systems and marketing in order
to significantly increase our share of the fast-growing online gaming market.
We are on a focused journey to grow our current operating market and launch into new markets. In this regard, we have concluded a 70% investment in
SunBet Africa Holdings, for a consideration of USD3.2 million (R52.4 million). This company has online sports betting and casino licences to operate in
Ghana, Zambia and Kenya. We are in the early stages of rolling out the SunBet operating model and brand in these markets, which have attractive long
term growth potential.
Resorts and hotels
Following a difficult start to the year due to the closure of borders due to the Omicron Covid-19 variant, we have experienced a strong recovery in our
resorts and hotels business. Domestic leisure, conferencing and sports and events revenues exceeded 2019 levels while international leisure business
recovered strongly in the second half of the year.
Total resorts and hotels revenue was up 65% on the prior year, to R2 571 million. Total revenue was in line with 2019 levels, while casino income
exceeded 2019 as a result of us leveraging the Sun City Resort and Wild Coast Sun for the benefit of our MVG and SunBet customers. Overall, our
resorts and hotels generated an adjusted EBITDA of R450 million, making a complete turnaround from a loss of R56 million in the prior year and
adjusted EBITDA of R300 million in the 2019 year. The adjusted EBITDA margin of 17.5% reflects a substantial improvement from the adjusted EBITDA
margin of 11.7% achieved in 2019 and represents meaningful progress towards achieving our margin targets.
Debt
Overall group debt (excluding IFRS 16 lease liabilities) reduced from R7.1 billion at 31 December 2021 to R6.6 billion at 31 December 2022. Our South
African debt reduced from R6.4 billion at 31 December 2021 to R5.9 billion at 31 December 2022, after allocation of cash generated to capital
expenditure, investments, share buy-backs and dividends. Our South African debt to adjusted EBITDA and interest cover of 1.84 times and 6.51 times
respectively is well within our lenders' covenants of 3.25 times and 3.0 times respectively. Our statement of financial position is in a strong position with
unutilised facilities of R2.5 billion. We continue to prioritise increasing free cash flows and disciplined capital allocation to maximise shareholder value
within a set of fundamental capital allocation principles.
Outlook
The group's urban casino properties and LPM operations are demonstrating continued resilience despite the tough operating environment. SunBet is
achieving record numbers in terms of revenue and all key indicators, and will deliver another step change this year. Our resort and hotel properties have
continued to perform exceptionally well, and we anticipate another good year from them in 2023.
Load shedding is impacting our costs, with diesel expense incurred between R12 million and R14 million a month with an approximate 20% offset
saving in electricity. We have accelerated our programme to explore all options around a comprehensive energy plan which will not only solve this
challenge but also achieve good returns on capital.
Our balance sheet remains strong, and guided by our clearly laid out capital allocation framework. Going forward, we will continue to be disciplined
with capital allocation, targeting a 2 times net debt to adjusted EBITDA and paying out 75% of adjusted headline earnings as dividends.
Dividend declaration
Notice is hereby given that the Board has declared a final gross cash dividend of 241 cents (192.80000 cents net of dividend withholding tax) for the
year ended 31 December 2022, payable to shareholders recorded in the register of the company at the close of business on the record date appearing
below. The company did not declare a dividend in the prior comparative period. The dividend has been declared from reserves and therefore does not
constitute a distribution of 'contributed tax capital' as defined in the Income Tax Act, 58 of 1962. A dividend withholding tax of 20% will be applicable to
all shareholders who are not exempt.
The issued share capital at the declaration date is 262 052 195 ordinary shares. The salient dates for the final dividend will be as follows:
Declaration date Monday, 13 March 2023
Last day to trade cum dividend Tuesday, 28 March 2023
Shares commence trading 'ex' dividend Wednesday, 29 March 2023
Record date Friday, 31 March 2023
Payment date Monday, 3 April 2023
Share certificates may not be dematerialised or rematerialised between Wednesday, 29 March 2023 and Friday, 31 March 2023, both days inclusive.
Ordinary shareholders who hold dematerialised shares will have their accounts at their CSDP or broker credited or updated on 03 April 2023. Where
applicable, dividends in respect of certificated shares will be transferred electronically to shareholders' bank accounts on the payment date. Where the
transfer secretaries do not have the banking details of any certificated shareholders, the cash dividend will be held in trust by the transfer secretaries
pending receipt of the relevant certificated shareholder's banking details after which the cash dividend will be paid via electronic transfer into the
personal bank account of the certificated shareholder.
Financial overview
31 Dec 31 Dec
R million 2022 % 2021
Income 11 274 44 7 812
Adjusted EBITDA 3 306 96 1 685
Depreciation and amortisation (828) 4 (863)
Adjusted operating profit 2 478 >100 822
Foreign exchange loss (1) 50 (2)
Net interest (495) 12 (564)
Net external interest (469) 13 (538)
Profit relating to the interest rate swaps 56 (5) 59
IFRS 16 interest (82) 4 (85)
Adjusted profit before tax 1 982 >100 256
Taxation (628) <(100) (66)
Adjusted profit after tax 1 354 >100 190
Minorities (270) <(100) (73)
Adjusted attributable profit 1 084 >100 117
Share of associates 1 100 -
Continuing group adjusted headline earnings 1 085 >100 117
Discontinued headline loss - (100) (7)
Group adjusted headline earnings 1 085 >100 110
Adjusted headline earnings adjustments (526) <(100) 155
Group headline earnings 559 >100 265
Headline earnings adjustments (4) (100) (2)
Group basic earnings 555 >100 263
Basic earnings (cents per share) 224 >100 105
Headline earnings (cents per share) 226 >100 106
Adjusted headline earnings (cents per share) 439 >100 44
Interim dividend paid (cents per share) 88 100 -
Final dividend declared (cents per share) 241 100 -
Further information
This short-form announcement is the responsibility of the directors and is only a summary of the information contained in the full announcement. Any
investment decision should be based on the full announcement published on Sun International's website and on the SENS link below. Only the
short-form announcement will be available on SENS. The full announcement will be available on the link www.suninternational.com/investors or
through this link https://senspdf.jse.co.za/documents/2023/jse/isse/SUI/FY2022.pdf and shareholders and/or investors will be able to view the full
announcement at Sun International's registered office and the offices of the sponsor, at no charge, during normal office hours from Monday to Friday,
08h00 to 16h30.
This report is extracted from audited results but is itself not audited. The auditors, Deloitte & Touche, have audited the consolidated financial statements
and their unmodified audit opinion, including key audit matters, along with the audited consolidated annual financial statements are available for
inspection at the Company's registered office and also available on Sun International's website at www.suninternational.com/investors. The company's
external auditor has not audited or reported on any forecasts included in these audited summary group financial statements or this announcement.
13 March 2023
Sponsor
Investec Bank Limited
