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SUN INTERNATIONAL ANNUAL REPORT ’10
The group achieved revenue for the year ended 30 June 2010 of
R8.0 billion which was 1% below last year, but 3% lower if Monticello
(Chile) and the Federal Palace (Nigeria) are excluded.
Gaming revenue was in line with last year at R6.2 billion with tables
revenue up 2% while slots revenue declined by 1%. Excluding Monticello
and the Federal Palace, slots and tables revenue both declined by 2%.
Customers continued to feel the economic pressures, although popularity
of the properties remains high and footfalls strong, spend per customer
has generally declined.
Rooms revenue of R857 million declined by 5% from last year. Group
occupancy was down 5 percentage points at 67% and an average room
rate of R898 was achieved, which was a marginal decline on last year.
The group’s management fee income of R607 million was 9% lower than
last year, while related EBITDA of R345 million was 10% lower. Included
in revenue are development fees of R26 million compared to R40 million
last year. Management activities remain the second largest contributor to
group EBITDA at 14% of total EBITDA.
As a result of the decline in revenue and general cost pressures, the gross
margin at 55.8% was 1.9 percentage points down on last year. Excluding
Monticello where the gross margin is lower due to the higher gaming taxes,
the group’s gross margin declined by 2.0 percentage points to 57.2%.
EBITDA of R2.5 billion was 7% lower than last year and the EBITDA
margin declined 2.2 percentage points to 32.0%. The lower margin is
due to the contraction in comparable revenues combined with increases
in operating costs. Excluding the results of Monticello and the Federal
Palace, the EBITDA margin was 32.9% versus 36.2% last year.
Golden Valley Casino
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The net EBITDA effect of the Chile earthquake of R51 million represents
the net amount received from the business interruption claim and is in
effect the expected EBITDA had the earthquake not occurred.
Profit before tax at R1 250 million was 14% below last year. Depreciation
and amortisation charges were 4% up on last year (2% excluding
Monticello) while the net interest paid decreased by 19% from R592 million
to R482 million as a result of lower prevailing interest rates and lower
borrowings. Fluctuations in the Rand and Chilean Peso against the US Dollar
during the year resulted in a net exchange loss of R14 million compared to
a gain of R34 million last year.
Tax at R518 million declined by 16% from last year as a result of the lower
earnings in the current year and a prior year over-provision. The effective
tax rate excluding non-deductible preference share dividends, STC and
the prior year over-provision was 36% (2009: 33%) due primarily to other
permanent differences. These factors will result in the effective tax rate
remaining well above the statutory tax rate for the next few years.
Net headline and adjusted headline earnings adjustments of R1 million
include the Monticello insurance deductible of R59 million, pre-opening
expense relating primarily to Monticello of R28 million almost entirely
offset in part by a SARS refund relating to a previous claim of an onerous
contract deduction that has now been allowed by SARS. The prior year
adjustments included an impairment of goodwill of R108 million relating
to Monticello, pre-opening expenses of R21 million and a gain on the
realisation of R47 million of the foreign currency translation reserve
arising on the distribution of a dividend from RRHL.