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South Africa- Sun reduces first half loss as casinos increase by 61 per cent

By - 31 August 2021

Sun International delivered what it said was a ‘credible result for the half year ended 30 June 2021, demonstrating the benefits of achieved cost savings, efficiencies and continued deleveraging,’ reporting a loss of R59m for the period.

Whilst down impressively from the loss of R1.4bn reported for the the same period in 2020, the group’s casinos remain under pressure due to closures caused by COVID.

The group said: “The performance was achieved despite the extremely challenging South African trading environment, which saw businesses either locked down or operating under significant and varied restrictions as a result of the Covid-19 pandemic. During the period under review, we continued to focus on ensuring that the group remained in a strong position to trade through the lockdown periods and related restrictions imposed on its operations.

“Our core casino business, which represents approximately 70 per cent of earnings, has proven its resilience and we anticipate that we will continue to see improvement in income and adjusted EBITDA as the restrictions are eased further and ultimately lifted. Our Alternate Gaming operations remain an exciting growth platform and are now contributing meaningfully to the group. Management has performed extensive work on its cost base and has realised substantial sustainable savings in the company’s cost structure going forward. These actions and the various operational initiatives which we have undertaken and implemented have ensured that the group remains well placed to be able to deal with the current and future challenges and has positioned the group to recover and drive focused growth into the future
as a leaner and more efficient business.”

Overall, income from the South African operations improved by 52 per cent from the prior comparative period to R3.7bn with adjusted EBITDA up from R89mto R749m. With the easing of adjusted alert level 3 restrictions on 1 February 2021 and return to alert level 1 restrictions on February 28 2021, income and adjusted EBITDA improved steadily throughout the period. Casino income across the South African operations increased by 61 per cent compared to the corresponding period in 2020.

Sun said: “Trading was impacted by, inter alia, the imposition of curfew hours and the restrictions on the serving of alcohol. The limited capacity resulting from machines being switched off, caused challenges during peak periods. The South African hotel industry continues to be significantly impacted by the effects of the Covid-19 pandemic and the associated restrictions and lockdowns. While the hotel industry has re-opened for domestic leisure and business travel, trading levels remain severely muted. International travel for business and leisure purposes resumed on 1 October 2020, albeit with strict restrictions in place and limited demand. Food and Beverage income remains well below the prior year due to the closure of certain outlets, lower occupancies and the various Covid-19 restrictions. We have however been able to manage costs with employees either being temporarily laid off or working reduced hours.

The group has identified Alternate Gaming as a strategic growth area, and in the long term will counter balance (or even augment) any decline in its land based casino business. During the period under review, the online gaming business received increased strategic focus by the group. In addition to sports betting, SunBet now offers Lucky Numbers, Bet Games and Virtual Games. In August 2021 SunBet launched Live Games with trading to date being encouraging. To strengthen the leadership in this area, the group announced the appointment of Nigel Payne as a nonexecutive director on the Sun International board. Mr. Payne, who is based in the UK, is a well renowned expert in the online sports betting business, having founded, run and listed online sports businesses. He also advised the White House on two different occasions around the regulations and trends in this sector. SunBet continues to trade well growing strongly its active customer base as well as its product offering.

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