Sun International reports a record dividend in its full-year results for 2022, with large growth in its alternative gaming businesses.
Sun International said that a combination of market share gains in its urban casinos, the turnaround of its Sun City, growth in its alternate gaming businesses, and cost-saving measures saw the group’s adjusted EBITDA growing by 96% to R3.3 billion.
Adjusted headline earnings also improved from R110 million to earnings of R1.1 billion, with adjusted headline growing from 44 cents per share in the prior year to adjusted headline earnings of 439 cents per share.
The adjusted EBITDA margin improved from 28.2% in 2019 to 29.7%. The group said that it would have achieved its target 30% adjusted EBITDA margin, if not for the net diesel costs of R53 million due to load shedding.
Moreover, urban casinos grew by 41% compared to 2021, with overall urban casinos generating an adjusted EBITDA of R2,445 million for the year.
Due to the improved financial position of the group, it resumed dividend payments, with a total cash dividend of 329 cents per share for the year, representing a dividend payout of 75% of AHEPS.
“We are particularly pleased by the significant progress we are making with our online strategy with SunBet showing strong growth in all key indicators … Gaming income from casinos, Sun Slots and SunBet showed a significant recovery with income up 36%, “Sun International CEO Anthony Leeming said.
Suns slots delivered organic growth, with over 5,000 Limited Payout Machines (LPM) being active in the period under review. The group said that it will work with regulators to increase the roll out of LPMs to the 6 500 LPM positions that have been allocated.
Sun Slots income increased to R1,491 million from R1,242 million.
Moreover, SunBet’s income was up 86% compared to 2021, with growth of 135% in the second half of the financial year. Sun International’s online sports betting and gaming platform continued to grow with more games added to the service.
In addition, the number of active players for SunBet were up 50%, while deposits were up 130%.
The groups added that it will expand into new markets, with a 70% investment in SunBet Africa Holdings, for a consideration of $3.2 million – roughly R58 million.
“The company has online sports betting and casino licenses 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,” Leeming said.
Despite a tough start to the year due to the Omicron variant, the group experienced a strong recovery in its resorts and hotels, with domestic leisure, conferencing, and events exceeding 2019 levels, while international leisure business recovered in the second half the year.
Total resorts and hotels revenue was thus up by 65% on the prior year to over R2,5 billion.
Overall, the resorts and hotels generated an adjusted EBITDA of R450 million, compared to the R56 million loss the prior year.
The group said that it has successfully concluded its de-gearing programme and is in a good position to deliver cash returns to investors,
“We anticipate that SunBet will continue with strong revenue growth, which will be aided by the introduction of the recently launched slots offering. Our omni-channel offering, with Sun International’s premium hotel and casino portfolio and integrated MVG programme, will assist in increasing our share of the online gaming market,” said Leeming.
The group added that resort and hotel properties are performing well and expect 2023 to be another strong year.
However, load shedding is having a heavy impact on costs, with diesel expenses totalling between R12 to R14 million. The group said that it was exploring all options for a comprehensive energy plan that will minimise the effect of load shedding while also achieving a good return on capital.