Sun International revenue growth slowed

“We're going to continue to focus on expansion and renewal of our assets. It is tempting to cut back on these but if you do you tend to miss out at a later stage,” Coutts-Trotter said, following

this announcement.

The share price plunged 7,5% to us$ 14.61 after the release of the results for the six months to December. Gaming revenue increased 13% to us$ 364 million in the six months to December but revenue growth was slower compared with previous periods, mainly as a result of interest rate s and higher inflation.

“We're going to ride this out. There is no real choice. We're not going to cut back on our revenue-generating opportunities or marketing promotions. “We'll just have to focus on overall cost containment,” Coutts-Trotter said.

Hotels contributed us$ 52.8 million in revenues and Coutts-Trotter said that this had shown more resilience than the gambling business as it was less exposed to interest rates and inflation than gambling.

The group's earnings before interest, tax, depreciation and amortisation (Ebitda) showed an increase of 14%, while its underlying operating profit dropped from R908m in the same period last year to us$ 105.9 million this year, largely due to a black economic empowerment transaction charge of us$ 22.8 million.

“The empowerment transaction charge of us$ 22.8 million recognises the difference between the price at which Grand Parade Investments was granted an option over 5% of the equity in SunWest and the estimated fair value,” the company said.

Adjusted earnings per share were up 4% on last year, taking into consideration the dilution experienced from a us$ 288.7 million share buy-back last year. Debt increased to just under R6bn while total capital expenditure for the six months was us$ 57.2 million, including expansion, refurbishment and asset replacement costs.

Coutts-Trotter said “about us$ 125.5 million” had been earmarked for offshore investments but said that the priorities were the group's $200 million casino and accommodation development in Chile and the $150 million refurbishment of Nigeria's Federal Palace Towers hotel.

The 40% stake in the Chilean casino project, Mostazal, he said, had cost the group about $ 44 million and included a gambling licence covering 70 km, including Santiago. The Chilean gambling regulator gave Sun International and its partners, Austrian group Novamatic, the go-ahead for the project in December last year. It is set to open in May next year.

“Our interests in neighbouring countries have been coming through nicely. Previously, people were saying that it was trading lower than our local operations, but it has actually helped us out,” Coutts-Trotter said in light of the local slowdown.

The group has recently employed the services of A-list actress Charlize Theron to promote it.