unaudited interim results announcement · recommendation regarding the securities of the company....

20

19

UNAUDITED

INTERIM

RESULTS

ANNOUNCEMENTfor the six month period ended 30 June 2019

1

Certain statements in this document may constitute

’forward looking statements’. Such forward looking

statements reflect the company’s beliefs and

expectations and involve known and unknown risks,

uncertainties and other important factors that could cause

the actual results, performance or achievements of Sun

International Limited and its subsidiaries to be materially

different from the future results, performance or

achievements expressed or implied by such forward

looking statements. The company undertakes no

obligation to update publicly or release any revisions to

these forward looking statements to reflect events or

circumstances after the date of this document, or to

reflect the occurrence of anticipated events. Past

performance of the company cannot be relied on as a

guide to future performance. Forward-looking statements

speak only as at the date of this document.

You are cautioned not to place any undue reliance on

such forward looking statements. No statement in this

document is intended to be a profit forecast.

This document is being supplied to you for informational

purposes only. This document is not a prospectus or

an offer or invitation or inducement to subscribe for or

purchase any securities, and nothing contained herein

shall form the basis of any contract or commitment

whatsoever. This document does not constitute a

recommendation regarding the securities of the company.

No representation or warranty, express or implied, is

given by the company, its subsidiaries or any of their

respective directors, officers, employees and affiliates

or any other person as to the fairness, accuracy or

completeness of the information (including data obtained

from external sources) or opinions contained in this

document, nor have they independently verified such

information, and any reliance you place thereon will be

at your sole risk. Without prejudice to the foregoing,

no liability whatsoever for any loss howsoever arising,

directly or indirectly, from any use of information

contained in this document, or otherwise arising in

connection therewith is accepted by any such person

in relation to such information. None of the data in this

document has been reviewed or reported on by the

group’s auditors and no guarantee or warranty as to

the data’s accuracy, expressed or implied, is given.

Disclaimer

co

nte

nts

2

OVERVIEW AND KEY HIGHLIGHTS

TIME SQUARE UPDATE

STRATEGIC OBJECTIVES

SEGMENTAL REVIEW

CAPITAL INVESTMENT

BORROWINGS AND CASH FLOW

SUPPLEMENTARY INFORMATION

FINANCIAL REVIEW

3

OVERVIEW AND

KEY HIGHLIGHTS

The Park Hyatt Hotel and Casino, Mendoza, Argentina

4

GROUP INCOME

UP 7% TO

R8.5

billion

GROUP ADJUSTED

OPERATING PROFIT

UP 5% TO

R1.3

billion

GROUP ADJUSTED

EBITDAR

UP 3% TO

R2.2

billion

GROUP ADJUSTED

DILUTED HEPS

UP 30% TO

136 cents

per share

The Palace, South Africa

5

Overview and key highlights

SOUTH AFRICA

Trading remained

subdued

• The South African

economy continues

to under perform,

with low GDP

growth, high

unemployment

and an uncertain

political landscape

Income increased by

2% with EBITDAR up

by 4%

• Gaming income up

by 3%

• Rooms revenue down

by 1%

• Overall 0.5% EBITDAR

margin growth in South

Africa

Time Square market

share

• 14.6% for H1, up by 1.1%

• 15.2% for Q2

• Market share since H1 to

25 August at 17.4%

Sun Slots income up by

13% and adjusted EBITDAR

up by 19%

SunBet income up by 146%

and EBITDAR at R20 million

Transactions

concluded to:

• Increase interest

in Sibaya by

22.4% and

Manco’s for

R540 million

• Increase interest

in Sun Slots by

30% for

R504 million

Debt

• The debt levels

reduced from

R9.2 billion in

December 2018

to R8.8 billion

• Debt to EBITDA

down from 3.0x

to 2.8x

LATAM

Disposing of

14.94% interest

in Sun Dreams

for US$86 million

• Regulatory

approval

outstanding

Comparable

Sun Dreams

performed under

expectations

• Income in line with

the prior period

while EBITDA

decreased by 7%

• Monticello income

was up by 2% and

EBITDA down

by 8%

Acquisitions

• The prior year

acquisition of

Thunderbird Resorts

and Park Hyatt

Mendoza generated

revenue of R149 million

and R213 million

respectively with both

generating EBITDAR

of R31 million

Ocean Sun Casino

in Panama and

Sun Nao Casino

in Colombia losses

reduced significantly,

with Panama

incurring an EBITDA

loss of R2 million and

Colombia breaking

even

New Peruvian gaming

tax which resulted in

gaming tax increasing

by 4.8% on average

• The gaming industry

has launched a legal

challenge against this

as unconstitutional and

illegal

• Sun Dreams has made a

provision of R13 million

relating to this tax

6

STRATEGIC

OBJECTIVES

Boardwalk, South Africa

7

• Refurbishments:

- Carnival has refurbished its Prive and has commenced with its

rooms refurbishment. Prive opened end of August

- Refurbishment of the Palace and Cascades rooms at Sun City

ongoing

- Sun City repaired following storm damage

- Monticello Prive refurbished and new Prive smoking deck under

construction - due to open December 2019

- Hotels in Chile to undergo refurbishment

• Food and beverage offering under review at Time Square - La Rosa

replaced ETAS, changes being made to Brew Monkey

• Launched CLEAR (Connect, Listen, Engage, Act, Reconnect)

customer and leadership service philosophy

• Significant focus on repairs, maintenance and refurbishment of our

properties

• Customer satisfaction scores improving

• Implementing Playtech casino management system in Mendoza

Improve guest experience


8

• The head office optimisation and efficiency review underway

- to be completed by November

• Kronos and advance scheduling starting to show benefits

• Sold Miss SA but remain venue sponsor - significant reduction in cost

• Integration of key systems remain ongoing

• Shared Service Centre rollout continuing. All payroll now centralised

• Operating margins critically assessed and benchmarked in order to

set targets

• South African EBITDA margin improved

Efficiency and optimisation


9

SOUTH AFRICA

• No progress with the draft Tobacco Bill

• The Bill for the proposed new Gauteng tax regime withdrawn by MEC

• The draft legislation to be published for comment on proposed national gambling

tax of 1%

• Comments on the amended National Gambling Amendment Bill submitted via CASA

• No update on Western Cape Licence Relocation Bill

• The Boardwalk restructure continue to be delayed

• The Wild Coast licence bid was submitted and the public hearing concluded. The

Eastern Cape Gambling Board has subsequently extended the existing Wild Coast

Casino licence for six months to 28 February 2020

• The Carousel restructure completed with hotel and tables closed. Slots reduced to

400

• Submitted a bid to renew the Table Bay lease which expires in 2022

• Partnered with Flanagan & Gerard and Moolman Group regarding the Boardwalk

Mall development. Emfuleni will realise R93 million and will reinvest R63 million.

All debt for the project will be on a non recourse basis

• Carnival City land development progressing with various approvals underway

• Disposal of Sibaya excess land for R45 million approved by gaming board

Protect and leverage

existing asset portfolio


10

NIGERIA

• In the process of appointing advisors to dispose of our investment

and loan account

LATAM

• In Chile, considering a legal challenge due to the modification of the

original gambling law that gave a considerable advantage to the licence

holder

• Challenging the deficiencies in Enjoy’s technical bid for the Puerto

Varas and Pucon licences

- Likely to cause significant delay in hand over of licence

- Puerto Varas property valued in the range of US$25 million

to US$35 million

• Peru casino industry challenging the recent imposition of a new tax

Protect and leverage

existing asset portfolio | continued


11

• Acquired Dolcoast’s 22.4% interest in Sibaya and manco’s for a

consideration of R540 million resulting in our interest in Sibaya

increasing to 87.2%. Transaction expected to be implemented in

September

• Increased our interest in Sun Slots by 30% for a consideration of

R504 million resulting in Sun Slots becoming a wholly owned subsidiary.

Transaction expected to be implemented in quarter 4

• Disposed of a 14.94% interest in Sun Dreams for US$86 million thereby

reducing our equity interest to 50%. Transaction expected to be

implemented in September

• Considering additional Vacation Club opportunities in South Africa

• Good prospects exist for online sports betting and casinos in Latam

which are being explored

Growing our business


12

• Leadership roadshow concluded in July 2019

• Sun Stars program nearing completion

• Rewards and recognition program updated

• Into second year of three-year wage agreement

• Launched Sun Academy to improve staff training

Our people


13

• Changes to remuneration policy adopted by shareholders

• Looking to implement a new share incentive plan following shareholder

approval

• Focused group sustainability hub incorporating occupational health

and safety, environmental, socio-economic and B-BBEE functions

• Integrating South Africa and Latam’s governance structures

and implementing a sustainability strategy in Latam

• Sun International achieved Level 1 B-BBEE rating

Governance and sustainability


14

TIME SQUARE

UPDATE

Time Square, South Africa

1515

Time Square summary

TIME SQUARE UPDATE

GAUTENG GAMBLING MARKET

OPERATIONS

OUTLOOK

FINANCIAL PERFORMANCE

• Time Square captured 14.6% of Gauteng’s gaming market share

for the six months ending June 2019

• Recent performance has shown positive growth in market share,

with the first five weeks post June 2019 showing 17.4%

• Income increased by 15% to R671 million

• Casino income increased by 17% to R594 million

• Gross profit margin increased by 8% to 56%

• EBITDAR increased by 55% to R203 million

• Operating profit: R70 million

• 1 750 slots and 60 tables

• 8 500 seater arena

• 238 key hotel

• Significant increase in activity and visitation

• Market share on an upward trend

28

1616

17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug

TIME SQUARE UPDATE

Time Square market share: 2019

4 Week rolling market share % 8 Week rolling market share %

1616

17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug

TIME SQUARE UPDATE

Time Square market share: 2019

4 Week rolling market share % 8 Week rolling market share %

19%

18%

17%

16%

15%

14%

13%

12%

17

FINANCIAL REVIEW

Sibaya, South Africa

1818

Significant Changes to Reporting

IFRS 5: HELD FOR SALE ASSETS AND DISCONTINUED OPERATIONS

• Disposal of 14.94% in Sun Dreams, results in each of the 2 shareholders holding a 50% equity

interest in Sun Dreams

• Results in Sun losing control of a subsidiary

• Sun Dreams no longer consolidated, has to be presented in a single line in the income statement

IFRS 16: LEASES

• Effective 1 January 2019

• Distinction between operating and finance leases removed. Results in almost all leases being

recognised on the balance sheet

FINANCIAL REVIEW

1919

1. Reversal of IFRS 16 impact

2. Sun Dreams were disclosed as discontinued operations in line with IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations, the comparable period was also restated

Group highlights

R million South Africa Nigeria Other

Continuing

operations Sun Dreams² Swaziland Total group

Income 5 526 2% 70 9% - - 5 596 2% 2 783 17% 86 2% 8 465 7%

EBITDA (excl. IFRS 16) ¹ 1 426 3% (3) <100% (5) >(100%) 1 418 3% 643 1% (5) 17% 2 056 3%

EBITDA 1 480 7% (3) <100% (5) >(100%) 1 472 7% 673 6% (5) 17% 2 140 7%

Operating profit 900 11% (16) 42% (5) >(100%) 879 9% 375 6% (8) 20% 1 246 5%

FINANCIAL REVIEW

2020* Sun Dreams were disclosed as discontinued operations in line with IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations,

the comparable period was also restated

Financial overview

R million 2019 % 2018*

Income 5 596 2 5 469

Adjusted EBITDA (excluding IFRS 16) 1 418 3 1 379

Adjusted EBITDA 1 472 7 1 379

Adjusted operating profit 878 9 802

Foreign exchange profit (11) (22) (9)

Net interest (493) 11 (556)

Net external interest (456) (556)

IFRS 16 interest (37) -

Profit before tax 374 58 237

Tax (181) (5) (172)

Profit after tax 193 >100 64

Minorities (134) (11) (120)

Adjusted headline earnings continuing 59 >100 (56)

Share of associates 1 (67) 3

Adjusted headline earnings discontinued 112 (33) 168

Adjusted headline earnings 172 50 115

Adjusted headline earnings adjustments

Continuing operations 34 (47) 64

Discontinued operations (39) 8 (42)

Retained profit for the period 167 23 136

Analysis of attributable profit 2019 2018*

Attributable profit 59 (56)

Share of associates 1 3

Continuing adjusted headline earnings 60 (53)

Adjustments 34 64

to basic earnings 6 11

to headline earnings 27 53

Discontinued operations 73 125

Retained profit for the period 167 136

FINANCIAL REVIEW

2121* Sun Dreams were disclosed as discontinued operations in line with IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations,

the comparable period was also restated

Earnings reconciliation

FINANCIAL REVIEW

R million 2019 2018*

Profit attributable to ordinary shareholders 167 137

Net profit on disposal of property, plant and equipment - (15)

Profit on sale of management contract (Lesotho) (7) -

Tax on the above items 1 2

Minorities' interests in the above items - 2

Headline earnings 161 126

Adjustments to headline earnings 11 (11)

Straight-line adjustment for rentals - 6

Pre-opening expenses - 3

Restructure and related costs (Latam and Emfuleni) - 8

Restructure and related costs (Carousel) 12 -

Amortisation of Sun Dreams intangibles assets raised as part of PPA 54 63

Fair value adjustment on put option liabilities (24) (54)

Foreign exchange loss/(profit) on inter-company loan 5 (30)

Fair value gain on foreign exchange contract (16) -

Other 13 32

Tax relief on the above items (12) (7)

Minorities' interests in the above items (21) (32)

Adjusted headline earnings 172 115

22

SEGMENTAL REVIEW

The Palace, South Africa

2323

INCOME PER GEOGRAPHY

South Africa 66.5%

Latam 32.7%

Nigeria 0.8%

Slots 58.9%

Tables 13.9%

Sun Slots 7.7%

SunBet 0.8%

Rooms 8.2%

Food and beverage 7.9%

Other 2.7%

INCOME PER CATEGORY

South Africa Latam Nigeria and Swaziland Total

R million 2019 % 2018 2019 % 2018 2019 % 2018 2019 % 2018

Income 5 526 2 5 405 2 783 17 2 382 156 3 152 8 465 7 7 939

EBITDA (excluding IFRS 16) 1 426 3 1 379 638 1 631 (8) (33) (6) 2 056 3 2 004

EBITDA 1 480 7 1 379 668 6 631 (8) (33) (6) 2 140 7 2 004

Adjusted operating profit 900 11 814 370 (6) 393 (24) (9) (16) 1 246 5 1 185

SEGMENTAL REVIEW

2424

SEGMENTAL REVIEW

Depreciation for the six months period 30 June 2019 is inclusive of additional depreciation resulting from the adoption of IFRS 16: Leases

South African segmental review

Income Adjusted EBITDAR Depreciation & amortisation Operating profit

R million 2019 % 2018 2019 % 2018 2019 % 2018 2019 % 2018

GrandWest 1 047 (3) 1 075 398 (3) 409 (73) (4) (70) 323 (4) 337

Sun City 740 (6) 784 56 (36) 88 (109) 2 (111) (57) (90) (30)

Sibaya 667 6 632 234 9 215 (40) (14) (35) 192 8 178

Time Square 671 15 582 203 55 131 (131) (8) (121) 70 >100 9

Carnival City 474 1 469 119 (1) 120 (34) 28 (47) 83 17 71

Boardwalk 254 1 252 40 (9) 44 (37) (6) (35) 2 (75) 8

Wild Coast 225 (9) 247 34 (24) 45 (23) 4 (24) 10 (50) 20

Meropa 151 3 146 47 9 43 (11) - (11) 35 13 31

Windmill 125 (9) 138 42 (14) 49 (11) (10) (10) 29 (22) 37

Flamingo 76 (5) 80 16 (16) 19 (8) (14) (7) 7 (36) 11

Golden Valley 81 (4) 84 13 (19) 16 (8) - (8) 4 (50) 8

Carousel 54 (34) 82 (13) (63) (8) (8) 11 (9) (21) (24) (17)

The Table Bay 167 3 162 54 13 48 (8) 20 (10) 31 19 26

The Maslow 62 (9) 68 (5) <(100) 4 (17) <(100) (7) (22) 12 (25)

Naledi 10 - 10 (3) (50) (2) - 100 (1) (3) - (3)

South African operations 4 804 - 4 811 1 235 1 1 221 (518) (2) (506) 683 3 661

Sun Slots 637 13 562 157 19 132 (38) 19 (47) 118 48 80

SunBet 69 >100 28 20 >100 2 (1) - - 18 >100 1

South African operations

including alternative gaming5 510 2 5 401 1 412 4 1 355 (557) (1) (553) 819 10 742

Management companies 272 3 263 97 4 93 (23) (92) (12) 81 13 72

Inter-company management fees (256) 1 (259) - - - - - - - - -

5 526 2 5 405 1 509 4 1 448 (580) (2) (565) 900 11 814

2525

SEGMENTAL REVIEW

Latam segmental review

PPA adjustment included in central office

Income Adjusted EBITDA Depreciation & amortisation Operating profit

R million 2019 % 2018 2019 % 2018 2019 % 2018 2019 % 2018

Monticello 977 2 955 260 (8) 282 (89) (13) (79) 171 (16) 203

Sun Dreams SCJ licences 826 (1) 837 310 - 310 (21) (11) (19) 289 (1) 291

Sun Dreams municipal licences 420 (1) 424 142 (7) 152 (19) - (19) 123 (8) 133

Sun Chile office - - - (6) (100) - (1) (100) - (7) (100) -

Central office - - - (113) (22) (93) (62) (9) (57) (175) (17) (150)

Chile operations 2 223 - 2 216 593 (9) 651 (192) (10) (174) 401 (16) 477

Ocean Sun 54 (8) 59 (2) 82 (11) (36) 8 (39) (38) 24 (50)

Sun Nao Colombia 10 11 9 - 100 (7) (6) 54 (13) (6) 70 (20)

Peru excluding Thunderbird Resorts 134 (10) 149 15 (17) 18 (51) <(100) (12) (36) <(100) 6

Comparable operations 2 421 - 2 433 606 (7) 651 (285) (20) (238) 321 (22) 413

Thunderbird 149 >100 57 31 >100 8 (9) (13) (8) 22 100 -

Mendoza 213 100 - 31 100 - (4) (100) - 27 100 -

Total operations 2 783 12 2 490 668 1 659 (298) 21 (246) 370 (10) 413

Constant currency adjustment - 100 (108) - 100 (28) - (100) 8 - 100 (20)

Total Latam operations 2 783 17 2 382 668 6 631 (298) (25) (238) 370 (6) 393

Average Rand:Clp exchange rate 47.66 49.81

26

CAPITAL

INVESTMENT

The Table Bay, South Africa

2727

CAPITAL INVESTMENT

R million

2019

H1 actual

2019

12 month forecast

South African operations

Expansionary - -

Refurbishment and ongoing

Sun City 55 203

GrandWest 77 127

Sibaya 24 90

Sun Slots 48 122

Other 88 244

Total South African capital expenditure 292 786

Latam operations

Refurbishment and ongoing 233 520

Total Latam capital expenditure 233 520

Nigerian operation

Refurbishment and ongoing 2 10

Total Nigeria capital expenditure 2 10

Total group capital expenditure 527 1 310

Capital expenditure

28

BORROWINGS

AND CASH FLOW

GrandWest, South Africa

2929

Borrowings


R million Debt

IFRS 16

Lease liability

Total

debt

Minority

share

Sun

share

South Africa 8 824 783 9 607 1 518 8 089

Operating subsidiaries 7 610 595 8 205 1 518 6 687

Central office 1 214 188 1 402 - 1 402

Nigeria 605 - 605 306 299

Shareholder loans 932 - 932 472 460

Sun International inter-company debt (327) - (327) (166) (161)

Latam

Sun Chile 705 - 705 - 705

Continuing operations total debt as at 30 June 2019 10 134 783 10 917 1 824 9 093

Sun Dreams 3 733 316 4 049 1 442 2 607

Total debt as at 30 June 2019 13 867 1 099 14 966 3 266 11 700

31 December 2018 14 666 - 14 666 3 076 11 590

3030

1 607

1 131

668

395

17

3

273

206

287

466

153

393

Generated byoperations

Workingcapital

Tax paid Capex Free cash Interest paid Otherinvestingactivities

Cashflowprior to

funding anddividends

Dividendsto minority

shareholders

Borrowings Beginningof period

Cashat end

of period

R million

South African cash flow

Cash inflow Cash outflow


3131

Latam cashflow

656

561

396

761

221

3

76

240

127

3856

Generatedby

operations

Workingcapital

Tax paid Capex Freecash

Interestpaid

Otherinvestingactivities*

Cashflowprior tofunding

anddividends

Dividendsto minority

shareholders

Otherfinancingactivities

Borrowings Shareholderloan toPacifico

Beginningof period

Cashat end

of period

R million

Cash inflow Cash outflow


283

* Includes the contingency payment in PPA for the purchase of Mendoza of R42million

451

586

32

SUPPLEMENTARY

INFORMATION

Meropa, South Africa

62

3333


IFRS 5: Held for sale assets and discontinued operations• Reference is made to the disposal of the 14.94% of Sun International’s shareholding in Sun Dreams

• The investment in Sun Dreams has now been accounted for in terms of IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations:- The assets and liabilities of Sun Dreams has to be presented in a single line on the statement of financial position of Sun International at 30 June 2019;- The comparative statement of financial position was not restated; and- The equity relating to Sun Dreams on group consolidation level will remain unchanged.

• As Sun Dreams represents an entire geographical area and the probability of the sale being concluded in the next 12 months is high, Sun Dreamsmeets the requirements of IFRS 5: Discontinued Operations- The results of Sun Dreams had to be disclosed as a single line profit or loss from discontinued operations in the statement of comprehensive income.

• The below timeline provides a high level summary of the accounting treatment across the various dates applicable to this transaction

Year-endDecember 2018

SENSApril 2019

InterimJune 2019

Effective date3rd quarter of 2019

Year end2019

IAS 27Accounting

Subsidiary:Consolidated

Subsidiary:Consolidated

Subsidiary: Consolidated but disclosedin line with "IFRS 5 Assets Held for Sale and Discontinued Operations"

Joint Venture:Single line Reporting(Equity Accounting)

Joint Venture:Single line Reporting(Equity Accounting)

Background 64.94% Investment in Sun Dreams consolidated in SIL Group

SENS announcement was released regarding the proposed disposal of 14.94% of the investmentin Sun Dreams

At interim the investment in Sun Dreams is disclosed in line with "IFRS 5Non Current Assets Held for Sale",as a single line on the B/S and I/S,equity remains unchanged

On the effective date, in terms of IFRS 10, sole control is lost and the investment in Sun Dreams is subsequently to be disclosed in terms of IAS 27 as a Joint VentureThis entails the following:• derecognise the carrying amount of assets, liabilities and

non-controlling interests;• recognise the fair value of consideration received;• reclassify to profit or loss any amounts relating to the

subsidiary’s assets and liabilities previously recognized; and• recognise any resulting difference as a gain or loss in profit

or loss attributable to the parent.The investment in Sun Dreams will subsequently be disclosed as a single line on the balance sheet - "Investment in Joint Venture" and on the Income Statement - "Profit or loss from Joint Venture“

At year end Sun Dreams will be disclosed as a single line, Investment in Joint Venture andProfit or loss from Joint Venture in the statement of financial position and statement from comprehensive income respectively

3434


IFRS 16: Leases

IFRS 16 was issued in January 2016 and has been adopted by the group on 1 January 2019. It has resulted in

almost all leases being recognised on the balance sheet by lessees, as the distinction between operating and

finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial

liability to pay rentals is recognised. The only exceptions are short-term and low-value leases. The group applied

the simplified transition approach and have not restated the comparative amounts for the year prior.

The most significant operating leases that the group has relate to the Maslow Hotel Sandton, the head office

building and certain property leases in Peru.

The financial effects of IFRS 16 on the South African results are summarised below:

• A initial recognition of a “right-of-use asset” of R563 million;

• A initial recognition of a “lease liability” of R800 million;

• An increase in EBITDA of R54 million for the 6 month ending 30 June 2019, due to rental expenses reducing

above the EBITDA line;

• Depreciation increasing by R29 million;

• Interest expense increasing by R37 million; and

• The net impact on the statement of comprehensive income is a debit of R12 million for the 6 months ending

30 June 2019.

3535

IFRS 16 effect on EBITDA

R million South Africa Latam Group

Initial recognition

Lease liability 800 336 1 136

Reversal of straight-line (237) - (237)

Right of use asset 563 336 899

Deferred tax (B/S) 3 1 4

6 months ending 30 Jun 19

Additional ROU asset depreciation (29) (32) (61)

Additional ROU interest expense (37) (10) (47)

Reversal of operating lease expense 54 30 84

Foreign exchange - 8 8

Deferred tax (I/S) 4 1 5

IS impact after tax (8) (3) (11)

As at 30 Jun 19

Lease liability 783 316 1 099

Right of use asset 534 304 838

Deferred tax asset 70 1 71

IFRS 16 effect on EBITDA 54 30 84


3636


Latam segmental (CLP)

Income Adjusted EBITDA Depreciation & amortisation Adjusted operating profit

CLP million 2019 % 2018 2019 % 2018 2019 % 2018 2019 % 2018

Iquique 9 908 (3) 10 225 2 928 (8) 3 190 (245) (16) (211) 2 684 (10) 2 978

Puerto Varas 10 094 1 9 981 3 844 (5) 4 049 (651) 4 (680) 3 193 (5) 3 368

Temuco 14 067 (5) 14 748 5 160 (6) 5 487 (381) (17) (327) 4 780 (7) 5 160

Valdivia 9 340 4 8 967 3 268 10 2 964 (214) (1) (211) 3 054 11 2 752

Coyhaique 3 604 (2) 3 677 956 (6) 1 017 (133) (5) (127) 823 (7) 890

Punta Arenas 12 336 (1) 12 480 5 382 1 5 324 (266) (10) (241) 5 116 1 5 083

Monticello 46 546 2 45 514 12 374 (8) 13 463 (4 204) (11) (3 803) 8 170 (15) 9 660

Sun Chile office - - - (267) <(100) (22) - - - (267) <(100) (22)

Central office - - - (5 397) (22) (4 423) (2 939) (8) (2 717) (8 336) (17) (7 140)

Total Chile operations 105 895 0 105 592 28 248 (9) 31 047 (9 032) (9) (8 317) 19 216 (15) 22 730

Ocean Sun 2 571 (9) 2 825 (100) 81 (541) (1 830) 3 (1 882) (1 930) 20 (2 423)

Sun Nao 456 4 439 7 >100 (321) (309) 51 (627) (302) 68 (948)

Perú 6 377 (10) 7 086 705 (19) 870 (2 425) <(100) (565) (1 720) <(100) 304

Comparable operations 115 299 (1) 115 942 28 860 (7) 31 055 (13 596) (19) (11 392) 15 264 (22) 19 663

Thunderbird 7 118 >100 2 713 1 482 >100 376 (454) (8) (421) 1 029 >100 (45)

Mendoza 10 172 100 - 1 501 100 - (261) - - 1 240 100 -

Group operations 132 589 12 118 654 31 843 1 31 431 (14 311) (21) (11 813) 17 532 (11) 19 618

3737


Group effective tax rate

R million South Africa Nigeria

Sun Chile,

Sun Latam Total Swaziland

Sun

Dreams Panama Colombia

Profit before tax as per the financial overview 440 (38) (28) 374 (9) 320 (45) (8)

Adjusted headline earnings adjustments 29 1 - 30 - (67) - 2

Profit before tax continuing operations 469 (37) (28) 404 - - -

Profit before tax discontinuing operations - - - - (9) 252 (45) (6)

Preference share funding 59 - - 59 - - -

Depreciation on non-qualifying buildings 24 - - 24 - - -

Other non-deductible expenditure - Refer to Note 1 on following page 26 - - 26 - 35 - -

Movement in put options (24) - - (24) - - - -

Exempt Income - other (lessor contribution, associated income and

disposal of income earning structure)(10) - - (10) - - - -

Tax Incentives (12) - - (12) - - - -

Hyperinflationary adjustments - - - - - (12) - -

Chilean capital indexed to inflation adjustment - - - - - (79) - -

Tax losses not meeting recognition criteria 103 43 27 173 - 78 - -

Discontinued operation - tax losses not meeting recognition criteria - - - - - - 45 6

Taxable income 635 6 (1) 641 (9) 275 - -

Corporate tax rate 28.0% 30.0% 27.0% 28.0% 27.5% 27.0% 25.0% 34.0%

Tax at standard rate 178 2 - 179 (2) 74 - -

Current tax charge 178 2 - 179 (2) 74 - -

Withholding and other taxes 2 - - 2 - - -

Effects of tax rates in various jurisdictions (1) (3) (4) - 10 - -

Adjustment for current tax of prior periods 8 - - 8 - - -

Effective tax charge 187 (1) - 186 (2) 84 - -

Effective tax rate 46.0% 33.3%

3838


Group effective tax rate | continued

Note 1: Other non-deductible expenses Amount

Amortisation of bid expenditure 3

CSI expenditure not qualifying under s18A 1

Interest - non deductible (SIL)

Non-deductible legal or professional costs 2

Fines and penalties 1

Securities Transfer Tax -

Equity settled Share Based Payment expenditure 2

Employee dividend distributions (SIEST only) 11

Capital gains tax 7

Total 26

3939

2019 2018

R million Borrowings

IFRS 16

Lease liability

Total

borrowings

Minority

share

Attributable

to Sun

International Borrowings

Minority

share

Attributable

to Sun

International

South Africa 8 824 783 9 607 1 518 8 089 9 174 1 310 7 864

SunWest 488 10 498 175 323 503 176 326

SunWest - V&A loan 203 - 203 71 132 225 79 146

Carnival City 588 5 593 32 561 608 32 576

Sibaya 272 3 275 91 184 276 92 184

Boardwalk 509 5 514 76 438 507 76 431

Wild Coast 193 47 240 120 120 234 70 164

The Maslow 32 472 504 151 353 - - -

Meropa 64 2 66 19 47 74 21 53

Flamingo 72 1 73 18 55 73 18 55

Windmill 77 1 78 21 57 74 20 54

Golden Valley (14) 2 (12) (4) (8) (12) (4) (8)

Sun Slots 26 41 67 20 47 24 7 17

Time Square 5 100 6 5 106 728 4 378 5 070 722 4 348

Management and corporate 1 214 188 1 402 - 1 402 1 518 - 1 518

Nigeria 605 - 605 306 299 602 305 297

Shareholder loans 932 - 932 472 460 927 470 457

Sun International inter-company debt (327) - (327) (166) (161) (325) (165) (160)

Latam 705 - 705 - 705 787 - 787

Sun Chile 705 - 705 - 705 787 - 787

Continuing operations total debt as at 30 June 2019 10 134 783 10 917 1 824 9 093 10 563 1 615 8 948

Sun Dreams 3 733 316 4 049 1 442 2 607 4 103 1 461 2 642

Total debt as at 30 June 2019 13 867 1 099 14 966 3 266 11 700 14 666 3 076 11 590


Borrowings by subsidiary

South Africa Chile

Covenant Actual Covenant Actual

Debt to EBITDA 3.25x 2.8x 4.5x 2.9x

Interest cover 3.0x 3.5x

4040


Group structure

South Africa Economic interest %* Slots Tables Rooms

Gauteng Carnival City 91.2 1 360 48 106

The Maslow 100.0 - - 281

Time Square 82.3 1 736 60 238

Western Cape GrandWest 61.6 2 563 53 39

The Table Bay 61.6 - - 329

Golden Valley 61.4 220 7 98

SunBet 100.0 - - -

KwaZulu-Natal Sibaya 63.3 1 214 48 154

Limpopo Meropa 67.6 417 17 60

North West Sun City 100.0 700 51 1 312

Carousel 100.0 400 - -

Northern Cape Flamingo 71.4 300 10 -

Eastern Cape Boardwalk 81.6 900 26 140

Wild Coast 50.1 534 19 396

Free State Windmill 70.0 401 18 -

Naledi 100.0 - - 30

Management activities Sun International Management 100.0 - - -

Other Africa

Nigeria 49.3 100 5 146

Swaziland 50.6 158 13 351

Latam

Sun Dreams 64.4 8 336 369 719

Economic interest %* LPMs Sites

South Africa

Sun Slots 70.0 4 167 840

* Excluding employee share scheme shareholding percentage

4141

Profit after tax % Shareholding Minority portion including SIEST

R million 2019 2018 2019 2018 2019 2018

South Africa 403 57 (153) (135)

SunWest 222 33 61.6% 61.6% (85) (87)

Sibaya 128 116 63.3% 63.3% (47) (43)

Carnival City 28 29 91.2% 91.2% (2) (3)

Boardwalk (13) (12) 81.6% 81.6% 2 2

Wild Coast (1) 4 50.1% 70.0% 1 (1)

Meropa 23 18 67.6% 67.6% (7) (6)

Windmill 18 23 70.0% 70.0% (6) (7)

Flamingo 3 6 71.4% 71.4% (1) (2)

Golden Valley 3 6 61.4% 61.4% (1) (2)

Time Square (134) (210) 82.3% 82.3% 24 37

South African operations with minorities/SIEST 277 13 (122) (112)

Sun Slots 83 56 70.0% 70.0% (25) (17)

Management companies with minorities 42 (12) 0.0% 0.0% (6) (6)

Management and corporate

Manco - NCR - - 90.8% 90.8% (1) (1)

Manco - AfrisunKZN 10 9 52.3% 52.3% (4) (4)

Manco - Meropa 2 2 50.0% 50.0% (1) (1)

Manco - Windmill - 1 50.0% 50.0% - -

Dinokana (5) (5) 93.2% 93.2% - -

SIEST (4) - - 0.0% - -

Center and wholly owned subsidiaries 40 (19) 100.0% 100.0% - -

Nigeria (37) (31) 49.3% 49.3% 19 15

Total group - continuing 365 26 (134) (120)

Latam 196 251 64.4% 64.4% (79) (120)

Total group 561 277 (213) (240)


Analysis of minority shareholders

20

19

UNAUDITED

INTERIM

RESULTS

ANNOUNCEMENTfor the six month period ended 30 June 2019

unaudited interim results announcement · recommendation regarding the securities of the company....

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