* Ditches dividend for FY to conserve cash
* Diluted adjusted headline earnings per share fall 35 pct
* Expects gaming revenue to remain under pressure
(Adds details, CEO comments about Latin American business)
By Nqobile Dludla
JOHANNESBURG, March 27 South African casino and
hotel operator Sun International scrapped its dividend
after reporting a drop in annual profit on Monday, seeking to
conserve capital to reduce debt and complete a casino complex in
One of two listed casino operators in South Africa, Sun
International has been hit by sluggish economic growth in its
home market. It is scheduled to open its second-largest casino
and entertainment complex there, the 4.2 billion rand ($340
million) Time Square project in Pretoria, next month.
"Taking account of the difficult trading conditions, the
need to complete strategic group initiatives, particularly Time
Square, and the need to reduce debt, the board decided not to
declare a dividend for the period," the company said in a
The owner of Sun City resort and the Sibaya Casino in South
Africa said the slowing economy, foreign exchange losses and
settlement charges resulted in a 35 percent drop in full-year
The group's core casino operations in South Africa were
negatively affected by sagging demand from gamblers due to
"difficult trading conditions and reduced consumer spend", with
casino revenue down 2.7 percent.
CEO Anthony Leeming, who took the helm in February, said
gaming revenue in South Africa would remain under pressure due
in part to increased personal income taxes and reduced
"Hotel occupancy is however anticipated to grow for the
remainder of the year and will be boosted by the refurbished
conference and entertainment centre at Sun City, where forward
bookings for conferences are well up on last year," Leeming said
in the company's statement.
"The opening of the casino at Time Square in April 2017 is
expected to have a positive impact on the group's performance
Sun International also said it was considering options for
its Latin American unit Sun Dreams after a minority shareholder
called for the business to be listed in New York or Santiago.
Sun Dreams was created last year when Sun International
merged its Latin American business with Chile's Dreams S.A.
The minority shareholder is a private investment fund with a
20 percent stake in Sun Dreams, while Sun International owns 55
percent but has said it wants to increase its stake longer term.
"When we did the deal, the fund wanted an exit out of the
business at some point in time. We have the option to either put
the shares to us or to list," Leeming told Reuters by phone.
Leeming said if the group decides against a listing, the
fund has said it would exercise its option to sell its stake to
"It's still very early days to decide on what is going to
happen," Leeming added.
Sun International, which recently changed its financial
year, said its diluted adjusted headline earnings per share
(HEPS) for July 1 to December 2016 fell to 223 cents per share
from 344 cents in the comparable year.
HEPS is the most widely watched profit gauge in South Africa
and strips out certain one-off items.
Shares in the group, which have fallen more than 12 percent
year-to-date, were down 1 percent at 76.20 rand by 1141 GMT.
Sun International said group revenue for the year ended
December was 31 percent higher than a year ago at 7.7 billion
rand, with growth attributable to the inclusion of the Dreams
S.A. merger and GPI Slots operations for the full period.
($1 = 12.3275 rand)
(Reporting by Nqobile Dludla; editing by Susan Thomas and Susan