Sun international report loss, exits Nigeria

SUN International recorded a
R503m loss for the year ended
June 30, 2016, despite revenue
growing 15% to R12bn. It has also
announced that it will be exiting Nigeria.
The group attributed its growth in
revenue to the acquisitions in Latin
America as well as revenue generated
by insourcing of food and beverage.
Room revenue was up by 14%,
benefiting from the weak rand, with
strong growth in international business,
in particular at The Table Bay and Sun
City.
The group’s recorded loss was largely
due to a R675m settlement with
Peermont paid in exchange for the rival
group lifting its objection to the Morula
casino licence being transferred to a
new casino currently under construction
– Time Square in Pretoria.
Sun International also announced
its plans to exit Nigeria. Currently, the
group is a 49% shareholder in the
Federal Palace in Lagos. The hotel’s
occupancy dropped 6,8% to 41,6%.
Although the company tried to keep
costs low by raising the average room
rate by 3,8%, the earnings before
interest, taxes, depreciation and
amortisation declined 58%. The group
has experienced a number of problems
with its local partners at the hotel,
including a feud with local shareholders
and the harassment of the group’s
staff. The low oil price, presence of
Boko Haram and a weakening naira
have also influenced the company’s
decision to leave. The exit will be
a protracted process in order to
ensure a fair value is received for the
investment.