Anthony Leeming, the CEO of gaming, hotels and casino group Sun International, says the company is banking on the growing online betting market for future growth.
The JSE-listed firm is preparing to grow its online business into Africa after SunBet generated record income for the year to December.
The company said on Monday that it had finalised a 70% investment in SunBet Africa Holdings for a consideration of $3.2m, and was gearing up to roll out its online betting platform, SunBet, into new markets including Ghana, Kenya and Zambia, where Sun International has online sports betting and casino licences to operate.
“Our company growth is certainly going to come through our online business; it has a lot of potential over the next few years,” Leeming told Business Day.
“We are in the early stages of rolling out the SunBet operating model and brand in these markets,” he said.
In the year under review, its online platform, SunBet, recorded a 50% surge in the number of active players, and deposits rose 130%. Gaming income from casinos, Sun Slots and SunBet showed a significant recovery with income up 36%.
This was as additional games were being offered on Sun International’s rapidly expanding online sports betting and gaming platform, enhancing the overall player experience.
Leeming said while the move to be online was happening in every industry, Sun International did not see it as “cannibalisation” of its land base but rather that the omnichannel offering it was presenting as a move that would assist in increasing its share of the online gaming market.
“Certain people want access to these facilities all the time and at home, so I think the growth in online will continue,” he said adding that the global phenomenon was evident in the high numbers of people that played the lottery and live slots.
The Johannesburg-based company cashed in on consumers travelling more after the Covid-19 pandemic and government lockdowns restricted holiday options over the past few years.
Due to more people gambling and going out, the profit after tax of the company, valued at R9.17bn on the JSE, more than doubled year on year to R765m in its 2022 annual results for the year to end-December.
“Domestic leisure, conferencing and sports and events revenues exceeded 2019 levels while international leisure business recovered strongly in the second half of the year,” Sun International said, commenting on its resorts and hotels.
Net gaming wins, which generate almost 80% of income, improved 35.7% to R9bn.
The board declared a final dividend of 241c per share.
“The group was able to successfully defend and grow market share in all provinces, while income generated from Sun Slots recovered to pre-Covid-19 levels. SunBet generated record income during the year under review and is well on its way to achieving our aggressive growth targets for this business,” the company added.
The 2022 calendar year was the first one that was largely unaffected by the pandemic and trading restrictions.
This helped group income surge 44.3% to R11.3bn and operating profit 86.6% to R2.44bn.
Many local businesses have had to fork out to minimise the impact of load-shedding, which was high in the second half of 2022. For Sun International, the total cost of the power outages amounted to R12m-R14m monthly in 2022.
The group reported that net diesel costs of R53m due to load-shedding held it back from achieving its targeted 30% adjusted Ebitda margin, although other cost-saving measures helped the SA operations’ adjusted Ebitda margin improve from 28.2% in 2019 to 29.7%.
“We have accelerated our programme to explore all options around a comprehensive energy plan, which will not only solve this challenge but also achieve good returns on capital,” it said.
Leeming said the energy plan would include a mix of battery storage, solar and wheeling power to its operations.
“I think a lot of corporates are going to invest quite heavily in wheeling, which will certainly add a lot of capacity to the grid and which has an impact on the whole of SA and not just us,” he said.
“These things are self-funding: if you can generate your own electricity for basically nothing other than the capital costs, you are going to make a return on it.”
The firm cut its group debt from R7.1bn to R6.6bn
At the end of 2022, the group acquired 22.6% of the issued share capital in Grand Parade Investments Limited for R374m and repurchased 1.9-million of Sun International’s shares for R58m.
“Even with these investments, the group is in a strong financial position,” it maintained.
Cash generated by operations jumped 71.8% to R3.68bn, and cash and cash equivalents 46% to R546m.
Sun International’s share price closed 3.87% higher at R34.37 on Monday.
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