Welcome to our recording for our Interim Results for the End of June 2025. The format of today's presentation will be an intro from our CEO, an operational and financial overview from our CFO. Thereafter, we'll close off with strategic and outlook statements from our CEO, Ulrik. With that, I will thank you and hand over to Ulrik.
Good morning, everyone. I want to start by saying how excited I am to be here leading such an incredible company and team. I joined Sun International because I truly believe in the potential, in the brand, in the market, and the people. There is a real opportunity to create a market-leading, omni-channel gaming company. But before we get into the detail of that, let me share some background on myself. I was born and raised in southern Sweden. I went to school in Canada, and I started out in the gaming industry in Malta back in 2012. South Africa is now the fifth country I work and live in, and my family is joining me here in January.
Most recently, I've been based in London, holding several executive and non-executive positions in listed public companies over the last 20 years, including being the CEO of William Hill, a leading U.K. sports betting and online gaming company, before it was sold to Caesars. While I was the CEO of William Hill, I led the transformation from a traditional retail bookmaker to an online-centric company and leading omni-channel operator. This is my first set of results since becoming CEO of Sun on July 1st, so I'm going to let Norman do the heavy lifting today. But before I hand over to Norman, let me give you a brief overview. These are a solid set of half-year results, with growth of 6.7%.
I'm very happy with the continued growth in SunBet of 70%, and I'm also pleased with the performance of our Sun Slots business that is also growing. Our Urban Casinos, and more specifically, the land-based gaming business, has had a challenging first half. The market was down 3.75%, but we also have some operational challenges, and combined, these impacts our growth and margins negatively. This prompted us to reassess how we go about some things in our business, and we have, for starters, changed the operating model, where gaming now report directly into me as one revenue driver across the group. We benefit from a strong balance sheet, and this provides us with choices around how we use capital to invest in the business and deliver returns for shareholders.
With that, let me hand over to Norman to take you through the first half performance in more detail.
Thank you, Ulrik. Sun International delivered another solid performance for the six months ended 30th June 2025, successfully navigating a challenging macroeconomic landscape and ongoing structural shifts within the gaming industry. These results reflect the strength and agility of our diversified portfolio, which continues to benefit from our strategic emphasis on building a robust Omni-channel presence. We will now delve into the performance of each segment and examine the key drivers behind their results. SunBet delivered another exceptional performance, with income surging 70.7% year-on-year to ZAR 874 million. This growth reflects the platform's increasing scale and relevance in a rapidly expanding digital gaming market.
Adjusted EBITDA rose sharply to ZAR 292 million, pre-management fees up from ZAR 166 million in the prior period, translating to a robust margin of 33.4%, which is a clear indicator of operational leverage and disciplined cost control. The primary growth driver was a 128.7% increase in slots, which contributes 73% of income and supported by strong customer engagement and deposit volumes. Key performance indicators also showed impressive momentum. Unique active players grew 70.6%, first-time depositors rose 43.5%, and total deposits increased by 105.2%. Our strategic advantage lies in our ability to enhance product offerings and scale operations by drawing on the broader resources and infrastructure of the Sun International Group and brand.
Our ambition remains clear: to establish SunBet as a leading and most trusted online gaming operator in Southern Africa. We also launched SunBet Botswana in late 2024. While still in its early stages, we are confident in our ability to grow market share through targeted retail expansion and brand-led marketing initiatives. So SunBet continues to perform strongly, being one of the prominent players in a rapidly growing market, but we have more work to do with significant opportunities to scale and invest in the business. Urban Casinos remain the cornerstone of Sun International's land-based operations, generating ZAR 3.2 billion in income for the six months, reflecting a 1.4% year-on-year decline. The income decline was primarily driven by lower conversion of footfall into gaming activity and certain operational inefficiencies identified, particularly in gaming table games and machine mix optimization.
Adjusted EBITDA was at ZAR 1 billion, a decline of 5.6% compared to the prior comparative period. We have now responded by implementing new initiatives to support the urban casino portfolio as integrated entertainment destinations. Investment is being directed towards casino floor optimization, service enhancement, and product innovation, as well as improved marketing to better convert footfall. This, in combination with a sharpened focus on customer acquisition and retention strategies is expected to support income. We continue to leverage high-impact non-gaming assets, such as the SunBet Arena at Time Square and the GrandWest Grand Arena, to enhance customer experience and drive incremental footfall to our casino floors. Despite the gaming softness, urban casinos delivered robust growth in rooms, food and beverage, rentals, and entertainment.
In the contracting land-based gaming market, we have successfully gained market share in KwaZulu-Natal, up 0.7%, Gauteng up 1.4%, and Eastern Cape up 3.8%. While the business faces some structural headwinds, we believe there is an opportunity to further optimize our casino business as we adopt a proactive, customer-centric approach to continue to drive the business forward. Sun Slots delivered a steady performance for the six months, with income rising 2.2% year-on-year to ZAR 701 million, driven by improved gross gaming revenue per machine per day. Adjusted EBITDA came in at ZAR 161 million, with a margin of 23%, slightly down from 23.6% in the prior period.
The business remains a strategic pillar within Sun International's gaming portfolio, serving a distinct demographic not fully captured by our broader casino operations. During the period, we've redeployed machines to higher-performing sites following unplanned disclosures, which contributed to lower capital expenditure and improved asset utilization. The total number of active LPMs was 4,950, down from 5,182 in the prior period. Our focus remains on optimizing the existing footprint by targeting high-yield sites in key regions. The coordinated rollout of Type B licenses continues to be a strategic lever for expansion and income growth. In parallel, we are executing cost containment initiatives that are expected to deliver margin support in the second half of the year. Sun Slots is well-positioned to deliver sustainable returns through disciplined capital deployment, operational efficiency, and targeted growth in underserved markets.
Excluding the impact of the Table Bay Hotel lease cessation, income from our resorts and hotels segment increased by 4.3% to ZAR 1.3 billion for the six months. This growth was supported by favorable calendar dynamics, specifically the convergence of Easter and Freedom Day in April, which boosted travel demand, extended booking durations, and lifted overall spend across leisure and conferencing channels. Income growth was underpinned by Sun City's increase in occupancy and uplift in average daily room rate, with Sun City income increasing by 7.6% to ZAR 973 million. The Maslow revenue was up 3.9% due to an increase in corporate demand and events, Wild Coast experienced a decline in slots and tables income, primarily due to reduced player activity.
Additionally, indirect costs rose by 4.6%, driven by increased marketing spend and property-related expenses, including repairs to rooms and the golf course, following damage caused by severe rainfall. Across this segment, rooms and food and beverage revenue grew by a strong 9.9% year-on-year, reflecting improved occupancy and pricing power. Adjusted EBITDA declined to ZAR 221 million, with margins contracting to 16.8%. This decline is slightly distorted due to the impact of a levy refund that Sun City received from the North West Gambling Board of ZAR 15.4 million, which was included in the prior year. The broader sector is showing signs of recovery, supported by the resurgence in conferencing, particularly as South Africa hosts the G20 Summit, as well as improved leisure demand.
Sun City continues to benefit from its multi-phase refurbishment program, with hotel room upgrades scheduled for completion by year-end and public area enhancements targeted for H1, 2026. The Sun Vacation Club Reserve refurbishment is also on track for completion by April 2026. This segment remains a key contributor to our diversified portfolio, and we are confident that the strategic investments underway will support margin recovery and long-term value creation. In summary, group continuing income for the period, excluding the impact of the Table Bay Hotel lease cessation, rose by 6.7% to ZAR 6.1 billion, reflecting the strength of our diversified portfolio and the resilience of our core operations. The successful execution of our omni-channel strategy.
Particularly, the accelerated growth of our online gaming business translated into a 1.1% increase in continuing Adjusted EBITDA to ZAR 1.6 billion, with a margin of 25.4%. SunBet was the standout performer, with income up 70.7%, contributing significantly to digital growth momentum, and contributing 14% of group income and 17% of group Adjusted EBITDA before management fees. Urban Casinos continue to be the largest contributor to group income, generating ZAR 3.2 billion for the period. While income declined marginally by 1.4%, this has prompted a proactive strategic reassessment aimed at unlocking further value and enhancing operational efficiency across the portfolio. Results in hotels delivered a 4.3% increase, supported by conferencing and leisure recovery.
SunSlots delivered steady top-line growth of 2.2%, underpinned by consistent performance and disciplined margin management, reinforcing its role as a reliable contributor within Sun International's diversified gaming portfolio. All of this has translated to adjusted headline earnings per share, increasing by 6.5% to ZAR 2.29, up from ZAR 2.15 in the prior period. We declared an interim dividend of ZAR 1.72 per share, representing a 6.8% increase year-on-year, and reaffirming our commitment to delivering sustainable and growing returns to shareholders. Sun International continues to demonstrate robust cash generation across its diversified portfolio, reinforcing the group's ability to fund growth, deliver shareholder returns, and maintain financial flexibility.
The group's balance sheet remains strong, with debt excluding IFRS 16 lease liabilities, reduced to ZAR 5 billion, down from ZAR 5.2 billion as at 31st December 2024. Our debt to adjusted EBITDA ratio stands at 1.5 times, comfortably below the bank covenant threshold of 2.75 times. While our interest cover ratio of 6.8 times exceeds the minimum requirement of 3.3 times, highlighting prudent leverage and strong earnings quality. Liquidity remains healthy, with ZAR 2.4 billion in available cash and facilities, providing ample headroom for strategic investment and capital returns. These metrics underscore the group's disciplined capital allocation and its consistent ability to convert earnings into cash. Strategic investment into our core assets remains central to sustaining long-term growth and enhancing shareholder returns. During the period, we deployed capital into high-impact refurbishment initiatives aligned with our premium hospitality strategy.
A total of ZAR 94 million has thus far been invested in the multi-phase refurbishment of the Sun City Hotel, aimed at modernizing guest rooms, public areas, and infrastructure. This program expands 2024 to 2026 and is designed to elevate the property's luxury positioning and operational efficiency. ZAR 20 million was further invested in Sun Vacation Club Reserve for the period, part of a multi-year upgrade initiative focused on enhancing units, infrastructure, and amenities to drive occupancy and guest satisfaction. Beyond these flagship projects, we invested ZAR 154 million in ongoing CapEx across the portfolio, reinforcing our commitment to maintaining asset quality and operational excellence. These investments are not only enhancing the guest experience, but also positions our properties to capture future demand and deliver improved returns on capital.
Sun International continues to demonstrate strong cash conversion and disciplined capital allocation, reinforcing its ability to fund strategic initiatives while delivering consistent shareholder returns. After accounting for working capital movements, tax, and both major and ongoing CapEx, the group generated ZAR 1 billion in free cash flow for the period. Notably, 106.7% of adjusted EBITDA was converted into operating cash, underscoring the quality and resilience of earnings. Of the ZAR 1.7 billion in cash generated from operations, 62.4% was converted into free cash, highlighting efficient operational performance and prudent cost management. Included in our cash flow for this period is the final net dividend of ZAR 591 million paid to shareholders in respect of the 2024 financial year.
In May 2025, the group received ZAR 80 million related to the second contingent earn-out from the Dreams transaction at net of taxes and expenses. These proceeds were strategically applied to reduce debt, further strengthening the balance sheet and enhancing financial flexibility. Sun International remains committed to disciplined capital allocation and long-term value creation through a balanced approach to shareholder returns, asset investment, and strategic expansion. We have maintained a consistent dividend payout ratio of 75% of Adjusted headline earnings per share, reflecting our commitment to sustainable shareholder returns. Continued investment in our existing asset base remains a priority, ensuring operational excellence and long-term competitiveness. We've implemented alternative energy solutions across four key properties, being Sun City, Sibaya, Carnival City, and The Maslow Sandton. We are actively exploring initiatives across the broader portfolio to enhance environmental sustainability and reduce operating costs.
Expansion into selected African markets is underway for both SunBet and SunSlots, supporting our strategy to scale digital gaming across high-potential geographies. We continue to refine and streamline our portfolio, including selective minority buyouts, where it makes sense strategically and at fair value. These actions allow us to reallocate capital towards growth areas that support long-term value creation and operational focus. Since initiating our share buyback program in 2022, we have returned ZAR 199 million to shareholders, reinforcing our confidence in the group's intrinsic value and capital efficiency. So in summary, Sun International has delivered a solid first half performance, underpinned by strong cash generation, disciplined capital allocation, and continued progress in executing our Omni-channel strategy. With a resilient balance sheet and clear growth levers across both digital and land-based operations, the group is well-positioned to unlock further value.
Thank you for tuning into our results, and I will now hand over to Ulrik to take you through our strategic focus and outlook.
Thank you, Norman. Customer expectations and behaviors are changing fast, and they're being driven by technology, values, and innovation. This is a critical time for our industry and for Sun International. We have an incredible set of physical and digital assets, and a unique ability to offer a true omni-channel experience. Our job is now to stay ahead of the curve, make sure we are thriving in a digital, mobile, and AI-first world. Over the coming months, I will reassess our approach to both driving improvements in growth and optimizing returns. My focus is on the long-term competitiveness of Sun International as a digitally led, market-leading, omni-channel gaming company of scale, enabled by competitive products, smart omni-channel solutions, and engaged teams, and improved execution. Having been around the group, it is clear to me that all the business areas have their own distinct set of opportunities.
I look forward to working with all of our talented teams to shape the plan of how we execute on this. Now, let me talk you through some of the opportunities that I see. For our SunBet business, the opportunity is to enhance technology and product, and marketing efficiency, to build something that can scale and grow and take market share in the long term. In our casinos, the opportunity is to improve operational excellence, our machine mix, and marketing to better utilize the footfall we have coming into our properties. For our SunSlots business, the Type B license rollout and the continued optimization of our portfolio of sites is an opportunity. In resorts and hotels, we continue to evolve our offering, drive room rate and occupancy, in addition to reviewing some of our business models. I also want to ensure we remain at the forefront of responsible gambling.
We will actively engage with regulators to ensure we are part of the discussion, and the appropriate standards are maintained and improved upon. I have seen regulation evolve in many, many jurisdictions, and there is so much that we can learn from what has happened in North America and in Europe, and I am determined we will continue to be in the forefront and leading the evolution of responsible gaming in South Africa. I'm also looking at our capital allocation framework to ensure that in the future, we have the right balance between investments, value-accretive M&A, and returns to shareholders. With a strong balance sheet and clear levers for growth, I'm excited about the future and what it can bring. Over the next few months, we will evolve our thinking around our future plans, and we will update you on our plans once we have a really set view.
Thank you so much for listening.