Q2 2026 Sun International Ltd Earnings Call

September 7, 2026

Speaker #1: Good morning, everyone, and welcome to the beautiful and transformed Table Bay Hotel and Sun International's 2026 interim results presentation. In the first half of 2026, we delivered results at the upper end of our expectations, with 7.4% revenue growth.

Speaker #1: This was driven by a standout performance from our land-based casinos, which returned to growth for the first time in 3 years. Together with over 35% growth from our Sun Bet business.

Speaker #1: We are very encouraged by the trajectory we're on. Particularly in our land-based casino business, reflecting strong execution and sound investment decisions. While we remain early in the stages of our 5-year value creation plan, and there is now clear evidence that our initiatives and operational improvements we have put in place are working, and that delivering tangible results—we also recognize that there is more work to be done.

Ulrik Bengtsson: Good morning, everyone, and welcome to the beautiful and transformed Table Bay Hotel and Sun International's 2026 interim results presentation. In the H1 2026, we delivered results at the upper end of our expectations, with 7.4% revenue growth. This was driven by a standout performance from our land-based casinos, which returned to growth for the first time in three years, together with over 35% growth from our SunBet business. We are very encouraged by the trajectory we are on, particularly in our land-based casino business, reflecting strong execution and sound investment decisions.

Speaker #1: And we have initiated multiple productivity initiatives which we expect to see results from in 2027. Importantly, adjusted EBITDA growth accelerated in the seasonally weaker first half relative to the first half of 2025, even with a deliberate investment we have made in technology, capabilities, customer acquisition, and market share gains.

Ulrik Bengtsson: While we remain early in the stages of our five-year value creation plan, there is now clear evidence that our initiatives and operational improvements we have put in place are working and are delivering tangible results. We also recognize that there is more work to be done, and we have initiated multiple productivity initiatives, which we expect to see results from in 2027. Importantly, adjusted EBITDA growth accelerated in the seasonally weaker H1 relative to the H1 2025, even with the deliberate investment we have made in technology, capabilities, customer acquisition, and market share gains. The near-term EBITDA margin impact reflects our current investment phase, while the initiatives are intended to support stronger operating leverage over time. The strong performance in the period has enabled us to increase our interim dividend by 7.6% to ZAR 1.85. The operating environment was challenging in the period.

Ulrik Bengtsson: While we remain early in the stages of our five-year value creation plan, there is now clear evidence that our initiatives and operational improvements we have put in place are working and are delivering tangible results. We also recognize that there is more work to be done, and we have initiated multiple productivity initiatives, which we expect to see results from in 2027. Importantly, adjusted EBITDA growth accelerated in the seasonally weaker H1 relative to the H1 of 2025, even with the deliberate investment we have made in technology, capabilities, customer acquisition, and market share gains. The near-term EBITDA margin impact reflects our current investment phase, while the initiatives are intended to support stronger operating leverage over time. The strong performance in the period has enabled us to increase our interim dividend by 7.6% to ZAR 1.85. The operating environment was challenging in the period.

Speaker #1: The near-term EBITDA margin impact reflects our current investment phase, while the initiatives are intended to support stronger operating leverage over time. The strong performance in the period has enabled us to increase our interim dividend by 7.6% to $185.

Speaker #1: The operating environment was challenging in the period. Geopolitical uncertainty, together with inflationary pressures, and elevated cost of living means that discipline and execution remain crucial for the business.

Speaker #1: However, megatrends such as digitalization, demand for real-life experiences, and growth in online betting continue to support our business long-term. As for regulation, we continue to engage proactively with regulators and policymakers to help shape a sustainable and future-fit national regulatory framework for the industry.

Speaker #1: During the period, we have undertaken one of the largest capability-building and upskilling programs in the group's history, and we have made excellent progress with around 150 key appointments over the past 6 months.

Ulrik Bengtsson: Geopolitical uncertainty, together with inflationary pressures and elevated cost of living, means that discipline and execution remain crucial for the business. However, mega trends such as digitalization, demand for real-life experiences, and growth in online betting continue to support our business long-term. As for regulation, we continue to engage proactively with regulators and policymakers to help shape a sustainable and future-fit national regulatory framework for the industry. During the period, we have undertaken one of the largest capability-building and upskilling programs in the group's history, and we have made excellent progress with around 150 key appointments over the past six months. The investment has been deliberately targeted at capabilities required to execute our strategy and to build an advantaged organization and culture, which we refer to as The Sun Edge. Our capability-building program is mainly focused on technology, data, and operational execution capabilities.

Speaker #1: The investment has been deliberately targeted at capabilities required to execute our strategy, and to build an advantaged organization and culture, which we refer to as the Sun Edge.

Speaker #1: Our capability-building program is mainly focused on technology, data, and operational execution capabilities. As you know, technology is one of the most important enablers of our value creation plan.

Speaker #1: We have outlined our roadmap at the capital markets day in March, and we are pleased to report considerable progress. The launch of the new Sun Bet interface in South Africa and in Botswana is more than a product upgrade.

Speaker #1: This is the rollout of the first component of proprietary in-house technology within the Sun Bet technology stack. The new user interface provides faster load times, more seamless user journeys, and better and more easily accessible responsible gambling tools.

Speaker #1: All aimed at improving conversion rates and supporting future growth for the Sun Bet business. The early responses from our customers have been very encouraging.

Ulrik Bengtsson: As you know, technology is one of the most important enablers of our value creation plan. We have outlined our roadmap at the Capital Markets Day in March, and we are pleased to report considerable progress. The launch of the new SunBet interface in South Africa and in Botswana is more than a product upgrade. This is the rollout of the first component of proprietary in-house technology within the SunBet technology stack. The new user interface provides faster load times, more seamless user journeys, and better and more easily accessible responsible gambling tools, all aimed at improving conversion rates and supporting future growth for the SunBet business. The early responses from our customers has been very encouraging. We continue to make good progress with various other deliveries in our roadmap, and they are planned for later in 2026 and early 2027.

Speaker #1: We continue to make good progress with various other deliveries in our roadmap, and they are planned for later in 2026 and early 2027. Our financial discipline strategy discussed at the capital markets day centered on finding solutions to our underperforming assets and improved operational efficiency.

Speaker #1: We are implementing a more centralized and efficient operating model across selected smaller properties, improving profitability, of that portfolio. In addition, we have started consultations in certain head office functions as we roll out productivity initiatives across the group.

Speaker #1: With that, I will now hand over to Norman, who will unpack the operational and financial performance in more detail.

Speaker #2: Thank you, Ulrik. Let me start with Sun Bet. Revenue increased by 35.5% to $1.2 billion, significantly ahead of the broader online gambling market. Which grew by approximately 19% during the same period.

Ulrik Bengtsson: Our financial discipline strategy, discussed at the Capital Markets Day, centered on finding solutions to our underperforming assets and improved operational efficiency. We are implementing a more centralized and efficient operating model across selected smaller properties, improving profitability of that portfolio. In addition, we have started consultations in certain head office functions as we roll out productivity initiatives across the group. With that, I will now hand over to Norman, who will unpack the operational and financial performance in more detail.

Speaker #2: Growth was driven by both the strength of our core online gambling business and continued momentum within our sportsbook offering. Unique active player days increased by 32.3% and first-time depositors increased by 17.5%.

Speaker #2: Adjusted EBITDA grew 42.1% to $415 million, highlighting the scalability of the business and the benefits of disciplined operational execution. Turning to our land-based casino portfolio.

Norman Basthdaw: Thank you, Ulrik. Let me start with SunBet. Revenue increased by 35.5% to ZAR 1.2 billion, significantly ahead of the broader online gambling market, which grew by approximately 19% during the same period. Growth was driven by both the strength of our core online gambling business and continued momentum within our sportsbook offering. Unique active player days increased by 32.3%, and first-time depositors increased by 17.5%. Adjusted EBITDA grew 42.1% to ZAR 415 million, highlighting the scalability of the business and the benefits of disciplined operational execution. Turning to our land-based casino portfolio, revenue increased by 1.5% to ZAR 3.4 billion, with gross profit at ZAR 2 billion. Gross profit was impacted by deliberate investments made in marketing and capabilities. Importantly, we continue to gain market share in what remains a relatively mature market. This reflects improved execution, a stronger customer proposition, and the benefits of the operational initiatives implemented.

Speaker #2: Revenue increased by $1.5% to $3.4 billion, with gross profit at $2 billion. Gross profit was impacted by deliberate investments made in marketing and capabilities.

Speaker #2: Importantly, we continue to gain market share in what remains a relatively mature market. This reflects improved execution, a stronger customer proposition, and the benefits of the operational initiatives implemented.

Speaker #2: During the period we accelerated investments in our gaming product offering, including the rollout of $876 new slot machines and stadium gaming products. While continuing to focus on table game execution and customer experience enhancements.

Speaker #2: Turning to hospitality. Revenue increased by 7.7% to $1.3 billion, despite geopolitical uncertainty and approximately $20 million of war-related cancellations during the period. Gross profit increased by 9.9% to $570 million, benefiting from disciplined yield management across the portfolio.

Norman Basthdaw: During the period, we accelerated investments in our gaming product offering, including the rollout of 876 new slot machines and stadium gaming products, while continuing to focus on table game execution and customer experience enhancements. Turning to hospitality, revenue increased by 7.7% to ZAR 1.3 billion, despite geopolitical uncertainty and approximately ZAR 20 million of war-related cancellations during the period. Gross profit increased by 9.9% to ZAR 570 million, benefiting from disciplined yield management across the portfolio. Performance was supported by a stronger customer experience and enhanced food and beverage offering, resilient domestic demand, and strong activity across conferences, events, and entertainment. Sun City continues to be a standout performer, with income increasing by 9.9%, benefiting from refurbished investments, a strengthening events calendar, and growing demand for premium leisure and conferencing experiences.

Speaker #2: Performance was supported by a stronger customer experience and enhanced food and beverage offering, resilient domestic demand, and strong activity across conferences, events, and entertainment.

Speaker #2: Sun City continues to be a standout performer. With income increasing by 9.9%, benefiting from refurbished investments and strengthening events calendar, and growing demand for premium leisure and conferencing experiences.

Speaker #2: While international travel remains somewhat subdued, we responded proactively by targeting domestic and alternative international markets. Resulting in an increase in net average daily rates of 7.4%, reflecting the quality of our offering and disciplined yield management.

Speaker #2: Focusing on sun slots. Income declined marginally by 0.4% to $698 million, reflecting operational disruption from anti-illegal immigration protests temporarily site closures and weaker execution in parts of the Western Cape.

Speaker #2: While we are not satisfied with this performance, we have been quick to identify the underlying issues and have already implemented corrective actions to improve execution and operational effectiveness.

Norman Basthdaw: While international travel remains somewhat subdued, we responded proactively by targeting domestic and alternative international markets, resulting in an increase in net average daily rates of 7.4%, reflecting the quality of our offering and disciplined yield management. Focusing on SunSlots, income declined marginally by 0.4% to ZAR 698 million, reflecting operational disruption from anti-illegal immigration protests, temporary site closures, and weaker execution in parts of the Western Cape. While we are not satisfied with this performance, we have been quick to identify the underlying issues and have already implemented corrective actions to improve execution and operational effectiveness. Adjusted EBITDA declined by 8.1% to ZAR 148 million, impacted by the lower revenue base, as well as once-off restructuring costs incurred during the period. Excluding these one-off costs, the underlying business continued to benefit from productivity and efficiency initiatives.

Speaker #2: Adjusted EBITDA declined by 8.1% to $148 million, impacted by the lower revenue base as well as once-off restructuring cost incurred during the period. Excluding these once-off costs, the underlying business continued to benefit from productivity and efficiency initiatives.

Speaker #2: Turning to the financial review. Revenue growth was broad-based across the portfolio, with particularly strong momentum from Sun Bet and encouragingly progress in our land-based casinos.

Speaker #2: Sun Bet continued to increase its contribution to the group, now contributing 18% to group revenue. Reflecting the success of our digitally growth strategy. While our land-based and hospitality businesses delivered resilient performances.

Speaker #2: Together with these results, demonstrate the benefits of our diversified portfolio and the progress we are making in building a digitally led, market-leading omnichannel gaming company of scale.

Norman Basthdaw: Turning to the financial review, revenue growth was broad-based across the portfolio, with particularly strong momentum from SunBet and encouragingly progress in our land-based casinos. SunBet continued to increase its contribution to the group, now contributing 18% to group revenue, reflecting the success of our digitally growth strategy. Our land-based and hospitality businesses delivered resilient performances. Together with these results demonstrate the benefits of our diversified portfolio and the progress we are making in building a digitally led, market leading, omni-channel gaming company of scale. We continue to invest behind our growth strategy during the H1, the group nevertheless delivered adjusted EBITDA growth of 2% to approximately ZAR 1.6 billion. This reflects the underlying strength and resilience of the portfolio and demonstrates that we can continue investing while growing earnings.

Speaker #2: While we continue to invest behind our growth strategy during the first half, the group nevertheless delivered adjusted EBITDA growth of 2% to approximately $1.6 billion.

Speaker #2: This reflects the underlying strength and resilience of the portfolio and demonstrates that we can continue investing while growing earnings. The most significant contribution to EBITDA growth was Sun Bet, where strong revenue growth, disciplined execution, and the inherent scalability of the business resulted in EBITDA growth of 42.1%.

Speaker #2: Increasing Sun Bet's contribution to group EBITDA to approximately $24%. As previously indicated, the first half was characterized by deliberate investment in technology, capabilities, customer acquisition, and marketing as we execute our value creation plan.

Speaker #2: These investments impact short-term margins, but are intended to strengthen the business, enhance competitive positioning, and support future growth. Group adjusted EBITDA margin was 24.1%, reflecting these investments together with inflationary cost pressures across the business.

Norman Basthdaw: The most significant contribution to EBITDA growth was SunBet, where strong revenue growth, disciplined execution, and the inherent scalability of the business resulted in EBITDA growth of 42.1%, increasing SunBet's contribution to group EBITDA to approximately 24%. As previously indicated, the H1 was characterized by deliberate investment in technology, capabilities, customer acquisition, and marketing as we execute our value creation plan. These investments impact short-term margins but are intended to strengthen the business, enhance competitive positioning, and support future growth. Group adjusted EBITDA margin was 24.1%, reflecting these investments together with inflationary cost pressures across the business. Importantly, we believe these are the right investments to make at this stage of the strategy, and they position the group to deliver improved operating leverage over time.

Speaker #2: Importantly, we believe these are the right investments to make at this stage of the strategy, and the position the group to deliver improved operating leverage over time.

Speaker #2: What is particularly encouraging is that we are beginning to see the evidence of the operating momentum generated by these investments through stronger market share performance, growing customer engagement, and improving business execution across the portfolio.

Speaker #2: As the value creation initiatives mature and revenue continues to grow, we expect increasing benefits from scale and operating leverage. Supporting our long-term objective of improving EBITDA margins towards the levels outlined at our capital markets day.

Speaker #2: Our capital allocation framework remains unchanged, and continues to guide every investment decision we make. We are investing behind our value creation plan, while maintaining a strong balance sheet and returning capital to shareholders.

Norman Basthdaw: What is particularly encouraging is that we are beginning to see the evidence of the operating momentum generated by these investments through stronger market share performance, growing customer engagement, and improving business execution across the portfolio. As the value creation initiatives mature and revenue continues to grow, we expect increasing benefits from scale and operating leverage, supporting our long-term objective of improving EBITDA margins towards the levels outlined at our Capital Markets Day. Our capital allocation framework remains unchanged and continues to guide every investment decision we make. We are investing behind our value creation plan while maintaining a strong balance sheet and returning capital to shareholders. The combination of a 7.6% increase in the interim dividend, completion of the share buyback program, and continued investment in future growth reflects both the strength of our cash generation and our confidence in the long-term outlook for the business.

Speaker #2: The combination of a 7.6% increase in the interim dividend, completion of the share buyback program, and continued investment in future growth reflects both the strength of our cash generation and our confidence in the long-term outlook for the business.

Speaker #2: Overall, our priority remains clear: to balance investment in growth, balance sheet strength, and shareholder returns in a disciplined and sustainable manner. Capital investment is a critical enabler of our strategy.

Speaker #2: During the first half, we accelerated investment across gaming, technology, and our property portfolio, deploying approximately $492 million into initiatives that support future growth and enhance returns.

Speaker #2: These included targeted refurbishment projects at Sun City, gaming product investment, and continued investment in our technology roadmap. Importantly, these investments are focused on areas where we see clear opportunities to strengthen our market position, improve customer experiences, and deliver long-term value for shareholders.

Norman Basthdaw: Overall, our priority remains clear: to balance investment in growth, balance sheet strength, and shareholder returns in a disciplined and sustainable manner. Capital investment is a critical enabler of our strategy. During the H1, we accelerated investment across gaming, technology, and our property portfolio, deploying approximately ZAR 492 million into initiatives that support future growth and enhanced returns. These included targeted refurbishment projects at Sun City, gaming product investment, and continued investment in our technology roadmap. Importantly, these investments are focused on areas where we see clear opportunities to strengthen our market position, improve customer experiences, and deliver long-term value for shareholders. Our balance sheet remains a source of strength for the group. Despite investing in our growth strategy and returning significant capital to shareholders, leverage remains conservative at 1.6x net debt to adjusted EBITDA, well within our target range.

Speaker #2: Our balance sheet remains a source of strength for the group. Despite investing in our growth strategy, and returning significant capital to shareholders, leverage remains conservative at $1.6 times net debt to adjusted EBITDA, while within our target range.

Speaker #2: Combined with interest cover of 8.3 times and $1.8 billion of available liquidity, we retain substantial financial flexibility to execute our strategy. While maintaining a disciplined approach to risk and shareholder returns.

Speaker #2: The group continues to generate strong cash flows, which provide the flexibility to invest in growth while maintaining attractive shareholder returns. Free cash flow conversion of $47.1% reflects a deliberate increase in capital investment across gaming, technology, and our property portfolio.

Speaker #2: Importantly, these investments are expected to support future growth and returns and has this investment cycle matures we expect cash generation to move back towards our medium-term target range of $55% to 60%.

Norman Basthdaw: Combined with interest cover of 8.3 times and ZAR 1.8 billion of available liquidity, we retain substantial financial flexibility to execute our strategy while maintaining a disciplined approach to risk and shareholder returns. The group continues to generate strong cash flows, which provide the flexibility to invest in growth while maintaining attractive shareholder returns. Free cash flow conversion of 47.1% reflects a deliberate increase in capital investment across gaming, technology, and our property portfolio. Importantly, these investments are expected to support future growth and returns, and as this investment cycle matures, we expect cash generation to move back towards our medium-term target range of 55% to 60%. In summary, we have demonstrated that Sun International can invest for the future while delivering today.

Speaker #2: So in summary, we have demonstrated that Sun International can invest for the future while delivering today. We achieved results at the upper end of our expectations.

Speaker #2: Strengthened our market positions maintained financial discipline and continued to build the technology capabilities and scale required to deliver sustainable long-term growth and shareholder value.

Speaker #2: Now, on a personal note, this is my final results presentation as CFO of Sun International. I would like to sincerely thank our shareholders, lenders, analysts, and the broader investment community for your support, engagement, and trust over the years.

Speaker #2: It has been an absolute privilege to serve the group. I will now hand back to Ulrik to conclude.

Norman Basthdaw: We achieved results at the upper end of our expectations, strengthened our market positions, maintained financial discipline, and continued to build the technology capabilities and scale required to deliver sustainable long-term growth and shareholder value. On a personal note, this is my final results presentation as CFO of Sun International. I would like to sincerely thank our shareholders, lenders, analysts, and the broader investment community for your support, engagement, and trust over the years. It has been an absolute privilege to serve the group. I will now hand back to Ulrik to conclude.

Speaker #1: Looking ahead, we are making good progress against our long-term economic goals. With early signs that our strategy is working. Our priority for the remainder of the year is to continue to drive revenue growth and market share gains.

Speaker #1: And ensure that the progress achieved across our value creation plan translates into measurable earnings growth, margin improvements, and sustainable returns. The second half has started strongly.

Speaker #1: Giving us increasing confidence that our strategy is delivering the outcomes we expected. The investments we have made in technology, capabilities, customer acquisition, and operational excellence are beginning to translate into a stronger business performance.

Ulrik Bengtsson: Looking ahead, we are making good progress against our long-term economic goals, with early signs that our strategy is working. Our priority for the remainder of the year is to continue to drive revenue growth and market share gains and ensure that the progress achieved across our value creation plan translates into measurable earnings growth, margin improvements, and sustainable returns. The H2 has started strongly, giving us increasing confidence that our strategy is delivering the outcomes we expected. The investments we have made in technology capabilities, customer acquisition, and operational excellence are beginning to translate into a stronger business performance, market share gains, and improved execution momentum across the group. Our trading in the H2 has also been strong, with revenue growth as of 31 August ahead of the group's guidance range of 6% to 8%.

Speaker #1: Market share gains and improved execution momentum across the group. Our trading in the second half has also been strong. With revenue growth as of the 31st of August ahead of the group's guidance range of 6% to 8%.

Speaker #1: While we remain in the early days of our five-year value creation plan, we are encouraged by the progress achieved to date, and we believe that the foundations for the next phase of growth are firmly in place.

Speaker #1: With the strong leadership team, enhanced capabilities, disciplined capital allocation, and clear strategic roadmap, we remain confident our ability to deliver against the economic goals we have outlined.

Speaker #1: And create sustainable long-term value for our shareholders. Finally, I would like to thank Norman for his commitment and contribution to Sun over the past 13 years.

Speaker #1: As announced, Norman will step down as CFO and Finance Director with effect from January 1st of January, 2027. We wish him very well in his future endeavors.

Ulrik Bengtsson: While we remain in the early days of our five-year value creation plan, we are encouraged by the progress achieved to date, and we believe that the foundations for the next phase of growth are firmly in place. With a strong leadership team, enhanced capabilities, disciplined capital allocation, and clear strategic roadmap, we remain confident our ability to deliver against the economic goals we have outlined and create sustainable long-term value for our shareholders. Finally, I would like to thank Norman for his commitment and contribution to Sun over the past 13 years. As announced, Norman will step down as CFO and finance director with effect from 1 January 2027. We wish him very well in his future endeavors.

Speaker #1: Thank you very much, Norman, and on a personal note, I'd like to say you've been an incredible help to me getting onboarded to this company when I started.

Speaker #1: A little bit more than a year ago.

Speaker #3: This will be the best golf course in South Africa, without a question, no debate. That is a bunker. Anything if there's rock there, then I'm responsible.

Speaker #3: We're going to try and use all these rocks every single rock you have here.

Speaker #4: We'll get it right, but it's just making sure that Mr. Player is happy.

Speaker #3: It's a hell of a golf course, this.

Speaker #4: He's in his element.

Speaker #3: She spit whatever you have.

Speaker #4: We're creating an international standard golf course.

Speaker #3: Hey, that's a hole.

Speaker #4: What's the minimum yardage you'd be happy with on this hole?

Ulrik Bengtsson: Thank you very much, Norman, and on a personal note, I would like to say you have been an incredible help to me getting onboarded to this company when I started a little bit more than a year ago.

Speaker #3: Well, you can never do what I want. Give me a hand up there. I love some of those snacks.

Speaker #4: It's the last view of seven and twelve.

[Company Representative] (Sun International): This will be the best golf course in South Africa, without a question, no debate. That is a bunker. Only thing, if there is rock there, then I am responsible. I want to try and use all these rocks, every single rock you have here. We will get it right, but it is just making sure that Mr. Player is happy.

Speaker #3: Will we do this in time?

Speaker #4: Easy peasy. Time is of the essence to make sure these changes are ready for an open golf challenge.

[Company Representative] (Sun International): It is a hell of a golf course, this.

[Company Representative] (Sun International): He is in his element.

[Company Representative] (Sun International): Jees, but what a view, eh?

[Company Representative] (Sun International): We are creating an international standard golf course.

[Company Representative] (Sun International): Hey, that is a tee hole.

[Company Representative] (Sun International): What is the minimum yardage you would be happy with on this hole?

[Company Representative] (Sun International): Well, you can never do what I want. Give me a hand up there. I would love some of those stacked.

[Company Representative] (Sun International): It is a nice view of seven and 12.

[Company Representative] (Sun International): Nice. Will we do this in time?

[Company Representative] (Sun International): Easy peasy. Time is of the essence to make sure these changes are ready for the Africa Open Golf Challenge.

[Company Representative] (Sun International): You have got the rocks, it is a gift.