Johannesburg - Africa's biggest hotels and gambling company Tsogo Sun on Wednesday reported flat profit for the 6 months to September as trading conditions remain under pressure.
Total income for the six months of R6.3 billion was 8 percent higher than a year ago, with 3 percent growth in gaming win assisted by a 12 percent growth in hotel rooms revenue, a 7 percent growth in food and beverage revenue and strong growth in property rental income and dividends received, it says.
Earnings before interest, income tax, depreciation, amortisation, property rentals, long-term incentives and exceptional items was 7 percent higher at R2.2 billion, while adjusted headline earnings per share was flat at 88c.
Tsogo, which has operations in SA, Nigeria, Kenya and Mozambique, says trading during the first half of the year remained volatile and reflected continued pressure on the consumer because of the macro-economic environment and weak sentiment.
Despite this, it says tear-on-year growth was achieved in both casino and hotel revenues and the trading results were positively impacted by various expansionary projects, including the acquisition of the Holiday Inn Sandton and Crowne Plaza Rosebank hotel businesses in March 2016.
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It also expects to benefit from , and the consolidation of the Hospitality Property Fund from September 2016, which saw the title of those properties as well as 13 additional third-party operated hotels added to the group's portfolio, including the Westin Cape Town, Radisson Foreshore, Radisson Gautrain and Birchwood Hotel and Conference Centre amongst others. In addition, the group acquired a 20 percent stake in the Grand West and Worcester casinos in the Western Cape in April 2016.
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During the half year, it spent R1.3 billion, which included buying Grand West and Worcester casinos and continued to plan to expand Suncoast Casino and Entertainment World with construction starting this month. The R2.1 billion 2-year project will add 22 000m2 destination retail mall, additional restaurants and entertainment offerings, additional parking and an expansion of the casino floor to incorporate an additional 900 gaming machines and 16 gaming tables.
An amount of R585 million was invested on maintenance capex group-wide, including the Montecasino casino floor and major hotel refurbishments, “ensuring our assets remain best in class,” it says.
A 34c a share dividend was declared.
IOL
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