Tsogo places its chips on an economic recovery

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Tsogo places its chips on an economic recovery

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Published Date: 2018-05-24 | Source: Stephen Gunnion | Author: Stephen Gunnion

Tsogo places its chips on an economic recovery

The hotel and casino operator says its underlying operations remain highly geared towards the SA consumer and the corporate market, with significant growth potential should the economy improve

Sun International's new Time Square casino in Pretoria is giving Tsogo Sun a run for its money. The hotels and gaming group says net casino gaming win fell by 2% last year after the opening of Time Square. It says the comparative period a year earlier was also boosted by a strong first-quarter performance from its Gauteng casinos, particularly Montecasino.

Reporting results for the year to end-March, Tsogo said trading was also impacted by continued pressure on the consumer due to the macroeconomic environment, extremely weak sentiment and political uncertainty. The acquisition of Galaxy Bingo and Vukani Slots, as well as two hotel businesses from the Liberty Group and Hospitality Property Fund, propped up trading income, it said.

Total income for the year rose 6% to R14 billion, with 6% growth in net gaming win and a 9% rise in food and beverage revenue. It said net gaming win growth was assisted by the acquisition of Gameco from Hosken Consolidated Investments and other stakeholders. Earnings before interest, tax, depreciation, amortisation and rentals (EBITDAR) increase by 4% to R5.3 billion. Group adjusted headline earnings for the year declined 1% to R2 billion, while adjusted headline earnings per share declined by 5% to 197.8c after it issued more shares for the Gameco acquisition. It's declared a final dividend of 70c per share.

The group says overall hotel industry occupancies in the country reduced to 64.2% from 65.2%, with occupancies in the Western Cape weakening, particularly during the last quarter, due to the water crisis. Its hotels reported flat system-wide revenue per available room as it kept average room rates unchanged at R1 066, with occupancies slightly up on the prior year at 64.7%. Revenue from its SA hotels division increased 8% to R3.8 billion, assisted by the inclusion of the Garden Court Umhlanga and the StayEasy City Bowl hotels last September. Revenue from its offshore hotels declined 11% to R565 million, hurt by weak local economies and the stronger rand.

Tsogo says its underlying operations remain highly geared towards the SA consumer and the corporate market and there is significant growth potential should the casino and hotels sectors of the economy improve.

Its shares declined 1.4% to R22.50 yesterday.



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