TSOGO AIMS TO SWEAT ASSETS FOR GROWTH

TSOGO Sun’s organic growth priority was to get more out of its “irreplaceable” set of casino licences and hotel assets while trading conditions remained tough, CEO Marcel von Aulock said at the group’s annual general meeting (AGM) on Wednesday.

He said that the hotel and casino operator, which is highly dependant on the strength of the South African economy and consumer, had little room to further improve efficiencies unlike some of its competitors.

The R560m upgrade and expansion of Tsogo Sun’s Silverstar casino and entertainment complex was part of this strategy to make the establishment “more relevant” to its target market. Silverstar, one of various capital expenditure programmes Tsogo Sun undertook recently, holds a valuable licence that the group fought to retain when it merged with Gold Reef Resorts in 2011.

Elsewhere, Tsogo Sun was repositioning some of its hotels to become more relevant in their respective markets, including on a price basis.

Shareholder activist Theo Botha raised various concerns at the company’s AGM, which was its first since SABMiller sold its large shareholding and voting rights in Tsogo Sun. He said independent non-executive director Jabu Ngcobo should not be considered “independent” as he held the same position at Hosken Consolidated Investments — Tsogo Sun’s largest shareholder.

“We work on a see-through basis,” Tsogo Sun chairman John Copelyn said in response, adding that directors could be regarded as independent on both boards.

Mr Botha also said Tsogo Sun should offer shareholders more information on how it determined executive bonuses.

Mr Copelyn said the group had a strong track record of earnings growth, a good remuneration policy based on a “rigorous” budget process, and also of avoiding retrenchments while increasing employee pay at above inflation.

“I do think that a fair amount of the credit for that fact goes to people like Graham Mackay, who were obsessed with policy formulations applicable in the group,” Mr Copelyn said. The late Mr Mackay is credited for leading SABMiller to become the world’s second largest brewer.

Source: BDLive – Nick Hedley