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RECOVERING HOTEL MARKET BOOSTS TSOGO SUN

LISTED hotel and casino operator Tsogo Sun on Thursday reported a 24% rise in adjusted headline earnings per share to 150.3c for the year ended March, driven by growth out of existing operations and a continued recovery in its hotels business.

CEO Marcel von Aulock said hotel rooms revenue growth was strong, at 19%. Further, the group had achieved 16% growth in food and beverage revenue.

The growth was as a result of the continued recovery in the hotel market and the group’s merger and acquisition activity. Casino revenue growth at 7% was “a little lighter than we would have liked but not a bad result”.

Tsogo Sun declared a final gross cash dividend of 51c per share for the period under review, 28% up on the previous year.

Avior Research hotels and gaming analyst De Wet Schutte said the group had been able to maintain margin expansion. “The hotels did well especially over the second half of the year, and we think the hotel segment will continue to outperform the casinos for the next 24 months or so.”

Mr Schutte said the company was highly cash generative “and they have enough projects to invest in, which we believe is likely to grow both cash flows and future dividends”. The group had a strong focus on expansions of existing assets.

Mr von Aulock said capital expenditure, including maintenance, was about R1.3bn over the period “and we are running about a R2.5bn programme”. The busy period for the group was because of its merger with Gold Reef Resorts in 2011.

During the year, Tsogo Sun concluded the acquisition of Southern Sun Hyde Park and began or completed various redevelopments and refurbishments including those done to 54 on Bath. Projects under way include the R200m expansion of the Emnotweni Casino and the R480m expansion of the Silverstar Casino.

Other projects under way are the R270m upgrade and refurbishment of Gold Reef City Casino and Theme Park, the $30m expansion and refurbishment of the Southern Sun Maputo and expansion of the Garden Court Blackrock hotel.

Source: BDLive – Nick Hedley