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SLOW DOWN REDUCES TSOGO SUN EARNINGS

Tsogo Sun yesterday released its maiden results for the year to March, providing investors with the first detailed view of the gaming and hotel group’s financial performance ahead of its planned merger with rival Gold Reef Resorts.
The two groups in February announced that they would merge and are seeking the various regulatory approvals needed to effect the R2,1bn deal.

The year under review was one of the toughest for the group as its hotel division was hit by the slowing economy. This resulted in a 2% drop in income to R5,8bn while earnings before interest, taxation, depreciation, amortisation and rentals (ebitdar) fell 12% to R2,3bn.

With a sharp slowdown in corporate and government business. Southern Sun Hotel group saw occupancies dive 10 percentage points to 58%, while it kept its average room rate steady at R803.

This saw revenue per available room (revpar) slip 13% to Rl,5bn and Ebitdar 29% to R555m.

“While we see an improvement over the Cup. we will not see revpar improving until we see the return of the corporate and government sectors.” said chief financial officer Marcel von Aulock. The gaming division fared better with total gaming income rising to R4.1bn and ebitdar flat at R1.7bn.

Source: Business Day – Julius Bauman