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TSOGO SUN DECLINE MARGINALly

Tsogo Sun Holdings (TSH) on Thursday announced basic and diluted adjusted headline earnings per share of 50.1 cents in interim results for the six months ended September 2011, from 52.1 cents previously.

It noted basic and diluted headline earnings per share of 50.1 cents, from 50.0 cents in 2010.

Basic and diluted earnings per share stood at 50.4 cents, unchanged from before.

Overall income improved 38% to R4.356 billion, from R3.156 billion, while operating profit improved to R1.174 billion, from R883 million.

Room occupancy climbed marginally to 59.5%, from 58.5% with the average room rate at R786, from R917 in 2010 with rooms revenue declining to R777 million, from R850 million before. Profit for the period increased 23% to R 618 million.

Tsogo Sun announced an interim cash dividend of 20 cents per share.

The group noted that the past six months had seen the integration of the Gold Reef properties into the Tsogo group. “This process has proceeded smoothly and is largely complete,” it said.

The group continued to pursue investments in terms of its stated growth strategy resulting in the recently announced acquisition of the hotel and office development in Rosebank, that previously traded as the Grace, for R85 million.

Tsogo had also reached agreement for the acquisition of an additional 16.5% effective interest in the Suncoast Casino for R510 million, bringing the total ownership of that operation to 90%.

Gauteng recorded provincial growth in gaming win of 3.3% over the period.

Montecasino and Gold Reef City casinos recorded gaming win growth of 7.3% and 8.4% respectively for the six months, while Silverstar casino recorded a decline of 1.8% for the same period.

KwaZulu-Natal provincial gaming win grew by 8.0% with the Suncoast Casino and Entertainment World reflecting growth of 5.1% in gaming win with Golden Horse casino and Blackrock casino reflecting growth of 12.7% and 11.4% respectively for the six months, showing strong demand in their relevant catchment areas.

Mpumalanga reported growth in provincial gaming win of 8.1% for the six months ended September 2011. The Ridge casino in Emalahleni and the Emnotweni casino in Nelspruit reported growth in gaming win of 6.7% and 6.6% respectively for the six months.

The Eastern Cape provincial gaming win grew marginally by 0.3%. However, despite the difficult conditions in the East London economy, Hemingways reported growth in gaming win of 4.2%, and continued to benefit from the attractions associated with Hemingways Mall which opened in 2009.

The Western Cape reported growth in provincial gaming win of 4.2%. The Caledon Hotel and Spa and Garden Route casino in Mossel Bay reported growth of 8.7% and 2.4% respectively for the six months, while the Mykonos casino in Langebaan reported a decline in gaming win of 1.0% for the same period.

“The Western Cape market continues to be impacted by poor economic fundamentals, particularly in the leisure-based coastal areas outside of the larger Cape metropole,” Tsogo said.

Other gaming operations, consisting of the Sandton Convention Centre, the Stay

Easy Century City hotel and head office costs, reflected a loss of R76 million, R46 million adverse to the prior period mainly due to non-repeating World Cup- related trading at the Sandton Convention Centre and the inclusion of Gold Reef central costs.

“The hotel industry in South Africa is still experiencing the dual impact of depressed demand and over supply, with overall industry occupancies of around 52% for the six months to September 2011. The group’s hotels are likewise affected. However, as a result of the strong sales and distribution channels available within the group, a significant occupancy and rate premium is being achieved in the segments in which the group operates,” the group said.

It added that with little recovery in the core corporate market, the group’s system-wide occupancies remained under pressure in South Africa at 58.9%.

Looking ahead, the group said that despite a difficult trading environment for gaming and hotels, the group remained highly cash-generative and had significant opportunities to invest capital in its growth strategy at attractive rates of return. “The ability to continue to pursue such investments will depend on the final outcome of, and impact from, the variety of proposed regulatory changes by Government,” it said.

By 10:42, shares in Tsogo declined 55 cents or 3.32% to R16.00 on the JSE

Source: Business Report – INet Bridge