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TSOGO SUN H1 DILUTED ADJ HEPS UP 20% TO 81.3c

Tsogo Sun reports a 20% rise in diluted adjusted headline earnings per share to 81.3c for the six months ended September 2013 from 68.0c a year ago.

Hotels and gaming group Tsogo Sun Holdings (TSH) has reported a 20% rise in diluted adjusted headline earnings per share to 81.3c for the six months ended September 2013 from 68.0c a year ago. The group declared an interim dividend of 29c per share – up 21% on a year ago.

The group said year-on-year growth was achieved in both casino and hotel revenues assisted by the merger and acquisition activity undertaken as part of the groups growth strategy.

Total income grew 9% to R5.2bn with a 6% growth in gaming win assisted by a 17% growth in hotel rooms revenue and a 21% growth in food and beverage revenue.

Earnings before interest‚ income tax‚ depreciation‚ amortisation‚ property rentals‚ long-term incentives and exceptional items (Ebitdar) was also 9% higher at R2.0bn. The overall group ebitdar margin of 38.2% is flat on the prior period.

Tsogo said its underlying operations remain highly geared towards the South African consumer (in gaming) and the corporate market (in hotels) with both sectors still experiencing difficult economic conditions and increased administered costs (electricity‚ water and property rates). The results for the year to date continue to reflect the growth potential of the group should these sectors of the South African economy continue to improve.‚ it said.

Tsogo said the hotel industry in South Africa continues to experience a recovery from the dual impact of depressed demand and oversupply. Overall industry occupancies have improved to 58.8% (2012: 57.7%) for the six months.

“As a result of the strong sales and distribution channels and the superior product and service quality available within the group‚ Tsogo Sun Hotels continues to achieve an occupancy and rate premium in the segments in which the group operates‚” it said.

Looking ahead‚ it said the continued improvement in trading performance across the groups operations during the period remains encouraging. However‚ the ongoing sustainability of this growth is uncertain due to the inconsistent monthly results.

It added that nevertheless‚ the group remains highly cash generative and continues to pursue significant opportunities to invest capital in its growth strategy.

The group is also exploring a variety of projects‚ including the expansion of the Suncoast casino and related entertainment facilities‚ as well as a number of potential acquisitions which are at various stages.

The potential to bid for the relocation of one of the smaller casinos in the Western Cape to the Cape Metropole remains an opportunity for the group‚ although the recent increase in provincial taxes in the Western Cape has made this a less attractive opportunity than before‚ it said.

Source: eProp Commercial Property News