LISTED diversified company Hosken Consolidated Investments (HCI) posted a 40% slump in basic earnings per share for the six months to September, owing to once-off items, the group said on Friday.

The group said this was in part due to tosses incurred as a result of the mark-to-market of Tsogo Sun’s initial investment in Gold Reef Resorts and the impairment of natural gas put options held by Montauk, an energy firm in which it holds 91,5% share.

HCI, with stakes in companies ranging from Tsogo Sun lo e.tv, said the consolidation of Seardel Group, its clothing and textile unit, boosted its revenue 35,3% to R4,16bn over the interim period. “We remain hopeful that the turnaround efforts we have been driving at will bear fruit and allow the group to be returned to profitability in its continuing operations,” it said of Seardel.

But its earnings before interest, tax, depreciation and amortisation (ebitda) declined 6% after taking a hit mainly from its hotel business, which faced difficult trading conditions. HCI said finance costs increased significantly primarily as a result of the increased level of group borrowings, which were used to consolidate Seardel and raise HCI’s interest in Tsogo Sun.

HCI said group profit after tax from continuing operations rose to R622m from R486m.

Tsogo Sun, it said, continued to outperform other operators in SA in terms of earnings before interest, tax, depreciation, amortisation and rentals (ebitdar) margin. Total revenue of R1,98bn and ebitdar of R805m were achieved.

“Gauteng province has been under pressure, recording a 4,8% decline for the six months, whilst Montecasino recorded a 1% growth in gaming win. indicating that the Montecasino catchment area is not as affected as other regions within Gauteng,” HCI said.

Clover had a much better six months than expected after the food and beverage unit, in which HCI holds 44%, aligned its milk purchases more closely with its fresh products sales.

In the vehicle component segment, Formex. in which HCI owns a 90% share, turnover declined from R262m to R160m, resulting in a loss of R21m for six months.

HCI said Golden Arrow Bus Services, its wholly owned subsidiary, had major difficulties with collecting debts on its contract with the government. This unit also had a significant decline in the number of passengers being carried.

Source: Business Day – Artwell Dlamini