JSE-LISTED gambling and hotel group Tsogo Sun grew its adjusted headline earnings per share 20% in the six months to September, despite what CEO Marcel von Aulock called a difficult market where consumers were under pressure.

Tsogo Sun, which on Thursday released its results for the six months, said it recorded adjusted headline earnings per share of 81.3c. The group’s total comprehensive income for the period was R991m, up 26% on R787m achieved in the six months to September last year.

An interim dividend of 29c per share was declared, a 21% increase on the comparative period.

“Our customers, many of which are middle-class gamblers, are under pressure. People do not gamble when they do not have money to spend on leisure and when they are worried about their financial well-being,” Mr von Aulock said.

He was impressed with the results given the weak demand for gambling in the country.

“The group has delivered a solid performance. Although the pace of growth slowed in the second quarter, the group is highly cash generative and excellent progress was made on our growth strategy with R1.3bn invested into expanding and upgrading existing assets and acquiring other strategic interests during the period,” Mr von Aulock said.

He said the hotel segment of Tsogo Sun was performing well, while the gambling side was erratic on a month-to-month basis. South Africa’s hotel industry was experiencing a recovery from the dual effect of depressed demand and oversupply.

Revenue per available room grew 10% compared to the prior period. Occupancies were largely unchanged at 62.5%.

The offshore hotel division achieved total revenue for the six-month period of R256m, representing a 43% improvement on the prior period.

The potential to bid again for the relocation of one of the group’s smaller casinos in the Western Cape to the Cape metropole remained an opportunity for the group, although the recent increase in provincial taxes in the Western Cape made this a less attractive opportunity than before.

The Mpumalanga Gaming Board reinitiated the request for proposals for the fourth licence in the province following the withdrawal of an earlier bidding process.

Avior Research hotels and gaming analyst De Wet Schutte said the hotel segment had been expected to outpace the casinos segment of Tsogo Sun for a while because of pressures on consumers.

Tsogo Sun declared an increased interim dividend of 29c per share, which is a 21% increase on the prior six months.

Source: BDLive – Alistair Anderson