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Tsogo profits up 12% despite visa rules debacle

May 25 2016 09:24
Matthew le Cordeur

Cape Town – Casino group Tsogo Sun [JSE:TSH] said while it was adversely impacted by the contentious visa regulations, it still managed to increase profit by 12%.

Announcing its financial results for the year ended March 31 on Wednesday, Tsogo Sun said its adjusted headline earnings per share – its measure of profit - was 196.5 cents, up 12%.

Income grew by 8% to R12.3bn, with a 6% growth in gaming win, assisted by a 13% growth in rooms revenue and a 12% growth in food and beverage revenue.

Profit after tax increased 6% to R1.8bn, while it paid shareholders a final dividend per share of 67.0 cents, an increase of 12%. Its share price was 1% down at close of trade on Tuesday at R25.06.

It said industry occupancies have improved to 63.8% (2015: 62.5%) for the year, “but were adversely impacted by visa regulations which constrained growth”.

“The sustainability of this performance is uncertain and will depend on how these economies perform going forward, including the impact of changes in commodity prices, and the level of policy certainty that the government is able to instill in areas ranging from visa regulations to gaming taxes and administered costs.

“Nevertheless, the group remains highly cash generative and is confident in achieving attractive returns from the growth strategy once the macro-economic environment improves.”

Growth was achieved in casino and hotel revenues, while the results were positively impacted by the acquisition of hotel businesses from Liberty and the Cullinan Hotel.

Tsogo Sun spent R2bn on its growth strategy last year, spending R640m on the refurbishment and expansion of Gold Reef City. It also invested R945m on maintenance expenditure, including gaming system replacements and casino floor and major hotel refurbishments.

Gauteng recorded provincial growth in gaming win of 3.7% for the year. Gaming win growth of 5.1% was achieved at Montecasino, 4.9% at Silverstar and 5.5% at Gold Reef City, it said.

KwaZulu-Natal provincial gaming win grew by 7.3% for the year, Mpumalanga reduced by 2.8%, Eastern Cape grew by 1.9% and the Western Cape grew by 3.8%.

tsogo sun  |  visa regulations  |  casino
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