Tsogo Sun spends huge amounts on expansion, upgrades

SOUTH African hotel, gaming and entertainment group Tsogo Sun has spent huge amounts of money on expansion, construction and upgrading its properties to ensure its assets remain best-in-class.

The group said it had forked out R1.6 billion in expansion and refurbishment of the Suncoast Casino and Entertainment World in Durban in the six months to September.

Tsogo Sun had also spent R30 million on furniture and fittings for the opening of a new 504room SunSquare and StayEasy and a further R438m on maintenance, system replacement and casino floor and major hotel refurbishments during the period.

New chief executive Jacques Booysen said the investments, together with acquisitions, would serve the company well in the future by providing good returns.

Booysen stressed that the company would continue to look for more acquisitions in the future.

“The acquisition of additional hotel properties by International Hotel Properties, which currently owns nine hotels in the UK, is anticipated in the future, and the group may apply additional capital in this regard,” he said.

The group said the investments, as well as continued pressure on consumers and weak sentiment, impacted negatively on its performance during the period.

Tsogo Sun said it recorded a 1 percent increase in total income to R6.4bn.

Adjusted headline earnings per share declined 10 percent to 78.8 cents a share, down from 88c compared with last year.

Earnings before interest, income tax, depreciation, amortisation, property rentals, long-term incentives and exceptional items (Ebitdar) of R2.2bn ended flat on the prior period.

The overall group Ebitdar margin of 34.4 percent is 0.6 percentage points down on the prior period.

The group declared an interim dividend of 32c a share, which was down 6 percent.

Revenue for the gaming division was down 2 percent to R4.4bn, while revenue for the South African hotel division increased 15 percent to R1.7bn.

The offshore division of hotels achieved revenue of R279m, which was 17 percent down on the prior period, impacted by tough local economic environments, due mainly to the low commodity prices.

Tsogo Sun shares rose 3.58 percent on the JSE yesterday to close at R21.10.