Tsogo Sun to acquire Sunwest, Worcester Casino for R1.35bn

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 Tsogo Sun, the casino and hotels group is in the process of acquiring the Golden Valley Casino Worcester is situated in the heart of the Breede River Valley Western Cape. Tsogo Sun, the casino and hotels group is in the process of acquiring the Golden Valley Casino Worcester is situated in the heart of the Breede River Valley Western Cape.

Tsogo Sun is in the process of buying 20% stake of Sunwest International and Worcester Casinos for R1.35bn from Sun International and Grand Parade Investments, the company announced recently.

It is also buying Garden Court Umhlanga and the StayEasy Pietermaritzburg for R310m from Liberty.

Competition Tribunal hearings are scheduled for August for its proposed acquisition of a controlling stake in Hospitality Property Fund. A stake of 25% was also acquired in the International Hotel Group, a property fund focused on hotel opportunities in the UK and Europe.

Tsogo recently reported a stronger second-half showing from its portfolio of casino properties. The company grew income by 8% to R12.3bn and after tax profit by 6% to R1.8bn.

The payout to shareholders of casino group comes to 67c per share for the year to end-March‚ a 12% increase on the previous year.

Opportune Investments CEO Chris Logan said the results were commendable for a firm so geared to the local economy.

Tsogo has opted to revamp Suncoast to the tune of R2.1bn — including additional casino space and a new Privé, 20,000m² of retail and restaurant space, as well as a multistorey parkade. Construction will start shortly on a two-year building programme.

Its biggest casino, Montecasino, performed well — reporting revenue up 6.5% to R2.7bn. Montecasino, which has undergone extensive refurbishment, still managed an encouraging ebitdar margin of close to 45%.

Nearly 60% of the group’s revenue came from what it describes as “net gaming win” which grew 6% to R7.4bn.

Gold Reef City’s gambling income growth slowing to 5.5% due to a R640m refurbishment and expansion project which was completed in October was compensated for by strong growth in its coastal casinos.

In KwaZulu-Natal‚ gaming win growth of 7.1% was achieved at Suncoast Casino and Entertainment World‚ 8.8% at Blackrock Casino in Newcastle and 9.5% at Golden Horse Casino in Pietermaritzburg.

In the Western Cape‚ The Caledon Casino reported 10% growth‚ Garden Route Casino in Mossel Bay 18.2% and Mykonos Casino in Langebaan 6.7%.

Tsogo Sun’s fastest growing revenue stream was from hotel rooms‚ which grew 13% to R2.8bn‚ contributing 23% of total revenue.

Its South African hotels benefited from occupancy rates improving to 63.5% from the previous year’s 62.8% and average room rates increasing 7% to R1‚018‚ CEO Marcel von Aulock said in the results statement.

The international hotel division pumped up revenue 25% to R691m — the increase mainly due to contributions from the Southern Sun Maputo, which was closed for refurbishment in the previous financial year.

Food and beverages revenue grew 12% to R1.4bn‚ contributing 11% of total revenue.

Its effective tax rate for the year increased to 30.4% from the prior year’s 28.8% due to a capital gains tax inclusion rate on deferred tax of R54m and non-deductible expenditure such as casino building depreciation‚ offset by foreign exchange losses on US dollar denominated loans.

“Given the weak state of the South African economy and many of the commodity focused countries in which the group operates‚ trading is expected to remain under pressure.

"However‚ the fourth quarter of the financial year was strong in both the gaming and particularly the SA hotel environment‚” Von Aulock said.

Read more on:

Hotels and Leisure  |  Tsogo Sun  |  Hospitality Property Fund Ltd (HPF)  |  Sun International  |  Marcel von Aulock  |  Gold Reef City  |  Montecasino  |  Chris Logan  |  Suncoast Casino  |  Grand Parade Investments (GPI)  |  SunWest International  |  Worcester Casino  |  International Hotel Group (IHL)  |  The Caledon Hotel and Spa  |  Garden Route Casino  |  Mykonos Casino