Gooderson earnings slide as revenue grows

Specialist hotel group Gooderson Leisure Corporation has experienced some disappointing years since it relisted on the JSE in 2006.

Specialist hotel group Gooderson Leisure Corporation has experienced some disappointing years since it relisted on the JSE in 2006.

Although results for the year to February, released on Tuesday, showed a 17% increase in revenue to R150m — largely due to the takeover of Beach Hotel in Durban — the group reported a steep dive in headline earnings.

The company said trading conditions remained tough and were compounded by load shedding, interest rate hikes, the spread of the Ebola virus, and onerous new visa laws in SA.

Headline earnings per share fell to 3.40c, from 6.25c a year earlier. Profit decreased to R4.11m, from R7.56m.

Gooderson declared no dividend, “due to tough economic conditions”.

It said it remained the policy of the group to review the dividend annually in light of the group’s cash flow, gearing, and capital requirements.

The company first listed on the JSE in 1968 as Gooderson Hotels. When current chairman Alan Gooderson purchased the business from his family in 1972, he pursued a new strategy that included delisting.

Ten years ago, shareholders felt the time was right to list again, citing SA’s budding tourism figures. The listing was a “strategic step” to allow it to “raise capital in support of its vision of becoming a medium-size, empowered leisure company”, the company said.

Hopes were pinned on the 2010 Soccer World Cup, with Gooderson saying the event would ensure a revenue growth rate of more than 10% over the three to five years following the tournament. These ambitions looked to be on track when the company reported a 39% rise in full-year revenue in 2007.

In 2008, revenue grew 20% and in 2009, it rose 12%. But in 2010, revenue fell 22%, and the dream began to fade.

The World Cup was a bust for a number of hotel groups because of overdevelopment in the sector ahead of the event. The domestic economy began to show serious signs of wear and tear and it only got worse in the years after the soccer tournament.

Gooderson listed on the AltX at 85c per share in 2006, but was trading at about 45c on Tuesday.