Golden delivers solid growth with increased revenues

2008-03-16 00:00

The Golden Horse Casino delivered solid growth for the year to December 2007, with revenue rising by 12,7% to R225,9 million.

The performance of one of Pietermaritzburg’s anchor entertainment establishments, which saw Earnings Before Interest, Tax, Depreciation, Amortisation & Rentals (Ebitdar) rise by 18,8% to R109 million, is contained within the financial results of parent company, Gold Reef Resorts group.

Critically, the margins at the local casino remain "good" and cost control measures already in place are realising benefits, Group Financial Director Jarrod Friedman told The Witness.

However, it is clear that revenue growth has slowed — from 19,6% in 2006 to 12,7% in 2007— as locals begin to feel the pinch of soaring consumer inflation and diminishing disposable income.

Furthermore, Group CEO Steven Joffe has warned that growth in 2008 will be even more challenging given the general economic slowdown.

Interestingly, the group is currently considering additional improvements to the Golden Horse Casino. However, Friedman declined to comment on the nature of any future developments.

He noted that while the local casino’s growth remains satisfactory, the consumer downturn both locally and nationwide has placed pressure on the business, which is highly sensitive to rising interest rates and rising consumer inflation.

While noting that the two

major KZN cities are not entirely comparable, he said two large Durban casinos experienced better growth than the Pietermaritzburg casino in 2007.

Friedman said the first half of the year was better than the second half, adding that this was in line with the overall performance of the group.

The newly-renovated Salon Prive — one example of a number of furbishments and expansions at the casino undertaken by the group in recent years — attracted more patrons last year.

The Gold Reef Resorts group, which also owns the renowned Gold Reef City, posted solid results for the year to December 2007, with revenue growing 14,8% to R1,7 billion.

Headline earnings per share (HEPS) for the year, a key profit measure for local companies, increased 18,3% to 150,7 cents compared to HEPS of 127,4 cents at the same time in 2006.

Gold Reef Resorts recorded a 43,6% rise in its margin on revenue as Ebitdar (to eliminate once-off costs that occurred during the year) came in at R760 million, up by 21,9%.

The group declared a dividend of 65 cents a share for 2007, higher than the 55 cents a share in 2006. In addition, positive cash flow motivated Gold Reef to declare a special dividend of 35 cents a share to bring the total dividend to R1 a share.

kavith@witness.co.za

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