Recession allows a tiny growth in profit at Gold Reef
Business Day
30 March 2010

Siseko Njobeni

Casino group Gold Reef Resorts ’ lacklustre performance in the past financial year is a reflection of the tough conditions that slashed consumers’ disposable income.

The recession was always going to test how Gold Reef would respond to consumers’ cutback on discretionary spending and their reduced access to credit.

In the year to December, the company reported 1% increases in revenue (to R2,2bn), in earnings before interest, taxes, depreciation, amortisation and rent (to R897m) and in headline earnings per share (to R131,9c).

The company declared a 65c a share ordinary dividend. Capital expenditure was reduced from the previous R445m to R206m.

The company said yesterday trading conditions in the year were challenging, but it managed to increase earnings and revenue. It continued to focus on its “controllable cost base” especially costs associated with employees. Staff numbers were reduced through natural attrition.

Gold Reef’s Silverstar casino’s performance was mainly behind the company’s market share growth (from 24,5% to 25,1%) in Gauteng. The company’s gross gaming revenue in Gauteng was down 1%, compared with the previous year’s 8% growth “and the double-digit growth in prior years, clearly reflecting the current subdued consumer environment”.

Revenue at Silverstar rose 6% to R543m, while earnings before interest, taxes, depreciation, amortisation and rent rose 11% to R208m. Revenue at Gold Reef City was down 3% to R960m. The group has, however, slashed its debt from R247m at the end of 2008 to R18m.

Revenue at the company’s Golden Horse casino in KwaZulu- Natal rose 2% to R248m. Revenue at Mykonos casino was up 2% to R114m, while revenue at the Garden Route fell 2% to R160m. Goldfields casino in the Free State increased revenue 1% to R119m, while Queens casino in the Eastern Cape increased revenue 11%.

<< Back