JOHANNESBURG (Reuters) - South Africa’s Tsogo Sun Holdings Ltd plans to buy more hotels in the United Kingdom where it is performing well and weakness in the pound has made assets much more affordable, it said on Wednesday, after reporting flat half-year profit.
Africa’s biggest hotels and gambling operator, which also has interests in Nigeria, Kenya and Mozambique, said it expects trading conditions outside the UK to remain under pressure, although it continues to invest.
Tsogo Sun will buy additional hotel properties through International Hotel Properties Limited, a European hotel investment of the group in which it holds a 25 percent stake, and which owns eight hotels in the UK.
“We’ve put about 500 million rand into the UK market, which is doing quite well for us and I think we’re going to put in more money,” Chief Executive officer Marcel von Aulock told Reuters over the phone, without giving any financial details.
“Quite frankly with Brexit and all the uncertainty, and the collapse of the pound, [it] actually gives opportunity. Those UK hotel assets just got a whole lot cheaper in rands.”
Tsogo Sun said adjusted headline earnings per share (HEPS) were unchanged at 88 cents in the six months to end September.
Shares were down 0.54 percent to 29.24 rand at 0859 GMT.
Total revenue for the South African hotel division increased 22 percent to 1.5 billion rand ($106 million), assisted by the various expansion projects including the recently acquired Hospitality Property Fund.
The Gaming division increased revenue by 4 percent to 4.5 billion rand, while revenue from hotel rooms grew by 12 percent. The group declared an interim dividend of 34 cents per share, up 10 percent.
Tsogo Sun said trading is expected to remain under pressure due to a weak economy in South Africa and many of the commodity focused countries in which it operates.
“Growth will depend on the future performance of these economies as well as the level of policy certainty in South Africa,” von Aulock said.
In the last seven years, the owner of Montecasino and Gold Reef City has spent over 20 billion rand expanding the business and the current total project pipeline is about 6 billion rand, Von Aulock added.
($1 = 14.1213 rand)
Reporting by Nqobile Dludla; Editing by Joe Brock and Alexandra Hudson
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