Chairman’s statement


Subsequent to year end your company has undergone a historic change with the exit by SABMiller after some 45 years of ownership in the organisation. This has presented the opportunity for the group to simultaneously increase the free float and consequential liquidity available for the trading of the company’s shares and undertake a compelling and value creating buy-back of around 12% of the company’s own shares. The placing undertaken on behalf of SABMiller was very well received by both local and international institutions, with the final book being some 2.25 times oversubscribed at the placing price of R25.75 per share and some 35% of the orders coming from foreign institutions.
John Copelyn


   Growth strategy assisted adjusted earnings performance in difficult trading environment.
Strategic investments in the acquisition of a 40% stake in the GrandWest Casino and the buy-back of shares totalling R5 billion.
BBBEE rating has been reaffirmed at level 2.


During the year ended March 2014 the Tsogo Sun group faced a difficult trading environment, but despite this macro headwind, delivered a strong performance in adjusted earnings. The continued delivery of its growth strategy assisted the group in augmenting the poor levels of organic growth, particularly in casino win, and while the ability to continue to deliver strong earnings growth will ultimately depend on a macro recovery in the South African economy, it is encouraging that the group continues to explore every avenue for development and expansion. Once again a number of investment projects have been implemented or initiated, including the redevelopment and capacity increases at our Silverstar and Gold Reef properties in Gauteng and the application for a large-scale expansion and development at the Suncoast Casino and Entertainment world. With regards to our sub-Saharan operations we have invested in projects totalling US$100 million in Nigeria and Mozambique and continue to look for opportunities to add to our businesses in these regions.

Operating environment

The group’s operations delivered organic growth, albeit at a slower rate in gaming than we would have liked, with hotels delivering a satisfactory growth in Revpar despite a marginal decline in occupancies. Both the corporate and the consumer markets continue to face uncertain economic circumstances, exacerbated by the continued effect of industrial unrest and general poor economic fundamentals. Regulatory challenges are the only other real substantive risks to the group and we remain vigilant to these, constructively engaging and challenging the various government departments to ensure that the value created by the group, and the benefits offered in terms of positive commercial contribution towards employment creation and tax revenues, are fully understood by all stakeholders.

Tsogo Sun, due to its strong balance sheet and industry knowledge, remains uniquely placed to take advantage of opportunities, the most significant of which are the announced acquisition of a 40% stake in the GrandWest Casino in Cape Town which is currently subject to regulatory approval and the buy-back of shares referred to above. These two projects will see some R5 billion of capital deployed into what we think are both lucrative and strategic investments.