Chief Executive Officer’s review

The strategic priorities of the Tsogo Sun group remain sustainability and growth. Sustainability, or more simply staying in business, is achieved through firstly, avoiding mistakes that can threaten the survival of the business and secondly, identifying external risks and developing mitigating strategies to minimise or eliminate their impact on the organisation. Growth is achieved both organically and inorganically and is measured by the increase in the group’s free cash flow generated over time.
Marcel von Aulock

Chief Executive Officer

The group has the financial ability to withstand macro-economic shocks and has pursued significant attractive investment opportunities both during and subsequent to the financial year
The orderly disposal of SABMiller’s investment and the share buy-back will concentrate HCI’s ownership in the group and broaden the shareholder base
Exciting product initiatives include the relaunch of the reward programmes, the introduction of free Wi-Fi at all of our hotel properties and the launch of our new restaurant brands Vigour & Verve and Grill Jichana
The launch of a single group employee engagement programme is important in creating a proper work environment
A recovery in consumer and business confidence remains the largest growth opportunity for the group


Major acquisitions


  • 30% of Suncoast (R1 billion)
  • Century Casinos (R438 million)


  • Gold Reef merger


  • 16.5% of Suncoast (R510 million)
  • 52.6% of Hotel Formula 1 (R300 million)


  • 10% of Suncoast (R400 million)
  • 75.5% of Southern Sun Ikoyi (R695 million)


  • 10% increase in interest in Cullinan and acquisition of hotel assets (R762 million)
  • 25% of RedefineBDL (R145 million)
  • 40% of SunWest and Worcester casinos (R2 185 million)
  • Buy-back of 12% of Tsogo Sun ordinary shares (R2 800 million)


In order to take advantage of commercial opportunities that are presented, a business needs to first and foremost stay in business. The discussion on sustainability is about the five major pillars of focus for ensuring the long-term survival and prosperity of Tsogo Sun. The group continues to make good progress in each of these areas.

Financial strength and durability

The 2014 financial year delivered a satisfactory operating performance with adjusted headline earnings growing by 18% and closing net debt:Ebitdar of 1.1 times at 31 March 2014, despite the significant investment activities undertaken during the year. This is, however, set to change. While the group retained the financial resources to withstand unexpected shocks from the macro-economic environment and still pursue attractive opportunities to invest capital in our core businesses, as detailed below we have put this advantage to use in the first half of the 2015 financial year.

The debt:Ebitdar ratio is expected to increase as we implement the acquisitions and as we roll out our expansion activities, but is not expected to present any form of undue pressure to the business. The group has renegotiated R5.7 billion in additional facilities which, together with cash resources, should allow sufficient headroom in both facilities and covenants to cater for all the acquisition activity and unforeseen circumstances.

Deliver to our stakeholders

During the 2014 financial year the group continued to enjoy a stable and supportive shareholder base. Post-year end SABMiller announced that it was considering options for disposing of its investment in Tsogo Sun which ultimately resulted in a combination of a disposal to local and international institutional shareholders and a buy-back of just over 12% of the company’s shares. We are now held principally through HCI at 47.6% and by institutions that manage the retirement and savings funds of countless individuals.

It will always be important who owns us and who enjoys the economic benefit of the group’s activities through dividends, employment, taxes and social programmes.

In particular, HCI has shown a significant amount of support and enthusiasm for the group’s growth strategy and this has played a material part in assisting the group to close a number of the important expansion deals highlighted in the commentary below.

With approximately 20 000 people directly and indirectly employed and over R2 billion in direct taxes per annum, it is clear that the benefits of the group’s activities are enjoyed through a large and diverse stakeholder base. I refer you to the value added statement in the key relationships section here and the community section here for further information.