Chief Financial Officer’s report

Income statement comparison for the year ended

  31 March      31 March        
  2014      2013       % change    
Rm    Rm     on 2013    
Income   10 767    9 910     9    
Gaming win   6 819    6 525     5    
Revenue            
Rooms   2 221      1 914       16    
Food and beverage   1 063      869       22    
Other   664    602     10    
Ebitdar   4 214    3 886(1)  8    
Gaming   3 281    3 138     5    
Hotels – South Africa   737      615       20    
             – Offshore   153      93       65    
Foreign exchange gains   33      37       *    
Corporate   10    5     *    
Ebitdar margin   39.1%  39.2%  (0.1pp)
Long-term incentives   (150)      (234)      36     
Property rentals   (221)      (193)      (15)    
Amortisation and depreciation   (648)      (608)      (7)     
Exceptional items   (73)      (19)      *     
Finance costs (net)  (373)      (385)      3     
Associates and joint ventures   –       6       *     
Income tax   (776)      (701)      (11)    
Non-controlling interests   (96)      (125)      23     
Attributable earnings   1 877     1 627     15     
Adjustments   61       20       *     
Adjusted earnings   1 938     1 647     18     
Weighted number of shares in issue (m)  1 098     1 097     –     
Adjusted HEPS (cents)  176.5     150.1     18     

* Variance not meaningful
(1) Restated for R2 million changes in accounting policies – refer to note 2 of the summarised consolidated financial statements

Trading performance

Trading during the financial year was satisfactory in a tough economic environment. Year-on-year growth was achieved in both casino and hotel revenues assisted by the merger and acquisition activity undertaken as part of the group’s growth strategy.

Total income for the year of R10.8 billion ended 9% (organic growth 6%) above the prior year with a 5% growth in gaming win assisted by a 16% growth in hotel rooms revenue and a 22% growth in food and beverage revenue.

Operating expenses including gaming levies and VAT and employee costs but excluding exceptional items and long-term incentives increased by 9% (organic growth 6%) on the prior year mainly due to non-organic growth in the business and increased offshore overheads as a result of the weakening of the Rand against both the US Dollar and the Euro offset by savings initiatives.

Ebitdar at R4.2 billion for the year reflected an 8% (organic growth 6%) increase on the prior year. The overall group Ebitdar margin of 39.1% is 0.1pp down on the prior year.

Long-term incentives

The long-term incentive expense at R150 million is R84 million below the prior year and reflects the effect of the increased
long-term incentive liability (including dividend adjustments) due to the Tsogo Sun share price used to value the liability increasing to R27.00 at 31 March 2014. Refer to the remuneration report here for further detail.

Rentals, amortisation and depreciation

Property rentals at R221 million are 15% up on the prior year mainly due to contractual increases and straight-line lease provision adjustments. Amortisation and depreciation at R648 million is 7% up on the prior year due mainly to the capital spend during the year and the acquisition of Southern Sun Ikoyi.