Gold Reef profit rises despite fewer gamblers
Business Report
28 August 2009

Audrey ‘D Angelo

Fewer people tried their luck in Gold Reef Resorts' casinos in the six months to June 30 as the recession, high food prices and high interest rates reduced their disposable incomes.

Nevertheless, the company increased its gaming revenues in both Gauteng and KwaZulu-Natal, ending the first half of its financial year with a 3 percent rise in total revenue to R1.1 billion and a 4 percent rise in earnings before income tax depreciation and amortisation (Ebitda) to R410 million.

The full opening of its new Silverstar casino after a gradual opening in phases, and a joint promotions campaign for it and the flagship Gold Reef entertainment complex, enabled the company to increase its market share in Gauteng to 25.6 percent from 24.5 percent.

Discussing earlier fears that its black economic empowerment (BEE) credentials might be compromised by the acquisition of a 34.8 percent stake by a subsidiary of Tsogo Sun, the directors said this meant that Tsogo Sun "would control the BEE voting pool".

They said they were engaging with Tsogo Sun and gaming boards to ensure Gold Reef continued to comply with empowerment credentials.

The acquisition has been approved by all the relevant gaming boards.

Gold Reef's total gaming revenue in Gauteng rose by a marginal percent, with that from Gold Reef City increasing by 3 percent.

Total revenue from the casino rose by 2 percent to R482m and, the directors say, "together with active cost control there was margin improvement with Ebitda increasing 2 percent to R175m."

Losses at the Gold Reef theatre complex were reduced substantially, from R14m to R5m, with a change in the production mix. But families stayed away from the theme park, where the directors say "trading was adversely affected by difficult economic conditions. "There was no growth in revenue from the comparative period while inflationary pressures on costs resulted in losses increasing by R2m. A refurbishment of the hotel has recently commenced."

 In KwaZulu-Natal, revenue from the Golden Horse casino grew by 3 percent to R121m. The directors say this was in line with the growth in gaming revenue for Kwazulu-Natal.

But gaming revenue fell in other parts of the country, with the biggest drop of 8 percent recorded in the Western Cape, where visitor numbers to Mykonos casino were down by 15 percent.

Revenue from the casino was 2 percent lower at R55m. The directors say the economy in the Western Cape was "one of the hardest hit, with the property and tourism sectors most significantly affected".

Revenue from the Garden Route casino slumped by 7 percent to R76m while visitor numbers dropped by 5 percent. Total gaming revenue in the Eastern Cape decreased by 4 percent but rose by 20 percent to R24m at Queens casino "due largely to the phased opening of the casino in the prior comparative period."

The number of visitors at the Goldfields casino in the Free State fell by 8 percent.

 Gold Reef shares yesterday rose 1.1 percent to R18.01.

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