Hospitality and gaming group Tsogo Sun has raised concerns about what it describes as “disappointing” regulatory delays and entrenched monopolistic conditions in the Western Cape casino market.
Tsogo Sun said its efforts to invest in and expand casino and hotel facilities in Somerset west and Strand had stalled for more than a decade because of provincial authorities’ failure to process its application for a new development.
“The significant delay in finalising the application by the regulatory authorities and provincial government has been disappointing,” the company said in a statement accompanying its annual results on Wednesday.
“Land-based casinos invest substantially in infrastructure and create significant direct and indirect jobs.”
Tsogo Sun had earmarked substantial investment in the Helderberg and Overberg regions, but those plans have been stifled due to what the company says is a lack of progress from regulatory bodies.
The group’s frustration is amplified by a rival casino operator continuing to dominate the market, accounting for about 81% of the Western Cape’s casino revenue. Tsogo Sun said such a monopoly limits competition, restricts consumer choice and undermines efforts to broaden tourism and entertainment infrastructure across the province.
“These regions have been unserved and deprived of convenient, appropriate quality and secure casino and hotel development,” the company said, pointing out that the exclusivity period granted to the competing operator has long since expired.
The group sees the impasse as a major barrier to job creation, tourism development, and broader economic revitalisation in areas that have long lacked access to such facilities.
Despite the regulatory challenges in the Western Cape, Tsogo Sun reported resilient operational performance for the financial year in review. The group generated income of R11.2bn, a slight decrease from R11.5bn the previous year. Adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) declined 11% to R3.47bn and the adjusted ebitda margin slumped to 31.1%.
Headline earnings per share dropped 16% to 142c while net interest-bearing debt and guarantees were reduced to R7.19bn from R7.67bn.
Tsogo Sun declared a final dividend of 30c a share, down from 40c last year, making for a total payout of 60c for the full financial year.
Capital expenditure for the year reached R700m, driven largely by solar energy installations and refurbishments, with a similar capex outlook for the year ahead.
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