Casino and energy losses knock HCI
November 14, 2008
By Thabiso Mochiko
Johannesburg - Once-off losses from its casino and energy subsidiaries slashed the interim net profit of Hosken Consolidated Investments (HCI), the company said yesterday.
Net profit for the six months to September came in at R506 million, down 39 percent from a year earlier, even as group revenue rose 20 percent to R4.9 billion.
Tsogo Sun, in which HCI owns 38 percent, incurred losses of R136 million when it had to adjust property valuations after lifting its stake in casino operator Gold Reef Resorts to 20 percent.
US energy firm Montauk lost about R70.6 million from hedging natural gas prices. The losses dragged HCI's headline earnings down to R154 million from R282 million. Headline earnings a share fell 45 percent to R1.24.
HCI chief executive Johnny Copelyn said the write-offs were significant and disappointing.
"Of all the results we have put out, these are the most mediocre. Some of the businesses did not perform well," he acknowledged.
However, Copelyn said, the performance was not an indication of the future of the business.
The casino division saw profit before tax fall 30 percent to R426.3 million although revenue grew 8 percent to R294 million.
The star performer was the hotel business. Revenue leapt 31 percent to R1.02 billion while pretax profit doubled to R321 million. HCI expects the hotel division to remain buoyant.
The media arm, housing Sasani Studios, e.tv, YFM and Cape Town Film Studios, lifted revenue 37 percent to R745 million.
Pretax profit fell 2 percent to R221 million with the cost of launching the e.News channel on DStv in June. HCI is confident it will be profitable in 12 months. HCI spent R180 million to set up the channel and build the Sasani Studios to produce local content.
Golden Arrow Bus Services was hit by fuel hikes, which Copelyn said were not passed on to consumers. Its pretax profit fell 44 percent to R33 million.
HCI fell 3.3 percent to R47.
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