Owner of a number of hotels including the Tropicana and Drakensburg Gardens, Gooderson Leisure Corporation on Friday announced diluted headline earnings per share (HEPS) of 2.02 cents for the year ending in February, from 6.31 cents previously.

It noted diluted earnings per share of 2.04 cents, from 6.36 cents.

Group revenue fell by 16% from R115.93 million to R97.093 million, primarily as a result of lower occupancies, while profit declined by 68% from R7.95 million to R2.55 million "in the most difficult trading conditions experienced in SA".

Gooderson said that the timeshare division also saw a decline in profits, with consumer disposable income being affected by high levels of household debt and increased utility and municipal charges.

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) of R10.84 million declined 29% from 2010 and the ebitda margin was five percentage points down to 11%.

"As expected, the difficult trading conditions persisted into the second half of the financial year.

"The committed expenditure on the refurbishment of all the hotels and lodges in preparation for the 2010 FIFA Soccer World Cup and the upgrade and refurbishment of the recent acquisitions to Gooderson's standards contributed significantly to the decline in the group profits compared with the same period last year," the group said.

Due to the challenging economic conditions, the group noted a marked decline in the core revenue source of accommodation and conferencing at Tropicana and Beach Hotel in Durban.

The group said that it expanded its operations into the hospitality sector during the prior year through the acquisition of Sanrock Resort and Conference Centre and Fabz Estate Hotel and Restaurant and upgraded and refurbished all its properties.

Occupancy levels during the Soccer World Cup were satisfactory, considering the late cancellation of a large number of bookings by FIFA's associate, MATCH.

"Partly as a result of the Soccer World Cup, the hospitality sector has become grossly over-traded. Price wars are expected to be a marketing staple for the foreseeable future," Gooderson said.

Looking ahead, the group said that the recessionary trading conditions were expected to remain a "big challenge" in the year ahead.

"With the upgrade and refurbishment now complete on all properties, the group is well-positioned to benefit significantly from any improvements in the economy as they arise to enhance shareholder value.

"The group will focus on aggressively driving new business opportunities and stringent cost control," it concluded.

Source: I-Net Bridge