MARC HASENFUSS: The tricky nature of family-controlled businesses
I’ll bet even the coolest punter wasn’t able to maintain a poker face when perusing the trading update issued by Sun International last Friday. It was bad enough dealing with the expected loss of 161c-196c/share for the year to end-December — but far worse to hear the admission that the new (and much vaunted) Time Square is not spinning the expected profits. This new casino in Menlyn, Pretoria, was expected to be one of the most profitable gaming properties in SA. But the trading update indicates that Time Square — which opened last April, with the arena opening in November — generated revenue of R827m and earnings before interest, tax, depreciation and amortisation (Ebitda) of R184m for what was effectively a nine-month trading period. That’s a 22% trading margin. While Time Square may be a new development, that figure is still well off the margin achieved by larger casino properties, which range from 34%-40%. Sun concedes that Time Square is trading behind expectations and has cap...
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