Redcape has released its results for the first half of the financial year, boding well for its growth prospects and for the broader industry.
Redcape Hotel Group Management (RHGM), responsible entity for the Redcape Hotel Group (ASX:RDC) portfolio, reported a $17.4m first-half profit and 10.9 per cent increase in distributable earnings, to 4.78 cents per security (cps).
FY20 guidance on distributable earnings is now expected to be 9.21 cps. The distribution of 4.41 cps represents annualised yield of 7.81 per cent.
Total revenue was up 12.7 per cent ($160.6m), with like-for-like revenue up 6.2 per cent on the previous corresponding period (pcp).
Operating EBITDA increased 19.8 per cent on the pcp, to $38.7m, with EBITDA margin of 24.1 per cent, up from 22.7.
Portfolio value stands at $1.06bn, following one acquisition and one divestment in the first half. Settlement on a sale and acquisition in December is due in the second half.
Gearing remains at the bottom end of RDC’s target range, at 35.9 per cent, providing plenty of scope for further capital deployment. 1H saw refurbishment projects completed at the Australian Hotel & Brewery, Central Hotel, Crescent, Shamrock Hotel, Unanderra Hotel and Vauxhall Hotel, and a major refurbishment is in the works at the Mt Annan Hotel.
The company offers that total revenue growth was driven by the continued improvement in gaming margins. The six-plus per cent like-for-like growth speaks to underlying growth in the industry.
“During the period we continued our strategic focus on growing and optimising our asset base,” offered Redcape CEO, Dan Brady in the release.
“We added one new venue with good growth potential and divested another at a premium to book value. We also announced that in 2H20 we would divest Royal Hotel Granville, also at a premium to book value, and acquire The Kings Head Tavern. In addition, we invested $6.8 million in growth capex as part of our ongoing refurbishment program.”
At the end of 2019 Redcape’s portfolio comprised 30 freehold going concerns and two leaseholds.
At close of trading today share price was up on the announcement, finishing at $1.13.