One-off costs impact strong Redcape result

28 August, 2019 by Andy Young

Redcape Hotel Group has announced its first full year results with CEO Dan Brady saying the company has achieved a lot and is well positioned for the future, despite delivering a $4.9m statutory net profit loss for the year.

The group reported total revenue for the year of $285.2m, up 17.4 per cent and EBITDA of $42m, up 21.3 per cent on the prior corresponding period, which it acknowledged was underpinned by the acquisition of six venues and solid like for like revenue growth.

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The group did say that this growth was achieved despite a small number of the initial acquisitions taking longer than expected to integrate into the portfolio.

Redcape CEO, Dan Brady, said the “Group performed strongly in a soft consumer market, underscoring the defensive nature of the business.”

Brady told TheShout that the company was elated with the results being in line with PDS forecasting.

“We’re really pleased with the results, you’re getting the $46.5m [in distributable earnings] in line with the PDS, and we were able to affirm our 8.8 cents per  security in the distributable income, which was within our guidance.”

Net profit after tax was $12m, but one-off costs of $13.8m and $6.8m listed as ‘Performance Fee’ and ‘Listing Costs’ respectively meant the group’s Statutory net profit after tax is -$4.9m.

Redcape’s existing portfolio performed well on a like for like basis achieving +3.3 per cent revenue growth, demonstrating the strength and defensive characteristics of the business.

Redcape acquired six venues over the period and invested $21.6m in growth capex, including major refurbishments of the Leumeah Hotel, Eastwood Hotel and Cabramatta Hotel. Both measures have enhanced the quality of the portfolio, diversifying earnings and laying a strong platform to drive future earnings growth. Highlighting the refurbishment of Cabaramatta Hotel and the operation of the Australian Brewery, Brady suggested that those diverse strategies will continue to strengthen Redcape’s results for securityholders in the future.

Not reflected in the valuations is the alternate use potential of Redcape’s freeholds, which the business is continuing to progress and enhance.

“These sorts of things are totally additive, they’re not featured in our valuations today, but we’re building out our capability in that regard.

“We look to be expanding those sorts of measures in the coming year as well in more of our vertical integration and accountability. That’s exciting as well, and it all feeds into the growth that we’ve we’ve been able to provide.”