Redcape to continue acquisition spree after gaming revenues increase
Redcape Hotel Group has seen profits in pub values and gaming jump almost 46 per cent to $25.4 million, following the return of patron to gaming and pokies venues.
Redcape, which own 36 pubs throughout Queensland and NSW, has not only benefitted from restrictions lifting, but has also benefited from government stimulus.
Overall, the company has seen revenue at gaming venues jump from $102.68 million to $110.98 million. Redcape has also been bold in its acquisition strategy.
COVID may have hindered operations at the beginning of the pandemic, but the company still managed to purchase Gladstone Hotel in Dulwich Hill in Sydney’s inner west, and O’Donoghues in Emu Plains, Penrith.
It also purchased the Shafston and Aspley Hotels in Brisbane.
“We have a high level of confidence in the future performance of our business and our strengthened balance sheet positions us well to maximise our pub performance, seek acquisition opportunities and to deliver sustainable growth in future periods,“ said Redcape chief executive Dan Brady.
Its quarterly statement has been a success story.
Operating earnings of $40.9 million and distributable earnings of $32.9 million were ahead of guidance.
Meanwhile, Redcape was able to draw down debt, which declined to $359 million. It is now below its target range of 35 per cent to 45 per cent, giving it further power to expand operations, including more acquisitions.
“This was a very solid performance in light of prevailing operating restrictions over the period,” Ord Minnett said. “Redcape remains well positioned to explore acquisitions with gearing below its targeted range.
“The strong uplift in Net Asset Value is the key here and illustrates the overall resilience of Redcape’s pub network. At an NAV of $1.22, Redcape is trading at a material discount. We expect this to unwind.”
Redcape is currently trading at 96c.
Irit Jackson, 18th February 2021
