Tsogo Sun in a spin over Covid-19


Tsogo Sun in a spin over Covid-19


Published Date: 2020-05-25 | Source: Stephen Gunnion | Author: Stephen Gunnion

Tsogo Sun in a spin over Covid-19

The casino operator will has booked large impairments as its casinos and bingo outlets remain closed under the lockdown.

Tsogo Sun Gaming says it will report a sharp slide in annual earnings after writing down the value of its businesses by about R2 billion.

In a trading statement, the casino operator said it expected income from continuing operations for the year to end-March to be flat to 2% higher than the R11.6 billion it reported last year. Earnings per share (EPS) would fall by as much as 125% from last year's 155c, while adjusted headline EPS were likely to be between 13% and 15% down from 157.1c previously. Total group EPS were expected to be 80% to 90% lower, with adjusted HEPS down by 23% to 27%.

Tsogo said earnings were negatively impacted by impairments of intangible assets of R1.9 billion and other impairments, fair value losses and once-off costs totalling R186 million. These were excluded from adjusted HEPS.

In an update in March, the group said all its casinos as well as Galaxy Bingo sites would close due to the lockdown, with the reduced trading volumes since 19 March impacting its full-year performance. However, it said it remained positive that the changes made to the business over the course of the year, and the additional improvements planned for this year, would deliver positive results in the long term - if it could operate at full capacity again in the near future.

Last year, Tsogo separated its casino and hotel interests, listing Tsogo Sun Hotels and unbundling the shares to its shareholders. The move was intended to give investors greater investment choice and the ability to better manage their exposure to gaming and hotels separately. It retained its casino and alternative gaming operations.

In a trading update on Thursday, Tsogo Sun Hotels said it expected revenue for the year to end-March to be 1% to 3% higher but said it would report a loss per share and a 28-33% decline in HEPS for the year. Earnings were impacted by exceptional losses of R1.2 billion, mostly relating to fair-value losses.

While trading during the first nine months of its financial year was hindered by the depressed macroeconomic environment, it said Covid-19 had further impacted fourth-quarter trading, with international demand declining as early as February. It said its entire portfolio of hotels in SA, the rest of Africa and the Seychelles had been deactivated apart from those that were designated as quarantine facilities or accommodation for essential service providers and people awaiting repatriation.

Tsogo Sun Hotels said it had been lobbying for the relaxation of travel restrictions and the resumption of inter provincial travel to aid the hospitality industry.

Tsogo Sun Gaming fell 11% to R1.72 on Friday. Tsogo Sun Hotels rose 7.3% to R1.48 after gaining 2.2% on Thursday.


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