June 9, 2020 / 5:19 PM / a month ago

South Africa's Tsogo Sun Gaming's annual profit hit by lockdown

JOHANNESBURG (Reuters) - South Africa’s Tsogo Sun Gaming (TSGJ.J) on Tuesday reported a marginal fall in annual core earnings and did not declare a final dividend, as it shuttered its casinos amid nationwide lockdowns to contain the spread of the COVID-19 pandemic.

The gambling industry, which counts on air travel and large groups of people in close proximity, is one of the hardest hit from the restrictions imposed from March 27 to check the health crisis.

“The spread of the COVID-19 virus and government’s subsequent regulatory restrictions negatively impacted the business,” it said in a statement.

The owner of Montecasino and theme park Gold Reef City said the focus during the lockdown, which is in its 11th week, has been primarily to eliminate variable operating costs, reduce fixed costs and cancel non-essential and uncommitted capital expenditure in order to reduce its cash burn.

The group has lost about 2 billion rand ($120 million) in revenue during the lockdown in April and May, which has resulted in an increase in net debt post-year end to about 12 billion rand, it said.

Lenders have agreed to waive financial covenants for the September 2020 measurement period and defer interest payments for three quarters to provide the group with additional liquidity.

Tsogo Sun said core earnings for the year to March 31 fell 1% to 4 billion rand from 3.9 billion rand a year earlier, while income only grew by 1% to 11.7 billion rand.

Tsogo said it is in an advanced stage of entering the online betting industry with a focus on mobile betting.

“With smartphones having become more accessible to the general public, this separate segment of the market will be a positive addition to the various gaming and entertainment offerings of the group,” it added.

Reporting by Nqobile Dludla; Editing by David Goodman and David Evans

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