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Condensed unaudited consolidated interim financial statements for the six months ended 30 September 2020
Tsogo Sun Gaming Limited
(Incorporated in the Republic of South Africa)
(Registration number 1989/002108/06)
Share code: TSG ISIN: ZAE000273116
JSE Alpha code: TSGI
('Tsogo Sun Gaming' or 'the company' or 'the group')
Condensed unaudited consolidated interim financial statements
for the six months ended 30 September 2020
Income R1.6 billion down 74%
Ebitda R0.2 billion down 90%
Headline loss R0.5 billion down >100%
Headline loss per share 51.9 cents down >100%
Loss per share 52.6 cents down >100%
Interim dividend per share Nil
NIBD and guarantees R11.8 billion
March 2021 covenant waivers required
Review of operations
The spread of the Covid-19 virus and government's regulatory
restrictions such as the curfew, limited capacity and ban on
alcohol sales, had a substantial negative impact on the results
for this interim reporting period. All businesses in the group
were closed for the first quarter of the financial period and
thereafter opened in a staggered manner, but are not as yet
fully operational.
With the significant investment in infrastructure, high
employment numbers and staff costs, casinos were not built to
operate in a constrained environment, thereby placing severe
pressure on the group's cash flow and debt position for the
period under review. The resultant focus on reducing operating
expenses was therefore inevitable and this should provide a
positive impact on the group's ability to survive, recover
and emerge a strong business subsequent to the current crisis.
The trading levels at Bingo sites were also constrained by
floor limitations and the curfew. There are limited cost
savings opportunities in this division.
The ban on alcohol and consequential closure of bars and
restaurants had a significant detrimental impact on the LPM
division. Since the reopening of this sector of the economy,
the division has recovered faster than all the other businesses
in the group as a result of its low cost base, being a non-
operational business and the low number of machines per site
making social distancing easier to manage.
Income for the interim period totalled R1.6 billion, Ebitda
amounted to R191 million (R136 million including lease costs
which are now included in depreciation and finance costs in
terms of IFRS 16 Leases). The headline loss for the period
amounted to R543 million.
Net interest-bearing debt and guarantees at 30 September 2020
totalled R11.8 billion, which are R400 million above the
31 March 2020 balance of R11.4 billion. The group's strategy
remains to reduce the long-term debt levels, thereby decreasing
risk and funding costs.
Dividend
The board of directors has resolved not to declare an interim
dividend in respect of the six months ended 30 September 2020.
Going concern
The directors considered the going concern status of the group
taking into account the current financial position and their
best estimate of the cash flow forecasts in terms of their
current knowledge and expectations of ongoing developments of
the Covid-19 pandemic. The cash flow and liquidity projections
for the group have been prepared based on current trading
conditions, extrapolated for a period exceeding 12 months from
the reporting date and included performing sensitivity analyses.
After taking the above factors, including the discussions with
the lenders, into account, the group considers the going concern
method to be appropriate for the presentation of the Condensed
Unaudited Consolidated Interim Financial Statements.
The September 2020 covenants have been waived by the lenders.
The group still requires the waiver of the expected covenant
breaches for March 2021 (and it is possible the group may require
the waivers for September 2021), without which the debt becomes
due and payable. In addition, should there be a suspension of
trade after 30 November 2020, or the group is not operating cash
positive, the group would need to provide a business plan to be
approved by the lenders. Refer to 'Material uncertainty relating
to going concern' contained in the independent auditor's report
in the Group Annual Financial Statements issued on 31 July 2020.
Important information
The contents of this short form announcement are the responsibility
of the board of directors of Tsogo Sun Gaming. Shareholders are
advised that this short form announcement represents a summary of
the information contained in the full announcement. Any investment
decisions by investors and/or shareholders should be based on
consideration of the full announcement as a whole and shareholders
are encouraged to review the full announcement, which is available at
https://senspdf.jse.co.za/documents/2020/jse/isse/TSGE/Interims.pdf
and on the group's website at https://www.tsogosungaming.com.
Fourways
19 November 2020
Equity Sponsor
Investec Bank Limited, 100 Grayston Drive, Sandton, 2196 (PO Box
785700, Sandton, 2146)
Debt Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank
Limited, 3rd floor, Block F, 135 Rivonia Campus, 135 Rivonia Road,
Sandown, Sandton, 2196 (PO Box 1144, Johannesburg, 2000)
Date: 19-11-2020 01:27:00
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