Tsogo Sun Hotels yesterday said it expects to fall into a full-year loss, hurt by reduced trading volumes as a result of the Covid-19 outbreak in its operations. Photo: Supplied
Tsogo Sun Hotels yesterday said it expects to fall into a full-year loss, hurt by reduced trading volumes as a result of the Covid-19 outbreak in its operations. Photo: Supplied

Tsogo Sun is expecting an annual loss on Covid-19 knock

By Sandile Mchunu Time of article published May 21, 2021

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DURBAN - TSOGO Sun Hotels yesterday said it expects to fall into a full-year loss, hurt by reduced trading volumes as a result of the Covid-19 outbreak in its operations.

Tsogo Sun operates a portfolio of more than 100 hotels in South Africa, Africa, Seychelles and the Middle East.

The hotels group said in a trading update for the year to end March that it was likely to report a headline loss of between 57.4 cents a share and 66.7c, reversing headline earnings per share (Heps) of 20.4c reported a year earlier.

However, it expected its loss a share to reflect an improvement of between 8 percent and 20 percent, to be between 67.6c and 77.7c, improving on last year’s loss of 84.5c.

The expected improvement in a loss a share is a result in lower impairment charges in the current year compared to a year earlier.

The group was impacted by exceptional losses of R263 million net of tax, and non-controlling interests, the majority of which related to fair value losses on the revaluation of the externally managed investment properties in Hospitality Property Fund, property, plant and equipment impairments of a number of hotels in South Africa and offshore as well as impairments of offshore investments.

In last year’s results, the group reported impairment charges of R1.17 billion.

“The majority of the quantum of these impairments are due to management’s assessment of the negative impact of Covid-19 on forecast cash flows generated by the underlying hotels for the financial years to end March 2022 and March 2023, as well as the volatility in the bond market and increased in-county risk assessments that have had a material impact on discount rates across the portfolio,” the group said.

In November last year, Tsogo Sun Hotels welcomed the lifting of the international travel ban in South Africa which it deemed to be important in stimulating tourism industry and demand.

However, revenue was expected to decline by between 72 percent and 76 percent, down from R4.48bn reported last year.

Its earnings before interest, tax, depreciation, amortisation and rentals (Ebitdar) was expected to fall by between R1.52bn and R1.54bn compared to R1.35bn reported last year.

The group said it continued with the implementation of its Covid-19 action plan to contain costs and preserve cash.

Tsogo Sun Hotels expects to release its full-year results on May 27.

Tsogo Sun shares closed 1.32 percent lower at R2.25 on the JSE yesterday.

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