Tsogo Sun triples full-year dividend in post-Covid rebound


The Covid-19 pandemic fallout seems to be a distant memory for Tsogo Sun Gaming – the largest JSE-listed casino and leisure group in terms of market cap – as it tripled dividends for the full-year ended 31 March 2023.

On the back of a strong rebound, the group reported a 27% surge in both income (to R11.3 billion) and Ebitda (earnings before interest, taxes, depreciation and amortisation), which saw it declaring a final gross cash dividend of 57 cents per share for the year from ‘distributable reserves’.

For its prior financial year (FY2022), Tsogo Sun declared a final dividend of 19c per share, but this was announced in August.

“Headline earnings achieved for the year amounted to R1.6 billion compared to R1.2 billion reported for the prior year. If, however, the cost of the cancellation of the hotel management contracts, amounting to R289 million [after tax and non-controlling interests], and R57 million [after tax] in respect of a credit for the ineffectiveness of the interest rate swaps are excluded from the headline earnings calculation, then the adjusted headline earnings achieved isR1.8 billion,” it noted.

Tsogo Sun unbundled its former hotel business last year, which is now separately listed on the JSE as Southern Sun Hotels (formerly Tsogo Sun Hotels).

The gaming group, which has a current market cap on the JSE of just over R13.1 billion and owns landmark casino properties like Suncoast and Montecasino, said in its latest results that the “cost of diesel and the adverse effect on income due to high levels of load shedding” had “negatively impacted the group’s expected year end position and margins”.

Tsogo Sun Gaming cut its net interest-bearing debt and guarantees by R1 billion or 11% over the year, to R8 billion as at 31 March 2023.

Highlighting the reduced debt and better covenant levels, the group said: “It is pleasing to note that the net debt to adjusted Ebitda ratio for the 31 March 2023 year end, as measured for covenant purposes, amounted to a ‘2.0 times’ multiple. This represents a reduction from the 2.9 [times] multiple at the31 March 2022 year end.”

It noted that the required ratio in terms of the group’s debt covenants is less than a ‘3.0 times’ multiple.

“The group refinanced R2.6 billion of its debt in February 2023, whereafter it effectively has no short-term debt, although the RCF of R1.15 billion can be called up on 13 months’ notice. Another R1.6 billion of medium-term notes is anticipated to be refinanced on 31 May 2023,” it said.