Gaming group Solar Worldwide – proprietor of landmark on line casino complexes in South Africa corresponding to Solar Metropolis, GrandWest and Boardwalk – has been pummelled by the Covid-19 pandemic, with revenue from persevering with operations plunging by nearly half to R6.1 billion for its full-year to the tip of December 2020.
The drastic drop in revenue, largely pushed by government-instituted lockdown measures to curb the unfold of the virus, noticed the group reporting a R1.1 billion headline loss for the yr on Monday.
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Solar Worldwide, together with different gaming and hospitality teams, was compelled to close operations for simply greater than three months (late March to June) in 2020, however confronted ongoing commerce restrictions (home and worldwide journey bans, liquor bans, curfews, capability limits due social distancing guidelines and so forth).
Solar Metropolis in North West province, the group’s largest property, took probably the most ache after solely having the ability to reopen in September.
This led to the worth of the resort, which is residence to the Palace of the Misplaced Metropolis and different landmark vacationer sights, being impaired by round R900 million at year-end.
“The Covid-19 pandemic had a major influence on the group, with all operations being closed for 3 months or longer and the March 2020 buying and selling considerably disrupted. Earnings from persevering with operations declined by 49% from R11.8 billion to R6.1 billion and adjusted Ebitda [earnings before interest, taxation, depreciation and amortisation] decreased by 72% from R3.2 billion to R897 million,” Solar Worldwide says in its JSE outcomes Sens assertion.
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“Our complete group adjusted headline earnings declined from R763 million to a lack of R1.1 billion with an adjusted headline lack of 633 cents per share,” it provides.
First half takes greatest hit
Unsurprisingly, the group took its greatest hit within the first half of the yr to June 2020, when South Africa was beneath its hardest lockdowns (between late March and June).
Earnings from its most important South African enterprise declined 55% to R2.5 billion for the half-year in contrast with its corresponding half yr to end-June 2019. This led to a 95% plunge in adjusted Ebitda for its 2020 half-year, to R80 million.
With the resumption of buying and selling of most operations from July 1, 2020, Solar Worldwide notes that revenue and adjusted Ebitda improved steadily all through the remaining six months till the transfer to adjusted Stage 3 lockdown, coupled with the imposition of the 8pm curfew and alcohol gross sales ban in mid-December 2020.
“This led to a major drop in exercise and cancellation of bookings for the second half of December and into January 2021,” it says.
“Because of the prolonged lockdown and anticipated gradual restoration we incurred impairment prices of R1.3 billion – being Solar Metropolis [R900 million], Boardwalk [R180 million], the Maslow Sandton [R96 million] and intangible belongings of R72 million,” it provides.
Commenting on the leads to a separate media assertion, Solar Worldwide CEO Anthony Leeming stated the group took key steps in the course of the yr to handle the influence of the pandemic on the enterprise.
“[This] ensured that the group was in a powerful place to take care of the lockdown and the restrictions imposed on its operations, however extra importantly, they’ve positioned the group on a stable footing for a put up Covid-19 sustainable restoration,” he famous.
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“We labored exhausting to scale back prices, optimise working capital, prioritise capital funding and negotiate with lenders, service suppliers and suppliers for both a waiver, discount or deferment of funds. We formulated and carried out plans to realize operational efficiencies and restructured sure elements of the enterprise,” he added.
Leeming stated Solar Worldwide additionally used the lockdown interval to critically assess the group’s operational practices, methods, advertising and marketing and visitor expertise.
“A number of initiatives had been undertaken that are having and may have a optimistic influence on the group’s future outcomes,” he pressured.
Measures Solar Worldwide took in responding to the pandemic included:
Addressing short-term liquidity dangers, together with an as much as 60% discount in payroll prices throughout lockdown, deferring all capital funding apart from vital spend and asserting the closure of the Naledi Solar and Carousel casinos;
Accelerating the disposal of sure non-core belongings;
The profitable conclusion of a R1.2 billion rights provide; and,
Disposing of the group’s curiosity in Solar Goals in Latin America, which grew to become efficient on October 31, 2020.
“The capital elevate because of the rights provide and the proceeds from the disposal of Solar Goals has improved our liquidity place and considerably strengthened the group’s stability sheet,” Leeming stated.
“These actions and the assorted operational initiatives which we now have undertaken and carried out within the final 12 months have ensured that the group stays effectively positioned to have the ability to take care of the present and future Covid-19 challenges and has strongly positioned the group to get better and develop into the long run.”
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