Tsogo Sun Gaming huffs and puffs at plan for smoking-free areas indoors
• Big casino group says bill comes at bad time as sector battles with pandemic’s effects, crippling energy crunch and high interest rates
Tsogo Sun Gaming has hit back at proposals to tighten the rules on smoking in public places, saying the consequences could be far-reaching for the casino industry.
The company says that the industry is still recovering after the lockdown restrictions imposed as a result of the Covid19 pandemic.
The department of health is looking to introduce entirely smoke-free areas in indoor public places as part of the Tobacco Products and Electronic Delivery Systems Control Bill, which is intended to mitigate tobacco-related illnesses and related costs.
Tsogo, which owns Gold Reef City and Montecasino among its gambling assets, said in a results statement on Thursday that passing the bill into law would result in job losses and reduced capital investment as well as lower taxes for the government.
The broad-based BEE-compliant suppliers including cleaning services, landscaping, food and beverage, security and other services are also likely to be affected, the company warned.
The bill could not have come at a worse time with the industry still dealing with the aftereffects of the pandemic, a crippling energy crunch and high interest rates.
Tsogo fared a lot better operationally in the year to endMarch than it did during the previous matching period, when vestiges of the pandemic lockdown restrictions were still in place.
Its core profit, or earnings before interest, taxes, depreciation and amortisation (Ebitda), was up 27% to R4bn year on year despite stage 5 and 6 loadshedding, which the company said affected revenue, with customers increasingly reluctant to travel at night.
To soften the blow of the energy shortfall, it is expediting investment in solar projects and additional generator capacity.
“What is of concern [though] is whether generators can sustain the workload as the pressure of load-shedding mounts,” the company said in a statement.
“Preventative maintenance has been stepped up and the casinos have ordered generators with a combined cost of approximately R30m. This is in order to prevent a complete shutdown in the event of equipment failure.” The casino precincts have implemented green energy solutions, with Montecasino scheduled to complete its 4.3MW rooftop solar installation in July, which is going to be one of the largest of its sort in SA.
Expansion of the existing solar plants at Silverstar and Garden Route casino already under way is scheduled for completion in August.
A new installation generating capacity of about 1.5MW is planned for Gold Reef City, and will be completed in November.
However, Tsogo expects that its revenue from casinos will remain under pressure in the short term as higher interest rates continue to erode consumers’ disposable income.
Its results coincided with the Reserve Bank’s monetary policy committee meeting, which hiked rates by another 50 basis points, taking the repurchase
BILL WILL RESULT IN JOB LOSSES AND REDUCED CAPITAL INVESTMENT AS WELL AS LOWER TAXES FOR THE GOVERNMENT
rate to 8.25%, its highest level since 2009. Tsogo Sun Gaming’s share price ended the trading session on Thursday 1.70% weaker to R12.30 on the JSE, having risen by 60% over the past two years, according to Infront data.