HCI CEO Johnny Copelyn. Picture: FINANCIAL MAIL
HCI CEO Johnny Copelyn. Picture: FINANCIAL MAIL

Hosken Consolidated Investments (HCI) said it had made an R822m impairment as it expects a deterioration in its hotel business for the current financial year due to Covid-19 restrictions. 

HCI, which has investments in hotels and gaming, media, oil and gas, said on Wednesday it has been forced to write down and impair many of its assets due to the effect of Covid-19, which hurt its earnings for the year to end-March 2020.

HCI had 49% holdings in Tsogo Sun Gaming and Tsogo Sun Hotels as of its 2019 financial year. Last week Tsogo Sun Gaming reported that operating profit for the year to March dropped more than two-thirds as the Covid-19 outbreak compounded the effects of an already weak economy.

HCI, led by CEO Johnny Copelyn, said it wrote down properties in both its hotel and gaming businesses, and certain assets in its oil and gas exploration interests.

While the majority of HCI’s media and broadcasting, transport and coal mining operations were designated as essential services under the lockdown regulations, the group’s gaming operations have not been able to trade and its hotel operations have only recently been able to operate on a limited basis, which had hurt the group’s prospects. The group has factored in a 96% reduction in revenue for the first six months of the 2021 financial year in its hotel operations.

For the year to March , HCI’s revenue rose 4% to R14.9bn.  

Earnings per share fell 656% to a loss of 4591.5c, from 826.24591.5c previously. 

Headline earnings per share was up 5% to 1263.2c. 

HCI’s asset impairments include casino licence impairments of R9.2bn from its gaming operations. This was a result of  trade restrictions because of the lockdown, the deterioration in growth assumptions and discount rates used in the respective valuations, and general weak trading in certain precincts, the company said.

Operationally, a 4% increase in advertising revenue was recorded in a difficult television advertising environment in HCI’s media and broadcasting unit, which earned R122.4bn in headlinR122.4bn. Licence fee revenue also increased 4% for the unit, while advertising revenue from the OpenView business increased to R194m from R132m prR194msly.

R132miew, which is a satellite TV content provider, grew its active set-top boxes from just over 1.57-million in 2019 to almost 2-million 2-millionperiod, said HCI.

In an effort to preserve cash, the company did not declare a dividend. 

The group holds debt of close to R3bn.

Shares in HCI were 6.67% stronger at the close of trading, at R32. 

gavazam@businesslive.co.za