Sun International’s Time Square casino. Picture: XAVIER SAER
Sun International’s Time Square casino. Picture: XAVIER SAER

Casino and gaming group Sun International has warned shareholders to expect a headline loss of as much as R765m, amid a huge profit swing after Covid-19 shuttered operations and prompted it to tap shareholders.

The group said in a trading update on Monday it expected a headline loss per share of between 170c and 290c in its year ended December, from profit of 603c previously.

Headline earnings is a widely-used profit measure that excludes certain one-off items, and basic earnings is expected to reflect a loss of between 1,000c and 1,100c, from basic earnings of 518c previously. This implies a loss of about R2.9bn in 2020, from profit of R653m previously.

The group has written down assets in SA, including Sun City, Boardwalk and Maslow Sandton, by R1.3bn as a result of tough trading conditions.

The swing in headline earnings per share also comes after the group almost doubled the number of its shares in issue in 2020.

In August, it completed a R1.2bn rights offer that increased its shares in issue from 136.7-million to 263.9-million.

Also in August, Sun International had agreed to sell its 64.94% stake in Latin American operation Sun Dreams to partner Nueva Inversiones Pacifico Sur for $160m (R2.7bn at the time).

That partner had also made a takeover offer for Sun International in June, valuing the group at R22 per share, but this was rejected by Sun International’s two largest investors, Allan Gray and Value Capital Partners, who at the time cited the group’s long-term potential.

Sun International said on Monday it had written down Sun Dreams by R612m.

In morning trade on Monday, Sun International’s share was down 2.56% to R15.10, having recovered about 26% over the past six months, but having  fallen more than two thirds over the past 2 years.

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