| Tue 2 Sep 2008, 14:30 | | GPL - Grand Parade - Reviewed Results For The Year Ended 30 June 2008 and |
|
GPL
GPL
GPL - Grand Parade - Reviewed Results For The Year Ended 30 June 2008 and
dividend declaration
GRAND PARADE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/003548/06)
Share code: GPL
ISIN code: ZAE00119814
("Grand Parade" or "GPI" or "the company")
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008
* Headline earnings per share increased by 13%
* Dividends per share increased by 33%
* Net asset value per share increased to 335 cents per share
GRAND PARADE INVESTMENTS LIMITED
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008
INCOME STATEMENT
Audited
Reviewed 12 months % change
12 months 30 June 2007
30 June 2008 Restated
Revenue 34,032,163 90,409,714 (62%)
Net operating costs (16,136,711) (9,194,173) 76%
Negative goodwill from
associate 784,087,333 - -
Share of income / (loss) of
associates 47,051,571 (383,422) -
Impairment of investment in
associate (92,131,891) - -
Profit from operations 756,902,465 80,832,119 836%
Finance costs (8,934,260) (35,980) -
Net profit before taxation 747,968,205 80,796,139 826%
Taxation (9,385,063) (7,718,013) 22%
Net profit after taxation 738,583,142 73,078,126 911%
Number of shares - weighted
average ** 365,766,533 323,010,368 **
Number of shares - at end of
the period ** 469,028,354 332,038,052 **
** prior years shares
adjusted for the 4 for 1
share split
Basic earnings (cents) per share -
weighted 200.98 20.34
- on closing issued shares 156.73 19.78
Diluted earnings per share 200.98 20.34
Reconciliation of basic earnings
and headline earnings
Basic earnings
Net profit for the year 738,583,142 73,078,126
Preference dividend (3,481,412) (7,393,734)
Basic earnings 735,101,730 65,684,392
Headline earnings
Basic earnings 735,101,730 65,684,392
Adjustments:
Negative goodwill from
associate (784,087,333) -
Impairment of investment in
associate 92,131,891 750,380
BEE transaction in associate 43,064,735 -
Profit on disposal of
property, plant and
equipment* (60,795) -
Profit on disposal of
investments in associate* (2,312,455) -
Provision for pension fund
exposure* 362,170 -
tax effect on above where
applicable 563,102 (217,610)
Headline earnings 84,763,045 66,217,162
Headline earnings (cents) per
share (after share split) 23.17 20.50 13%
* tax applied on these items
GRAND PARADE INVESTMENTS LIMITED
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008
BALANCE SHEET
Audited
Reviewed 12 months
12 months 30 June 2007
30 June 2008 Restated
R R
ASSETS
Non current assets 1,696,386,628 227,964,581
Plant and equipment 936,409 23,682
Investment in associates 1,675,120,542 369,468
Available for sale investments 20,329,677 227,571,431
Current Assets 95,625,715 81,193,511
Related party loan 8,118,000 5,947,677
Trade and other receivables 5,673,518 5,535,539
Cash & cash equivalents 81,834,197 69,710,295
Total Assets 1,792,012,343 309,158,092
EQUITY AND LIABILITIES
Capital and reserves 1,572,534,408 297,695,327
Share Capital and premium 740,835,489 112,283,566
Accumulated profits 813,984,851 109,569,214
Preference share capital & premium - 57,797,500
Available for sale investments fair value
reserve 17,483,473 17,930,047
Capital redemption reserve fund 230,595 115,000
Non current liabilities 204,239,880 2,922,603
Deferred tax liability 2,841,772 2,922,603
Preference share capital & premium 201,398,108 -
Current Liabilities 15,238,055 8,540,162
Trade and other payables 7,698,496 2,358,657
Taxation 3,673,291 2,424,125
Dividends payable 3,866,268 3,757,380
Total Equity & liabilities 1,792,012,343 309,158,092
Number of shares - weighted average 365,766,533 323,010,368
Number of shares - at end of the period 469,028,354 332,038,052
Net Asset Value (NAV) per share (cents) 335 90
NAV excluding fair value adjustment (cents) 164 84
GRAND PARADE INVESTMENTS LIMITED
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008
CASHFLOW STATEMENT STATEMENT
Reviewed Audited
12 months 30 June 2007
30 June 2008 Restated
R R
Net cash inflow from operating activities 3,146,971 4,809,674
Net cash outflow from investing activities (346,394,896) (35,989,449)
Net cash inflow from financing activities 355,371,827 11,607,324
Net increase / (decrease) in cash and cash
equivalents 12,123,902 (19,572,451)
Cash and cash equivalents at beginning of
year 69,710,295 89,282,746
Cash and cash equivalents at end of year 81,834,197 69,710,295
GRAND PARADE INVESTMENTS LIMITED
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008
STATEMENT OF CHANGES IN EQUITY
Capital Ordinary Share
Redemption share capital premium
Reserve Fund
R R R
Adjusted balance at 30
June 2006 - 80,000 92,643,584
As previously reported - 80,000 92,643,584
Prior period adjustments - - -
Profit for the year - - -
Unrealised fair value
gain on available for
sale investments - - -
Ordinary dividend paid - - -
Preference dividend - - -
Preference shares
redeemed
Transfer to capital
redemption reserve fund 115,000
Share capital raised 3,009 19,556,973
Balance at 30 June 2007 115,000 83,009 112,200,557
Profit for the year - - -
Unrealised fair value
loss on available for
sale investments - - -
Share of loss from
associate prior to
becoming an associate - - -
Ordinary dividend paid - - -
Preference dividend - - -
Preference shares
redeemed - - -
Transfer to capital
redemption reserve fund 115,595 - -
Share capital raised - 34,248 636,914,915
Share issue expenses - - (8,397,240)
Balance at 30 June 2008 230,595 117,257 740,718,232
Redeemable Accumulated Available for sale
Preference Profits Fair Value
share capital Reserve
R R R
Adjusted balance at
30 June 2006 115,297,500 58,399,873 14,251,013
As previously reported 115,297,500 62,166,076 -
Prior period
adjustments - (3,766,203) 14,251,013
Profit for the year - 73,078,126 -
Unrealised fair value
gain on available for
sale investments - - 3,679,034
Ordinary dividend paid - (14,400,051) -
Preference dividend - (7,393,734) -
Preference shares
redeemed (57,500,000)
Transfer to capital
redemption reserve
fund (115,000) -
Share capital raised
Balance at 30 June
2007 57,797,500 109,569,214 17,930,047
Profit for the year - 738,583,142 -
Unrealised fair value
loss on available for
sale investments - - (446,574)
Share of loss from
associate prior to
becoming an associate - (5,667,644) -
Ordinary dividend paid - (24,902,854) -
Preference dividend - (3,481,412) -
Preference shares
redeemed (57,797,500) - -
Transfer to capital
redemption reserve
fund - (115,595) -
Share capital raised - - -
Balance at 30 June 2008 - 813,984,851 17,483,473
Total Minority Total
R Interest Equity
Adjusted balance at 30 June
2006 280,671,970 - 280,671,970
As previously reported 270,187,160 3,005,111 273,192,271
Prior period adjustments 10,484,810 (3,005,111) 7,479,699
Profit for the year 73,078,126 - 73,078,126
Unrealised fair value gain
on available for sale
investments 3,679,034 - 3,679,034
Ordinary dividend paid (14,400,051) - (14,400,051)
Preference dividend (7,393,734) - (7,393,734)
Preference shares redeemed (57,500,000) - (57,500,000)
Transfer to capital
redemption reserve fund - - -
Share capital raised 19,559,982 - 19,559,982
Balance at 30 June 2007 297,695,327 - 297,695,327
Profit for the year 738,583,142 - 738,583,142
Unrealised fair value loss
on available for sale
investments (446,574) - (446,574)
Share of loss from
associate prior to becoming
an associate (5,667,644) - (5,667,644)
Ordinary dividend paid (24,902,854) - (24,902,854)
Preference dividend (3,481,412) - (3,481,412)
Preference shares redeemed (57,797,500) - (57,797,500)
Transfer to capital
redemption reserve fund - - -
Share capital raised 636,949,163 - 636,949,163
Share issue expenses (8,397,240) - (8,397,240)
Balance at 30 June 2008 1,572,534,408 - 1,572,534,408
Introduction
Grand Parade Investments Limited ("GPI") is pleased to report its maiden
financial results as a JSE Limited ("JSE") listed company. GPI listed as
Granprade ("GPL") under the "general financial" sector on the main board of
the JSE on the 6 June 2008. GPI is a Broad Based Black Economic Empowered
(BBBEE) investment holding company, holding stakes in businesses operating in
the gaming and leisure industry across South Africa. The reviewed condensed
consolidated financial information is presented for the financial year ended
30 June 2008. GPI has had an eventful year and shareholders are referred to
the
company`s Pre-Listing Statement dated 19 May 2008 ("Pre-Listing Statement")
for additional background information.
Basis of presentation and accounting policies
The financial statements have been prepared on the historical cost basis,
except where stated otherwise, and in accordance with International Financial
Reporting Standards (IFRS) and are presented in terms of disclosure
requirements set out in IAS 34 - Interim Financial Reporting and the Companies
Act of South Africa. The group adopted the following new and amended standards
and interpretations during the year.
* IFRS 7 - Financial instruments - disclosure
* IAS 1 - Presentation of financial statements
* IFRIC 10 - Interim Financial reporting and impairment
Adoption of these standards and interpretations did not have an effect on the
financial performance or position of the group, however, they did give rise to
additional disclosure. Except for the effects of the above, the accounting
policies applied to the consolidated financial information are consistent with
those set out in the audited annual financial statements for the year ended 30
June 2007.
General overview
The difficult economic environment has put a strain on consumer disposable
incomes and this has had an adverse impact on the gaming industry as a whole.
Pleasingly, GrandWest grew its revenue by 10% despite these difficult trading
conditions. The Limited Payout Machine ("LPM") market continues to perform
exceptionally well where the formula of a limited number of machines at more
sites is starting to reap rewards and GPI benefited from a significant
increase
in earnings from its 25,1% interest in Thuo Gaming Western Cape ("Thuo Gaming
WC"), which is held through wholly-owned subsidiary GPI Slots (Proprietary)
Limited ("GPI Slots").
Revenue
Revenue is comprised of:
2008 2007
R million R million
Dividends received - SunWest - 63,2
Dividends received - National Manco 1, 5 1,2
Management fees - Western Cape Manco 21, 7 20,2
Interest received 10, 8 5,8
Total Revenue 34, 0 90,4
GPI` s investment in SunWest International (Proprietaty) Limited ("SunWest")
is
now accounted for as an associate and therefore revenue in 2008 excludes
dividends received from SunWest. Total revenue would have been R124 million if
one includes GPI`s share of associate earnings and the R43 million adjustment
in respect of GPI`s share of SunWest`s BEE transaction charge. This
represents a growth of 37% compared with the previous year.
Operating expenses
The increase in operating costs is primarily due to once-off listing expenses
of R5 million. More staff has been employed, significantly strengthening the
financial management of GPI and a call centre at Computershare has been
established in order to communicate to GPI`s wide shareholder base.
Negative goodwill from associate
SunWest is now being accounted for as an associate in terms of IAS 28:
Investments in Associates. Due to purchasing additional shares during the
course of the year, it is a requirement of IFRS 3: Business Combinations to
fair value the identifiable net assets and liabilities. As a result, an
adjustment of R784,1 million has been made for negative goodwill.
Impairment of investment in associate
An impairment loss of R92,1 million has been recognised in respect of the
investment in Real Africa Holdings Limited ("RAH") at year end in order to
comply with IAS 36: Impairment of assets. A substantial portion of the RAH
acquisition was funded by way of the issue of GPI shares at a price
significantly above GPI`s current trading price and was based on a relative
valuation of the GPI and RAH shares at the time of the transaction.
Profit after tax
If profit after tax is adjusted for the negative goodwill and the impairment
loss it would have increased by 23% compared to the prior year.
Earnings per share
Headline earnings have increased by 13% to 23,17 cents per share compared to
the prior year`s restated 20,5 cents per share (the prior year headline
earnings
per share has been restated and split on a 4 for 1 basis). GPI`s headline
earnings would have been 24,54 cents per share had it not incurred the once-
off listing expenses of R5 million.
Net asset value
Net asset value per share increased by 272% to 335 cents per share compared to
90 cents per share at June 2007. Net asset value per share excluding the
negative goodwill and the fair value adjustments increased by 95,0% to 164
cents per share from 84 cents at 30 June 2007.
Restatement of prior year figures
Deferred tax assets amounting to R3,7 million arising from STC credits on
dividends received in previous years have been reversed in the current year.
In addition, the consolidation of the Western Cape Casino Resort Management
Company (Proprietary) Limited ("Western Cape Manco") as a subsidiary has been
discontinued and this investment is now accounted for as a joint venture in
terms of IAS 31: Interest in Joint Ventures. National Casino Resort Management
Company (Proprietary) Limited ("National Manco") has been held at historical
cost in the past. During the current year the investment was fair valued as it
should have been in the prior year in accordance with IAS 39: Financial
Instruments: Recognition and Measurement.
R million
Prior year ordinary shareholders interest as 270,1
previously stated 1 July 2006
Adjustments for:
Deferred tax asset (3,7)
Available for sale fair value reserve - National Manco 14, 2
Restated prior year ordinary shareholders interest 280, 6
Minority shareholders -
Total equity restated 280,6
Review of investments and major transactions
Direct Interest (%)
30 June 2008 30 June 2007
Associates, investments and joint ventures
SunWest 26,41 19,80
RAH 30,60 -
Akhona GPI 50,00 -
Golden Valley 36,70 38,00
Thuo Gaming WC 25,10 25,10
National Manco (Investment) 5,67 5,67
Western Cape Manco (Joint Venture) 50, 00 50,00
SunWest:
In November 2007, GPI increased its direct holdings in SunWest to 26,41%.
The additional shares purchased at a cost of R240,4 million brought the total
cost of GPI`s investment in SunWest to R447,2 million. It should be noted that
SunWest incurred a charge of R182 million during the year in respect of an
option granted to GPI in terms of its BEE transaction. Subsequent to year end,
GPI exercised part of this option and purchased an additional 2,83% of SunWest
for R92,4 million. GPI now owns 29,24% of SunWest directly and a further
4,47% indirectly through its interest in RAH. GrandWest Casino and
Entertainment World (GrandWest), being the key asset of SunWest, grew its
revenue by 10% in 2008.
RAH:
In June 2008, GPI acquired a 30,6% interest in RAH for R600,6 million. The
acquisition was funded by R139,3 million in cash and R461,4 million in GPI
shares. This acquisition had the effect of increasing GPI`s stake in some of
its key assets, whilst also significantly diversifying GPI`s asset base into
areas outside of the Western Cape. The full benefit of the RAH investment on
GPI`s earnings will be reflected in the 2009 financial year.
Western Cape Manco:
GPI owns 50,0% of Western Cape Manco. This investment is now accounted for as
a
joint venture, whereas previously it was accounted for as a subsidiary.
Western
Cape Manco derives its revenue primarily from management fees from GrandWest.
Income before tax grew by 9,0% to R40,1 million.
National Manco:
GPI holds a 5,7% shareholding in National Manco that was initially purchased
at a cost of R57,00. This investment is classified as available-for-sale,
and has been revalued in terms of IAS 39: Financial instruments: Recognition
and Measurement. The comparative has been restated accordingly. The total fair
value reserve relating to the investment in National Manco amounted to R17,4
million at year end (2007: R17,9 million).
GPI Slots:
GPI Slots accounts for its 25,1% stake in Thuo Gaming WC as an associate
investment. Its share of associate net income amounted to R4,7 million (2007:
R0,4 million). Thuo Gaming WC now has 850 machines in operation throughout the
Western Cape and has experienced excellent growth in revenue and profits this
past financial year.
Akhona Gaming Portfolio Investments (Proprietary) Limited ("Akhona GPI")
Akhona GPI is in the process of being renamed from Spogtrade 24 (Proprietary)
Limited. GPI holds a 50,0% interest in Akhona GPI. Akhona GPI owns a 6% stake
in Dolcoast Investments Limited, which in turn holds a 22% stake in Sibaya
casino in Kwa Zulu-Natal, together with a 20% shareholding in Thuo Gaming
KZN. Sibaya Casino performed strongly during 2008. Thuo Gaming KZN has 368
machines in operation of a total licence allocation of 1 000 machines.
Worcester Casino (Proprietary) Limited (Golden Valley):
Golden Valley is in its infancy stage. Pleasingly, revenue grew by 88,3% and
EBITDA by 79,0%. The new hotel at Golden Valley was officially opened in April
2008 at a cost of R71,4 million.
Preference shares
Preference shares classified as equity of R57 million were redeemed during the
year. New preference shares classified as debt of R201 million were issued.
This funding was utilised to acquire the additional shares in SunWest and RAH.
Share capital
During the year GPI issued a number of new ordinary shares to fund the
acquisitions in SunWest and RAH. Furthermore a 4 for 1 share split was
implemented prior to the listing. Taking into account the 4 for 1 share split,
an effective 136 990 302 shares were issued at an average price of R4, 62 per
share.
Related party transactions
The group, in the ordinary course of business, entered into various
transactions with related parties. All transactions were concluded on an arm`s
length basis. Any intra-group related party transactions and outstanding
balances are eliminated in the preparation of the consolidated financial
statements of the group as presented.
Segment report
Based on risks and returns the directors consider that the primary reporting
format is by business segment. The directors consider that there is only one
business segment being investments. Therefore the disclosures for the primary
segment have already been given in these financial statements. The secondary
reporting format is by geographical analysis by origin and destination.
Subsequent events
Subsequent to year end GPI exercised part of its SunWest option and purchased
an additional 2,83% of SunWest for R92,4 million. There were no other
material events after balance sheet date.
Settlement of court cases
On the 11 November 2007, Cape Empowerment Trust Limited ("CET") and GPI
entered into the CET settlement agreement in terms of which CET withdrew all
legal action against GPI and GPI withdrew its appeal in the Quintessence
matter as referred to in the Pre-Listing Statement.
Review report
The group`s auditors Ernst & Young Inc have reviewed the condensed
consolidated
financial information for compliance with IFRS and the Companies Act of South
Africa for the year ended 30 June 2008. Their unqualified review opinion is
available for inspection at the registered office of the company.
Future prospects
GPI`s key source of cash flow income is dividends from its investments in
SunWest and Western Cape Manco. GPI also expects to benefit from dividends
from its holdings in RAH and Thuo Gaming WC.
GPI will focus it efforts on optimizing the performance of its investments and
search for new opportunities to acquire assets of the same quality.
Directorate
Subsequent to the financial year end Mr. Adrian Funkey has been appointed
Chief Executive Officer of GPI (effective 1 September 2008) to succeed Mr.
Richard Hoption who remains with GPI but will now focus on strategy and
investments.
Dr. Norman Maharaj and Mr. Charl Williams were appointed independent non
executive directors with effect from 1 August 2008. Their appointment will
assist in further strengthening the Board with meeting the requirements of The
King Code of Corporate Governance.
Ordinary dividend declaration
Notice is hereby given of the declaration of an ordinary cash dividend of 10
cents per share (2007 : 7,5 cents per share or 30 cents before the 4 for 1
share split) ("the dividend"). The following salient dates will apply to the
dividend:
Last date to trade "cum" the dividend Friday, 21 November 2008
Trading commences "ex" the dividend Monday , 24 November 2008
Record date Friday, 28 November 2008
Date of payment of the dividend Monday, 01 December 2008
Shares certificates may not be rematerialised or dematerialised between
Monday, 24 November 2008 and Friday, 28 November 2008, both days inclusive.
For and on behalf of the board
H Adams
Chairman
2 September 2008
Registered Office
15th Floor Triangle House
22 Riebeeck Street
Cape Town, 8001
(P.O. Box 7746, Roggebaai, 8012)
Transfer Secretaries
Computershare Investor Services (Proprietary) Limited
70 Marshall Street
Johannesburg, 2001
Attorneys
Bernadt Vukic Potash & Getz Attorneys
Corporate advisors
Leaf Capital (Proprietary) Limited
Sponsor
PSG Capital (Proprietary) Limited
Directors
H. Adams (Chairman), R. Freese #, A. Abercrombie #, N, Mlambo #,
A.W. Bedford #, R. Hoption, C. Williams (appointed 1 August 2008) #*,
N. Maharaj (appointed 1 August 2008) #*, A. Funkey (CEO)
(appointed 01 September 2008).
(# non executive * independent)
Company Secretary
Ralph Gordon Freese
"INVESTING IN CHANGE"
Date: 02/09/2008 14:30:39 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
