| Thu 3 Sep 2009, 10:00 | | GPL - Grand Parade Investments Limited - Reviewed final results for the year |
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GPL - Grand Parade Investments Limited - Reviewed final results for the year
ended 30 June 2009
GRAND PARADE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1997/003548/06
Share code GPL
ISIN ZAE00119814
REVIEWED FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2009
HIGHLIGHTS
Headline earnings UP 14%
Operating costs DOWN 7%
Dividend of 7,5 cps
NAV per share UP 11%, strong balance sheet and low gearing
Share buy-back - 27 million shares at an average of R2,18
Increased exposure to select urban casinos and the LPM industry
Cash retained for acquisitions
INCOME STATEMENT
Reviewed Audited
30 June 30 June
2009 2008 %
Note R`000s R`000s change
Revenue 1 27 451 34 032 (19)
Operating costs 2 (14 932) (16 137) (7)
Profit from operations 12 519 17 895 (30)
Share of profit from associates 3 118 191 47 052 151
Impairment in investment in
associates 4 - (92 132) (100)
Negative goodwill from associates 5 80 623 784 087 (90)
Net income before finance costs
and taxation 211 333 756 902 (72)
Finance costs 6 (31 939) (8 934) 240
Net profit before tax 179 394 747 968 (76)
Taxation (7 470) (9 385) (20)
Net profit for the year 171 924 738 583 (77)
Attributable to ordinary
shareholders 171 924 738 583
Reconciliation of earnings per
share
Basic earnings 171 924 738 583
Preference dividend - (3 481)
Attributable profit after
preference dividend 171 924 735 102
Negative goodwill from associates (80 623) (784 087)
Impairment in investment in
associates - 92 132
Loss on disposal of plant and
equipment 13 -
Profit on sale of subsidiary (213) -
Tax on above 56 -
Associates 5 548 41 054
- BEE transaction - 43 064
- (Gain)/Loss on disposal of
plant and equipment 53 (60)
- Gain on disposal of
investments recycled to
income statement (869) (2 312)
- Impairment of casino licence 3 613 -
- Provision for pension fund
exposure 2 751 362
Tax effect of above (28) 563
Headline earnings 96 677 84 764
Reversal of employee share trust
consolidated** (162) -
Adjusted headline earnings 96 515 84 764
Headline earnings and dividend
per share
Shares in issue (`000s) 443 761 469 028
Weighted average shares (`000s) 462 033 365 767
Adjusted weighted average
shares (`000s) 462 033 -
Basic earnings per share (cents) 37,21 200,98
Diluted earnings per share (cents) 37,21 200,98
Headline earnings per share (cents) 7 20,92 23,17
Adjusted headline earnings per
share (cents)** 20,89 -
Dividends paid per share (cents)* 10,00 7,50
* Final dividend declared in respect of the previous financial year and paid in
December.
** The consolidation of the Employee Share Trust is reversed as the group does
not receive the economic benefits of the trust.
BALANCE SHEET
Reviewed Audited
30 June 30 June
2009 2008
Note R`000s R`000s
ASSETS
Non-current assets 3 1 876 137 1 696 386
Current assets 80 235 95 626
Total assets 1 956 372 1 792 012
EQUITY AND LIABILITIES
Capital and reserves
Shareholders` interest 1 639 715 1 572 534
Non-current liabilities 287 496 204 240
Current liabilities 29 161 15 238
Total equity and liabilities 1 956 372 1 792 012
Net asset value (cents) 370 335
CASH FLOW STATEMENT
Reviewed Audited
30 June 30 June
2009 2008
R`000s R`000s
Cash and cash equivalents at beginning of year 81 834 69 710
Cash flows from operating activities 3 353 (2 595)
Cash flow from investing activities (133 664) (346 394)
Cash flows from financing activities 104 231 361 113
Cash and cash equivalents at end of year 55 754 81 834
STATEMENTS OF CHANGES IN EQUITY
Capital Ordinary
redemption share Share
reserve fund capital premium
R`000s R`000s R`000s
Balance at 30 June 2007 115 83 112 201
Profit for the year
Unrealised fair value
loss on available-for-sale
investments
Total income and
expense for the year - - -
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 - -
Share issue expenses - - (8 397)
Share capital raised - 34 636 914
Balance at 30 June 2008 230 117 740 718
Profit for the year - - -
Unrealised fair value loss on
available-for-sale investments - - -
Total income and
expense for the year - - -
Ordinary dividend paid - - -
Shares bought back - (5) (43 654)
Treasury shares purchased - - -
Treasury shares issued - - -
Transfer to capital
redemption reserve fund 22 - -
Balance at 30 June 2009 252 112 697 064
Available-
Redeemable for-sale
preference fair value Treasury
share capital reserve shares
R`000s R`000s R`000s
Balance at 30 June 2007 57 798 17 930 -
Profit for the year -
Unrealised fair value
loss on available-for-sale
investments (446) -
Total income and
expense for the year - (446) -
Share of loss from associate
prior to becoming an associate - - -
Ordinary dividend paid - - -
Preference dividend - - -
Preference shares redeemed (57 798) - -
Transfer to capital
redemption reserve fund - - -
Share issue expenses - - -
Share capital raised - - -
Balance at 30 June 2008 - 17 484 -
Profit for the year - - -
Unrealised fair value loss on
available-for-sale investments - (3 134) -
Total income and
expense for the year - (3 134) -
Ordinary dividend paid - - -
Shares bought back - - -
Treasury shares purchased - - (15 238)
Treasury shares issued - - 3 569
Transfer to capital
redemption reserve fund - - -
Balance at 30 June 2009 - 14 350 (11 669)
Accumulative
profits Total
R`000s R`000s
Balance at 30 June 2007 109 569 297 696
Profit for the year 738 583 738 583
Unrealised fair value loss on
available-for-sale investments (446)
Total income and expense for the year 738 583 738 137
Share of loss from associate prior to
becoming an associate (5 669) (5 669)
Ordinary dividend paid (24 902) (24 902)
Preference dividend (3 481) (3 481)
Preference shares redeemed - (57 798)
Transfer to capital redemption reserve fund (115) -
Share issue expenses - (8 397)
Share capital raised - 636 948
Balance at 30 June 2008 813 985 1 572 534
Profit for the year 171 924 171 924
Unrealised fair value loss on
available-for-sale investments - (3 134)
Total income and expense for the year 171 924 168 790
Ordinary dividend paid (46 281) (46 281)
Shares bought back - (43 659)
Treasury shares purchased - (15 238)
Treasury shares issued - 3 569
Transfer to capital redemption reserve fund (22) -
Balance at 30 June 2009 939 606 1 639 715
SEGMENTAL ANALYSIS
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.
The following table details GPI`s share of associate income from its various
investments. GPI`s prior year earnings attributable from SunWest includes its
share of the BEE transaction charge amounting to R43 million.
Reviewed Audited
30 June 2009 30 June 2008
R`000s R`000s
Income from associates 118 191 47 052
- SunWest 85 298 36 809
- RAH 28 109 5 482
- Thuo WC 4 566 4 738
- Akhona GPI 218 23
ACCOUNTING POLICIES AND BASIS OF PREPARATION
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 GPI group did not early adopt any new amendments or
statements during the reported financial year.
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 2008.
GENERAL OVERVIEW
INVESTMENT HIGHLIGHTS
During the year under review GPI increased its direct stake in SunWest
(Proprietary) Limited (SunWest) by 2,83% at a cost of R92,4 million by
exercising 560 000 of its 700 000 SunWest share options at an exercise price of
R165 per SunWest share.
GPI through its associate Akhona Gaming Portfolio Investments Holdings
(Proprietary) Limited (Akhona GPI), increased its indirect stake in the
exceptionally well-positioned Sibaya Casino. GPI provided Akhona GPI with the
funds to exercise its pre-emptive rights in acquiring additional Dolcoast
Investments Limited (Dolcoast) shares. As a consequence, GPI`s effective
economic stake in Akhona GPI increased to 75% with its voting rights increasing
to 49,99%. It is noted that Akhona Investment Holdings Limited, the other
shareholder of Akhona GPI, was granted an option to call a portion of these
shares so issued in order to restore the economic shareholding to parity.
GPI increased its indirect stake in Thuo Gaming KwaZulu-Natal (Proprietary)
Limited (Thuo KZN) through Akhona GPI`s acquisition of Wild Rush Trading 97
(Proprietary) Limited (Wild Rush), which owns 10% of Thuo KZN at a cost of
R6 million.
In accordance with the GPI board`s previously stated view that GPI`s share
price is trading at a substantial discount to its underlying value, GPI has,
through the market, acquired some 19,4 million shares during the reporting
period at an average cost of R2,24 cents per share. In addition, the Grand
Parade Share Incentive Trust (GPSIT), with the assistance of GPI, acquired a
further 7,6 million shares in GPI at R2,00 per share. The combined average price
per share of these buy backs amounts to R2,18 per share. Key executives of GPI,
in accordance with the rules of the GPSIT, were granted and exercised options
over 1,8 million of these shares during the year, with the remaining 5,8 million
shares held as treasury shares.
The following table reflects GPI`s direct holding in its various investments.
Direct interest (%) 30 June 2009 30 June 2008
SunWest 29,24 26,41
Real Africa Holdings Limited (RAH) 30,57 30,57
Akhona GPI 75,00 50,00
Worcester Casino (Proprietary) Limited
(Golden Valley/Worcester Casino) 36,70 36,70
Thuo Gaming Western Cape (Proprietary)
Limited (TGWC) 25,10 25,10
National Casino Resort Management
Company (Proprietary) Limited (National Manco) 5,67 5,67
Western Cape Casino Resort Manco
(Proprietary) Limited (Western Cape Manco) 50,00 50,00
COMMENTARY ON GPI`S FINANCIAL PERFORMANCE AND POSITION
1 Revenue
Revenue comprises GPI`s share of management fee revenue generated by WC Manco,
dividends received from National Manco, dividends received from preference
share investments and interest earned on positive cash balances. Revenue has
decreased mainly due to lower interest received as a result of lower average
cash balances during the reporting period and lower revenues generated by
Western Cape Manco.
2 Operating costs
Operating costs were well controlled and savings of 7% were achieved on last
year`s costs. This was despite the additional demands of being a listed company
with
a larger portfolio of investments.
3 Share of profit from associates
GPI`s share of associate income increased substantially this year. In the case
of SunWest this growth is attributed to its increased stake for the full year.
Profit from RAH has been accounted for the full current reporting period,
compared to one month in the previous year.
Thuo WC performed well during the year, growing its revenues by 12%. Due to
substantially more administration and personnel costs, as well as higher
capital charges incurred in introducing new slot machines and undertaking
extreme makeovers on selected Limited Payout Machine (LPM) sites, attributable
profits from this associate declined slightly compared to last year.
The increase in earnings from Akhona GPI is due to accounting for a full year
of earnings and the increase in GPI`s economic stake which increased from 50%
to 75% for six months of the year.
4 Impairment of investment in associates
In terms of IAS 36 - Impairment of Assets, an entity must determine whether
there is any indication of impairment at each balance sheet date. IAS 36
requires that the higher of the fair value less cost to sell or the value in
use be used to assess whether any impairment is necessary. Based on discounted
free cash flow valuations prepared by management and reviewed by the
independent auditors, the board of GPI is satisfied that no impairment is
required.
5 Negative goodwill from associates
In terms of IFRS 3 - Business Combinations, whenever there is a change in a
business combination, the fair value of the affected investment must be brought
to account.
A detailed fair value assessment of SunWest was conducted at the time of this
transaction and this confirmed a fair value per SunWest share of R359,27. An
R80,6 million negative goodwill adjustment has therefore been accounted for.
6 Finance costs and activities
The increase in GPI`s finance costs is attributed to higher levels of interest-
bearing debt during the reporting period. GPI utilised this debt to fund its
long-term acquisitions this year and in the prior year and still has
substantial capacity for additional acquisitions. GPI is well positioned with
its relatively low gearing in this challenging environment.
The interest-bearing Sun International Limited (Sun International) preference
shares were repaid on 25 October 2007. In the prior year the coupon on these
preference shares was reflected as dividends paid as the terms of these
preference shares resulted in this source of funds being treated as share
capital. During the current period, an additional R105 million of preference
share funding was raised with the coupon determined at 83% of the prime lending
rate.
7 Headline earnings and HEPS
Headline earnings increased from R84,8 million to R96,7 million for the year
ended June 2009. This represents a 14% increase on the prior year. Headline
earnings per share decreased by 9,7%. This is due to the increased weighted
average number of shares in issue this year.
Reviewed Audited
30 June 2009 30 June 2008
Drivers of headline earnings R`000s R`000s
Headline earnings 96 677 84 764
Associates
- SunWest* 85 298 79 873
- RAH 28 109 5 482
- TGWC 4 566 4 738
- Akhona GPI 218 23
Joint venture
WC Manco 20 115 21 734
Other# 5 242 (2 015)
Operating costs (14 932) (16 137)
Finance costs (31 939) (8 934)
* This amount includes the reversal of the BEE transaction charge in respect of
the options granted by SunWest to GPI last year.
# Other includes interest received, tax paid and other adjustments to headline
earnings.
8 Related party transactions
The GPI group, in the ordinary course of business, entered into various
transactions with related parties. All transactions were concluded at arm`s
length. Any intra-group related party transactions and outstanding balances are
eliminated in the preparation of the consolidated financial statements of the
group as presented.
9 Ordinary dividend declaration
Notice is hereby given of the declaration of an ordinary cash dividend of
7,5 cents per share (2008: 10 cents per share). The following salient dates will
apply to the dividend:
- Last date to trade "cum" the dividend Friday, 27 November 2009
- Trading commences "ex" the dividend Monday, 30 November 2009
- Record date Friday, 4 December 2009
- Date of payment of the dividend Monday, 7 December 2009
Share certificates cannot be dematerialised or rematerialised between Monday,
30 November 2009 and Friday, 4 December 2009, both days inclusive.
10 Subsequent events
There were no material events subsequent to the balance sheet date.
11 Directorate
During the financial year Richard Hoption was appointed as Financial Director.
He has also assumed the responsibilities of Company Secretary with effect from
25 June 2009.
12 Review results
The GPI group 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 2009. Their unqualified review
opinion is available for inspection at the registered office of the company.
13 Prospects
GPI`s healthy portfolio of highly cash-generative assets have proved resilient
during the unfolding global economic storm. These assets have provided GPI with
an excellent platform on which to build on GPI`s enviable track record. Mindful
of the needs of our shareholders and our commitment to be a dividend active
company, provision has been made for the payment of a dividend. The retained
cash in the business as well as its strong balance sheet places GPI in a good
position to expand its interests in the tourism and leisure sector, including
the urban casino industry and the LPM market. During this recessionary period,
where many businesses are waiting for the economic storm to abate, GPI is firmly
on the move and taking advantage of its opportunities.
For and on behalf of the board
H Adams A Funkey
Chairman Chief Executive Officer
2 September 2009
Cape Town
GRAND PARADE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1997/003548/06
Share code GPL
ISIN ZAE00119814
Directors
H Adams (Chairman)#, A Abercrombie#, A W Bedford#, A Funkey, R Freese#,
R Hoption , Dr N Maharaj#*, N Mlambo #, C Williams #*
(# non-executive * independent)
Registered office
15th Floor Triangle House, 22 Riebeek Street, Cape Town, 8001
PO Box 7746, Roggebaai, 8012
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
Attorneys
Bernadt Vukic Potash & Getz Attorneys
Corporate advisers
Leaf Capital (Proprietary) Limited
Sponsor
PSG Capital (Proprietary) Limited
Company Secretary
Richard Hoption
Date: 03/09/2009 10:00:01 Produced by the JSE SENS Department.
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