| Wed 20 Mar 2002, 0:00 | | Gold Reef Casino Resorts - Financial Results For |
|
2001
Increase in Attributable Profit of 33,5%
NAV per Share at 320 cents
Proposed Share Repurchase at R3
Group Income Statement
Audited 12 Audited 12
months months
ended 31 ended 31
December December
2001 2000
R'000 R'000
Net profit 25.2% 64,092 51,186
Taxation 17,077 17,881
Net profit after taxation 41.2% 47,015 33,305
Share of results in associates 24.5% 35,792 28,742
Akani Egoli - (Gold Reef City) 37,595 26,177
Akani Msunduzi - (Golden Horse) (3,840) -
West Coast Leisure - (Casino Mykonos) (955) -
CAI Gold Reef Management 2,992 2,565
Profit attributable to shareholders 33.5% 82,807 62,047
Number of shares in issue (000) 177,262 177,262
Weighted Average number of shares in 177,262 152,854
issue (000)
Earnings per share (cents) 15.0% 46.7 40.6
Headline earnings per share (cents) 15.6% 46.7 40.4
Group Balance Sheet
Audited at Audited at
31 December 31 December
2001 2000
R'000 R'000
Assets
Non-current assets
Property, Plant and Equipment 188 102
Investment in associates 538,196 445,652
- Akani Egoli 409,100 396,369
- Akani Msunduzi 99,702 19,554
- West Coast Leisure 6,837 8,514
- CAI Gold Reef Management 22,557 21,215
Other Investments 2 500
Loan to share incentive trust 7,406 7,406
Deferred taxation 111 -
545,903 453,660
Current assets
Receivables and prepayments 1,140 2,461
Cash and cash equivalents 45,801 97,462
46,941 99,923
592,844 553,583
Equity and liabilities
Capital and reserves
Ordinary shareholders' equity 360,885 360,885
Non-distributable reserves 14,120 15,885
Retained earnings 192,344 110,287
567,349 487,057
Current liabilities
Payables and provisions 6,799 13,213
Bank overdraft 14,582 35,438
Taxation liabilities 4,114 17,875
25,495 66,526
592,844 553,583
Net asset value per share (cents) 320 275
Group Statement of Changes in Equity
Audited 12 Audited 12
months months
ended 31 ended 31
December December
2001 2000
R'000 R'000
Share capital
Ordinary shares
- at the beginning of the year 3,545 2,636
- ordinary shares issued - 909
- at the end of the year 3,545 3,545
Share premium
- at the beginning of the year 357,340 258,343
- share premium raised - 98,997
- at the end of the year 357,340 357,340
Total share capital at the end of the year 360,885 360,885
Non-distributable reserves
- at the beginning of the year 15,885 17,650
- NDR released (1,765) (1,765)
- at the end of the year 14,120 15,885
Retained earnings
- at the beginning of the year 110,287 48,240
- net profit for the year 82,807 62,047
- prior year adjustment (750) -
- at the end of the year 192,344 110,287
Group Cash Flow Statement
Audited 12 Audited 12
months months
ended 31 ended 31
December December
2001 2000
R,000 R'000
Cash flow from operating activities
Net profit 64,092 51,186
Non-cash items and other adjustments (56,339) (52,789)
Cash flow from trading activities 7,753 (1,603)
(Increase)/Decrease in working capital (5,093) 291
Cash flow from operating activities 2,660 (1,312)
Net interest received 56,903 55,178
Taxation paid (30,949) (15,323)
Net cash generated by operating activities 28,614 38,543
Cash flow from investing activities (2,556) (20,000)
Cash flow from financing activities (56,863) 43,752
Net (decrease)/increase in cash and cash (30,805) 62,295
equivalents
Cash and cash equivalents at the beginning of 62,024 (271)
the year
Cash and cash equivalents at the end of the 31,219 62,024
year
The Year Under Review
The emphasis in the year ended 31 December 2001 for Gold Reef Casino Resorts
(GRCR) has been on building on its existing platform. In common with most of
the South African gaming industry, the group is still very young and this
phase presents us with the opportunity to review our progress and, where
necessary, to refine our operations.
The latter half of the year witnessed a weakening in most world economies.
This, combined with certain events, adversely affected the South African
gaming sector. The weaker Rand has dramatically increased the cost of gaming
equipment but fortunately, GRCR had completed its major development programs
and has not been seriously affected. Nevertheless, the softening in global
economies has reduced public confidence and further limited disposable
income. In spite of this, growth was achieved in all important areas,
including profitability.
During the year the development program at Gold Reef City was, to all
intents and purposes, completed.
Gold Reef City Theme Park continued to trade well and major developments,
including the Shaft of Terror and the Big Wheel, were completed and opened
during the year.
The Freedom Park, renamed the South African Apartheid Museum, opened on 30
November 2001 and is attracting great interest, particularly from both local
and international media.
At Pietermaritzburg, Golden Horse opened its doors on 9 September 2001. By
year-end, most of the development had been completed with the science centre
and museum scheduled for completion in April 2002.
Results
The financial statements have been prepared in accordance with Generally
Accepted Accounting Practice.
The group's flagship, Gold Reef City, in which GRCR holds a 50% direct
investment and a 75,6% economic interest, reported further growth,
notwithstanding that smoking legislation introduced during the year had an
adverse affect on revenues. Separate smoking facilities only became
operational in December. Equity accounted profits grew to R37,595 million
after deducting taxation of R13,998 million (Taxation in 2000: R2,056
million).
Trading at Golden Horse started slowly but a strong December performance was
followed by encouraging results in January and February. In accordance with
accounting guidelines, non-recurring pre-opening expenses of R7,438 million
have been deducted from the net profit after tax, resulting in a net charge
to the income statement of R3,840 million. The company is budgeting to make
a profit in the current financial year. The opening of a new casino in
Durban is not expected to have a significant impact as Golden Horse does not
attract many patrons from the Durban area.
Casino Mykonos completed its first full year of trading, emphasising the
seasonal influence on performance. A focus on reducing costs, followed by a
significant growth in trading for the December holiday period has left
management with a good understanding of the trends and the ability to
achieve profitability.
Despite the accounting losses, both Golden Horse and Casino Mykonos
generated positive cashflows.
GRCR has continued to benefit from its investment in CAI Gold Reef
Management (CAIGR), the joint venture with Casinos Austria International
Holding GmbH (Casinos Austria), which manages all of the casino operations.
Bid costs of R2,928 million (2000 - nil) diluted what would have otherwise
reflected better growth.
Group net profit before taxation showed a 25,2% improvement to R64,092
million. After tax profit was up by 41,2% to R47,015 million. The group's
share of profits from its associate companies rose by 24,5% to R35,792
million with Akani Egoli, the parent company of the Gold Reef City
operation, and CAIGR accounting for the growth.
Attributable profit grew by 33,5% to R82,807 million, translating into
headline earnings per share of 46,7 cents - a growth of 15% after an
increase in the weighted average number of shares in issue of approximately
16%.
Future developments
The group's bid for a licence to operate a casino at Welkom in the Free
State is still pending and awaits the reconstitution of the local gaming
board. The application for a licence at George was unsuccessful but the
group is involved in negotiations with the successful bidder. Any investment
in either of these regions will not be material with the focus being on
obtaining management contracts.
The year ahead
Subsequent to the financial year-end, the group concluded linked
transactions with Casinos Austria, significantly increasing that company's
direct investment in GRCR.
This arrangement is expected to produce meaningful benefits in the longer
term, along with strong, immediate cashflows. The transactions are subject,
inter alia, to the necessary consents from the relevant gaming boards.
In the current year, emphasis will be on consolidation, repayment of debt
and growing the group's market share in the various regions in which it
operates. At this early stage it would be imprudent to predict earnings for
the year. However, the group has budgeted for growth, notwithstanding the
Gaming Board's decision to award a sixth casino licence in Gauteng.
Proposed share repurchase
The board has resolved to recommend to shareholders that a wholly owned
subsidiary of GRCR makes an offer to all GRCR shareholders to purchase up to
8% of their shareholdings at R3 per share (share repurchase), being the
price at which shares will be issued to Casinos Austria, pursuant to the
transactions referred to above. The offer will not be made to Casinos
Austria in respect of the 35,6 million shares to be issued to it, pursuant
to those transactions. If all shareholders accept the offer in full GRCR
will repurchase a total of 14 235 346 shares at a cost of R42 706 038. The
share repurchase will be financed out of existing cash resources and
cashflow.
Shareholder approval for the proposed repurchase will be sought at the
forthcoming annual general meeting due to be held during June 2002. A full
announcement containing the information required in terms of the JSE listing
requirements will be made shortly.
Cautionary announcement
Shareholders are advised to exercise caution in their share dealings until
the above mentioned announcement is made.
Registered office
Gold Reef City
Gate 4
Northern Parkway
Ormonde, 2157
Transfer secretaries
Mercantile Registrars Limited
10th Floor
11 Diagonal Street
Johannesburg, 2001
Directors
M Krok (Chairman), A J Aaron, J S Friedman, S B Joffe, R J Khoza,
M Z Krok, B J Schutte
www.grcresorts.co.za
