| Wed 19 Mar 2003, 17:20 | | Gold Reef Casino Resorts - Preliminary Reviewed An |
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GOLD REEF CASINO RESORTS - PRELIMINARY REVIEWED ANNUAL FINANCIAL RESULTS FOR THE
YEAR ENDED 31 DECEMBER 2002
GOLD REEF CASINO RESORTS
Gold Reef Casino Resorts Limited
("GRCR")
(Registration number 1989/002108/06)
Share Code: GDF
ISIN Code: ZAE000028338
HIGHLIGHTS
Attributable profit up 39.7%
HEPS up 19.8%
Net cash generated in operating activities R221,7 million
EBITDA: Revenue 39.2%
Maiden dividend declared of 15 cents per share
The Garden Route Casino opens
PRELIMINARY REVIEWED ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER
2002
Group Income Statement
For the For the Proforma
year year for the
ended 31 ended 31 year
December December ended 31
2002 2001 December
2001
R"000 R"000 R"000
Revenue 787,125 - 605,730
Direct costs (292,342) - (224,694)
Gross profit 494,783 - 381,036
Other operating income - 17,734 15,438
Other operating expenses (186,268) (5,159) (165,501)
Operating profit before 308,515 12,575 230,973
depreciation and amortisation
Depreciation and amortisation (86,467) (3,659) (64,517)
Operating profit 222,048 8,916 166,456
Finance (costs)/income (50,879) 53,346 (46,228)
Pre-opening costs expensed - - (7,438)
Profit before taxation 171,169 62,262 112,790
Taxation (56,149) (17,077) (32,643)
Net profit after tax 115,020 45,185 80,147
Equity accounted earnings - 27,374 -
Akani Egoli (Gold Reef City) - 29,290 -
Akani Msunduzi (Golden Horse) - (3,840) -
West Coast Leisure (Casino - (1,068) -
Mykonos)
Pinnacle Point Casino (Garden - - -
Route Casino)
CAI Gold Reef Management - 2,992 -
Profit from ordinary activities 115,020 72,559 80,147
Outside shareholders" interest (13,663) - (7,588)
Profit attributable to 39.7% 101,357 72,559 72,559
shareholders
Amortisation of goodwill 7,358 3,568
Profit on disposal of property, (248) -
plant and equipment
Amortisation of NDR to the (1,030) (1,765)
income statement
Headline earnings 107,437 74,362
Number of shares in issue (000) 213,542 177,262
Weighted average number of 213,542 177,262
shares in issue (000)
HEPS (cents)
basic 19.8% 50.3 42.0
before deducting depreciation 16.9% 54.6 46.7
on buildings
EPS (cents) 16.1% 47.5 40.9
Diluted EPS (cents) 16.5% 47.4 40.7
Net cash generated in operating 544.7% 103.8 16.1
activities per share (cents)
Dividend per share (cents) 15.0 -
Group Balance Sheet
At 31 At 31 Proforma at
December December 31 December
2002 2001 2001
R"000 R"000 R"000
Assets
Non-current assets
Property, plant and equipment 866,440 188 896,111
Leasehold improvements 144,280 - 125,995
Intangible assets 24,355 - 26,359
Goodwill 57,492 - 26,949
Investment in associates 11,361 524,250 -
Available-for-sale investments 1 2 2
Share incentive scheme 7,872 7,406 7,406
Deferred tax - 111 -
1,111,801 531,957 1,082,822
Current assets
Inventories 3,513 - 3,503
Receivables and prepayments 9,472 1,140 16,727
Cash and cash equivalents 153,365 31,219 -
Amounts owing by related parties 3,027 - 5,162
169,377 32,359 25,392
1,281,178 564,316 1,108,214
Equity and liabilities
Capital and reserves
Ordinary share capital 4,271 3,545 3,545
Share premium 465,454 357,340 357,340
Non-distributable reserves 1,774 14,120 14,120
Retained earnings 290,206 178,398 178,398
761,705 553,403 553,403
Outside shareholders" interest 58,178 - 92,839
Non-current liabilities
Interest bearing borrowings 262,608 - 65,014
Deferred tax liability 8,708 - 2,357
271,316 - 67,371
Current liabilities
Trade and other payables 38,809 6,799 56,606
Provisions 17,538 - 9,414
Bank overdraft - - 269,144
Tax liabilities 29,926 4,114 22,611
Current portion of interest bearing 102,676 - 32,790
borrowings
Amounts owing to related parties 1,030 - 4,036
189,979 10,913 394,601
1,281,178 564,316 1,108,214
Net asset value per share (cents) 356.7 312.2 312.2
Group Statement of Changes in Equity
For the year For the year
ended 31 ended 31
December 2002 December 2001
R"000 R"000
Share capital
At the beginning of the year 3,545 3,545
Ordinary shares issued 726 -
At the end of the year 4,271 3,545
Share premium
At the beginning of the year 357,340 357,340
Share premium raised 108,114 -
At the end of the year 465,454 357,340
Total share capital at the end of 469,725 360,885
the year
Non-distributable reserves
At the beginning of the year 14,120 15,885
NDR raised on acquisition of 390 -
subsidiaries
NDR raised on consolidation of 1,663 -
share incentive scheme
NDR released (14,399) (1,765)
At the end of the year 1,774 14,120
Retained earnings
At the beginning of the year 178,398 110,287
Change in accounting policy - (38)
Prior year adjustment (1,029) (4,410)*
Adjustment due to increased holding (1,760) -
in subsidiaries
Share of subsidiary retained income 55 -
prior to it becoming a subsidiary
Net income for the year 101,357 72,559
Transfer from reserves 13,185 -
At the end of the year 290,206 178,398
* The prior year adjustment relates mainly to goodwill not previously amortised
Group Cash Flow statement
For the year For the year
ended 31 ended 31
December 2002 December 2001
R"000 R"000
Cash flow from operating activities
Profit before taxation 171,169 62,262
Non-cash items and other adjustments 136,005 (50,952)
Cash flow from trading operations 307,174 11,310
Decrease/(increase) in working 7,983 (5,093)
capital
Cash flow from operating activities 315,157 6,217
Net interest (paid)/received (50,879) 53,346
Taxation paid (42,575) (30,949)
Net cash generated in operating 221,703 28,614
activities
Cash flow from investing activities
Acquisition of property, plant and (67,400) (177)
equipment
Proceeds on disposal of property, 2,479 -
plant and equipment
Acquisition of intangibles (381) -
Investment in associates * (2,377)
Increase in loans to associates (11,361) (56,863)
Net advances from related parties 509 -
Acquisition of subsidiaries (net of (300,222) -
cash acquired)
Other investments - (2)
Net cash utilised in investing (376,376) (59,419)
activities
Cash flow from financing activities
Ordinary shares issued 40 -
Share premium raised 5,960 -
Increase in share incentive scheme (466) -
loan
Increase in interest bearing 267,480 -
borrowings
Increase in outside shareholders" 3,805 -
loans
Net cash generated in financing 276,819 -
activities
Net increase/(decrease) in cash and 122,146 (30,805)
cash equivalents
Cash and cash equivalents at the 31,219 62,024
beginning of the year
Cash and cash equivalents at the end 153,365 31,219
of the year
*Amount less than R1000
COMMENTS
The preliminary annual financial results have been reviewed by
PricewaterhouseCoopers Inc. and the review opinion is available for inspection
at GRCR"s registered office. The preliminary reviewed annual financial results
have been prepared in accordance with South African Statements of Generally
Accepted Accounting Practice. The accounting policies used in the preparation of
these annual financial results are consistent with those used in the annual
financial statements for the year ended 31 December 2001 ("the previous year")
unless otherwise indicated.
The Year under Review
Casinos Austria Transactions
GRCR"s acquisition of the South African assets of Casinos Austria International
Holding GmbH ("Casinos Austria") for the issue of 33 600 000 shares and the
specific issue of 2 000 000 shares for cash all at 300 cents per share ("the CA
transactions"), were concluded with effect from 1 January 2002. Casinos
Austria"s 17% stake in GRCR following the CA transactions has subsequently been
raised to 31,6% by the acquisition of a further 24 615 384 shares at 325 cents
per share.
The CA transactions and Casinos Austria"s further acquisition of shares have
introduced a significant international shareholder to GRCR. Through the CA
transactions GRCR has strategically consolidated its interests in Gold Reef City
Casino, Golden Horse Casino and Casino Mykonos and in the management contracts
of these casinos, as well as secured access to international opportunities.
Operations
The group"s casinos reported strong results and maintained strict cost
discipline to post healthy EBITDA percentages and to reduce external debt.
Gold Reef City continued to perform exceptionally well. A resilient Gauteng
gaming market and successful marketing initiatives contributed to an increase in
revenue. The additional indoor smoking facility, which opened in November,
markedly contributed to the casino"s performance. The Theme Park also continued
to trade strongly achieving revenue growth and boosting net profit Golden Horse
Casino performed in line with expectations and was not materially affected by
the opening of Durban"s new casino in November. The casino also benefited from
synergies with the adjacent Scottsville racecourse.
Excellent trading at Casino Mykonos reflects the effects of the 2001
rationalisation and shareholders" recapitalisation, and resulted in the casino
exceeding targets.
The new Garden Route Casino in which GRCR has a 10% investment, opened in Mossel
Bay in December 2002 and performed well over the festive season. Substantial
non-recurring pre-opening expenses resulted in a nil contribution on an equity-
accounted basis.
Property Revenue EBITDA EBITDA
R"000 R"000 %
Gold Reef City 622,558 233,954 37.6
Golden Horse 118,604 42,714 36.0
Casino Mykonos 45,607 13,797 30.3
Garden Route Casino * 5,917 2,281 38.5
* The Garden Route Casino only opened on 12 December 2002.
Financial Results
Revenue grew by 30% to R787,1 million while attributable profit increased by
39,7% to R101,4 million. EBITDA of R 308,5 million representing a 39,2% margin
on revenue, together with a net asset value of 356,7 cents per share, reflects
the group"s robust performance. Net cash generated in operating activities
amounted to R221,7 million, equating to 103.8 cents per share.
Following the Casinos Austria transactions the board decided to consolidate
investments in which the company holds at least a 50% investment. This new
approach results in a more meaningful presentation of the group"s performance.
Proforma consolidated comparative information is provided in the Group Income
Statement and Group Balance Sheet.
The results take into account a change in accounting policy. In accordance with
accounting statement AC 123 the group now depreciates its buildings to nil over
a period of fifty years. Results for the previous year have been restated for
comparative purposes.
The adoption of AC 123 resulted in additional charges to the income statement
totalling R9,1 million. HEPS before deducting depreciation of buildings amounted
to R116,5 million translating into 54,6 cents a share for the year. This is a
growth of 16,9 % over the previous year"s published HEPS of 46,7 cents.
Post Balance Sheet Events
GRCR will finance the purchase from Gensec by AKA Capital (Pty) Ltd of its
investment in Akani Leisure Investments (Pty) Ltd, GRCR"s empowerment partner in
Akani Egoli (Pty) Ltd. AKA Capital is headed by Akani Egoli Chairman and GRCR
non-executive director Reuel Khoza. The transaction is subject to the approval
of the Gauteng Gaming Board which is expected mid 2003. This will increase
GRCR"s effective shareholding in Akani Egoli by 4.19%.
GRCR through a wholly owned subsidiary effected a post year-end pro-rata share
repurchase of 14 235 346 ordinary shares (which will not be cancelled or
delisted from the JSE Securities Exchange South Africa) at a cost of R42,7
million.
Future Developments
GRCR holds an interest in the consortium bidding for a casino license in Welkom.
Following the application hearing held on 21 January 2003 the consortium
anticipates being announced the preferred applicant. CAI Gold Reef Management
will hold the management contract for the new casino.
Outlook
Casinos Austria"s global expertise in managing casinos has augmented the group"s
skill in developing, structuring and financing casinos. Management will
investigate appropriate opportunities to capitalise on this combined expertise
in line with the group"s future growth strategy. Access to these opportunities
should benefit CAI Gold Reef Management, which will endeavour to secure the
management contracts for new developments.
The 42% reduction in net interest bearing external debt reduced gearing from 57%
to 26%. This together with strong cash flow from the operations has positioned
the group well for future growth.
Maiden Dividend Declaration
The board declared a maiden dividend of 15 cents per share covered 3,4 times by
basic HEPS. From time to time the board will reconsider dividend cover based on
the group"s cash flow, gearing and capital requirements.
The dividend will be financed out of GRCR"s free cash flow.
The salient dates for the dividend are as follows:
Last day to trade shares "cum" dividend Friday 4 April 2003
Shares trade "ex" dividend Monday 7 April 2003
Record date Friday 11 April 2003
Payment date Monday 14 April 2003
No share certificates may be dematerialised or rematerialised between Monday 7
April 2003 and Friday 11 April 2003, both dates inclusive.
On behalf of the Board.
19 March 2003
Directors: M Krok (Chairman)*; AJ Aaron*; JS Friedman; SB Joffe; RJ Khoza*; A
Krok**; MZ Krok*; S Krok**; FP McFadden*u; C Neuberger"; BJ Schutte; R
Vierziger**"
Non-executive director
**Alternate director
"Austrian Citizen
u Irish Citizen
www.grcresorts.co.za
Registered office: Gold Reef City, Gate 4, Northern Parkway, Ormonde, 2157
Transfer secretaries: Computershare Investor Services Limited, 70 Marshall
Street, Johannesburg 2001 (PO Box 1053, Johannesburg 2000)
