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GOLD REEF CASINO RESORTS -
Gold Reef Casino Resorts Limited
"GRCR"
Registration number 1989/002108/06
Share Code: GDF
ISIN Code: ZAE 000028338
HIGHLIGHTS
Attributable profit up 38,5%
HEPS up 26,6%
Net cash generated in operating activities of 41 cents per share
Welkom casino license awarded
COMMENTS
The unaudited interim financial results have been prepared in accordance with
South African Statements of Generally Accepted Accounting Practice. As reported
at year-end 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 six-month period
ended 30 June 2002 ("the previous comparative period") have been restated for
comparative purposes. In all other respects the accounting policies used in the
preparation of these unaudited interim financial results are consistent with
those used in the interim financial statements for the previous comparative
period.
The interim period
Operations
The decrease in interest rates during the interim period contributed to the
casinos" strong performances, which together with continued strict cost
discipline resulted in healthy EBITDA margins and a reduction in net external
debt across the group.
Gold Reef City continued its robust performance with R323,8 million revenue up
11,3% from the previous comparative period after an R84,5 million reduction in
external debt to R138,7 million. The Gold Reef City Theme Park continued to
trade satisfactorily.
Golden Horse maintained its revenue levels, a pleasing result in light of the
November opening of Durban"s new casino, and reduced its external debt by R6,3
million to R79 million. Excellent trading enabled Casino Mykonos to grow its
revenue by 26,7% to R27,4 million and to reduce its external debt by R4,1
million to R2,9 million.
The new Garden Route Casino, opened in Mossel Bay in December 2002, continued to
exceed expectations with revenue of R33,8 million. The group is confident of the
casino"s positive growth prospects.
Events
On 31 January 2003 GRCR, through wholly-owned subsidiary Aldiss Investments
(Pty) Ltd ("Aldiss"), effected a pro-rata share repurchase of 14 235 347 shares
at R3,00 per share totalling R42,7 million. Aldiss subsequently purchased 150
000 shares on the open market at an average price of R3,25 per share amounting
to R487 905. The purchases were financed out of GRCR"s existing cash resources.
The shares will be held as treasury stock and neither cancelled nor delisted
from the JSE Securities Exchange SA ("JSE").
On 4 July 2003 GRCR implemented an odd-lot offer to shareholders holding fewer
than 200 ordinary shares. 13 501 ordinary shares were repurchased at R3,59 per
share amounting to a total cash consideration of R48 469. These shares will be
cancelled and delisted. The odd-lot offer has reduced the number of GRCR
ordinary shareholders by 225 representing approximately 20% of total
shareholders, eliminating the substantial recurring costs of administration in
respect of this large number of shareholders holding a small amount of shares.
GRCR further issued 1 831 additional ordinary shares at R3,59 per share to odd-
lot holders electing to increase their individual holdings to 200 ordinary
shares for a total cash consideration of R6 573. The listing of these shares has
been approved by the JSE.
Financial results
As reported at year-end the board decided to consolidate investments in which
the company holds at least a 50% interest following conclusion of the Casinos
Austria transactions. This new approach has been applied in arriving at the
financial information for the six months ended 30 June 2003 and results in a
more meaningful presentation of the group"s results. Proforma consolidated
comparative information, to illustrate how the results for the six months ended
30 June 2002 would have been reported, were the new approach adopted, is
provided in the group Income Statement and group Balance Sheet. This information
does not reflect the effects of the Casinos Austria transactions.
For the interim period group revenue grew to R429,2 million while attributable
profit increased by 38,5% to R54,9 million from R39,7 million. EBITDA of R151,5
million, representing a 35,3% margin on revenue, reflects the casinos"
performances and tight cost control.
Property Revenue EBITDA EBITDA %
June June June June June June
2003 2002 2003 2002 2003 2002
R"000 R"000 R"000 R"000 % %
Gold Reef 323,839 291,016 114,532 103,655 35,4 35,6
City
Golden 58,671 58,959 19,734 20,911 33,6 35,5
Horse
Casino 27,440 21,646 9,797 6,190 35,7 28,6
Mykonos
Garden 33,789 - 13,412 - 39,7 -
Route
Casino
Net cash generated in operating activities amounted to R82,7 million equating to
41,0 cents per share, an increase of 16,5% over the proforma 35,2 cents per
share for the previous comparative period. Notwithstanding the cash utilised for
the group"s 15 cents per share maiden dividend and the share repurchase, the
group"s debt-to-equity ratio remained stable at 27% compared with 26% for the
previous year.
HEPS of 30,9 cents per share increased by 26,6% over HEPS of 24,4 cents for the
previous comparative period.
New projects and future developments
As anticipated at year-end the consortium in which GRCR holds a 10% stake was
successfully awarded the casino license for Welkom. CAI Gold Reef Management
secured the casino management contract. Ground has been broken and the casino
should be open for trading before the end of the current year.
The purchase by Eglin Investments No. 30 (Pty) Ltd from Gensec of its investment
in Akani Leisure Investments (Pty) Ltd, GRCR"s empowerment partner in Akani
Egoli (Pty) Ltd, is still subject to the approval of the Gauteng Gambling Board
which is expected later this year.
Outlook
GRCR anticipates that expected stronger market conditions and a further
reduction in interest rates should enhance the group"s performance in the six
months ahead to year-end. The recent strengthening of the Rand should impact
positively on the cost of imported gaming equipment, which bodes particularly
well for the new Welkom casino. The new casino will have no material effect on
results to year-end and is expected to contribute to profits in 2004.
On behalf of the Board.
8 August 2003
Directors: M Krok (Chairman)*; AJ Aaron*; JS Friedman; SB Joffe; RJ Khoza*; A
Krok**; MZ Krok*; S Krok**; FP McFadden*@; C Neuberger=; BJ Schutte; R
Vierziger**#
Non-executive director
** Alternative director
# Austrian Citizen
@ Irish Citizen
Registered office: Gold Reef City, Gate 4, Northern Parkway, Ormonde, 2157
Transfer secretaries: Computershare Investor Services Limited, 11 Diagonal
Street, Johannesburg 2001 (PO Box 1053, Johannesburg 2000)
www.grcresorts.co.za
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
Group Income Statement
For the 6 For the 6
months ended months ended
30 June 2003 30 June 2002
% R"000 R"000
Revenue 429,230 -
Direct costs (164,257) -
Gross profit 264,973 -
Other operating income 1,480 -
Other operating expenses (114,977) -
Operating profit before
depreciation and amortisation 151,476 -
Depreciation and amortisation (40,935) -
Operating profit 110,541 -
Finance costs (19,213) -
Profit before taxation 91,328 23,989
Taxation (30,409) (6,404)
Net profit after tax 60,919 17,585
Equity accounted earnings - 22,094
Profit from ordinary
activities 60,919 39,679
Outside shareholders" interest (5,981) -
Profit attributable to
shareholders 38,5 54,938 39,679
STC on dividend paid 3,736 -
Basic earnings for EPS 58,674 39,679
Amortisation of goodwill 3,679 3,679
Profit on disposal of
property, plant and equipment - -
Amortisation of NDR to the
income statement - -
Headline earnings 62,353 43,358
Number of shares in issue
(`000) 213,542 177,941
Weighted average number of
shares in issue (`000) 201,629 177,941
HEPS (cents) 26,6 30,9 24,4
EPS (cents) 30,5 29,1 22,3
Diluted EPS (cents) 30,5 29,1 22,3
Net cash generated in
operating activities per share
(cents) 1476,9 41,0 2,6
Group Income Statement (continued)
Proforma for Audited for
the 6 months the 12
ended 30 months
June 2002 ended 31
December
2002
R"000 R"000
Revenue 385,333 787,125
Direct costs (152,103) (292,342)
Gross profit 233,230 494,783
Other operating income - -
Other operating expenses (98,062) (186,268)
Operating profit before depreciation and
amortisation 135,168 308,515
Depreciation and amortisation (39,366) (86,467)
Operating profit 95,802 222,048
Finance costs (26,131) (50,879)
Profit before taxation 69,671 171,169
Taxation (20,539) (56,149)
Net profit after tax 49,132 115,020
Equity accounted earnings - -
Profit from ordinary activities 49,132 115,020
Outside shareholders" interest (9,453) (13,663)
Profit attributable to shareholders 39,679 101,357
STC on dividend paid - -
Basic earnings for EPS 39,679 101,357
Amortisation of goodwill 3,679 7,358
Profit on disposal of property, plant and
equipment - (248)
Amortisation of NDR to the income statement
- (1,030)
Headline earnings 43,358 107,437
Number of shares in issue (`000) 177,941 213,542
Weighted average number of shares in issue
(`000) 177,941 213,542
HEPS (cents) 24,4 50,3
EPS (cents) 22,3 47,5
Diluted EPS (cents) 22,3 47,4
Net cash generated in operating activities
per share (cents) 35,2 103,8
Group Balance Sheet
At 30 June At 30 June
2003 2002
R"000 R"000
ASSETS
Non-current assets
Property, plant and equipment 838,235 149
Leasehold improvements 143,312 -
Intangible assets 77,058 -
Investment in associates 11,224 530,536
Available-for-sale investments 1 2
Share incentive scheme 7,872 7,406
Deferred tax 1,810 111
1,078,512 538,204
Current assets
Inventories 3,447 -
Receivables and prepayments 24,064 3,792
Cash and cash equivalents 37,114 52,730
Amounts owing by related parties 8,842 -
73,467 56,522
1,151,979 594,726
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 3,983 3,558
Share premium 422,548 359,366
Non-distributable reserves 1,774 13,238
Retained earnings 315,998 218,077
744,303 594,239
Outside shareholders" interest 61,852 -
Non-current liabilities
Interest bearing borrowings 146,115 -
Deferred tax liability 10,519 -
156,634 -
Current liabilities
Trade and other payables 38,287 455
Provisions 27,346 -
Bank overdraft 5,595 32
Tax liabilities 15,246 -
Current portion of interest bearing
borrowings 102,615 -
Amounts owing to related parties 101 -
189,190 487
1,151,979 594,726
Net asset value per share (cents) 373,7 334,0
Group Balance Sheet (continued)
Proforma at Audited at
30 June 2002 31 December
2002
R"000 R"000
ASSETS
Non-current assets
Property, plant and equipment 892,376 866,440
Leasehold improvements 142,814 142,280
Intangible assets 46,036 81,847
Investment in associates 56 11,361
Available-for-sale investments 2 1
Share incentive scheme 7,406 7,872
Deferred tax 5,372 -
1,094,062 1,111,801
Current assets
Inventories 3,301 3,513
Receivables and prepayments 19,900 9,472
Cash and cash equivalents 80,633 153,365
Amounts owing by related parties 30,282 3,027
134,116 169,377
1,228,178 1,281,178
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 3,558 4,271
Share premium 359,366 465,454
Non-distributable reserves 13,238 1,774
Retained earnings 218,077 290,206
594,239 761,705
Outside shareholders" interest 118,161 58,178
Non-current liabilities
Interest bearing borrowings 320,530 262,608
Deferred tax liability 7,994 8,708
328,524 271,316
Current liabilities
Trade and other payables 36,038 38,809
Provisions 18,567 17,538
Bank overdraft 14,286 -
Tax liabilities 2,043 29,926
Current portion of interest bearing
borrowings 86,062 102,676
Amounts owing to related parties 30,258 1,030
187,254 189,979
1,228,178 1,228,178
Net asset value per share (cents) 334,0 356,7
Group Statement of Changes in Equity
For the 6 For the 6 Audited for
months months the 12
ended 30 ended 30 months
June 2003 June 2002 ended 31
December
2002
R"000 R"000 R"000
Ordinary share capital
At beginning of period 4,271 3,545 3,545
Ordinary shares issued - 13 726
Ordinary shares repurchased (288) - -
At end of period 3,983 3,558 4,271
Share premium
At beginning of period 465,454 357,340 357,340
Share premium raised - 2,026 108,114
Share premium utilised on share
repurchase (42,906) - -
At end of period 422,548 359,366 465,454
Total share capital at end of period 426,531 362,924 469,725
Non-distributable reserve
At the beginning of period 1,774 14,120 14,120
NDR raised on acquisition of
subsidiaries and consolidation of
share trust - - 2,053
NDR released - (882) (14,399)
At end of period 1,774 13,238 1,774
Retained earnings
At beginning of period 290,206 178,398 178,398
Net income for period 54,938 39,679 101,357
Prior year adjustment * - - (1,029)
Adjustment due to increased holdings
in subsidiaries - - (1,760)
Transfer from reserves - - 13,240
Dividends paid (29,146) - -
At end of period 315,998 218,077 290,206
* The prior year adjustment relates primarily to goodwill not previously
amortised
Group Cash Flow statement
For the 6 For the 6 Audited for
months months the 12
ended 30 ended 30 months
June 2003 June 2002 ended 31
December
2002
R"000 R"000 R"000
Cash flow from operating activities
Profit before taxation 91,328 23,989 171,169
Non-cash items and other adjustments 60,893 (24,358) 136,005
Cash flow from trading operations 152,221 (369) 307,174
(Increase)/decrease in working
capital (5,241) (7,033) 7,983
Cash flow from operating activities 146,980 (7,402) 315,157
Net interest (paid)/received (19,213) 24,439 (50,879)
Taxation paid (45,088) (12,481) (42,575)
Net cash generated in operating
activities 82,679 4,556 221,703
Cash flow from investing activities
Acquisition of property, plant and
equipment (5,972) (9) (67,400)
Acquisition of subsidiaries and
other intangible assets - - (297,615)
Investment in associate - - (11,361)
Net cash utilised in investing
activities (5,972) (9) (376,376)
Cash flow from financing activities
Ordinary shares (repurchased)/issued (288) - 40
Share premium (utilised)/raised (42,906) - 5,960
(Decrease)/increase in interest
bearing borrowings (116,553) 16,932 267,480
(Decrease)/increase in outside
shareholders" loans (2,307) - 3,805
Loans advanced to related parties (6,604) - (466)
Dividends paid (29,895) - -
Net cash (utilised)/generated in
financing activities (198,553) 16,932 276,819
Net (decrease)/increase in cash and
cash equivalents (121,846) 21,479 122,146
Cash and cash equivalents at
beginning of period 153,365 31,219 31,219
Cash and cash equivalents at end of
period 31,519 52,698 153,365
Date: 11/08/2003 07:30:15 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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