| Tue 9 Mar 2004, 18:02 | | Results for the year ended 31 Dec 03 |
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Gold Reef Casino Resorts - Provisional Reviewed Financial Results For The Year
Release Date: 09/03/2004 17:20:01 Code(s): GDF
Gold Reef Casino Resorts - Provisional Reviewed Financial Results For The Year
Ended 31 December 2003
GOLD REEF CASINO RESORTS
Gold Reef Casino Resorts Limited
(Registration number 1989/002108/06)
Share Code: GDF
ISIN Code: ZAE000028338
HIGHLIGHTS
- Dividend of 27 cents per share up 80%
- Attributable profit up 23,4%
- HEPS of 65,1 cents up 29,4%
- EBITDA: Revenue 38,6%
- Net cash generated in operating activities (before deducting dividend) of
141,7 cents
PROVISIONAL REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
COMMENTS
The provisional annual financial results for the year ended 31 December 2003
("the year") have been reviewed by PricewaterhouseCoopers Inc. and their
unqualified review opinion is available for inspection at GRCR"s registered
office. The provisional 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 provisional
reviewed annual financial results are consistent with those used in the annual
financial statements for the year ended 31 December 2002 ("the previous year").
The year under review
The group continued its consistent performance with real earnings growth and
strong cash flows. Each of GRCR"s casinos exceeded budget, reflecting excellent
trading driven in part by reduced inflation and interest rates. This, together
with continued strict cost discipline, further reduced net external debt at a
quicker rate than anticipated.
GRCR capitalised on the Rand"s strength during the year to enhance its offering
of imported casino equipment, concentrating on popular video gaming machines to
further entrench its competitive advantage in the gaming and leisure sector.
Gold Reef City
Gold Reef City continued to perform well with revenue up 14,5%. EBITDA of R265,9
million represented a healthy 37,3% margin on revenue.
Successful marketing initiatives and superior service levels assisted the casino
in increasing its market share in Gauteng. Its impressive 15,3% growth in gaming
revenues exceeded the province"s 11,3 % growth. The casino also substantially
reduced net external debt from R223,4 million to R80,2 million.
The Theme Park exhibited a satisfactory performance. Taking advantage of the
Rand"s strength during the year the group imported a new world-class
rollercoaster which is expected to be operational in the third quarter of 2004.
A new 500-seater conference facility at Gold Reef City Casino is currently under
construction and is expected to open in the third quarter of 2004, which will
broaden the casino"s customer profile.
The Apartheid Museum, which is independently run by a section 21 company,
enjoyed improved trading with Gold Reef City Casino continuing to contribute a
fixed monthly fee to fund operational expenses.
Golden Horse
Golden Horse Casino reflected moderate growth which was satisfactory in light of
increased competition in the area. The casino posted revenue of R122,5 million,
3,3% higher than the previous year. Cost discipline resulted in EBITDA of R43,7
million representing a 35,6% margin on revenue. Net external debt was reduced
from R85,3 million to R62,1 million.
Casino Mykonos
Another year of excellent trading at Casino Mykonos increased revenue by 21,3%
to R55,3 million. Management"s focus on cost control contributed to the casino"s
EBITDA margin on revenue of 33,5%, a commendable achievement in a casino of this
size. Term loan funding was reduced from R6,8 million to R2,7 million at 31
December 2003, which is expected to be fully repaid in the first half of 2004.
Garden Route Casino
The Garden Route Casino"s results have been proportionately consolidated
following the acquisition by GRCR on 19 September 2003 of an additional 32,5%
stake.(Further detail is set out below under `Empowerment and Transactions".)
Robust trading and a particularly strong festive season saw the casino post
revenue of R74,7 million. EBITDA of R30,2 million represented a 40,4% margin on
revenue. Net external debt at year-end was down from R50,0 to R32,8 million. No
trading comparison can be made to the previous year as the casino only opened
mid-December 2002.
Environmental approvals for the adjacent golf course development have been
obtained. Construction has begun and 80 golf lodges are expected to be completed
by year-end, which should impact positively on the casino.
Goldfields Casino
The new casino in which GRCR holds a 10% interest and the management contract,
opened in Welkom on 4 December 2003 and has traded well ahead of budget. The
casino reported revenue for 28 days of R5,8 million, with EBITDA of R2,7
million.
Based on early positive indications GRCR is confident of the growth prospects
for the casino, which is expected to contribute to profits in 2004.
CAI Gold Reef Management (Pty) Ltd ("CAIGR")
CAIGR, which holds one theme park and five casino management contracts,
continued to perform well and generated strong cash flows.
Empowerment and transactions
In November 2003 the Gauteng Gambling Board approved the purchase from Gensec by
Eglin No. 30 (Pty) Ltd of its 24,8% investment in Akani Leisure Investments
(Pty) Ltd ("ALI"). ALI is GRCR"s empowerment partner in Akani Egoli (Pty) Ltd
which owns and operates Gold Reef City Casino. This transaction has increased
GRCR"s effective economic interest in Akani Egoli by 4,19%.
As announced on 29 September 2003 GRCR acquired an additional 32,5% interest in
Pinnacle Point Casino (Pty) Ltd, which owns the Garden Route Casino ("the Garden
Route transaction"), increasing its interest to 42,5%. The total purchase
consideration was financed out of operating cash flow.
Corporate actions
As previously announced GRCR:
- through its wholly-owned subsidiary Aldiss Investments (Pty) Ltd ("Aldiss"),
effected a pro-rata share repurchase of 14 235 347 shares at a cost of R42,7
million on 31 January 2003. Aldiss subsequently purchased 192 255 shares on the
open market at a cost of R678 052. The purchases were financed out of GRCR"s
existing cash resources. The shares will continue to be held as treasury stock;
and
- successfully implemented an odd-lot offer to shareholders holding fewer than
200 ordinary shares on 4 July 2003. 13 501 ordinary shares were repurchased for
a total cash consideration of R48 469 and were cancelled, while 1 831 additional
ordinary shares were issued for a total cash consideration of R6 573.
Financial Results
Consolidated group revenue for the year increased 14,8% to R903,9 million while
profit attributable to shareholders rose 23,4% to R125,1 million. EBITDA of
R349,0 million, representing a 38,6% margin on revenue, was up 13,1% on the
previous year. The results reflect the group"s exceptional performance and tight
cost control.
Revenue EBITDA EBITDA %
Dec 2003 Dec 2002 Dec 2003 Dec 2002 Dec 2003 Dec 2002
R"000 R"000 R"000 R"000 % %
Gold Reef 712,918 622,558 265,935 233,954 37,3 37,6
City
Golden 122,534 118,604 43,662 42,714 35,6 36,0
Horse
Casino 55,336 45,607 18,550 13,797 33,5 30,3
Mykonos
Garden 74,654 5,917 30,183 2,281 40,4 38,6
Route
Casino*
Goldfields 5,832 - 2,716 - 46,6 -
Casino**
*opened 12 December 2002
**opened 4 December 2003
The group experienced a higher effective tax rate for the year due primarily to
secondary tax on companies (STC) of R3,7 million on the dividend paid to
shareholders.
Total net external debt across the group was down to R137,7 million at year-end
from R211,9 million at 31 December 2002, reflecting in a debt-to-equity ratio of
24.9%.
HEPS increased by 29,4% to 65,1 cents. Net cash generated from operations of
R286,2 million before deducting the dividend paid of R29,2 million, equated to
141,7 cents per share.
National Gambling Bill
GRCR supports the government"s endeavors to ameliorate the impact of compulsive
and problem gaming. As a member of the Casino Association of South Africa, GRCR
will make representations on the regulations promulgated pursuant to the
National Gambling Bill. The group is hopeful that the regulations will be
drafted based on international research and best practice and looks forward to
engaging with the Department of Trade and Industry to ensure a mutually
desirable outcome.
Outlook
Management will continue to explore opportunities in line with the group"s
growth strategy and will pursue only those opportunities that meet the
appropriate threshold and criteria. The group anticipates steady growth in the
year ahead, underpinned by its continued robust cash flow and reduced gearing
levels.
Dividend
Last year GRCR declared a maiden dividend of 15 cents per share, covered 3,4
times by HEPS. In view of the group"s strong performance and healthy cash flows,
the board has declared a dividend for the year of 27 cents per share covered 2,4
times by HEPS. From time to time the board will reconsider dividend cover having
regard to the group"s cash flow, gearing and capital requirements.
The dividend will be financed out of GRCR"s free cash flow after servicing the
debt of the group"s underlying operations.
The salient dates for the dividend are as follows:
Last day to trade shares "cum" dividend, Friday 26 March 2004
Shares trade "ex" dividend, Monday 29 March 2004
Record date, Friday 2 April 2004
Payment date, Monday 5 April 2004
No share certificates may be dematerialised or rematerialised between Monday 29
March 2004 and Friday 2 April 2004, both dates inclusive.
On behalf of the Board.
9 March 2004
Directors: M Krok (Chairman)*; S B Joffe (CEO); A J Aaron*; J S Friedman; R J
Khoza*; A Krok**; M Z Krok*; S Krok**; F P McFadden*; C Neuberger"; B J 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: Ultra Registrars (Pty) Ltd, 5th Floor, 11 Diagonal Street,
Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000)
Group Income Statement
Reviewed Audited
For the For the
year ended year
31 December ended 31
2003 December
2002
R"000 R"000
Revenue 14,8% 903,903 787,125
Direct costs (357,618) (292,342)
Gross profit 546,285 494,783
Other operating income 2,887 -
Other operating expenses (200,152) (186,268)
Operating profit before depreciation 13,1% 349,020 308,515
and amortisation
Depreciation and amortisation (89,790) (86,467)
Operating profit 259,230 222,048
Net finance costs (31,070) (50,879)
Profit before taxation 228,160 171,169
Taxation (81,925) (56,149)
Net profit after taxation 146,235 115,020
Outside shareholders" interests (21,166) (13,663)
Net profit attributable to
shareholders 23,4% 125,069 101,357
HEPS reconcilitation
Net profit attributable to
shareholders 125,069 101,357
Amortisation of goodwill 7,320 7,358
Profit on disposal of property, plant (958) (248)
and equipment
Amortisation of NDR to income - (1,030)
statement
Headline earnings 22,3% 131,431 107,437
Number of shares in issue (000) 217,860 213,542
Weighted average number of shares in 202,031 213,542
issue (000)
HEPS (cents) 29,4% 65,1 50,3
EPS (cents) 30,3% 61,9 47,5
Diluted earnings per share (cents) 30,4% 61,8 47,4
Net cash generated in operating 36,5% 141,7 103,8
activities per share before deducting
dividends paid (cents)
Dividend per share (cents) 80,0% 27,0 15,0
Group Balance Sheet
Reviewed At Audited
December At December
2003 2002
R"000 R"000
Assets
Non-current assets
Property, plant and equipment 865,107 866,440
Leasehold improvements 140,461 144,280
Intangible assets 84,305 81,847
Investment in associates 21,888 11,361
Financial assets 1 1
Share incentive scheme 21,715 7,872
Loans to joint ventures 23,398 -
1,156,875 1,111,801
Current assets
Inventories 3,340 3,513
Receivables and prepayments 12,785 9,472
Cash and cash equivalents 65,791 153,365
Amounts owing by related parties 812 3,027
82,728 169,377
Total assets 1,239,603 1,281,178
Equity and liabilities
Capital and reserves
Ordinary share capital 4,064 4,271
Share premium 437,915 465,454
Non-distributable reserves 1,611 1,774
Retained earnings 372,880 276,808
816,470 748,307
Outside shareholders" interest 69,715 71,576
Non-current liabilities
Interest bearing borrowings 98,338 262,608
Deferred tax liabilities 8,396 8,708
106,734 271,316
Current liabilities
Trade and other payables 59,379 43,655
Provisions 23,999 12,692
Tax liabilities 57,057 29,926
Current portion of interest bearing 105,144 102,676
borrowings
Amounts owing to related parties 1,105 1,030
246,684 189,979
Total equity and liabilities 1,239,603 1,281,178
Net asset value per share (cents) 401,7 356,7
Group Statement of Changes in Equity
Reviewed Audited For
For the the year
year ended ended 31
31 December December
2003 2002
R"000 R"000
Share capital
Ordinary share capital
At beginning of year 4,271 3,545
Ordinary shares issued 86 726
Ordinary shares acquired in odd lot offer * -
Treasury shares acquired (293) -
At end of year 4,064 4,271
Share premium
At beginning of year 465,454 357,340
Share premium raised 16,064 108,114
Ordinary shares acquired in odd lot offer (42) -
Treasury shares acquired (43,561) -
At end of year 437,915 465,454
Total share capital at end of year 441,979 469,725
Non-distributable reserves
At beginning of year 1,774 14,120
NDR released - (14,399)
NDR raised on consolidation of share - 1,663
trust
Transfer to retained income (163) -
NDR raised on acquisition of subsidiaries - 390
At end of year 1,611 1,774
Retained earnings
At beginning of year 276,808 178,398
Adjustment to outside shareholders" - (13,398)
interest due to prior losses not
recognised
Adjustment due to increased holding in - (1,760)
subsidiaries
Prior year adjustment - (1,029)
Transfer from NDR 163 13,185
Share of subsidiaries" retained income - 55
prior to becoming subsidiaries
Attributable profit for the year 125,069 101,357
Dividends paid (29,160) -
At end of year 372,880 276,808
* Amount less than R1 000
Group Cash Flow Statement
Reviewed Audited For
For the the year
year ended ended 31
31 December December
2003 2002
R"000 R"000
Cash flow from operating activities
Profit before taxation 228,160 171,169
Non-cash items and other adjustments 121,317 136,005
Cash flow from trading operations 349,477 307,174
Decrease in working capital 21,044 7,983
Cash flow from operating activities 370,521 315,157
Net interest paid (29,194) (50,879)
Dividends paid (29,160) -
Taxation paid (55,106) (42,575)
Net cash generated in operating 257,061 221,703
activities
Cash flow from investing activities
Acquisition of property, plant and (39,761) (67,400)
equipment
Proceeds from disposal of property, plant 3,103 2,479
and equipment
Investment in joint ventures (net of cash (24,219) (300,222)
acquired)
Investment in subsidiaries (5,603) -
Investment in associates * *
Loans to joint ventures (26,051) -
Loans to associates (20,667) (11,361)
Investment in intangibles (59) (381)
Net advances from subsidiaries and 2,290 509
related parties
Net cash utilised in investing activities (110,967) (376,376)
Cash flow from financing activities
Ordinary shares issued - 40
Share premium raised - 5,960
Treasury shares acquired (43,854) -
Ordinary shares acquired in odd lot offer (42) -
Decrease/(increase) in share incentive 2,308 (466)
scheme loan
(Decrease)/increase in outside (15,768) 3,805
shareholders" loans
(Decrease)/increase in interest bearing (176,312) 267,480
borrowings
Net cash (utilised)/generated in (233,668) 276,819
financing activities
Net (decrease)/increase in cash and cash (87,574) 122,146
equivalents
Cash and cash equivalents at beginning of 153,365 31,219
year
Cash and cash equivalents at end of year 65,791 153,365
* Amount less than R1 000
