| Wed 25 Aug 2004, 13:51 | | Interim Financial Results For The Six |
|
Gold Reef Casino Resorts - Unaudited Interim Financial Results For The Six
Months Ended 30 June 2004
GOLD REEF CASINO RESORTS
Gold Reef Casino Resorts Limited
(Registration number 1989/002108/06)
Share Code: GDF
ISIN Code: ZAE000028338
HIGHLIGHTS
- Attributable profit up 57,9%
- HEPS up 37,8%
- EBITDA: Revenue 40,8%
- Net external group debt down 54,4%
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004
COMMENTS
The unaudited interim financial results for the six months ended 30 June 2004
(`the interim period`) have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. The accounting policies
used in the preparation of these unaudited interim financial results are
consistent with those used in the audited annual financial statements for the
year ended 31 December 2003 (`the previous year`). The calculations of earnings
and headline earnings per share for June 2003 have been restated to include the
deduction of the secondary tax on companies (STC) paid by GRCR, making it
comparable with the interim period and the audited annual financial statements
for the previous year.
The Interim Period
GRCR continued its positive growth trend to deliver another strong
performance. Lower interest rates boosted disposable income and together with
management`s ongoing cost discipline reduced the group`s net external debt by
more than half.
Gold Reef City again performed well with revenue of R371,3 million up 14,7%
while net external debt reduced by a significant 67,3% to R45,3 million. In line
with expectations the casino`s new 500-seater conference centre is scheduled for
completion this month. This is anticipated to broaden the patron profile and to
contribute to revenue in the second half of the year. Expansion of the Theme
Park`s entertainment and retail facilities continued on schedule. The recently
imported rollercoaster was installed during the interim period and is expected
to be operational shortly.
Golden Horse posted an 11,5% increase in revenue to R65,4 million and reduced
net external debt by 40,8% to R46,8 million. EBITDA reflects management`s cost
discipline, rising 11,9% to R22,1 million from R19,7 million for the previous
comparative period.
Casino Mykonos continued to capitalise on robust trade to post a further 18,1%
rise in revenue, off a base of 26,7% growth in the previous comparative period.
The casino also completely eliminated its net external debt. This cash positive
position will enable Casino Mykonos to shortly begin the repayment of
shareholder loans.
The group`s stellar performance came from the Garden Route Casino, with revenue
of R46,7 million and EBITDA of R20,4 million up by an impressive 38,2% and 52,1%
respectively. To accommodate the casino`s heavy patronage the number of both
slot machines and tables will soon be increased and the Salon Prive doubled in
size. In addition the casino will introduce a sports bar and expand its
restaurant facilities.
The new Goldfields Casino, opened in Welkom in December 2003, performed
exceptionally well with revenue of R38,7 million for the first six months of
trading exceeding expectations. The casino has no external debt and has already
begun to repay shareholders` loans, with GRCR`s loan to the casino reduced from
R21,9 million to R8,6 million. In addition to a 10% stake in the casino GRCR
holds the management contract. The management fee based on revenue and operating
profit is increasing steadily.
The National Gambling Bill
As a member of the Casino Association of South Africa(CASA)GRCR made
representations in respect of the regulations under the National Gambling Bill.
The amended regulations are soon to be promulgated. GRCR is confident that the
group`s membership of CASA will facilitate a continued relationship with the
legislature to ensure ongoing satisfactory discussions.
Financial Results
For the interim period consolidated group revenue increased by 14,9% to R493,2
million. A 71,2% reduction in finance costs contributed to the 57,9% rise in
profit attributable to shareholders of R86,8 million. The casinos` performances
and tight cost control resulted in group EBITDA of R201,1 million, up 32,8% from
the previous comparative period and representing a 40,8% margin on revenue.
Revenue EBITDA EBITDA %
June June June June June June
2004 2003 2004 2003 2004 2003
R`000 R`000 R`000 R`000 % %
Gold Reef City 371,326 323,839 135,675 114,532 36,5 35,4
Golden Horse 65,425 58,671 22,086 19,734 33,8 33,6
Casino Mykonos 32,424 27,440 11,795 9,797 36,4 35,7
Garden Route 46,709 33,789 20,399 13,412 43,7 39,7
Casino
Goldfields 38,712 - 16,852 - 43,5 -
Casino*
*opened 4 December 2003
Net cash generated in operating activities of R104,4 million after tax payments
of R79,5 million but before the payment of the dividend and STC, equated to 51,4
cents per share. This was up by 20,9% over the restated 42,5 cents for the
previous comparative period. Total net external debt was slashed by 54,4% to
R99,1 million reflecting in a debt-to-equity ratio of 11,7%, compared with 24,9%
at year-end.
Headline earnings per share(HEPS) of 40,1 cents was up by 37,8% over the
restated 29,1 cents for the previous comparative period.
Outlook
The directors are confident that continued lower interest rates and the
traditionally buoyant holiday season bode well for the group in the second half
of the year. The directors accordingly anticipate continued real growth in
earnings.
The current dividend policy of the group is to pay one dividend annually at the
end of the financial year.
On behalf of the Board.
25 August 2004
Directors: M Krok (Chairman)*; SB Joffe (CEO); JS Friedman (FD); C Neuberger
(C00)`; AJ Aaron*; RJ Khoza*; A Krok**; MZ Krok*; S Krok**;
FP McFadden*#; BJ Schutte*; R Vierziger**` (*Non-executive director **Alternate
director `Austrian Citizen Irish Citizen)
Registered office: Gold Reef City, Gate 4, Northern Parkway, Ormonde, 2159
Transfer secretaries: Ultra Registrars (Pty) Ltd, 5th Floor, 11 Diagonal Street,
Johannesburg, 2001 (PO Box 4844, Johannesburg 2000).
Group Income Statement
For the 6 For the 6 Audited
months months for the 12
ended 30 ended 30 months
June 2004 June 2003 ended 31
December
2003
% R`000 R`000 R`000
Revenue 14,9% 493,213 429,230 903,903
Direct costs (191,817) (164,257) (357,618)
Gross profit 301,396 264,973 546,285
Other operating income 11,916 1,480 2,887
Other operating expenses (112,204) (114,977) (200,152)
Operating profit before 32,8% 201,108 151,476 349,020
depreciation and amortisation
Depreciation and amortisation (42,930) (40,935) (89,790)
Operating profit 158,178 110,541 259,230
Net finance costs (5,530) (19,213) (31,070)
Profit before taxation 152,648 91,328 228,160
Taxation (52,968) (30,409) (81,925)
Net profit after taxation 99,680 60,919 146,235
Associate earnings 537 - -
Outside shareholders` interests (13,453) (5,981) (21,166)
Net profit attributable to
shareholders 57,9% 86,764 54,938 125,069
HEPS reconciliation
Net profit attributable to
shareholders 86,764 54,938 125,069
Amortisation of goodwill 2,859 3,679 7,320
Profit on disposal of property,
plant and equipment (315) - (958)
Profit on sale of shares (7,800) - -
Headline earnings 39,1% 81,508 58,617 131,431
Number of shares in issue (000) 217,860 213,542 217,860
Weighted average number of shares
in issue (000) 203,258 201,629 202,031
HEPS (cents)
EPS (cents) 37,8% 40,1 29,1 65,1
Diluted EPS (cents) 57,0% 42,7 27,2 61,9
Net cash generated in operating 56,6% 42,6 27,2 61,8
activities per share before 20,9% 51,4 42,5 143,5
deducting dividend and STC (cents)
Dividend per share (cents)
- - 27,0
Group Balance Sheet
At 30 June At 30 June Audited at
2004 2003 31
December
2003
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and equipment 851,395 838,235 865,107
Leasehold improvements 138,367 142,312 140,461
Intangible assets 81,688 77,058 84,305
Deferred tax assets 2,810 1,810 2,660
Investment in associates 9,125 11,224 21,888
Loans to joint ventures 18,564 - 23,398
Financial assets 1 1 1
Share incentive scheme 21,177 7,872 21,715
1,123,127 1,078,512 1,159,535
Current assets
Inventories 3,244 3,447 3,340
Receivables and prepayments 23,084 24,064 12,785
Cash and cash equivalents 12,669 37,114 65,791
Amounts owing by related parties 1,739 8,842 812
40,736 73,467 82,728
Total assets 1,163,863 1,151,979 1,242,263
Equity and liabilities
Capital and reserves
Ordinary share capital 4,064 3,983 4,064
Share premium 437,915 422,548 437,915
Non-distributable reserves 1,605 1,774 1,611
Retained earnings 406,715 315,984 372,880
850,299 744,289 816,470
Outside shareholders` interest 83,168 61,852 69,715
Non-current liabilities
Interest bearing borrowings 50,141 146,115 98,338
Deferred tax liabilities 11,056 10,519 11,056
61,197 156,634 109,394
Current liabilities
Trade and other payables 58,160 38,301 59,379
Provisions 24,175 27,346 23,999
Bank overdraft - 5,595 -
Tax liabilities 24,012 15,246 57,057
Current portion of interest bearing 61,646 102,615 105,144
borrowings
Amounts owing to related parties 1,206 101 1,105
169,199 189,204 246,684
Total equity and liabilities 1,163,863 1,151,979 1,242,263
Net asset value per share (cents) 418,3 373,7 401,7
Group Statement of Changes in Equity
For the 6 For the 6 Audited
months months for the 12
ended 30 ended 30 months
June 2004 June 2003 ended 31
December
2003
R`000 R`000 R`000
Share capital
Ordinary share capital
At beginning of period 4,064 4,271 4,271
Ordinary shares issued - - 86
Ordinary shares acquired - - *
Treasury shares acquired - (288) (293)
At end of period 4,064 3,983 4,064
Share premium
At beginning of period 437,915 465,454 465,454
Share premium raised - - 16,064
Ordinary shares acquired - - (42)
Treasury shares acquired - (42,906) (43,561)
At end of period 437,915 422,548 437,915
Total share capital at end of period 441,979 426,531 441,979
Non-distributable reserves
At beginning of period 1,611 1,774 1,774
Transfer to retained earnings (6) - (163)
At end of period 1,605 1,774 1,611
Retained earnings
At beginning of period 372,880 290,206 276,808
Transfer from NDR 6 - 163
Attributable profit for the period 86,764 54,938 125,069
Dividend declared (52,935) (29,160) (29,160)
At end of period 406,715 315,984 372,880
* Amount less than R1 000
Group Cash Flow Statement
For the 6 For the 6 Audited
months months for the 12
ended 30 ended 30 months
June 2004 June 2003 ended 31
December
2003
R`000 R`000 R`000
Cash flow from operating activities
Profit before taxation 152,648 91,328 228,160
Non-cash items and other adjustments 48,145 60,158 121,317
Cash flow from trading operations 200,793 151,486 349,477
(Increase)/decrease in working capital (11,246) (5,241) 21,044
Cash flow from operating activities 189,547 146,245 370,521
Net interest paid (5,530) (19,213) (29,194)
Dividend paid (52,935) (29,160) (29,160)
Taxation paid (86,163) (42,088) (55,106)
Net cash generated in operating 44,919 52,784 257,061
activities
Cash flow from investing activities
Acquisition of property, plant and (25,907) (5,972) (39,761)
equipment
Proceeds from disposal of property, plant 2,648 - 3,103
and equipment
Investment in joint ventures (net of cash - - (24,219)
acquired)
Investment in subsidiaries - - (5,603)
Investment in associates - - *
Investments in intangibles (933) - (59)
Decrease/(increase) in loans to joint 4,834 - (26,051)
ventures
Decrease/(increase) in loans to 13,300 - (20,667)
associates
Net advances (to)/from subsidiaries and (826) (6,604) 2,290
related parties
Net cash utilised in investing activities (6,884) (12,576) (110,967)
Cash flow from financing activities
Treasury shares acquired - (43,194) (43,854)
Ordinary shares acquired in odd lot offer - - (42)
Decrease in share incentive scheme loan
Decrease in outside shareholders` loans 538 - 2,308
Decrease in interest bearing borrowings
- (2,307) (15,768)
(91,695) (116,553) (176,312)
Net cash utilised in financing activities (91,157) (162,054) (233,668)
Net decrease in cash and cash equivalents (53,122) (121,846) (87,574)
Cash and cash equivalents at beginning of
period 65,791 153,365 153,365
Cash and cash equivalents at end of 12,669 31,519 65,791
period
* Amount less than R1 000
