| Wed 15 Mar 2006, 13:52 | | Gold Reef - Reviewed Financial Results: 12 Months |
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GDF
GDF
Gold Reef - Reviewed Financial Results: 12 Months Ended 31 December 2005
GOLD REEF CASINO RESORTS
Gold Reef Casino Resorts Limited
(Registration number 1989/002108/06)
Share Code: GDF
ISIN Code: ZAE000028338
("GRCR" or "the company")
REVIEWED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 31 DECEMBER 2005 ("THE YEAR")
HIGHLIGHTS
EPS up 19,3% to 112,4 cents
HEPS up 12,1% to 102,1 cents
GRCR increases stake in Garden Route Casino to 85%
COMMENTS
The directors are pleased to present GRCR"s results for the year. Golden Horse,
Casino Mykonos, Garden Route Casino and Goldfields Casino continued to trade
well and achieved improved EBITDA margins. However, Gold Reef City"s performance
was impacted by poor trading at the Theme Park as a result of unjustified
negative publicity generated by M-Net"s programme Carte Blanche.
FINANCIAL RESULTS
While gaming revenue increased by 12,0%, group revenue for the year increased
10,3% to R1,2 billion. Profit attributable to shareholders grew 20,0% to R230,7
million. EBITDA of R488,1 million was up 10,4% and represented a 41,9% margin on
revenue.
Headline earnings per share (HEPS) increased by 12,1% to 102,1 cents from the
restated comparative of 91,1 cents.
Comparatives for the 2004 financial year have been restated in compliance with
the International Financial Reporting Standards (see "Transition to
International Financial Reporting Standards").
Revenue Revenue EBITDA EBITDA
2005 2004 2005 2004
R"000 R"000 % R"000 R"000 %
Gold Reef City 850,258 796,046 6,8 304,202 302,015 0,7
Golden Horse 167,549 142,350 17,7 73,321 57,531 27,4
Casino Mykonos 83,392 69,743 19,6 34,200 27,207 25,7
Garden Route 123,351 98,447 25,3 60,459 44,413 36,1
Casino
Goldfields Casino 86,241 80,550 7,1 39,460 35,895 9,9
Gold Reef 51,268 48,205 - 20,056 23,566 -
Management
GRCR - - - 28,487 12,160 -
Consolidation (196,637) (178,658) - (72,094) (60,594) -
1,165,422 1,056,683 10,3 488,091 442,193 10,4
EBITDA % EBITDA % CAPEX CAPEX
2005 2004 2005 2004
% % R"000 R"000
Gold Reef City 35,8 37,9 89,575 71,322
Golden Horse 43,8 40,4 6,975 6,625
Casino Mykonos 41,0 39,0 8,697 4,955
Garden Route 49,0 45,1 5,687 15,782
Casino
Goldfields Casino 45,8 44,6 1,686 1,909
Gold Reef - - 71 32
Management
GRCR - - - -
Consolidation - - (4,856) (10,778)
41,9 41,8 107,835 89,847
OPERATIONS
Gold Reef City - Gold Reef City Casino"s satisfactory performance resulted in an
8,4% increase in revenue to R804,0 million. However, Gold Reef City achieved
combined revenue growth of only 6,8% due to the Theme Park"s 14,4% decrease in
revenue to R46,3 million.
Gold Reef City Casino maintained an EBITDA margin on revenue of 37,8% to achieve
EBITDA of R304,2 million. The static performance was due mainly to the
underperformance of tables as a result of a lower hold percentage, as well as
renovations and construction which disrupted trade. In order to boost
performance the management team was bolstered during the year.
Since year-end the remodelled Globe Theatre and 1 400-bay covered parking
facility have been completed. Steady footfall at the casino in 2006,
notwithstanding inclement weather, reflects the benefit of the covered parking
facility. A five-year capital expenditure plan has been devised to drive future
growth. This involves an extensive upgrade and redesign of the casino floor and
surrounding amenities.
The number of visitors to the Theme Park declined by 21,1%. Legal and marketing
expenses increased over the course of the year to address the situation brought
about by the Carte Blanche programme. The Theme Park continues to invest
significant sums in maintaining the safety of its rides. In addition, the safety
of the rides continues to be regularly assessed by external structural engineers
and regulated by the Department of Labour, whose reports continue to affirm the
safety of the rides.
The Theme Park has further begun to implement a comprehensive plan to improve
its offering including increased capacity on major rides, a 4D cinema and new
restaurants. GRCR is confident that this plan should restore the Theme Park to
former levels of performance over the medium term. Post year-end GRCR issued
summons against M-Net and Carte Blanche for damages resulting directly from the
unjustified negative publicity.
The Apartheid Museum maintained its good performance through the successful roll
out of its school education programme and an escalating profile supported by
strict cost control.
Golden Horse - The casino"s strong performance was reflected in a 17,7% increase
in revenue to R167,6 million. EBITDA of R73,3 million was up 27,4% from R57,5
million, with an improved EBITDA: Revenue ratio of 43,8%. The casino is cash
positive having completely repaid external debt during the year.
Pietermaritzburg"s growth following its designation as the new capital city of
KwaZulu-Natal indirectly contributed to the casino"s robust trade and a high
occupancy rate in the hotel.
In order to capitalise on the casino"s steady growth, significant investment
will be made in new development projects including restaurants and a large multi
purpose function facility.
Casino Mykonos - Maintaining its track record of 20% growth year-on-year since
inception, the casino reported revenue of R83,4 million. Higher EBITDA of R34,2
million represented an increased 41,0% margin on revenue.
Macro-economic growth and increasing residential development along the coast in
the Western Cape continued to benefit the casino with positive trading
conditions and sustainable growth.
Garden Route Casino - The casino remained the group"s stellar performer with
revenue spiralling by 25,3% to R123,4 million from R98,4 million. A 36,1%
increase in EBITDA to R60,5 million reflected in a higher EBITDA:Revenue ratio
of 49,0%.
The lodges on the adjacent golf course have been opened and construction has
commenced on the 500-residence development. The internationally acclaimed golf
course is expected to be completed by the end of the year. In order to
accommodate the anticipated increase in patrons, new upmarket facilities will be
added to the casino.
Goldfields Casino - Notwithstanding a tough trading environment the relatively
young casino recorded revenue of R86,2 million. EBITDA of R39,5 million
represented a 45,8% margin on revenue. The casino also retained its debt-free
position to remain cash positive. Closure of mines in the area continued to
impact on the casino"s growth.
In line with the award by the Free State Gambling & Racing Board of a permanent
casino licence, an upgrade of the existing site is planned. Post year-end
Goldfields Casino has acquired the premises from which the casino operates for a
total consideration of R45 million.
CORPORATE ACTIONS
As previously reported:
- on 1 July 2005 GRCR sold its 9,9% investment in the issued share capital of
Johnnic Holdings Limited to Hosken Consolidated Investments Limited at a
profit of R20,4 million, which has been used to fund the group"s growth
strategy;
- following notification by SAB Miller plc that it is not a seller of its 49%
interest in Tsogo Sun Holdings (Pty) Limited, discussions between the
parties in this respect ceased during the year; and
- GRCR acquired from Casinos Austria International Holding GmbH its
entitlement to a royalty of 0,375% of the gross gaming revenues of GRCR"s
casinos, for R42,4 million. This transaction was effective 31 December
2005 and GRCR expects that it will be earnings enhancing in the medium
term.
FUTURE DEVELOPMENT
As previously announced Silverstar Development Limited ("Silverstar") was
awarded the sixth and final casino licence for Gauteng. During the year
Silverstar received environmental and town planning approval for the casino. The
Gauteng Gambling Board is considering change requests submitted by Silverstar,
motivated by changes in regulations and developments since submission of the
original license application nine years ago. A date for a hearing of the change
requests will be set in due course.
GRCR and Akani Leisure Investments (Pty) Limited ("ALI"), GRCR"s BEE partner in
Gold Reef City, have not yet exercised the option to purchase the entire issued
share capital of Silverstar and to secure the new casino"s management contract.
Silverstar will present GRCR with the opportunity to reduce the group"s
dependence on Gold Reef City.
POST BALANCE SHEET EVENTS
As announced on 13 February 2006 GRCR has concluded a number of corporate
actions ("the transactions") in line with its objective to consolidate its
gaming platform by increasing exposure to its existing operations. In addition
certain of the transactions facilitate the increase by GRCR"s BEE partners of
their beneficial shareholdings. This is in accordance with GRCR"s strategy to
increase BEE beneficial shareholding in all operations to at least 25,1% over
the medium term.
Specifically:
ALI transaction - ALI has elected to redeem the participating preference shares
issued to, inter alia, GRCR. In order to fund this redemption GRCR will acquire
a 49,97% direct interest in the ordinary share capital of ALI for R445,5
million, thereby reducing its economic interest in Akani Egoli (Pty) Limited
("Akani Egoli") - which operates Gold Reef City - from 83,94% but entrenching a
74,99% beneficial shareholding and securing a 25,01% BEE beneficial shareholding
in Akani Egoli. The ALI transaction remains subject to the approval of the
Gauteng Gambling Board.
Garden Route transaction - GRCR has increased its beneficial shareholding in
Garden Route Casino (Pty) Limited ("Garden Route") from 42,5% to 85,0% for a
consideration of R156 million. As BEE shareholder Widgetrade 205 (Pty) Limited
("Widgetrade") was unable to participate in the transaction in the ratio of its
pro rata shareholding in Garden Route by 28 February 2006, the Western Cape
Gambling and Racing Board has approved the transaction subject to black economic
empowerment investors being entitled to an option to increase their shareholding
in Garden Route to 25,1% in the future at fair value.
Goldfields transaction - GRCR had intended to increase its beneficial
shareholding in Goldfields Casino and Entertainment Centre (Pty) Limited
("Goldfields Casino") from 14,67% to 74,9%. This included the refinancing of
Akani Leisure Goldfields Investments (Pty) Limited ("ALGI") as a condition
precedent to the transaction. The Free State Gambling and Racing Board has
approved the transaction subject to the deletion of this condition precedent.
As a result the terms of the Goldfields transaction will be revised, with GRCR"s
direct shareholding in Goldfields Casino likely to increase to 60%. It is
anticipated that the transaction will be concluded on the revised terms and
conditions.
The Mykonos transaction - GRCR has increased its beneficial shareholding in West
Coast Leisure (Pty) Limited, which operates Casino Mykonos, from 54,3% to 60,3%.
The aggregate consideration amounted to R7,8 million and the transaction has
become unconditional.
Shareholders are referred to the announcement dated 13 February 2006 for
detailed information on the transactions.
PROSPECTS
The transactions reinforce GRCR"s confidence in the growth potential of its
existing operations and are expected to create long term financial benefits for
shareholders. In addition, enhanced BEE participation at certain of the group"s
operations following the transactions reflect GRCR"s commitment to
transformation and position the respective casinos for future growth.
The group will leverage its balance sheet and cash position to fund the
transactions as well as the Silverstar opportunity. The long term financial
benefit of both the transactions and the Silverstar opportunity together with
degearing over the medium to long term should contribute to future earnings
growth.
Accordingly the directors anticipate growth over the medium term, with the
transactions and initiatives including Silverstar expected to generate
substantially stronger growth over the long term.
DIVIDEND
The board has declared a dividend for the year of 51,0 cents per share covered
twice by 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 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 Wednesday, 12 April 2006
Shares trade ex dividend Thursday, 13 April 2006
Record date Friday, 21 April 2006
Payment date Monday, 24 April 2006
No share certificates may be dematerialised or rematerialised between Thursday
13 April 2006 and Friday 21 April 2006, both dates inclusive.
Steven Joffe
CEO
Jarrod Friedman
Financial Director
On behalf of the board.
15 March 2006
Directors: M Krok (Chairman)*; SB Joffe (CEO); JS Friedman (FD); C Neuberger
(COO)#; AJ Aaron*; RJ Khoza*; A Krok**; MZ Krok*; S Krok**; J Leutgeb*#; BJ
Schutte*; R Vierziger**#
*Non-executive director **Alternate director #Austrian 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)
Company secretary: JS Friedman CA (SA)
www.grcresorts.co.za
Group Income Statement
Reviewed Restated
for the for the
year year
ended 31 ended 31
December December
2005 2004
% R"000 R"000
Revenue 10,3 1,165,422 1,056,683
Net gaming win 12,0 1,046,409 934,502
Theme Park (14,2) 46,700 54,424
Food and beverage 1,8 26,944 26,465
Other 9,9 45,369 41,292
Other income 27,806 11,170
1,193,228 1,067,853
Gaming levies and VAT (207,610) (186,346)
Employee costs (253,402) (219,678)
Promotional and marketing costs (107,484) (84,480)
Depreciation and amortisation (90,278) (86,122)
Other operating expenses (147,144) (144,042)
Operating profit 11,6 387,310 347,185
Finance income 19,179 7,957
Finance costs (19,295) (13,222)
Profit before equity accounted
earnings 387,194 341,920
Share of profits of associate 2,613 1,414
Profit before taxation 13,5 389,807 343,334
Taxation expense (121,968) (122,302)
Profit for the year 21,2 267,839 221,032
Attributable to:
Equity holders of GRCR 20,0 230,732 192,208
Minority interest 37,107 28,824
267,839 221,032
Number of shares in issue (000) 220,603 220,003
Weighted average number of shares in 205,260 203,938
issue (000)
EPS (cents) 19,3 112,4 94,2
Diluted EPS (cents) 19,5 112,3 94,0
Dividend per share (cents) 6,3 51,0 48,0
Headline earnings reconciliation
Reviewed Restated
for the for the
year year
ended 31 ended 31
December December
2005 2004
% R"000 R"000
Attributable profit for the year 20,0 230,732 192,208
Profit on sale of financial
instruments (21,726) (6,919)
Loss on sale of property, plant and
equipment 488 590
Headline earnings 12,7 209,494 185,879
HEPS (cents) 12,1 102,1 91,1
EBITDA reconciliation
Reviewed Restated
for the for the
year year
ended 31 ended 31
December December
2005 2004
% R"000 R"000
Operating profit 11,6 387,310 347,185
Property and equipment rental 10,503 8,886
Depreciation and amortisation 90,278 86,122
EBITDA 10,4 488,091 442,193
EBITDA margin 0,2 41,9% 41,8%
Group Balance Sheet
Reviewed Restated
at 31 at 31
December December
2005 2004
R"000 R"000
Assets
Non-current assets
Property, plant and equipment 857,039 845,540
Leasehold improvements 98,540 101,626
Intangible assets 135,092 93,458
Deferred tax assets 6,046 9,624
Investment in joint ventures 18,591 18,733
Investment in associate 5,315 7,378
Financial assets 1 1
Share incentive scheme 32,839 37,613
1,153,463 1,113,973
Current assets
Inventories 2,739 2,986
Receivables and prepayments 15,007 17,666
Cash and cash equivalents 126,547 104,742
Amounts owing by related parties 98,401 27,840
242,694 152,234
Total assets 1,396,157 1,267,207
Equity and liabilities
Capital and reserves
Ordinary share capital 4,414 4,402
Share premium 498,975 497,583
Treasury shares (75,037) (43,854)
428,352 458,131
Share-based payment reserve 16,222 6,480
Other reserves 2,774 2,741
Retained earnings 595,373 463,589
1,042,721 930,941
Minority interest 96,429 74,454
Total equity 1,139,150 1,005,395
Non-current liabilities
Interest-bearing borrowings 10,682 26,698
Deferred tax liabilities 42,394 50,019
53,076 76,717
Current liabilities
Trade and other payables 66,033 72,811
Provisions 13,809 15,941
Bank overdraft 17,185 138
Tax liabilities 55,443 62,736
Current portion of interest-bearing borrowings
Amounts owing to related parties 50,000 30,000
1,461 3,469
203,391 185,095
Total equity and liabilities 1,396,157 1,267,207
Group Statement of Changes in Equity
Reviewed Restated
for the for the
year year
ended 31 ended 31
December December
2005 2004
R"000 R"000
Ordinary share capital
At beginning of year 4,402 4,357
Ordinary shares issued 12 45
At end of year 4,414 4,402
Share premium
At beginning of year 497,583 481,476
Share premium raised 1,392 16,107
At end of year 498,975 497,583
Treasury shares
At beginning of year (43,854) (43,854)
Treasury shares acquired (31,183) -
At end of year (75,037) (43,854)
Total share capital 428,352 458,131
Share-based payment reserve
At beginning of year 6,480 982
Recognition of share-based payments 9,742 5,498
At end of year 16,222 6,480
Other reserves
At beginning of year 2,741 1,611
Transfer to retained earnings (16) (12)
Profit on sale of shares by share trust 49 1,142
At end of year 2,774 2,741
Retained earnings
At beginning of year 463,589 324,304
Transfer from other reserves 16 12
Attributable profit for the year 230,732 192,208
Dividend declared (98,964) (52,935)
At end of year 595,373 463,589
Total equity holders" interest 1,042,721 930,941
Minority interest
At beginning of year 74,454 59,331
Movement in loans from outside shareholders (15,132) (13,701)
Attributable profit for the year 37,107 28,824
At end of year 96,429 74,454
Total equity 1,139,150 1,005,395
Group Cash Flow Statement
Reviewed Restated
for the for the
year year
ended 31 ended 31
December December
2005 2004
R"000 R"000
Cash flow from operating activities
Profit before taxation 389,807 343,334
Non-cash items and other adjustments 69,775 87,772
Cash flow from trading operations 459,582 431,106
(Increase)/decrease in working capital (6,004) 9,334
Cash flow from operating activities 453,578 440,440
Net interest received/(paid) 2,287 (4,701)
Taxation paid (133,308) (92,300)
Dividend paid (98,964) (52,935)
Net cash generated in operating activities
223,593 290,504
Cash flow from investing activities
Additions to property, plant and equipment (107,708) (88,550)
Additions to leasehold improvements (127) (1,297)
Proceeds from disposal of property, plant and
equipment 9,433 2,952
Proceeds from disposal of management contract 5,000 -
Proceeds from disposal of financial
instruments 20,411 -
Investment in intangibles (42,771) (2,114)
Loans repaid by joint ventures 548 4,926
Loans repaid by associate 5,052 16,145
Net advances to subsidiaries and related
parties (72,569) (24,664)
Net cash utilised in investing activities (182,731) (92,602)
Cash flow from financing activities
Ordinary shares issued 12 -
Share premium raised 1,392 -
Net treasury shares acquired by share scheme (31,134) -
Decrease in share incentive scheme loan 4,774 1,396
Decrease in outside shareholders" loans (15,132) (13,701)
Increase/(decrease) in interest-bearing
borrowings 3,984 (146,784)
Net cash utilised in financing activities (36,104) (159,089)
Net increase in cash and cash equivalents 4,758 38,813
Cash and cash equivalents at beginning of year
104,604 65,791
Cash and cash equivalents at end of year 109,362 104,604
TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
INTRODUCTION
These consolidated financial statements are the first financial statements of
GRCR that have been prepared in accordance with International Financial
Reporting Standards (IFRS). The financial statements have been reviewed by the
company"s auditors, PricewaterhouseCoopers Inc.. Their review opinion is
available for inspection at the company"s registered office.
South African Generally Accepted Accounting Practice (GAAP) differs in certain
respects from IFRS. When preparing GRCR"s 2005 consolidated financial
statements, management has amended certain accounting, valuation and
consolidation methods applied in the GAAP financial statements to comply with
IFRS. The comparative figures in respect of 2004 were restated to reflect these
adjustments. Reconciliations and descriptions of the effect of the transition
from SA GAAP to IFRS on GRCR"s equity and its net income are shown in this
announcement.
BASIS OF PREPARATION
GRCR has applied IFRS 1: First Time Adoption of International Financial
Reporting Standards in preparing these financial statements.
GRCR"s transition date is 1 January 2004 ("the transition date"). GRCR"s opening
IFRS balance sheet at that date has been restated to reflect all existing IFRS
statements applicable at 31 December 2005. At the transition date IFRS 1 allows
a number of exemptions from and exceptions to this retrospective application
principle on adoption of IFRS.
OPTIONAL EXEMPTIONS FROM AND MANDATORY EXCEPTIONS TO THE RETROSPECTIVE
APPLICATION OF OTHER IFRSs IN ACCORDANCE WITH IFRS 1
GRCR has elected to apply the following optional exemptions from full
retrospective application of IFRS:
* Business combinations exemption
GRCR has applied the business combinations exemption in IFRS 1. It has
therefore not restated business combinations that took place prior to
the transition date.
* Fair value or revaluation as deemed cost
GRCR has elected to measure selected items of casino equipment and Theme
Park rides included in property, plant and equipment at their fair value
and use that fair value at the transition date as their deemed cost.
* Share-based payment transaction exemption
GRCR has elected to apply the share-based payment exemption. IFRS 2: Share-
based Payment requires that equity instruments granted under equity-settled
awards are measured at the fair value of the equity instruments granted. By
applying the exemption, share-based payments that were granted before 7
November 2002, or granted after 7 November 2002 but vested before 1 January
2005, are not subject to IFRS 2.
* Changes in existing decommissioning, restoration and similar liabilities
included in the cost of property, plant and equipment GRCR has elected to
apply this exemption relating to a liability for restoration of a building
in an associate. IFRS 1 allows the entity to measure this liability at the
transition date to IFRS in accordance with IAS 37: Provisions, contingent
liabilities and contingent assets and to add the liability to the cost of
the asset to which it relates. As the associate is equity accounted in the
financial statements, the change has an effect on the income from associate
and investment in associate line items.
The remainder of the optional exemptions were considered and were not applicable
namely:
* Employee benefits exemption;
* Cumulative translation differences exemption;
* Compound financial instruments exemption;
* Assets and liabilities of subsidiaries, associates and joint ventures
exemption;
* Exemption from restatement of comparatives for IAS 32 and IAS 39;
* Designation of financial assets and financial liabilities exemption;
* Insurance contracts exemption;
* Leases exemption; and
* Fair value measurement of financial assets or liabilities at initial
recognition.
GRCR has applied the following mandatory exceptions from retrospective
application:
* Derecognition of financial assets and liabilities exception
Financial assets and liabilities derecognised before 1 January 2004 are not
re-recognised under IFRS. The application of the exemption from restating
comparatives for IAS 32 and IAS 39 means that GRCR recognised from 1
January 2005 any financial assets and financial liabilities derecognised
since 1 January 2004 that do not meet the IAS 39 derecognition criteria.
GRCR did not choose to apply the IAS 39 derecognition criteria to an
earlier date. There were no such assets and hence an adjustment was not
required.
* Hedge accounting exception
GRCR has claimed hedge accounting from 1 January 2005 only if the hedge
relationship meets all the hedge accounting criteria under IAS 39. GRCR
does not apply hedge accounting. No adjustment was required.
* Estimates exception
Estimates under IFRS at 1 January 2004 should be consistent with estimates
made for the same date under previous SA GAAP, unless there is evidence
that those estimates were in error. No adjustment was required.
* Assets held-for-sale and discontinued operations exception
GRCR applies IFRS 5 prospectively from 1 January 2005. Any assets held-for-
sale or discontinued operations are recognised in accordance with IFRS 5
only from 1 January 2005. GRCR did not have any assets that met the held-
for-sale criteria during the period presented. No adjustment was required.
Prior accounting policies not in accordance with international application
GRCR has identified prior accounting policies that were not in accordance with
international interpretations and applications. Retained income has been
adjusted for prior period errors in applying accounting policies relating to:
* Operating leases as per IAS 17: Leases; and
* Deferred income tax liabilities as per IAS 12: Income Taxes.
CHANGES IN ACCOUNTING POLICIES
The adoption of the new and revised standards and interpretations has resulted
in changes to GRCR"s accounting policies in the following areas that have
affected the amounts reported for the current and prior years:
In accordance with the provisions of IFRS 3:
* GRCR ceased amortisation of goodwill from 1 January 2004;
* accumulated amortisation as at 31 December 2003 has been eliminated with a
corresponding decrease in the cost of goodwill;
* all negative goodwill that was present on the transition date was fully
recognised in retained earnings; and
* from the year ended 31 December 2003 onwards goodwill is tested annually
for impairment, as well as when there are indications of impairment.
GRCR has reassessed the useful lives of its intangible assets in accordance with
the provisions in IAS 38: Intangible assets and accounts for any resulting
changes in accordance with IAS 8: Accounting policies, change in accounting
estimates and errors.
Share options granted to employees of GRCR are subject to service vesting
conditions and their fair value is recognised as per IFRS 2. The fair value of
the employee services received by the company and/or its subsidiaries in
exchange for the grant of the options is recognised as an expense. The fair
value of the employee services received by the company"s associate in exchange
for the grant of the options is recognised as an increase in the investment in
associate. The fair value of the employee services received by the company"s
joint ventures in exchange for the grant of the options is recognised as an
expense to the extent that the venture is consolidated - any remaining portion
is included in the investment in joint venture. A detailed accounting policy is
provided in the group financial statements.
IAS 16: Property, plant and equipment requires that the residual values and
useful lives of assets must be reassessed on an annual basis. This was taken
into consideration when re-calculating the depreciation charge. The deferred
taxation effect of these adjustments has been calculated and adjustments made to
the relevant deferred tax asset or liability. The effects of any such
reassessment are made prospectively as per the requirements of IAS 8.
IAS 16 also requires that each part of an item of property, plant and equipment
with a cost that is significant in relation to the total cost of the item shall
be identified and depreciated separately. Further changes have thus been made to
the classification of significant assets resulting in a reclassification of
assets between property, plant and equipment and leasehold improvements.
All changes in the accounting policies have been made in accordance with the
transition provisions in the respective standards. All standards adopted by GRCR
require retrospective application other than:
* IAS 16 - the exchange of property, plant and equipment is accounted for at
fair value prospectively;
* IFRS 2 - retrospective application for all equity instruments granted after
7 November 2002 and not vested at 1 January 2004; and
* IFRS 3 - prospectively after 31 March 2004.
IAS 39 requires simultaneous adoption with IAS 32.
IFRS 3 requires simultaneous adoption with IAS 36 and IAS 38.
FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements have been prepared under the historical
cost convention, as modified by the revaluation of financial assets and
financial liabilities at fair value through profit or loss.
Various classifications of income statement items were changed to ensure a more
relevant presentation of results as per the requirements of IAS 1. GRCR now
presents an income statement using classifications based on the nature of the
expense.
Reconciliation of equity holders" interest at 1 January 2004
R"000
Balance as per SA GAAP 816,470
Adjustments to property, plant and equipment and leasehold
improvements (1) (59,926)
Adjustments to intangible assets due to reassessment of
useful lives as per IAS 38 1,152
Deferred taxation effect of the above adjustments 5,097
Prior period error - change in recognition of deferred
taxation on temporary differences as per IAS 12 (12,775)
Prior period error - effect of straight lining operating
leases as per IAS 17 688
Effect of above transactions on minority interest 10,384
Negative goodwill released to retained income as per IFRS 3 7,716
Increase in investment in associate due to application of
IFRS 2 and IFRS 1 exemption 32
Increase in investment in joint ventures due to application
of IFRS 2 38
Balance as per IFRS 768,876
(1) Adjustments to the carrying values of property, plant
and equipment result from the application of IAS 16 and
IFRS 1. Further application of IAS 16 has resulted in the
reclassification of items from leasehold improvements to
property, plant and equipment.
Reconciliation of minority interest at 1 January 2004
R"000
Balance as per SA GAAP 69, 715
Effect of above transactions on minority interest (10,384)
Balance as per IFRS 59 331
Reconciliation of profit attributable to equity holders of GRCR for the year
ended 31 December 2004
R"000
Profit as per SA GAAP 194, 753
Change in depreciation of property, plant and equipment as
per IAS 16 (8,360)
Change in amortisation of intangibles as per IAS 38 2,685
Deferred taxation effect of the above adjustments 1,421
Prior period error - effect of straight lining operating
leases as per IAS 17 17
Share-based payment cost as per IFRS 2 (5,086)
Decrease in minority interest in profit due to the above
adjustments 1,112
Goodwill no longer amortised as per IFRS 3 5 784
Decrease in income from associate (118)
Profit as per IFRS 192,208
Reconciliation of equity holders" interest at 31 December 2004
R"000
Balance as per SA GAAP 975 582
Adjustments to property, plant and equipment and leasehold
improvements (1) (68,286)
Adjustments to intangible assets due to reassessment of
useful lives as per IAS 38 3,837
Deferred taxation effect of the above adjustments 6,518
Prior period error - change in recognition of deferred
taxation on temporary differences as per IAS 12 (12,775)
Prior period error - effect of straight lining operating
leases as per IAS 17 705
Effect of above transactions on minority interest 11,496
Negative goodwill released to retained income as per IFRS 3 7,716
Goodwill no longer amortised as per IFRS 3 5,784
Increase in investment in associate due to application of
IFRS 2 and IFRS 1 exemption 103
Increase in investment in joint ventures due to application
of IFRS 2 2,261
Balance as per IFRS 930,941
(1) Adjustments to the carrying values of property, plant
and equipment result from the application of IAS 16 and
IFRS 1. Further application of IAS 16 has resulted in the
reclassification of items from leasehold improvements to
property, plant and equipment.
Reconciliation of minority interest at 31 December 2004
R"000
Balance as per SA GAAP 85,950
Effect of above transactions on minority interest (11,496)
Balance as per IFRS 74,454
Date: 15/03/2006 01:52:18 PM Produced by the JSE SENS Department
