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GPL - Grand Parade - Reviewed Results For The Year Ended 30 June 2008 and

Release Date: 02/09/2008 14:30
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GPL - Grand Parade - Reviewed Results For The Year Ended 30 June 2008 and dividend declaration GRAND PARADE INVESTMENTS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1997/003548/06) Share code: GPL ISIN code: ZAE00119814 ("Grand Parade" or "GPI" or "the company") REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008 * Headline earnings per share increased by 13% * Dividends per share increased by 33% * Net asset value per share increased to 335 cents per share GRAND PARADE INVESTMENTS LIMITED REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008 INCOME STATEMENT Audited
Reviewed 12 months % change 12 months 30 June 2007 30 June 2008 Restated Revenue 34,032,163 90,409,714 (62%) Net operating costs (16,136,711) (9,194,173) 76% Negative goodwill from associate 784,087,333 - - Share of income / (loss) of associates 47,051,571 (383,422) - Impairment of investment in associate (92,131,891) - - Profit from operations 756,902,465 80,832,119 836% Finance costs (8,934,260) (35,980) - Net profit before taxation 747,968,205 80,796,139 826% Taxation (9,385,063) (7,718,013) 22% Net profit after taxation 738,583,142 73,078,126 911% Number of shares - weighted average ** 365,766,533 323,010,368 ** Number of shares - at end of the period ** 469,028,354 332,038,052 ** ** prior years shares adjusted for the 4 for 1 share split Basic earnings (cents) per share - weighted 200.98 20.34 - on closing issued shares 156.73 19.78 Diluted earnings per share 200.98 20.34 Reconciliation of basic earnings and headline earnings Basic earnings Net profit for the year 738,583,142 73,078,126 Preference dividend (3,481,412) (7,393,734) Basic earnings 735,101,730 65,684,392 Headline earnings Basic earnings 735,101,730 65,684,392 Adjustments: Negative goodwill from associate (784,087,333) - Impairment of investment in associate 92,131,891 750,380 BEE transaction in associate 43,064,735 - Profit on disposal of property, plant and equipment* (60,795) - Profit on disposal of investments in associate* (2,312,455) - Provision for pension fund exposure* 362,170 - tax effect on above where applicable 563,102 (217,610) Headline earnings 84,763,045 66,217,162 Headline earnings (cents) per share (after share split) 23.17 20.50 13% * tax applied on these items GRAND PARADE INVESTMENTS LIMITED REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008 BALANCE SHEET Audited Reviewed 12 months 12 months 30 June 2007
30 June 2008 Restated R R ASSETS Non current assets 1,696,386,628 227,964,581 Plant and equipment 936,409 23,682 Investment in associates 1,675,120,542 369,468 Available for sale investments 20,329,677 227,571,431 Current Assets 95,625,715 81,193,511 Related party loan 8,118,000 5,947,677 Trade and other receivables 5,673,518 5,535,539 Cash & cash equivalents 81,834,197 69,710,295 Total Assets 1,792,012,343 309,158,092 EQUITY AND LIABILITIES Capital and reserves 1,572,534,408 297,695,327 Share Capital and premium 740,835,489 112,283,566 Accumulated profits 813,984,851 109,569,214 Preference share capital & premium - 57,797,500 Available for sale investments fair value reserve 17,483,473 17,930,047 Capital redemption reserve fund 230,595 115,000 Non current liabilities 204,239,880 2,922,603 Deferred tax liability 2,841,772 2,922,603 Preference share capital & premium 201,398,108 - Current Liabilities 15,238,055 8,540,162 Trade and other payables 7,698,496 2,358,657 Taxation 3,673,291 2,424,125 Dividends payable 3,866,268 3,757,380 Total Equity & liabilities 1,792,012,343 309,158,092 Number of shares - weighted average 365,766,533 323,010,368 Number of shares - at end of the period 469,028,354 332,038,052 Net Asset Value (NAV) per share (cents) 335 90 NAV excluding fair value adjustment (cents) 164 84 GRAND PARADE INVESTMENTS LIMITED REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008 CASHFLOW STATEMENT STATEMENT Reviewed Audited
12 months 30 June 2007 30 June 2008 Restated R R Net cash inflow from operating activities 3,146,971 4,809,674 Net cash outflow from investing activities (346,394,896) (35,989,449) Net cash inflow from financing activities 355,371,827 11,607,324 Net increase / (decrease) in cash and cash equivalents 12,123,902 (19,572,451) Cash and cash equivalents at beginning of year 69,710,295 89,282,746 Cash and cash equivalents at end of year 81,834,197 69,710,295 GRAND PARADE INVESTMENTS LIMITED REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2008 STATEMENT OF CHANGES IN EQUITY Capital Ordinary Share Redemption share capital premium
Reserve Fund R R R Adjusted balance at 30 June 2006 - 80,000 92,643,584 As previously reported - 80,000 92,643,584 Prior period adjustments - - - Profit for the year - - - Unrealised fair value gain on available for sale investments - - - Ordinary dividend paid - - - Preference dividend - - - Preference shares redeemed Transfer to capital redemption reserve fund 115,000 Share capital raised 3,009 19,556,973 Balance at 30 June 2007 115,000 83,009 112,200,557 Profit for the year - - - Unrealised fair value loss on available for sale investments - - - Share of loss from associate prior to becoming an associate - - - Ordinary dividend paid - - - Preference dividend - - - Preference shares redeemed - - - Transfer to capital redemption reserve fund 115,595 - - Share capital raised - 34,248 636,914,915 Share issue expenses - - (8,397,240) Balance at 30 June 2008 230,595 117,257 740,718,232 Redeemable Accumulated Available for sale Preference Profits Fair Value
share capital Reserve R R R Adjusted balance at 30 June 2006 115,297,500 58,399,873 14,251,013 As previously reported 115,297,500 62,166,076 - Prior period adjustments - (3,766,203) 14,251,013 Profit for the year - 73,078,126 - Unrealised fair value gain on available for sale investments - - 3,679,034 Ordinary dividend paid - (14,400,051) - Preference dividend - (7,393,734) - Preference shares redeemed (57,500,000) Transfer to capital redemption reserve fund (115,000) - Share capital raised Balance at 30 June 2007 57,797,500 109,569,214 17,930,047 Profit for the year - 738,583,142 - Unrealised fair value loss on available for sale investments - - (446,574) Share of loss from associate prior to becoming an associate - (5,667,644) - Ordinary dividend paid - (24,902,854) - Preference dividend - (3,481,412) - Preference shares redeemed (57,797,500) - - Transfer to capital redemption reserve fund - (115,595) - Share capital raised - - - Balance at 30 June 2008 - 813,984,851 17,483,473 Total Minority Total R Interest Equity Adjusted balance at 30 June 2006 280,671,970 - 280,671,970 As previously reported 270,187,160 3,005,111 273,192,271 Prior period adjustments 10,484,810 (3,005,111) 7,479,699 Profit for the year 73,078,126 - 73,078,126 Unrealised fair value gain on available for sale investments 3,679,034 - 3,679,034 Ordinary dividend paid (14,400,051) - (14,400,051) Preference dividend (7,393,734) - (7,393,734) Preference shares redeemed (57,500,000) - (57,500,000) Transfer to capital redemption reserve fund - - - Share capital raised 19,559,982 - 19,559,982 Balance at 30 June 2007 297,695,327 - 297,695,327 Profit for the year 738,583,142 - 738,583,142 Unrealised fair value loss on available for sale investments (446,574) - (446,574) Share of loss from associate prior to becoming an associate (5,667,644) - (5,667,644) Ordinary dividend paid (24,902,854) - (24,902,854) Preference dividend (3,481,412) - (3,481,412) Preference shares redeemed (57,797,500) - (57,797,500) Transfer to capital redemption reserve fund - - - Share capital raised 636,949,163 - 636,949,163 Share issue expenses (8,397,240) - (8,397,240) Balance at 30 June 2008 1,572,534,408 - 1,572,534,408 Introduction Grand Parade Investments Limited ("GPI") is pleased to report its maiden financial results as a JSE Limited ("JSE") listed company. GPI listed as Granprade ("GPL") under the "general financial" sector on the main board of the JSE on the 6 June 2008. GPI is a Broad Based Black Economic Empowered (BBBEE) investment holding company, holding stakes in businesses operating in the gaming and leisure industry across South Africa. The reviewed condensed consolidated financial information is presented for the financial year ended 30 June 2008. GPI has had an eventful year and shareholders are referred to the company`s Pre-Listing Statement dated 19 May 2008 ("Pre-Listing Statement") for additional background information. Basis of presentation and accounting policies The financial statements have been prepared on the historical cost basis, except where stated otherwise, and in accordance with International Financial Reporting Standards (IFRS) and are presented in terms of disclosure requirements set out in IAS 34 - Interim Financial Reporting and the Companies Act of South Africa. The group adopted the following new and amended standards and interpretations during the year. * IFRS 7 - Financial instruments - disclosure * IAS 1 - Presentation of financial statements * IFRIC 10 - Interim Financial reporting and impairment Adoption of these standards and interpretations did not have an effect on the financial performance or position of the group, however, they did give rise to additional disclosure. Except for the effects of the above, the accounting policies applied to the consolidated financial information are consistent with those set out in the audited annual financial statements for the year ended 30 June 2007. General overview The difficult economic environment has put a strain on consumer disposable incomes and this has had an adverse impact on the gaming industry as a whole. Pleasingly, GrandWest grew its revenue by 10% despite these difficult trading conditions. The Limited Payout Machine ("LPM") market continues to perform exceptionally well where the formula of a limited number of machines at more sites is starting to reap rewards and GPI benefited from a significant increase in earnings from its 25,1% interest in Thuo Gaming Western Cape ("Thuo Gaming WC"), which is held through wholly-owned subsidiary GPI Slots (Proprietary) Limited ("GPI Slots"). Revenue Revenue is comprised of: 2008 2007 R million R million
Dividends received - SunWest - 63,2 Dividends received - National Manco 1, 5 1,2 Management fees - Western Cape Manco 21, 7 20,2 Interest received 10, 8 5,8 Total Revenue 34, 0 90,4 GPI` s investment in SunWest International (Proprietaty) Limited ("SunWest") is now accounted for as an associate and therefore revenue in 2008 excludes dividends received from SunWest. Total revenue would have been R124 million if one includes GPI`s share of associate earnings and the R43 million adjustment in respect of GPI`s share of SunWest`s BEE transaction charge. This represents a growth of 37% compared with the previous year. Operating expenses The increase in operating costs is primarily due to once-off listing expenses of R5 million. More staff has been employed, significantly strengthening the financial management of GPI and a call centre at Computershare has been established in order to communicate to GPI`s wide shareholder base. Negative goodwill from associate SunWest is now being accounted for as an associate in terms of IAS 28: Investments in Associates. Due to purchasing additional shares during the course of the year, it is a requirement of IFRS 3: Business Combinations to fair value the identifiable net assets and liabilities. As a result, an adjustment of R784,1 million has been made for negative goodwill. Impairment of investment in associate An impairment loss of R92,1 million has been recognised in respect of the investment in Real Africa Holdings Limited ("RAH") at year end in order to comply with IAS 36: Impairment of assets. A substantial portion of the RAH acquisition was funded by way of the issue of GPI shares at a price significantly above GPI`s current trading price and was based on a relative valuation of the GPI and RAH shares at the time of the transaction. Profit after tax If profit after tax is adjusted for the negative goodwill and the impairment loss it would have increased by 23% compared to the prior year. Earnings per share Headline earnings have increased by 13% to 23,17 cents per share compared to the prior year`s restated 20,5 cents per share (the prior year headline earnings per share has been restated and split on a 4 for 1 basis). GPI`s headline earnings would have been 24,54 cents per share had it not incurred the once- off listing expenses of R5 million. Net asset value Net asset value per share increased by 272% to 335 cents per share compared to 90 cents per share at June 2007. Net asset value per share excluding the negative goodwill and the fair value adjustments increased by 95,0% to 164 cents per share from 84 cents at 30 June 2007. Restatement of prior year figures Deferred tax assets amounting to R3,7 million arising from STC credits on dividends received in previous years have been reversed in the current year. In addition, the consolidation of the Western Cape Casino Resort Management Company (Proprietary) Limited ("Western Cape Manco") as a subsidiary has been discontinued and this investment is now accounted for as a joint venture in terms of IAS 31: Interest in Joint Ventures. National Casino Resort Management Company (Proprietary) Limited ("National Manco") has been held at historical cost in the past. During the current year the investment was fair valued as it should have been in the prior year in accordance with IAS 39: Financial Instruments: Recognition and Measurement. R million Prior year ordinary shareholders interest as 270,1 previously stated 1 July 2006 Adjustments for: Deferred tax asset (3,7) Available for sale fair value reserve - National Manco 14, 2 Restated prior year ordinary shareholders interest 280, 6 Minority shareholders - Total equity restated 280,6 Review of investments and major transactions Direct Interest (%) 30 June 2008 30 June 2007
Associates, investments and joint ventures SunWest 26,41 19,80 RAH 30,60 - Akhona GPI 50,00 - Golden Valley 36,70 38,00 Thuo Gaming WC 25,10 25,10 National Manco (Investment) 5,67 5,67 Western Cape Manco (Joint Venture) 50, 00 50,00 SunWest: In November 2007, GPI increased its direct holdings in SunWest to 26,41%. The additional shares purchased at a cost of R240,4 million brought the total cost of GPI`s investment in SunWest to R447,2 million. It should be noted that SunWest incurred a charge of R182 million during the year in respect of an option granted to GPI in terms of its BEE transaction. Subsequent to year end, GPI exercised part of this option and purchased an additional 2,83% of SunWest for R92,4 million. GPI now owns 29,24% of SunWest directly and a further 4,47% indirectly through its interest in RAH. GrandWest Casino and Entertainment World (GrandWest), being the key asset of SunWest, grew its revenue by 10% in 2008. RAH: In June 2008, GPI acquired a 30,6% interest in RAH for R600,6 million. The acquisition was funded by R139,3 million in cash and R461,4 million in GPI shares. This acquisition had the effect of increasing GPI`s stake in some of its key assets, whilst also significantly diversifying GPI`s asset base into areas outside of the Western Cape. The full benefit of the RAH investment on GPI`s earnings will be reflected in the 2009 financial year. Western Cape Manco: GPI owns 50,0% of Western Cape Manco. This investment is now accounted for as a joint venture, whereas previously it was accounted for as a subsidiary. Western Cape Manco derives its revenue primarily from management fees from GrandWest. Income before tax grew by 9,0% to R40,1 million. National Manco: GPI holds a 5,7% shareholding in National Manco that was initially purchased at a cost of R57,00. This investment is classified as available-for-sale, and has been revalued in terms of IAS 39: Financial instruments: Recognition and Measurement. The comparative has been restated accordingly. The total fair value reserve relating to the investment in National Manco amounted to R17,4 million at year end (2007: R17,9 million). GPI Slots: GPI Slots accounts for its 25,1% stake in Thuo Gaming WC as an associate investment. Its share of associate net income amounted to R4,7 million (2007: R0,4 million). Thuo Gaming WC now has 850 machines in operation throughout the Western Cape and has experienced excellent growth in revenue and profits this past financial year. Akhona Gaming Portfolio Investments (Proprietary) Limited ("Akhona GPI") Akhona GPI is in the process of being renamed from Spogtrade 24 (Proprietary) Limited. GPI holds a 50,0% interest in Akhona GPI. Akhona GPI owns a 6% stake in Dolcoast Investments Limited, which in turn holds a 22% stake in Sibaya casino in Kwa Zulu-Natal, together with a 20% shareholding in Thuo Gaming KZN. Sibaya Casino performed strongly during 2008. Thuo Gaming KZN has 368 machines in operation of a total licence allocation of 1 000 machines. Worcester Casino (Proprietary) Limited (Golden Valley): Golden Valley is in its infancy stage. Pleasingly, revenue grew by 88,3% and EBITDA by 79,0%. The new hotel at Golden Valley was officially opened in April 2008 at a cost of R71,4 million. Preference shares Preference shares classified as equity of R57 million were redeemed during the year. New preference shares classified as debt of R201 million were issued. This funding was utilised to acquire the additional shares in SunWest and RAH. Share capital During the year GPI issued a number of new ordinary shares to fund the acquisitions in SunWest and RAH. Furthermore a 4 for 1 share split was implemented prior to the listing. Taking into account the 4 for 1 share split, an effective 136 990 302 shares were issued at an average price of R4, 62 per share. Related party transactions The group, in the ordinary course of business, entered into various transactions with related parties. All transactions were concluded on an arm`s length basis. Any intra-group related party transactions and outstanding balances are eliminated in the preparation of the consolidated financial statements of the group as presented. Segment report Based on risks and returns the directors consider that the primary reporting format is by business segment. The directors consider that there is only one business segment being investments. Therefore the disclosures for the primary segment have already been given in these financial statements. The secondary reporting format is by geographical analysis by origin and destination. Subsequent events Subsequent to year end GPI exercised part of its SunWest option and purchased an additional 2,83% of SunWest for R92,4 million. There were no other material events after balance sheet date. Settlement of court cases On the 11 November 2007, Cape Empowerment Trust Limited ("CET") and GPI entered into the CET settlement agreement in terms of which CET withdrew all legal action against GPI and GPI withdrew its appeal in the Quintessence matter as referred to in the Pre-Listing Statement. Review report The group`s auditors Ernst & Young Inc have reviewed the condensed consolidated financial information for compliance with IFRS and the Companies Act of South Africa for the year ended 30 June 2008. Their unqualified review opinion is available for inspection at the registered office of the company. Future prospects GPI`s key source of cash flow income is dividends from its investments in SunWest and Western Cape Manco. GPI also expects to benefit from dividends from its holdings in RAH and Thuo Gaming WC. GPI will focus it efforts on optimizing the performance of its investments and search for new opportunities to acquire assets of the same quality. Directorate Subsequent to the financial year end Mr. Adrian Funkey has been appointed Chief Executive Officer of GPI (effective 1 September 2008) to succeed Mr. Richard Hoption who remains with GPI but will now focus on strategy and investments. Dr. Norman Maharaj and Mr. Charl Williams were appointed independent non executive directors with effect from 1 August 2008. Their appointment will assist in further strengthening the Board with meeting the requirements of The King Code of Corporate Governance. Ordinary dividend declaration Notice is hereby given of the declaration of an ordinary cash dividend of 10 cents per share (2007 : 7,5 cents per share or 30 cents before the 4 for 1 share split) ("the dividend"). The following salient dates will apply to the dividend: Last date to trade "cum" the dividend Friday, 21 November 2008 Trading commences "ex" the dividend Monday , 24 November 2008 Record date Friday, 28 November 2008 Date of payment of the dividend Monday, 01 December 2008 Shares certificates may not be rematerialised or dematerialised between Monday, 24 November 2008 and Friday, 28 November 2008, both days inclusive. For and on behalf of the board H Adams Chairman 2 September 2008 Registered Office 15th Floor Triangle House 22 Riebeeck Street Cape Town, 8001 (P.O. Box 7746, Roggebaai, 8012) Transfer Secretaries Computershare Investor Services (Proprietary) Limited 70 Marshall Street Johannesburg, 2001 Attorneys Bernadt Vukic Potash & Getz Attorneys Corporate advisors Leaf Capital (Proprietary) Limited Sponsor PSG Capital (Proprietary) Limited Directors H. Adams (Chairman), R. Freese #, A. Abercrombie #, N, Mlambo #, A.W. Bedford #, R. Hoption, C. Williams (appointed 1 August 2008) #*, N. Maharaj (appointed 1 August 2008) #*, A. Funkey (CEO) (appointed 01 September 2008). (# non executive * independent) Company Secretary Ralph Gordon Freese "INVESTING IN CHANGE" Date: 02/09/2008 14:30:39 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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