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Unaudited interim results of Grand Parade Investments Limited for the six months ended 31 December 2013
Grand Parade Investments Limited
(Incorporated in the Republic of South Africa)
Registration number 1997/003548/06
Share code: GPL
ISIN: ZAE000119814
("GPI" or "the company" or "the Group")
Unaudited Interim Results of Grand Parade Investments
Limited (GPI) for the six months ended 31 December 2013
Highlights
36%
Increase
in Group revenue
19.2 %
Increase
in Slots Group GGR
560
staff employed
1600 employees to enter our training
academy by June 2014
119
New staff entrants as at
31 December 2013
Opened 5 Burger King
restaurants
Acquired two additional
route operator licenses in
Gauteng and Mpumalanga
R2.6 million
contributed to various
CSI projects
In excess of R1 million
generated at inaugural
charity event
Condensed Group Statement of Comprehensive Income
for the six months ended 31 December 2013
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
6 months 6 months 12 months
Note R000's R000's R000's
Revenue 1 328 187 240 937 489 353
Cost of sales 2 (191 329) (136 642) (276 622)
Gross profit 136 858 104 295 212 731
Operating costs (108 054) (68 210) (142 039)
Profit from operations 28 804 36 085 70 692
Profit from equity-accounted investments 3 61 172 54 830 114 672
Impairment of plant and equipment 4 – – (316)
Remeasurement of investment 5 32 842 – –
Gain on acquisition of investment 6 23 843 – –
Depreciation and amortisation (22 922) (17 499) (36 130)
Profit before finance costs and taxation 123 739 73 416 148 918
Finance income 7 122 3 070 6 216
Finance costs 7 (10 375) (6 907) (14 603)
Profit before taxation 120 486 69 579 140 531
Taxation 8 (3 171) (6 796) (10 955)
Profit for the period 117 315 62 783 129 576
Other comprehensive income
Unrealised fair value loss on available-for-sale
investments, net of tax (1 174) (79) (1 887)
Total comprehensive income for the period 116 141 62 704 127 689
Profit for the period attributable to:
- Ordinary shareholders 120 911 62 783 131 533
- Non-controlling interest (3 596) – (1 957)
117 315 62 783 129 576
Total comprehensive income attributable to:
- Ordinary shareholders 119 737 62 704 129 646
- Non-controlling interest (3 596) – (1 957)
116 141 62 704 127 689
Cents Cents Cents
Basic and diluted earnings per share 9 26.21 13.63 28.55
Headline and diluted headline earnings per share 9 13.95 13.68 28.76
Adjusted and diluted adjusted headline earnings per share 9 14.94 15.86 31.00
Ordinary dividend per share 15.00 12.50 12.50
Special dividend per share – 7.50 7.50
Condensed Group Statement of Financial Position
as at 31 December 2013
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
Note R000's R000's R000's
ASSETS
Non-current assets 10 1 771 062 1 443 279 1 529 714
Current assets 11 332 029 399 292 471 033
Total Assets 2 103 091 1 842 571 2 000 747
EQUITY AND LIABILITIES
Total equity 12 1 737 067 1 588 554 1 655 497
Non-controlling interest (5 620) – (1 957)
1 731 447 1 588 554 1 653 540
Non-current liabilities
- Deferred tax liabilities 36 083 11 525 12 107
- Cumulative redeemable preference shares 13 132 624 101 670 132 424
- Interest-bearing borrowings 13 83 462 24 000 83 436
- Provisions 801 620 768
- Finance lease liabilities 2 111 165 244
Current liabilities 14 116 563 116 037 118 228
Total Equity and liabilities 2 103 091 1 842 571 2 000 747
Cents Cents Cents
Tangible net asset value per share 315 306 320
Adjusted tangible net asset value per share 317 306 321
Net asset value per share 369 345 359
Adjusted net asset value per share 371 345 360
Condensed Group Statement of Cash Flows
for the six months ended 31 December 2013
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
6 months 6 months 12 months
Note R000's R000's R000's
Cash flows from operating activities
Net cash generated from operations 15 13 261 48 684 86 352
Income tax paid (6 343) (7 722) (15 049)
Finance income 7 122 3 070 6 216
Net cash inflow from operating activities 14 040 44 032 77 519
Cash flows from investing activities
Acquisition of plant and equipment (55 293) (20 713) (68 327)
Acquisition of land and buildings (41 798) (35 675) (88 434)
Acquisition of intangibles (6 814) (2 939) (4 607)
Consideration from disposal of property, plant and
equipment 273 6 9
Cash acquired through business combinations 17 8 191 – –
Investments made (45 798) – –
Dividends received 79 591 66 203 131 496
Net cash (outflow)/inflow from investing activities (61 648) 6 882 (29 863)
Cash flows from financing activities
Dividends paid (70 758) (90 382) (90 873)
Acquisition of treasury shares (10 769) – –
(Decrease)/increase in loans 16 (9 028) (8 053) 56 882
Finance costs (10 119) (6 907) (15 594)
Net cash outflow from financing activities (100 674) (105 342) (49 585)
Net decrease in cash and cash equivalents (148 282) (54 428) (1 929)
Cash and cash equivalents at the beginning of period 403 218 405 147 405 147
Cash and cash equivalents at the end of period 254 936 350 719 403 218
Group Statement of Changes in Equity
for the six months ended 31 December 2013
Capital
Redemp- Available- Share-
tion Ordinary for-sale Accumu- based Non-
Reserve Share Share Treasury Fair Value lated pay- controlling
Fund Capital Premium Shares Reserve Profits ment Interest
R'000s R'000s R'000s R'000s R'000s R'000s reserve R'000s Total
Balance at 30 June 2012 301 115 730 249 (2 346) 8 132 881 026 – – 1 617 477
Total comprehensive
income/(loss) for the period – – – – (79) 62 783 – – 62 704
– Profit for the period – – – – – 62 783 – – 62 783
– Other comprehensive
income – – – – (79) – – – (79)
Conversion of par value
shares to non–par value
shares – 730 249 (730 249) – – – – – –
Treasury shares allocated to
employees – – – 276 – – – – 276
Dividends declared – – – – – (91 902) – – (91 902)
Balance at
31 December 2012 301 730 364 – (2 070) 8 053 851 907 – – 1 588 554
Total comprehensive
income/(loss) for the period – – – – (1 808) 68 750 – (1 957) 64 985
– Profit for the period – – – – – 68 750 – (1 957) 66 793
– Other comprehensive
income – – – – (1 808) – – – (1 808)
Balance at 30 June 2013 301 730 364 – (2 070) 6 245 920 657 – (1 957) 1 653 540
Total comprehensive
income/(loss) for the period – – – – (1 174) 120 911 – (3 596) 116 141
– Profit for the period – – – – – 120 911 – (3 596) 117 315
– Other comprehensive
income – – – – (1 174) – – – (1 174)
Non-controlling interest
acquired – – – – – – – – (67) (67)
Dividends declared – – – – – (68 964) – – (68 964)
Shares issued – 40 000 – – – – – – 40 000
Share-based payment
reserve – – – – – – 1 437 – 1 437
Treasury shares acquired – – – (10 868) – – – – (10 868)
Treasury shares allocated to
employees – – – 228 – – – – 228
Balance at
31 December 2013 301 770 364 – (12 710) 5 071 972 604 1 437 (5 620) 1 731 447
Segmental Analysis
for the six months ended 31 December 2013.
IFRS 8: Operating Segments requires a "management approach" whereby segment information is
presented on the same basis as that used for internal reporting purposes to the Executive Directors.
These directors review the group's internal reporting by industry. SunWest, Akhona GPI and Golden
Valley Casino, Winelands Manco Grand Casino and National Manco are classified as Casinos.
The GPI Slots group is classified, as Slots. GPI House Properties is classified as Property. Grand Tech is classified as IT and the
Burger King group is classified as Food division. The overheads and finance costs of GPI, Grand Lifestyles, Grand Capital and GPSIT are classified as other.
On 1 July 2013 GPI restructured its operations to effectively split the central services costs, classified
under the 'Services" segment in the prior periods, between its investment/corporate function and the
operating divisions. The restructure has impacted how the executive management review the business
and as a result the following items have been reclassified in the current segment report. The results
of the 'Services" segment have been reallocated between the 'Slots', 'Casino' and 'Other' segments.
In the comparative periods, the Group's funding structure was disclosed under the 'Other' segment,
however in the current period the funding liabilities and related finance costs were reallocated to the
'Casino' and 'Slots' segments." Listed below is a detailed segmental analysis:
The directors do not review the group's performance by geographical sector and therefore no such disclosure has been made.
Unaudited Unaudited Audited Unaudited Unaudited Audited
31 December 31 December 30 June 31 December 31 December 30 June
2013 2012 2013 2013 2012 2013
6 months 6 months 12 months 6 months 6 months 12 months
R000's R000's R000's R000's R000's R000's
Revenue Inter–segment revenue
Casinos 2 547 1 218 1 953 – – –
Slots 279 853 233 666 470 760 – – –
Services – 108 1 047 – 34 375 69 574
Property 133 – 366 5 442 – 2 987
Food 37 968 – 4 965 – – –
IT 715 – – 1 939 – –
Other 6 971 5 945 10 262 11 966 – –
328 187 240 937 489 353 19 347 34 375 72 561
Operating costs EBITDA
Casinos (72) (1 119) – 118 975 54 928 114 672
Slots (44 622) (32 016) (65 755) 70 976 65 008 132 124
Services – (21 636) (46 509) – (21 527) (43 824)
Property (2 354) (314) (2 047) (2 222) (314) (1 681)
Food (38 834) (9 105) (21 545) (27 675) (9 105) (20 321)
IT (2 787) – – (2 509) – –
Other (19 385) (4 020) (6 183) (10 884) 1 925 4 079
108 054 (68 210) (142 039) 146 661 90 915 185 049
Finance income Finance expense
Casinos 2 750 – – (5 934) – –
Slots 507 883 1 623 (1 375) (74) (119)
Services – 111 165 – (2 071) (3 755)
Property 421 – 85 (3 058) – (687)
Food 291 10 91 – (1) (159)
IT – – – – – –
Other 3 153 2 066 4 252 (8) (4 761) (9 883)
7 122 3 070 6 216 (10 375) (6 907) (14 603)
Depreciation and amortisation Equity-accounted earnings
Casinos – – – 61 172 54 830 114 672
Slots (17 915) (7 962) (15 888) – – –
Services – (9 531) (19 269) – – –
Property (3 062) – (672) – – –
Food (1 660) – (287) – – –
IT (277) – – – – –
Other (8) (6) (14) – – –
(22 922) (17 499) (36 130) 61 172 54 830 114 672
Segmental analysis continued
for the six months ended 31 December 2013
Unaudited Unaudited Audited Unaudited Unaudited Audited
31 December 31 December 30 June 31 December 31 December 30 June
2013 2012 2013 2013 2012 2013
6 months 6 months 12 months 6 months 6 months 12 months
R000's R000's R000's R000's R000's R000's
Taxation Profit/loss after tax
Casinos 722 – – 116 513 54 928 114 672
Slots (12 787) (7 597) (13 970) 39 404 15 883 33 479
Services – 1 405 (835) – 2 652 3 376
Property 747 (83) (9) (7 173) (398) 23
Food 8 689 (2) 5 074 (20 354) (9 098) (17 193)
IT – – – (2 785) – –
Other (542) (519) (1 215) (8 290) (1 184) (4 781)
(3 171) (6 796) (10 955) 117 315 62 783 129 576
Total assets Total liabilities
Casinos 1 175 966 1 102 756 1 092 469 (150 919) (1 848) –
Slots 430 414 266 059 283 240 (114 369) (40 992) (41 590)
Services – 76 842 94 407 – (65 787) (73 035)
Property 152 332 63 865 133 164 (67 472) 169 (75 727)
Food 93 716 13 554 83 512 (28 554) (42) (20 883)
IT 4 671 – – (2 592) – –
Other 245 992 319 495 313 955 (7 738) (145 517) (135 972)
2 103 091 1 842 571 2 000 747 (371 644) (254 017) (347 207)
Notes to financial Statements
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The accounting policies applied in the interim financial statements are in accordance with International
Financial Reporting Standards ("IFRS"), whilst the disclosures contained within comply with IAS 34:
Interim Financial Reporting, the Financial Reporting Guides as issued by the Accounting Practice
Committee of SAICA or its successors, the Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council and the Companies Act of South Africa No 71 of 2008, as
amended. The interim report has not been audited or reviewed, therefore no review opinion has been
obtained from the company's auditors. The accounting policies and methods of computation are
consistent with those applied in the financial results for the year ended 30 June 2013.
1. Revenue
Revenue comprises Gross Gaming Revenue ("GGR") from GPI's Limited Payout Machines ("LPM")
business, food sales from Burger King®, dividends received from National Casino Resort Manco (Pty)
Ltd ("National Manco"), and Grindrod Bank Limited ("Grindrod") and rental income.
GGR is the term used for the net revenue generated by an LPM from the amount of cash played
through the LPM less payouts to players. Overall GGR increased by 19.2% from the prior period.
Food sales to the amount of R38 million are included in the current period's revenue. Rental income
of R0.1 million and IT service fees of R0.7 million relates to 3rd party services rendered by the group.
These business units did not form part of the group during the previous period.
The dividend income for the current period consists of R1.7 million (R5.9 million) from the Grindrod
preference shares, R0.3 million (R0.4 million) from the National Manco and R2.2 million from Akhona
Gaming Portfolio Investments (Pty) Ltd ("Akhona GPI") as the Akhona GPI consolidated group
accounts was not available at the time of these results. This amount relates to the dividend received
from Dolcoast Investments (Pty) Ltd ("Dolcoast") and which has not been eliminated on consolidation
of Akhona GPI. The prior period dividends received included R0.9 million from Winelands Manco.
2. Cost of sales
Cost of sales relates to sales from the LPM and Food divisions. LPM cost of sales is directly related
to GGR, and comprises direct costs such as commissions to site owners, gambling levies and
monitoring fees. LPM cost of sales has increased by 20% in line with the increase in GGR. Food costs
were not part of the group figures during the prior period. Food costs remain under pressure due to
the temporary practice of importing of goods.
3. Profit from equity-accounted investments
Profit from equity-accounted investments is made up of profits from jointly-controlled entities,
SunWest International (Pty) Ltd ("SunWest"), and profits from associate, Akhona GPI. Akhona GPI
has been accounted for as an associate until 20 November 2013. From this date we obtained 100%
control of this investment and accounted for it as a subsidiary.
Overall profit from equity-accounted investments increased by 11.6% compared to the prior period.
This is mainly due to the increase in the SunWest's net profit after tax. At the time of completing these
results, Akhona GPI did not have consolidated group results. We therefore included the company
results for the period.
4. Impairment
In terms of IAS 36: Impairment of Assets , an entity must determine whether there is any indication of
impairment at each reporting date. IAS 36 requires assets to be impaired to the higher of fair value less cost
to sell or value-in-use based on discounted cash flow valuations. No assets were impaired during the period.
The impairment in the June 2013 results relates to certain LPMs that were no longer being used and
regarded as obsolete.
5. Remeasurement of investment
IFRS 3R – Business Combinations requires that where an acquirer purchases its interest in an acquiree in
stages and this results in a change in control of the acquiree, then the acquirer remeasures its previously
held interest at the acquisition date and recognises the resulting gain or loss, if any, in profit or loss. The
R32.8 million relates to the remeasurement of GPI's previously held 59% interest in Akhona GPI and
arose due to acquiring 100% of this investment. Refer to note 18.1.
6. Gain on acquisition of investment
In terms of IFRS 3R – Business Combinations, whenever there is a change in a business combination,
the fair value of the affected investment must be brought to account. A detailed fair value assessment
of Akhona GPI was conducted at the time of this transaction. A R23.8 million gain on the
acquisition of the investment adjustment has therefore been accounted for. Refer to note 18.1.
7. Finance costs
Finance costs increased by 50.2% due to the additional term loan of R75 million obtained during the
2013 financial year used to finance the head office building purchased and development by the group.
8. Taxation
The tax charge in the statement of comprehensive income is relatively low compared to the profit
before tax, due to exempt income earned, permanent differences and assessed losses raised.
9. Headline earnings, headline earnings per share and adjusted headline earnings per share
Headline earnings per share ("HEPS") for the six-month period ended December 2013 increased by
2%, while adjusted HEPS decreased by 5.8%. The main reason for the decrease when compared to
the prior period, is the additional establishment costs incurred in Burger King®, which is consistent
with the growth phase of a business.
Unaudited Unaudited Audited
31 December 31 December 30 June
6 months 6 months 12 months
2013 2012 2013
R000's R000's R000's
Headline earnings reconciliation
Profit for the period attributable to ordinary shareholders 117 315 62 783 129 576
Non-controlling interest 3 596 – 1 957
Profit for the period attributable to ordinary shareholders 120 911 62 783 131 533
Remeasurement of investment (32 842) – –
Gain on acquisition of investment (23 843) – –
Impairment of plant and equipment – – 316
Loss on sale of property, plant and equipment 215 351 733
Adjustments by jointly controlled entities
– Loss on disposal of plant and equipment – – 167
Tax effect on above (60) (98) (252)
Headline and diluted headline earnings 64 381 63 036 132 497
Reversal of employee share trust (108) (75) 73
Reversal of transaction costs 4 292 9 904 9 904
Adjusted headline and diluted adjusted headline earnings 68 565 72 865 142 474
Reconciliation of the number of shares 000's 000's 000's
Shares in issue (before deducting treasury shares) 469 588 460 680 460 680
Shares in issue (after deducting treasury shares) 466 170 459 648 459 648
Weighted average number of shares in issue (before deducting
treasury shares) 461 358 460 680 460 680
Adjusted weighted average number of shares in issue (after
deducting treasury shares) 458 934 459 541 459 623
Cents Cents Cents
Basic and diluted earnings per share 26.21 13.63 28.55
Headline and diluted headline earnings per share 13.95 13.68 28.76
Adjusted headline and diluted adjusted headline earnings per share 14.94 15.86 31.00
Ordinary dividend per share# 15.00 12.50 12.50
Special dividend per share # – 7.50 7.50
# Final dividend declared and paid in respect of the previous financial year.
10. Non-current assets
Increases in non-current assets are mainly due to the investment in land and buildings whereby the
group acquired three additional buildings during the period, acquiring new generation LPMs and
the establishment of Burger King® stores. Furthermore the group's non-current assets increased by
R169.1 million as a result of the business combination transactions concluded during the period. Refer
to note 18.
11. Current assets
Current assets have decreased mainly as a result of a decrease in cash and cash equivalents. The
group paid ordinary dividends of R69 million at the end of September 2013. Current assets for the
period consist mainly of cash and cash equivalents of R254.9 million, trade and other receivables of
R43 million, tax receivable of R16.4 million loans of R14.8 million and inventories of R2.8 million.
12. Increase in shares
During December 2013 8.9 million ordinary GPI shares to the value of R40 million were issued, which
related to the purchase price for the Hot Slots transaction. In addition 2.5 million treasury shares
were acquired at an average price of 431 cents per share in anticipation of the exercising of the options
awarded to executives during October 2013.
13. Non-current liabilities
Non-current liabilities increased mainly due to the R75 million term loan obtained from Sanlam Capital
Markets ("SCM") during the 2013 financial year. Since year-end R11.7 million has been repaid in respect
of term loans. No capital amounts have been repaid on the cumulative redeemable preference shares
due to the renegotiations, which were concluded during the prior year.
14. Current liabilities
Current liabilities mainly comprise trade and other payables of R94.3 million, the current portion of the
term loans with SCM of R11.4 million, dividends payable of R9.9 million, and the current portion of
finance leases of R0.3 million.
15. Cash generated from operations
The reconciliation of net profit for the period to cash generated by operations is as follows:
Unaudited Unaudited Audited
31 December 31 December 30 June
6 months 6 months 12 months
2013 2012 2013
Profit before tax 120 486 69 579 140 531
Depreciation and amortisation 22 922 17 499 36 130
Finance income (7 122) (3 070) (6 216)
Finance costs 10 375 6 907 14 603
Shares issued to employees 228 276 276
Loss on sale of plant and equipment 215 351 733
Profit on sale of investment (98) – –
Share-based payment reserve 1 437 – –
Dividends received (4 243) (7 164) (12 215)
Profit from equity-accounted investments (61 172) (54 830) (114 672)
Impairment of plant and equipment – – 316
Remeasurement of investment (32 842) – –
Gain on acquisition of investment (23 843) – –
Net cash generated from operations before working capital
movements 26 343 29 548 59 486
(Increase)/decrease in inventories (1 287) 136 533
(Increase)/decrease in trade and other receivable (18 674) 5 237 (16 307)
Increase in trade and other payables 6 879 13 763 42 640
Net cash generated from operations 13 261 48 684 86 352
16. (Decrease)/ Increase in loans
Loans receivable recovered 120 2 805 4 518
Loans receivable advanced – – (1 450)
Employee loans receivable recovered 1 039 1 692 120
Finance leases advanced 2 058 – 178
Finance leases repaid (520) (550) (1 116)
Term loans received – – 75 000
Term loans repaid (11 725) (12 000) (20 368)
(9 028) (8 053) 56 882
17. Cash acquired through business combinations
Akhona GPI (refer to note 18.1) 4 672 – –
Hot Slots (refer to note 18.3) 2 261 – –
Grand Tech (refer to note 18.4) 1 258 – –
8 191 – –
18.IFRS 3R – Business Combinations
18.1 Akhona GPI
During 2012 GPI made an offer to acquire the remaining 41% interest in Akhona GPI which GPI
did not already own for R20.7 million. This offer was accepted on 25 May 2012.
On 20 November 2013 all conditions precedent were met and the deal was concluded.
Akhona GPI owns a 24.9% stake in Dolcoast, which in turn owns 22.4% of Afrisun KZN (Pty) Ltd
("Sibaya Casino"). This investment will provide GPI with an effective 5.6% indirectly in Sibaya Casino.
GPI previously owned 59% economic interest in Akhona GPI this only translated into a 40% voting
interest. GPI therefore accounted for this investment as an associate. As GPI now owns 100% of
Akhona GPI, GPI will now consolidate this investment from the effective date of the acquisition.
IFRS 3R – Business Combinations requires that where an acquirer purchases its interest in
an acquiree in stages and this results in a change in control of the acquiree, then the acquirer
measures its previously held interest at the acquisition date and recognises the resulting gain or
loss, if any, in profit or loss. The R32.8 million relates to the remeasurement of its previously held
59% economic (40% voting stake) interest in Akhona GPI.
Akhona GPI's interest in Dolcoast has historically been recorded using the equity method,
however in determining the fair value as required by IFRS 3R the sum of the parts valuation
method was used. Discounted cash flows were used in order to obtain the fair value of Dolcoast.
A discount rate of 15.8% and a growth rate of between 3% and 4% was used.
No additional intangible assets have been identified given the approach to value Akhona GPI's
interest in Dolcoast.
R000's
Investment in associate 119 302
Cash and cash equivalents 4 672
Deffered tax liability (15 013)
Accounts and other payables (120)
Total identifiable net assets at fair value 108 841
Fair value of existing equity interest (64 216)
Gain on acquisition of investment (23 843)
Purchase consideration 20 782
Purchase consideration made up as follows
Cash paid in respect of acquisition 20 782
Analysis of cash flow on acquisition
Net cash acquired on acquisition 4 672
Cash paid in respect of acquisition (20 782)
Net cash outflow 16 110
18.2 Zimele Slots
On 2 August 2013 GPI announced that the Mpumalanga Gambling Board ("MGB") had approved
the transfer of the LPM Route Operator Licence held by Zimele Slots Mpumalanga (Pty) Ltd
("Zimele") to Grand Gaming Mpumalanga (Pty) Ltd ("GGM"), a wholly-owned subsidiary of GPI
Slots. The licence is one of two issued in the province where a maximum of 2 000 LPMs may be
rolled out. The acquisition became unconditional on 17 July 2013 when the MGB approved the
acquisition and transfer of the route operator licence resulting in GGM formally gaining control of
the business on 18 July 2013. The purchase price for Zimele was R6.75 million.
Included in revenue and profit for the period is R1.9 million and a loss after tax of R0.8 million
respectively since Zimele became a subsidiary.
As per IFRS 3R the acquirer, GGM is required to identify all the assets purchased and
liabilities assumed and to recognize these items, separately from goodwill, at the fair value
at the acquisition date. The only tangible assets acquired were the assets as defined per the
agreement, which mostly consisted of property, plant and equipment. As for intangible assets the
route operator licence and site operator licences were identified as intangible assets. No other
intangible assets have been identified.
R000's
Intangible assets
– Route operator licence 4 422
– Site operator licences 414
Property, plant and equipment 554
Deferred tax liability (1 509)
Total identifiable net assets at fair value 3 881
Goodwill 2 869
Purchase consideration 6 750
Purchase consideration made up as follows
Cash paid in respect of acquisition 6 750
Analysis of cash flow on acquisition
Net cash acquired on acquisition –
Cash paid in respect of acquisition (6 750)
Net cash outflow (6 750)
18.3 Hot Slots
On 2 August 2013 GPI announced that, through its 100% held subsidiary GPI Slots, it had
entered into an agreement to acquire 100% of the issued share capital and loan accounts in
Bohwa 1 (Pty) Ltd ("Hot Slots").
Hot Slots is licensed as a route operator in Gauteng to operate 1 000 LPMs. The agreement was
subject to the fulfillment of certain conditions precedent, including the approval of the transaction by
the Gauteng Gambling Board ("GGB") and GPI shareholder approval. GGB approval was obtained
on 3 December 2013 and GPI shareholder approval was obtained on 11 December 2013. In terms
of the agreement the effective date of the deal was 17 December 2013. GPI Slots acquired Hot
Slots for R65 million. A portion of the purchase price was settled by way of issuing GPI shares to
the value of R40 million.
Included in revenue and profit for the period is R2.4 million and R0.6 million respectively since
Hot Slots became a subsidiary.
As per IFRS 3R the acquirer, GPI Slots is required to identify all the assets purchased and liabilities
assumed and to recognize these items, separately from goodwill, at the fair value at the acquisition
date. As for intangible assets the route operator licence, site operator licences, brand and
trademarks were identified as intangible assets. No other intangible assets have been identified.
R000's
Intangibles
– Route Operator Licence 16 163
– Site operator licences 542
– Branding and trademarks 10 977
– Site establishment 320
Property, plant and equipment 14 080
Trade and other receivables 2 704
Cash and cash equivalents 2 261
47 047
Deferred tax liabilities (7 751)
Loan to holding company (92 042)
Trade and other payables (6 381)
(106 174)
Total identifiable net assets at fair value (59 127)
Goodwill 32 085
Loans acquired 92 042
Purchase consideration 65 000
Purchase consideration made up as follows
Cash paid in respect of acquisition 25 000
Shares issued 40 000
65 000
Analysis of cash flow on acquisition
Net cash acquired on acquisition 2 261
Cash paid in respect of acquisition (25 000)
Net cash outflow (22 739)
18.4 Grand Technology
On 1 July 2013 Grand Capital Investment Holding (Pty) Ltd ("GCI") acquired an 85% interest in
Grand Technology (Pty) Ltd ("Grand Tech"). This acquisition is part of the group's stated objective
of investing in its own Information Technology infrastructure.
R000's
Property, plant and equipment 2 281
Trade and other receivables 1 386
Cash and cash equivalents 1 258
4 925
Loans (1 450)
Trade and other payables (3 918)
(5 368)
Total identifiable net assets at fair value (443)
Positive goodwill 376
Non-controlling interest 67
Purchase consideration –
Purchase consideration made up as follows
Cash paid in respect of acquisition –
Analysis of cash flows on acquisition
Net cash acquired on acquisition 1 258
Cash paid in respect of acquisition –
Net cash outflows 1 258
19. Options granted to executives
In order to align key employee remuneration goals with that of the creation of shareholder wealth,
20.2 million options were awarded to key personnell, which included the executive directors on 9 October 2013.
These options will vest in 4 annual tranches starting from 30 August 2015. Participants have a 180 day period
from the respective strike dates during which options can be exercised. A total of R1.4 million has
been expensed in the statement of comprehensive income in profit or loss in this regard.
REVIEW OF OPERATIONS
Casino group
SunWest
SunWest consists of GrandWest Casino and the Table Bay Hotel.
GrandWest's revenue increased by 7.6% when compared to the prior period and its EBITDA increased
by 4.8% to R408 million (R389.4 million). Even though the absolute EBITDA value increased, the
EBITDA % decreased by 0.9% to 40.8%. This was exclusively due to an increase of 2% in the
gaming taxes. These increases translated into a 4.9% increase in profit after tax to R248.7 million
(R237 million). As our anchor investment we are very pleased with the results for the period and
acknowledge the effort that GrandWest's management team have put in to achieve these results.
The Table Bay Hotel incurred a R14.3 million loss after tax for the period (R26.9 million loss after
tax). The loss for the period is 46.8% lower than the loss reflected in the prior period. The current
period EBITDA of R21.9 million is 267% higher than that of the prior period and most
encouragingly the revenue of R107.9 million (R77.4 million) has increased by 39.3% compared to the
prior period.
Golden Valley Casino
Golden Valley Casino's revenue increased by 5% to R69.6 million (R66.3 million). Its EBITDA however
decreased by 35.5% to R9.4 million (R14.5 million) and its EBITDA percentage decreased by 8.5% to
13.4% (21.9%). These decreases resulted in a loss after tax of R2.5 million (R0.2 million loss after tax).
Akhona GPI
GPI acquired the remaining 41% of Akhona GPI on 20 November 2013 and in so doing became
the 100% owners of this entity. At the time of writing these results, we have not received any group
consolidated accounts from Akhona GPI. Akhona GPI did not equity account its investment in
Dolcoast due to the information not being available at the time. We therefore included the company
results for the period.
Slots group
The group now owns and operates a total of 5 LPM gaming licences in South Africa since the
acquisition of Hot Slots. Together with our other four licences namely; Grandslots, Kingdomslots,
Grand Gaming Mpumalanga and Grand Gaming Gauteng, the group now has access to a possible
5 000 LPMs.
We continue to explore LPM expansion opportunities in South Africa and abroad, with new and
existing bingo licences being pursued in the rest of the country.
Revenue Revenue Revenue
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
6 months 6 months 12 months
R000's R000's R000's
Gaming revenue
– Grandslots 160 413 139 830 281 107
– Kingdomslots 84 823 71 306 142 817
– Grand Gaming: Gauteng 24 839 19 092 39 425
– Grand Gaming Mpumalanga 1 983 - -
– Grand Gaming Hot Slots 2 452 - -
– Gross Gaming Revenue 274 510 230 228 463 349
– Other gaming revenue 5 343 3 545 8 458
279 853 233 773 471 807
CONTINGENT LIABILITIES
On 2 April 2013 SARS levied an additional assessment of R16.4 million against GPI.
An objection has been lodged. SARS has advised the matter to an Alternative Dispute Resolution
("ADR") hearing which is scheduled for 24 March 2014.
The group has not recognised a provision for this disputed penalty as it considers the risk of financial
outflow as 'possible' and therefore does not meet the definition of a provision under IAS 37 –
Provisions, contingent liabilities and contingent assets.
RELATED PARTY TRANSACTIONS
The group, in the ordinary course of business, entered into various transactions with related parties.
Any intra-group related party transactions and outstanding balances are eliminated in the preparation
of the consolidated financial statements of the group as presented.
DIVIDENDS
A final ordinary dividend of 15 cents per share (2012: 12.5 cents per share) was paid in September 2013.
SUBSEQUENT EVENTS
There were no material events subsequent to the reporting date.
DIRECTORATE
Walter Geach was appointed to the board of directors as a non-executive director on 18 September 2013.
PROSPECTS
GPI has had a very successful and exciting six months. The group continues to attract a lot of interest
from all spheres of the investment market and we have to take heed of this new-found level of
excitement around GPI. Opportunities abound and we have to consider how we focus our thinking
so that we extract the best possible outcome for all stakeholders. GPI is in a unique space where we
have demonstrated our ability to operate certain assets, exert significant influence on others and to
venture into completely new territory with confidence gained from these experiences and the energy
that permeates our management team. Our investment philosophy demonstrates this and we have
quite a few new developments pending which we will pursue to take us on this path.
For and on behalf of the board
H Adams A Keet
Executive Chairman Chief Executive Officer
21 February 2014 21 February 2014
Prepared by: Financial Director, S Petersen, CA(SA)
25 February 2014
Directors
H Adams (Executive Chairman), A Abercrombie, AW Bedford #, A Keet (Chief Executive Officer),
W Geach#, S Petersen (Financial Director), Dr N Maharaj #*, N Mlambo #, C Priem #*, MF Samaai #
(#non-executive * independent)
Grand Parade Investments Limited ('GPI' or 'the company' or 'the group')
Registered office
10th Floor, 33 On-Heerengracht
Heerengracht Street, Foreshore, Cape Town, 8001
(PO Box 6563, Roggebaai, 8012)
Transfer secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
Attorneys
Bernadt Vukic Potash & Getz Attorneys
Corporate advisors
Leaf Capital (Pty) Ltd
Sponsor
PSG Capital (Pty) Ltd
Company secretary
Lazelle Parton
Registration number
1997/003548/06
ISIN
ZAE000119814
Share code
GPL
www.grandparade.co.za
Date: 25/02/2014 09:03:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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