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Preliminary reviewed results of Grand Parade Investments Limited for the year ended 30 June 2014
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")
Preliminary reviewed results of Grand Parade Investments Limited for the year ended 30 June 2014
Introduction
2014 was a year in which GPI took significant strides in implementing its growth strategy.A reduction of 26%
in adjusted HEPS to 22.5c reflects GPI's commitment to investing in future value and growth. This decline can be
primarily attributed to significant investment in BURGER KING®.The effect on adjusted HEPS of the R53m loss
incurred in BURGER KING® is material in isolation, but it does not provide the necessary detail with regards to
the significant gains made in a mere 13 months to establish a world class brand projected to produce significant
long term profits. In arguably a very tough trading environment we managed to establish 18 stores and a
scalable supply chain. BURGER KING® also managed to contract on favourable terms with landlords and suppliers,
and this will set a platform for growing BURGER KING®.Interpreting these results is further complicated by the
disclosures required in terms of the various IFRS statements which arise as a result of several impending
transactions and these need to be studied closely to fully appreciate the implications.The company believes
that Net Asset Value is grossly understated, as was disclosed in the circular relating to the disposals of
our businesses to Sun International and other parties.The value at tributable to shareholders from these
transactions will only materialise in the current year (FY15) once all the conditions precedent (to those
transactions) have been fulfilled.
Increase in Slots Group Gross Gaming Revenue - 26%
BURGER KING® 18 stores, employing in excess of 1 000 people
Contributed to Corporate Social Investments projects - R8.2 million
Sale of significant gaming assets, subject to certain conditions precedent.Realising significant cash for reinvestment
Condensed group statement of comprehensive income
for the year ended 30 June 2014
Preliminary Restated
30 June 2014 30 June 2013
Note R000's R000's
Continuing operations
Revenue 1 134 976 15 593
Cost of sales 2 (85 107) (3 288)
Gross profit 49 869 12 305
Operating costs 3 (165 385) (49 590)
Loss from operations (115 516) (37 285)
Loss from equity-accounted investments 4 (255)
Remeasurement of investment 5 32 838
Gain on acquisition of investment 5 23 637
Depreciation and amortisation (15 531) (9 651)
Loss before finance costs and taxation (74 827) (46 936)
Finance income 8 621 4 502
Finance costs 6 (18 026) (12 415)
Loss before taxation (84 232) (54 849)
Taxation 7 20 744 3 438
Loss for the year from continuing operations (63 488) (51 411)
Discontinued operations
Profit for the year from discontinued operations 8 121 972 178 526
Profit for the year 58 484 127 115
Other comprehensive income
Items that will be reclassified subsequently
to profit and loss
Unrealised fair value losses on available-for-sale
investments, net of tax (5 189) (1 887)
Total comprehensive income for the period 53 295 125 228
Loss for the year from continuing operations
attributable to:
Ordinary shareholders (52 937) (49 454)
Profit for the year from discontinued operations
attributable to:
Ordinary shareholders 121 972 178 526
Non-contolling interest (10 551) (1957)
58 484 127 115
Total comprehensive income attributable to:
Ordinary shareholders 63 846 127 185
Non-controlling interest (10 551) (1 957)
53 295 125 228
Cents Cents % change
Basic earnings per share 9 14.79 28.02 (47)
Diluted basic earnings per share 14.73 28.02 (47)
Headline earnings per share 9 2.76 28.23 (90)
Diluted headline earnings per share 2.75 28.23 (90)
Adjusted headline earnings per share 9 22.50 30.46 (26)
Adjusted diluted headline earnings per share 22.41 30.46 (26)
Ordinary dividend per share 15.00 12.50 20
Special dividend per share 7.50 (100)
Condensed group statement of financial position
as at 30 June 2014
Preliminary Restated
30 June 2014 30 June 2013
Note R000's R000's
ASSETS
Non-current assets 10 293 873 1 529 714
Assets classified as held for sale 8 1 640 743
Current assets 11 210 483 472 697
Total Assets 2 145 099 2 002 411
EQUITY AND LIABILITIES
Total equity 12 1 681 277 1 649 098
Non-controlling interest (12 575) (1 957)
1 668 702 1 647 141
Non-current liabilities
Deferred tax liability 16 660 12 107
Cumulative redeemable preference shares 13 132 691 132 424
Interest-bearing borrowings 13 60 000 83 436
Provisions 490 768
Finance lease liability 945 244
Liabilities classified as held for sale 8 155 532
Current liabilities 14 110 079 126 291
Total equity and liabilities 2 145 099 2 002 411
Cents Cents % change
Net asset value per share
(before deducting treasury shares) 344 358 (4)
Adjusted net asset value per share
(after deducting treasury shares) 358 358
Tangible net asset value per share
(before deducting treasury shares) 292 318 (8)
Adjusted tangible net asset value per share
(after deducting treasury shares) 304 319 (15)
Condensed group statement of cash flows
for the year ended 30 June 2014
Preliminary Restated
30 June 2014 30 June 2013
Note R000's R000's
Cash flows from operating activities
Net cash utilised in operations 15 (100 341) (31 584)
Income tax paid (1 950) (1 310)
Finance income 8 621 4 502
Net cash from operating activities from discontinued
operations 106 711 105 911
Net cash inflow from operating activities 13 041 77 519
Cash flows from investing activities
Acquisition of plant and equipment (75 118) (31 111)
Acquisition of land and buildings (41 858) (78 555)
Acquisition of intangibles (4 286) (2 779)
Consideration from disposal of property, plant
and equipment 24
Cash acquired through business combinations 5 930
Investments made (43 331)
Consideration from the sale of investments 229
Dividends received 4 916 10 262
Net cash from investing activities of discontinued
operations (34 087) (72 318)
Net cash outflow from investing activities (119 407) (29 865)
Cash flows from financing activities
Dividend paid (68 563) (90 873)
Acquisition of treasury shares (10 770)
Share issue expenses (134)
Increase in loans advanced 16 9 595 78 435
Finance costs paid (17 702) (11 721)
Net cash from financing activities from
discontinued operations (32 109) (25 424)
Net cash outflow from financing activities (119 683) (49 583)
Net decrease in cash and cash equivalents (226 049) (1 929)
Cash and cash equivalents at the beginning of year 403 218 405 147
Cash and cash equivalents at the end of year 177 169 403 218
Group statement of changes in equity
for the year ended 30 June 2014
Capital Share- Available-
redemption Ordinary based for-sale Non-
reserve share Share Treasury payment fair value Accumulate controlling
fund capital premium shares reserve reserve profits interest
R000's R000's R000's R000's R000's R000's R000's R000's Total
Balance at 30 June 2012 301 115 730 249 (2 346) 8 132 881 026 1 617 477
Prior period error* (3 938) (3 938)
Restated balance 301 115 730 249 (2 346) 8 132 877 088 1 613 539
Total comprehensive
income/(loss) for the period (1 887) 129 072 (1 957) 125 228
Profit/(loss) for the year - - 129 072 (1 957) 127 115
Other comprehensive income (1 887) (1 887)
Dividends declared (91 902) (91 902)
Conversion of par value
shares to non-par value shares 730 249 (730 249)
Treasury shares allocated to
employees 276 276
Balance at 30 June 2013 301 730 364 (2 070) 6 245 914 258 (1 957) 1 647 141
Total comprehensive
income/(loss) for the period (5 189) 69 035 (10 551) 53 295
Profit/(loss) for the year 69 035 (10 551) 58 484
Other comprehensive income - (5 189) (5 189)
Dividends declared - (68 964) (68 964)
Dividends prescribed and
written back 4 383 4 383
Acquisition of subsidiary 67 (67)
Shares issued 100 000 (70 639) 29 361
Share issue expenses (134) (134)
Treasury shares allocated to
employees
Share-based payment reserve 3 620 3 620
Balance at 30 June 2014 301 830 230 (72 709) 3 620 1 056 918 779 (12 575) 1 668 702
*Refer to prior period error note on page 7.
Segmental analysis
IFRS 8: Operating Segments requires a “management approach” whereby segmental information is presented on the
same basis as that used for internal reporting purposes to the chief decision maker/makers. The chief decision
makers are considered to be the members of the Executive Committee, who review the group’s internal reporting
by industry.
SunWest International (Pty) Ltd (Sunwest), Grand Casino KZN Investments (Pty) Ltd (Grand Casino KZN), Golden
Valley Casino, Grand Casino Investments (Pty)Ltd (Grand Casino) and National Casino Manco (Pty) Ltd( National
Manco) are classified as Casinos.The GPI Slots group is classified as Slots. The Casino and Slots segments have
been classified as assets held for sale and has been separately classified in the segment analysis below as
discontinued operations. GPI House Properties (Pty) Ltd is classified as Property. Grand Technologies (Pty)
Ltd is classified as IT and BURGER KING® is classified as Food division. All other expenses, finance costs
and overheads are classified as Corporate.
On 1 July 2013, GPI restructured its operations to effectively split the central services costs, classified under
the Services segment in the prior period, 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 operating services costs have been
reallocated between Slots and the remainder of the services costs have been reallocated to the Corporate
segment.
The split of the central costs was also applied retrospectively and was allocated on a proportionate basis using
the head count numbers during the year.
The segments have been further amended to take into account the assets and liabilities held for sale due to the
sale of certain investments as discussed below in note 8. The directors do not review the group’s performance by
geographical sector and therefore no such disclosure has been made. Listed below is a detailed segmental analysis.
Preliminary Restated Preliminary Restated
30 June 2014 30 June 2013 30 June 2014 30 June 2013
R000's R000's R000's R000's
Continuing operations
Revenue Inter-segment Revenue
Property 838 366 13 348 2 987
Food 126 867 4 965 -
IT 436 5 406
Corporate 6 835 10 262 24 671
134 976 15 593 43 425 2 987
Discontinued operations
Casinos 556 1 953
Slots 599 060 471 739 69 574
599 616 473 692 69 574
Continuing operations
Operating costs EBITDA
Property 8 143 (939) 8 982 (1 306)
Food (108 101) (22 688) (66 547) (20 920)
IT (3 705) (3 321)
Corporate (61 722) (27 841) (1 590) (17 671)
(165 385) (49 590) (59 296) (37 285)
Discontinued operations
Casinos - 127 860 116 626
Slots (105 329) (93 250) 142 444 103 226
(105 329) (93 250) 270 304 219 852
Continuing operations
Finance income Finance costs
Property 729 85 (6 038) (687)
Food 676 91 (71) (159)
IT (11)
Corporate 7 216 4 326 (11 906) (11 569)
8 621 4 502 (18 026) (12 415)
Discontinued operations
Casinos
Slots 1 499 1 714 (4 116) (2 685)
1 499 1 714 (4 116) (2 685)
Continuing operations
Depreciation and Equity-accounted earnings
amortisation
Property (7 920) (672)
Food (5 623) (287) (255)
IT (862)
Corporate (1 126) (8 692)
(15 531) (9 651) (255)
Discontinued operations
Casinos 127 304 114 672
Slots (38 142) (26 479)
(38 142) (26 479) 127 304 114 672
Continuing operations
Taxation Profit after tax
Property 1 219 (9) (3 028) 23
Food 18 879 5 074 (52 686) (16 202)
IT (4 194)
Corporate 646 (1 627) 3 580 (35 232)
20 744 3 438 (63 488) (51 411)
Discontinued operations
Casinos - 127 860 116 625
Slots (107 573) (13 876) (5 888) 61 901
(107 573) (13 876) 121 972 178 526
Continuing operations
Total assets Total liabilities
Property 169 774 133 164 (70 159) (75 727)
Food 179 548 83 512 (42 625) (20 883)
IT 9 012 (7 966)
Corporate 146 022 313 955 (200 115) (135 972)
504 356 530 631 (320 865) (232 582)
Discontinued operation
Casinos 1 179 507 1 092 469 -
Slots 461 236 379 311 (155 532) (122 688)
1 640 743 1 471 780 (155 532) (122 688)
Accounting policies and basis of preparation
The preliminary reviewed condensed consolidated Annual Financial Statements (AFS) have been prepared on the
historical cost basis, except where stated otherwise, in accordance with International Financial Reporting
Standards (IFRS) and the Listing Requirements of the JSE Limited (JSE) and are presented in terms of disclosure
requirements set out in IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council and the Companies Act of South Africa. The accounting policies applied are consistent with
those applied in the financial results for the year ended 30 June 2013, with the exception of the following new
and amended standards which are effective for the financial year.
Statement Name Effective Effect
date
IFRS 10 Consolidated financial 01-Jan-13
statements
IFRS 11 Joint Arrangements 01-Jan-13
IFRS 12 Disclosures of interests in 01-Jan-13 No material effect, only additional disclosure
other entities required.
IFRS 13 Fair Value measurement 01-Jan-13
IAS 28 Investments in Joint and 01-Jan-13
Associates
IAS 1 Clarification of requirements 01-Jan-13 Clarifications of requirements around
for comparative information comparatives,especially in the instances of
restatements. No material effect, only
additional disclosure required.
IAS 32 Income tax consequences 01-Jan-13 To clarify that income tax related to
of distributions to holders of distributions to equity holders and income
an equity instrument, and of tax related costs of an equity transaction
transaction costs of an would be accounted for in accordance with IAS 12
equity transaction Income Taxes (this includes determining whether
the income tax is recognises in profit and loss
or immediately in equity). No material effect,
only additional disclosure required.
IAS 34 Segment reporting 01-Jan-13 To align the disclosure requirements in IAS 34
disclosures in interim with those of IFRS 8.To clarify that total
financial statements assets for a particular reportable segment
need only be disclosed when both:
The amounts are regularly provided to the chief
operating decision maker, and
There has been a material change in the total
assets for that segment from the amount disclosed
in the last annual financial statements. No
material effect, only additional disclosure
required.
Audit opinion
Our auditors, EY (previously known as Ernst & Young), have reviewed the condensed consolidated results contained
herein. Their reviewed unmodified report is available for inspection at the company's registered office.
Prior year error
During the current year management identified areas of non-compliance in some of the subsidiaries of GPI related
to the VAT status of suppliers which stemmed from the fact that the legacy accounting system was not configured
to distinguish between VAT registered vendors and non-VAT registered vendors. The total impact of the error was
quantified and disclosed to the South African Revenue Services as part of the voluntary disclosure programme.
Management has corrected the treatment by way of month end adjustments, until such time as the accounting system
can be reconfigured to distinguish between the VAT status of suppliers.
Restated Restated
30 June 2013 30 June 2012
R000's R000's
Statement of financial position
Increase in income tax receivable 1 664 1 147
Increase in trade and other payables (8 063) (5 085)
Statement of changes in equity
Decrease in opening balance (3 938) (2 050)
Decrease in net profit after tax (2 461) (1 888)
Statement of comprehensive income
Decrease in revenue (68) (76)
Increase in cost of sales (2 381) (1 850)
Increase in operating costs (33) (99)
Increase in finance cost (497) (307)
Decrease in operating profit (2 978) (2 332)
Taxation
Decrease in taxation (517) (444)
Decrease in net profit after tax (2 461) (1 888)
Cents Cents
Basic and diluted earnings per share (0.53) (0.40)
Headline and diluted headline earnings per share (0.53) (0.40)
Adjusted and diluted adjusted headline earnings per share (0.54) (0.40)
Notes to the financial statements
Due to GPI entering into sale agreements to sell various investments, the related assets and liabilities have
been separately disclosed in terms of IFRS5. Non-current Assets held for Sale and Discontinued Operations.
As these investments represent the Slots and Casino segments it meets the definition of a discontinued
operation and as a result the statement of comprehensive income comparative figures were restated as
required by IFRS 5.The effect of these transactions are disclosed in note 8.
The explanations contained in these results have taken the above effect into account.
1.Revenue
Revenue from continuing operations comprises mainly of food sales from GPI's food division, dividends received
from Grindrod Bank Limited ("Grindrod"), IT fees and rental income. Food sales from BURGER KING® amounted to
R127 million for the year.
2.Cost of sales
Costs of sales consists mainly of food costs. Food costs were higher than what is expected due to the
temporary practice of importing of goods.
3.Operating costs
Overall operating costs increased as a result of the additional establishment costs of BURGER KING®.
Included in operating costs are transaction costs to the value of R21 million which have been incurred during
the year. R13 million of these costs relate to our lottery bid, the remainder relates to all other deals
undertaken during the year. Transactions costs are added back in adjusted headline earnings.
4.Profit from equity-accounted investments
Profit from equity-accounted investments is made up of profits of R0.1 million from Mac Brothers Catering
Equipment (Pty) Ltd (Mac Brothers) for the period since acquiring our 22.2% interest and losses of
R0.4 million from equity-accounted investments from the food group in respect of the joint venture with
Excellent Meat.
5.Remeasurement of investment
IFRS 3 Business Combinations
During 2012 GPI made an offer to acquire the remaining 41% interest in Grand Casino KZN which GPI did not
already own. On 20 November 2013 all conditions precedent were met and the deal was concluded. Grand Casino
KZN owns a 24.9% stake in Dolcoast, which in turns owns 22.4% of Afrisun KZN (Pty) Ltd (Sibaya Casino). This
investment provided GPI with an effective 5.6% stake indirectly in Sibaya Casino. The R33 million relates
to the remeasurement of the 59% previously held interest in Grand Casino KZN and arose due to acquiring 100%
of this investment. A detailed fair value assessment of Grand Casino KZN was conducted at the time of this
transaction and a R24 million bargain purchase on the acquisition of the investment adjustment was accounted
for. The costof this investment has been included in investments made during the year in the cash flow. On
2 August 2013 GPI announced that the Mpumalanga Gambling Board (“MGB”) had approved the transfer of the LPM
Route Operator License held by Zimele Slots Mpumalanga (Pty) Ltd ('Zimele') to Grand Gaming Mpumalanga (Pty)
Ltd ('GGM'), a wholly-owned subsidiary of GPI Slots. The acquisition became unconditional on 17 July 2013
when the MGB approved the acquisition and transfer of the route operator license resulting in GGM formally
gaining control of the business on 18 July 2013. 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 license and site operator licenses were identified as intangible assets. No other
intangible assets have been identified.
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').
The effective date of the deal was 17 December 2013. As per IFRS 3R the acquirer, GPI Slots is required to
identify all the assets purchased and liabilitie sassumed and to recognize these items, separately from goodwill,
at the fair value at the acquisition date. As for intangible assets the route operator license, site operator
licenses, brand and trademarks were identified as intangible assets. No other intangible assets have been
identified.
On 1 July 2013 Grand Capital Investment Holding (Pty) Ltd ('GCI') acquired an 85% interest in Grand Tech.
This acquisition is part of the group’s stated objective of investing in its own Information Technology
infrastructure. The non- controlling interest in Grand Tech was based on the proportionate share of net
assets.
Goodwill on the above acquisitions has arisen as a results of expected synergies, whereas the gain on acquisition
of Grand Casino KZN has arisen from a discounted consideration paid for the fair value of the net assets acquired.
The discount realized can be attributed to the appreciation of the Dolcoast asset during the interim period of
negotiations.
Grand
Casino KZN Zimele Hotslots Grand Tech
Acquisition date 20 November 18 July 17 December 01 July
2013 2013 2013 2013
Economic percentage acquired 41% - 100% 85%
Voting percentage acquired 60% - 100% 85%
Revenue since acquisition (R000s) 6 461 44 480 32 746 6 982
Profit/(loss) since acquisition (R000s) 6 557 (3 006) (1 523) (4 194)
Revenue if acquired on 1 July 2013 (R000s) 10 365 44 480 58 363 6 982
Profit/(loss) if acquired on 1 July 2013 (R000s) 10 531 (3006) (3 543) (4 194)
Identifiable assets and liabilitiesI
Investment in associate 119 302 – – –
Property, plant and equipment – 554 14 080 2 281
Intangible assets – 4 836 28 002 –
Trade and other receivables – – 2 704 1 386
Cash and cash equivalents 4 672 – 2 261 1 258
Deferred tax liabilities (15 013) (1 509) (7 751) –
Related party loans – – (92 042) (1 450)
Trade and other payables (120) – (6 381) (3 918)
Total identifiable net assets at fair value 108 841 3 881 (59 127) (443)
Goodwill/(Gain on acquistion of investment) (23 637) 2 869 32 085 376
Non-controlling interest – – – 67
Loans acquired – – 92 042 –
Fair value of existing equity interest (31 374) – – –
Remeasurement of investment (32 842 – – –
Purchase consideration 20 988 6 750 65 00 –
Purchase consideration made up as follows
Cash paid in respect of acquisition 20 988 6 750 25 000 –
Shares issued – – 40 000 – 20 988 6 750 65 000 –
Analysis of cash flow on acquisition
Net cash acquired on acquisition 4 672 – 2 261 1 258
Cash paid in respect of acquisition (20 988) (6 750) (25 000) –
Net cash outflow (16 316) (6 750) (22 739) 1 258
6.Finance costs
Finance costs increased year on year as a result of the long term loan that was received at the end of the
2013 financial year from Sanlam Capital Markets in respect of our head office building.
7.Taxation
The tax charge in the statement of comprehensive income decreased compared to the prior year due to BURGER KING®
only being part of the group for 6 weeks during the prior year whereas during the current year an additonal
R19 million deferred tax asset was raised, as a result of losses incurred.
8.Discontinued operations and assets held for sale
Due to GPI entering into sale agreements to sell various investments, the related assets and liabilities have
been separately disclosed on the statement of financial position and statement of comprehensive income as
required by IFRS 5.
As these investments include the Slots and Casino segments. They are considered to be a separate major line
of business, and therefore meet the definition of discontinued operations and as a result the statement of
comprehensive income and statement of cash flows comparative figures have been restated as required by IFRS 5.
While GPI currently owns 100% of the Slots group it plans to dispose of 70% of GPI Slots in three separate
tranches with the effective date of the first tranche of 25% being 1 July 2014. As the sale of the first tranche
gives rise to a loss in control of the assets and liabilities of the Slots group has been disclosed as held
for sale.
Currently GPI owns 25.1% in SunWest and Worcester respectively and an effective indirect stake of 5.6% in
Sibaya Casino through its investment in Dolcoast. In terms of the sale agreement, GPI will sell these
investments during the next twelve months once all conditions precedent have been met.
The holding in National Manco, an available for sale instrument, is also being disposed of in this transaction.
The investment is carried at its fair value of R1 million, based on the agreed transaction price, which is
considered to be the best indication of the fair value of this investment. This measurement basis results in
the asset being considered a level 3 investment (i.e. that the valuation is based on unobservable inputs).
No significant change in the valuation is expected to impact the profit and loss and therefore no sensitivity
has been provided.
Overall Gross Gaming Revenue (GGR) from slots group increased by 26% compared to the prior year. GGR is the
term used for the net revenue generated by a limited payout machine (LPM) from the amount of cash played
through the LPM less payouts to players. Cost of sales mainly consists of cost of sales in respect of LPM’s,
which includes direct costs such as commissions to site owners, gambling levies and monitoring fees. Cost of
sales in respect of LPM’s has increased by 29%, due to additional taxes being incurred as a result of the
additional revenues. Included in the tax charge in the statement of comprehensive income is the deferred tax
effect of R70 million as a result of the decision to sell these assets.
Profit from equity-accounted investments relates to the profit from SunWest and Grand Casino KZN.
No profit from Worcester has been recognised due to the company making losses during the year and the
cumulative losses since acquisition exceeding the original cost, resulting in a carrying value of nil.
The results of the Slots group, SunWest, Dolcoast and National Manco for the year are presented below.
Preliminary Restated
2014 2013
R000's R000's
Statement of Comprehensive Income
Revenue 599 616 473 692
Cost of Sales (351 287) (275 262)
Gross Profit 248 329 198 430
Operating costs (105 329) (93 250)
Profit from operations 143 000 105 180
Profit from equity-accounted investments 127 304 114 672
Depreciation
(38 142) (26 479)
Profit before finance costs and taxation 232 162 193 373
Finance income 1 499 1 714
Finance costs (4 116) (2 685)
Profit before taxation 229 545 192 402
Taxation (107 573) (13 876)
Profit for the year from discontinued operations 121 972 178 526
Statement of financial position
ASSETS
NON-CURRENT ASSETS
Investments in jointly-controlled entities 1 056 924
Investment in associates 121 283
Investments 1 300
Goodwill 160 902
Property, plant and equipment 132 130
Intangible assets 85 006
Deferred tax assets 2 887
CURRENT ASSETS
Inventories 1 419
Trade and other receivables 40 260
Related party loans 3 887
Income tax receivable 3 058
Cash and cash equivalents 31 687
TOTAL ASSETS 1 640 743
NON-CURRENT LIABILITIES
Finance lease liabilities 1 773
Deferred tax liabilities 88 932
Provisions 1 653
CURRENT LIABILITIES
Trade and other payables 54 172
Provisions 4 478
Related party loans
Finance lease liabilities 516
Taxation 4 008
TOTAL EQUITY AND LIABILITIES 155 532
NET ASSETS DIRECTLY ASSOCIATED WITH DISCONTINUED OPERATIONS 1 485 211
Cents Cents
Basic earnings per share 26.20 31.92
Diluted basic earnings per share 41.00 31.92
9.Headline earnings, HEPS and adjusted HEPS
Headline earnings per share (HEPS) decreased by 90% adjusted HEPS decreased by 26%. The main reason
for the decrease when compared to the prior year is the additional establishment costs incurred in
BURGER KING®,which is consistent with the growth phase of a business.
Preliminary Restated
30 June 2014 30 June 2013
R000's R000's
Headline earnings reconciliation
Profit for the year 58 484 127 115
Less non-controlling interest (10 551) (1 957)
Profit for the year attributable to ordinary shareholders 69 035 129 072
Remeasurement of investment (32 838)
Gain on acquisition of investment (23 637)
Impairment of plant and equipment 316
Loss on sale of property, plant and equipment 190 733
Adjustments by jointly-controlled entities 253 167
Loss on disposal of plant and equipment 253 167
Tax effect on above (124) (252)
Headline and diluted headline earnings 12 879 130 036
Reversal of employee share trust (156) 73
Reversal of transaction costs 21 580 9 904
Reversal of IAS 12 tax adjustment 69 885
Adjusted headline and diluted adjusted headline earnings 104 188 140 013
000's 000's
Reconciliation of the number of shares
Shares in issue (before deducting treasury shares) 484 403 460 680
Shares in issue (after deducting treasury shares) 466 170 459 648
Weighted average number of shares in issue 466 738 460 680
Adjusted weighted average number of shares in issue 462 985 459 623
Diluted weighted average number of shares in issue 468 719 460 680
Diluted adjusted weighted average number of shares in issue 464 966 459 623
Cents Cents
Basic earnings per share 14.79 28.02
Diluted earnings per share 14.73 28.02
Headline earnings per share 2.76 28.23
Diluted headline earnings per share 2.75 28.23
Adjusted headline earnings per share 22.50 30.46
Adjusted diluted headline earnings per share 22.41 30.46
Ordinary dividend per share paid# 15.00 12.50
Special dividend per share# 7.00
# Final and special dividend declared in respect of the previous financial year and paid in October.
10.Non-current assets
Comparatively non-current assets decreased as a result of disclosing the Slots group, SunWest, Worcester and
Dolcoast as Assets Held for Sale. Remaining in non-current assets are property, plant and equipment acquired as
a result of the establishment of BURGER KING® stores and our initial investment of 22.2% in Mac Brothers
amounting to R22 million which was accounted for as an associate at year end. Subsequent to year end we
acquired a further 42.8% in Mac Brothers.
11.Current assets
Current assets decreased as a result of a decrease in cash and cash equivalents.The cash utilised during the year
was used to fund the expansion of BURGER KING® acquistion of limited payout machines, new investments and
servicing of debt.
12.Increase in shares
During the year 8.9 million and 14.8 million ordinary GPI shares to the value of R40 million and R60 million
respectively were issued,which related to the purchase price of Grand Gaming Hot Slots and the establishment of
the GPI Womens BBBEE Trust. The shares issued to the GPI Womens BBBEE Trust has been accounted for as treasury
shares. 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
During the year R32 million was repaid in respect of term loans. No capital amounts have been repaid on the
cumulative redeemable preference shares.
14.Current liabilities
Current liabilities mainly comprise trade and other payables of R69 million, the current portion of the term
loans with SCM of R7 million, dividends payable of R8 million, the current portion of finance leases of
R1 million and R25 million relating to the facility with The Standard Bank of South Africa.
15.Cash generated from operations
The reconciliation of net profit for the period to cash generated by operations is as follows:
Preliminary Restated
30 June 2014 30 June 2013
R000's R000's
Loss before tax (84 232) (54 849)
Depreciation and amortisation 15 531 9 651
Finance income (8 621) (4 502)
Finance costs 18 026 12 415
Non cash staff costs (98) 276
Share-based payment expense 3 029
Loss on sale of property, plant and equipment (21)
Dividends received (4 916) (10 262)
Profit from equity-accounted investments 255
Remeasurement of investment (32 838)
Gain on acquisition of investment (23 637)
Net cash utilised in operations before working capital movements (117 522) (47 271)
Increase in inventories (9 150) (300)
(Increase)/decrease in trade and other receivables (39 696) 1 270
Increase in trade and other payables 66 027 14 717
Net cash utilised from operations (100 341) (31 584)
16.Increase in loans
Preliminary Restated
Note 30 June 2014 30 June 2013
R000's R000's
Loans receivable recovered 3 491
Loans receivable advanced (10 232) (1 450)
Employee loans receivable recovered 1 112 1 762
Finance leases received 14 1 188
Finance leases repaid 14 (37)
Term loans repaid (7 436) (368)
Term loans received 14 25 000 75 000
Net loans advanced 9 595 78 435
Operational highlights
REVIEW OF OPERATIONS
Casino Group
SunWest
SunWest consists of GrandWest Casino and the Table Bay Hotel.
GrandWest's revenue increased by 8.2% when compared to the prior year and its EBITDA increased by 5.6% to
R833 million. These increases translated into a 0.5% increase in their profit after tax to R489 million. As our
major 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 loss after tax for the year of R25 million despite showing a R23 million operating
profit. Pleasingly, the loss for the year is 45.4% lower than the prior year. The current year EBITDA of
R50 million is 127% higher than that of the prior period and most encouragingly the revenue of R233 million has
increased by 28.6% compared to the prior year.
Golden Valley Casino
Golden Valley Casino's revenue increased by 12.2% to R144 million. Its EBITDA however decreased by 6.3% to
R27 million and its EBITDA percentage decreased by 3.6% to 18.5% (22.2%). These decreases resulted in a loss after
tax of R0.1 million (R1 million profit after tax).
Grand Casino KZN
GPI acquired the remaining 41% of Grand Casino KZN on 20 November 2013 and in so doing became the 100% owner of
this entity. Grand Casino KZN has been consolidated from this time and the share of profits from Dolcoast has
been accounted for as part of the assets held for sale.
Slots Group
The group now owns and operates a total of 5 LPM Route Operator 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.
GPI previously announced that its wholly-owned subsidiary, GPI Slots concluded an agreement to acquire
the shares and operations of Gold Circle KwaZulu-Natal Slots (Pty) Ltd, trading as KZN Slots ("KZN Slots"). All
conditions precedent were met on 6 August 2014 when the KZN Gambling Board approval was received.The total
purchase price paid in respect of the acquisition of KZN Slots ("the KZN Slots Purchase Consideration") amounts
to R78 million.
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
Preliminary Restated
30 June 2014 30 June 2013
R000's R000's
Gaming revenue
Grandslots 323 230 281 107
Kingdomslots 173 130 142 817
Grand Gaming Gauteng 52 809 39 425
Grand Gaming Hotslots 31 948
Grand Gaming Mpumalanga 4 328
Gross Gaming Revenue 585 445 463 349
Other Gaming Revenue 13 615 8 390
599 060 471 739
Food Group
During the year BURGER KING® South Africa has opened a total of 18 stores in Gauteng, Western Cape and
KwaZulu-Natal, and served more than 1.8 million customers. In addition the company trained and certified more
than 1000 staff members. BURGER KING®'s beef patty plant, a Joint Venture with Excellent Meat, officially opened
in May 2014 and was certified by BURGER KING® World Wide in June 2014, further enforcing our commitment to
localise our supply chain. This dedicated plant is the first of its kind in Africa and has the ability to meet
the growing demand of BURGER KING® South Africa as well as servicing an export market.
CONTINGENT LIABILITIES
The contingent liability relating to the additional assessment which was disclosed at the end of June 2013 was
been resolved with SARS and the R16 million paid to SARS in this regard was refunded.
No provision for penalties has been raised in respect of the incorrect treatment of VAT as discussed in the prior
year error note. The group has embarked on a voluntary disclosure process with SARS.
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
The company has reaffirmed its policy of being dividend active, but has delayed an announcement of a dividend
until such time as the proceeds from the sale of its gaming assets to Sun International and other parties is
certain and all conditions precedent have been met.
SUBSEQUENT EVENTS
On 23 July 2014, Grand Foods acquired a further 42.8% of Mac Brothers for a cash consideration of R43 million
thereby increasing its total investment to 65.8%.
The KZN Slots Purchase Consideration will be settled in a combination of a cash payment of 80%, equating to
R63 million and an issue of shares equating to 20% or R15 million ("the KZN Slots Acquisition Issue"). The number
of shares to be issued in terms of the KZN Slots Acquisition Issue will be calculated by dividing R15 million by
a subscription price per GPI share equal to the 30 day volume weighted average trading price of GPI shares on the
JSE, for the 30 day period immediately preceding 1 July 2014.
On 30 July 2014, GPI, through its wholly owned subsidiary GPI Investments 1 (Pty) Ltd entered into an agreement
with Spur Corporation Limited ("Spur") whereby GPI will subscribe for 10% of the issued share capital of Spur
for a total consideration of R295 million. The purchase consideration represents a 10%, B-BBEE lock-in,
discount to the volume-weighted average trading price of Spurs shares on the JSE Limited for the
90 days trading prior to 30 July 2014. This transaction is still subject to certain conditions precedent.
No information in respect of the fair value of assets and liabilities has been disclosed as the purchase price
allocation has not yet been completed on any of the business combinations mentioned in this subsequent events
section.
DIRECTORATE
Mogamat Faldi Samaai resigned as non-executive director on 2 June 2014 in order to take on an executive position
in our property division as property executive.
PROSPECTS
The domestic economy remains under pressure with high inflation slow growth and a cycle of increasing interest rates.
Trading conditions will consequently remain under pressure for our Gaming and Food assets.
BURGER KING® is projected to break-even in short term and will no longer require any further cash investment from GPI
beyond June 2015. The expansion of BURGER KING® locally as well as within the African countries to which GPI has
the rights, will be continued and explored to such an extent that it is envisaged that the income that is foregone
through the sales of the Gaming assets will be replaced by the remaining assets, by 2016. Beyond 2016, the
potential growth in revenues and profitability is projected to justify the decision to re-position GPI through
the sale of assets where growth has plateaued. The company’s strong balance sheet positions it well to take
advantage of the current economic circumstances that prevail and to pursue its strategic goals.
Any statements included in this announcement which may be construed as general profit forecasts has not been reviewed
or reported on by the company's auditors.
For and on behalf of the board
H Adams A Keet
Executive Chairman Chief Executive Officer
27 August 2014 27 August 2014
Prepared by: Financial Director, S Petersen, CA(SA)
28 August 2014
DIRECTORS
H Adams (Executive Chairman), A Abercrombie, A Bedford#, W Geach*#, A Keet (Chief Executive Officer),
S Petersen (Financial Director), Dr N Maharaj#*, N Mlambo#, C Priem*# (# non-executive * independent)
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
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