investing in
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quality assets
RAH
GPI's effective stake: 30,6%
GPI directly owns 30,6% of RAH, through a 100% held subsidiary company.
RAH is a JSE-listed investment holding company that holds its core investments in gaming assets in the Western Cape, KwaZulu-Natal, Gauteng and the Eastern Cape. The gaming industry continues to enjoy favourable trading conditions in South Africa, notwithstanding the general slow-down in consumer spending and it is expected that the resilience of earnings in the industry will continue.
RAH’s principal assets are its interests in four casinos, being Carnival City, Sibaya, Boardwalk and GrandWest. In addition, RAH has interests in the management companies of each of the aforementioned casinos, as well as Sun International’s National Casino Management Company. In addition to the above interests, RAH has recently acquired an interest in Worcester Casino (Golden Valley), and has also disposed of its investments in the health-care sector.
PROFIT AND DIVIDEND ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2008| GROUP INCOME STATEMENTS | |||
| Year ended 30 | |||
| Six months ended 31 December | June | ||
| 2008 | 2007 | 2008 | |
| R'000 | Unaudited | Unaudited | |
| Revenue | 42 839 | 1 532 | 67 408 |
| Net investment (losses)/profits | (9,382) | 89 635 | 95 389 |
| Share of profits of associates | 24 820 | 24 650 | 48 946 |
| Interest income | 1 851 | 3 030 | 4 450 |
| Litigation settlement | - | 110 000 | 110 000 |
| Operating income | 60 128 | 228 847 | 326 193 |
| Operating costs | (2 592) | (4 167) | (6 765) |
| Amortisation | (3 791) | (4 641) | (7 584) |
| Interest expense | ( 258) | (4 001) | (5 647) |
| Profit before tax | 53 487 | 216 038 | 306 197 |
| Tax | ( 425) | (29 425) | (33 720) |
| Profit | 53 062 | 186 613 | 272 477 |
| Attributable to: | |||
| Minority | 3 816 | 32 063 | 44 713 |
| Ordinary shareholders | 49 246 | 154 550 | 227 764 |
| 53 062 | 186 613 | 272 477 | |
| Earnings per share (cents) | 13.6 | 42.7 | 63.0 |
| Headline earnings per share (cents) | 16.1 | 19.3 | 37.7 |
| GROUP BALANCE SHEETS | |||
| 31 December | 30 June | ||
| 2008 | 2007 | 2008 | |
| R'000 | Unaudited | Unaudited | Restated |
| ASSETS | |||
| Non current assets | |||
| Investments in associates | 123 557 | 146 634 | 132 073 |
| Available-for-sale investments | 808 635 | 1 077 833 | 732 702 |
| 932 192 | 1 224 467 | 864 775 | |
| Current assets | |||
| Trade and other receivables | - | 23 | 245 |
| Tax | 2 446 | - | 2 374 |
| Cash and cash equivalents | 29 991 | - | 42 234 |
| 32 437 | 23 | 44 853 | |
| Total assets | 964 629 | 1 224 490 | 909 628 |
| EQUITY AND LIABILITIES | |||
| Capital and reserves | |||
| Ordinary shareholders' equity | 841 290 | 1 026 282 | 778 617 |
| Minority interest | 65 091 | 102 917 | 58 747 |
| 906 381 | 1 129 199 | 837 364 | |
| Non current liabilities | |||
| Preference shares | 15 000 | 49 122 | 37 392 |
| Deferred tax | 264 | 264 | 264 |
| Tax | 14 548 | - | 14 548 |
| 29 812 | 49 386 | 52 204 | |
| Current liabilities | |||
| Trade and other payables | 1 307 | 329 | 2 003 |
| Provisions | 27 000 | 18 000 | 18 000 |
| Bank overdraft | - | 8 954 | - |
| Tax | 129 | 18 622 | 57 |
| 28 436 | 45 905 | 20 060 | |
| Total liabilities | 58 248 | 95 291 | 72 264 |
| Total equity and liabilities | 964 629 | 1 224 490 | 909 628 |
| SUMMARISED GROUP CASH FLOW STATEMENTS | |||
| Year ended 30 | |||
| Six months ended 31 December | June | ||
| 2008 | 2007 | 2008 | |
| R'000 | Unaudited | Unaudited | |
| Cash flows from operating activities | (3 849) | 132 193 | 73 610 |
| Cash flows from investing activities | 74 234 | 163 204 | 278 774 |
| Cash flows from financing activities | (82 628) | (341 507) | (347 306) |
| Net cash flows | ( 12 243) | ( 46 110) | 5 078 |
| GROUP STATEMENT OF CHANGES IN EQUITY | |||||||
| Restated R'000 |
Ordinary share capital and premium |
Capital redemption reserve |
Non- controlling reserve |
Retained earnings |
Fair value reserve |
Minority interest |
Total |
| Balances at 30 June 2007 | 85 161 | 1 080 | (3 751) | 262 014 | 803 334 | 150 656 | 1 298 494 |
| Profit | 227 764 | 44 713 | 272 477 | ||||
| Dividends paid | (198 824) | (41 644) | (240 468) | ||||
| Investment revaluation | (265 465) | (22 350) | (287 815) | ||||
| Purchase of minorities' interests | (14 192) | (63 712) | (77 904) | ||||
| Movement in treasury shares | 1 881 | 1 881 | |||||
| Balances at 30 June 2008 as previously stated | 87 042 | 1 080 | (17 943) | 290 954 | 537 869 | 67 663 | 966 665 |
| Impact of restatement | (120 385) | (8 916) | (129 301) | ||||
| Restated balances at 30 June 2008 | 87 042 | 1 080 | (17 943) | 290 954 | 417 484 | 58 747 | 837 364 |
| Profit | 49 246 | 3 816 | 53 062 | ||||
| Dividends paid | (57 915) | (2 063) | (59 978) | ||||
| Investment revaluation | 71 342 | 4 591 | 75 933 | ||||
| Balances at 31 December 2008 | 87 042 | 1 080 | (17 943) | 282 285 | 488 826 | 65 091 | 906 381 |
| HEADLINE EARNINGS PER SHARE | Year ended 30 | ||
| Six months ended 31 December | June | ||
| 2008 | 2007 | 2008 | |
| R'000 | Unaudited | Unaudited | |
| Headline earnings per share (cents) | 16.1 | 19.3 | 37.7 |
| Weighted average number of shares (million) | 361.6 | 361.6 | 361.6 |
| Reconciliation of headline earnings (R'000) | |||
| Earnings attributable to ordinary shareholders | 49 246 | 154 550 | 227 764 |
| Adjusted for: | |||
| Realised investment profits | - | (90 705) | (114 930) |
| Provision for pension fund exposure | 9 000 | - | 18 000 |
| Tax on above items | - | 5 940 | 5 560 |
| Headline earnings | 58 246 | 69 785 | 136 394 |
| NET ASSET VALUE | ||||
| 31 December | 30 June | |||
| 2008 | 2007 | 2008 | ||
| R'000 | Unaudited | Unaudited | ||
| Afrisun Leisure | 1 246 810 | 1 566 787 | 1 041 836 | |
| Other net liabilities | (27 788) | (18 000) | (22 610) | |
| Cash/(bank overdraft) | 18 432 | (9 629) | 30 722 | |
| Borrowings | (7 022) | (21 497) | (7 584) | |
| Net asset value | 1 230 432 | 1 517 661 | 1 042 364 | |
| Issued shares net of treasury shares (million) | 361.6 | 361.6 | 361.6 | |
| Net asset value per share (cents) | 340 | 420 | 288 | |
| Notes | ||||
| 1. | Afrisun Leisure's value is stated net of preference share debt and cash. | |||
| 2. | All the investments held by Afrisun Leisure have been valued using the Discounted Cash Flow (DCF) valuation method applying a discount rate of 12,57% (31 December 2007:13,35%; 30 June 2008:15,10%) at 31 December 2008, to the directors' current estimated future cash flows. A minority discount of 15% has been applied to the valuation of the gaming company investments. The significant volatility in the discounted rates used in the respective valuations is due to the changes in the long term government bonds used as the risk free rate. | |||
| Actual number of shares | 361 605 469 | 361 605 469 | 361 605 463 | |
ACCOUNTING POLICIES
The unaudited condensed consolidated financial information has been prepared in accordance with the recognition and measurement criteria of all applicable statements and interpretations of International Financial Reporting Standards (IFRS) and is presented in terms of the disclosure requirements set out in IAS 34 - Interim Financial Reporting. The accounting policies applied to the condensed consolidated financial information are consistent with those as set out in the annual financial statements for the year ended 30 June 2008.
RESTATEMENT
As disclosed in the group`s audited annual financial statements for the year ended 30 June 2008, a minority discount of 15% is applied by RAH in determining the fair value of its minority investments. In calculating the fair value of the available-for-sale investments at 30 June 2008, the 15% minority discount was inadvertently omitted. The audited financial statements at 30 June 2008 have been restated to correct this omission. This restatement has no impact on the income statement with the only impact on the balance sheet being:
| Available- | Fair value | ||
| for-sale | reserve | Minority | |
| R`000 | investments | (Equity) | interest |
| Balance as previously stated | 862 003 | 537 869 | 67 663 |
| Adjustment | (129 301) | (120 385) | (8 916) |
| Restated balance | 732 702 | 417 484 | 58 747 |
REVIEW OF RESULTS
Revenue comprising dividends received was above the previous period due to SunWest and Afrisun KZN not having declared a dividend in the prior period. Share premium distributions totalling R42,7 million were effected by these entities in that period.
The net investment loss of R9,4 million (2007: R89,6 million profit) relates primarily to an increase of the pension fund provision relating to Life Esidimeni (Pty) Limited (R9 million), resulting from Life Esidimeni continuing to negotiate a settlement in the matter between the company and the curator of the Life Healthcare Pension Fund. Included in the comparative period is the profit on the sale of Life Esidimeni of R90,7 million following its disposal for R180 million. The share of profits of associates includes the group`s share of income from Afrisun Gauteng, Zonwabise as well as the management companies. Interest expense has been significantly reduced due to the redemption of preference shares during the six months under review.
The tax charge for the comparative six months includes capital gains tax on the litigation settlement and the gain on the disposal of Life Esidimeni. Headline earnings per share declined by 17%. In the prior period, headline earnings included the litigation settlement of R110 million, the impact of which has been partially offset by higher dividends received in the current period.
The board has declared an interim dividend of 4 cents per share.
NON CURRENT ASSETS
During the period, the group`s effective interest in Afrisun Leisure`s underlying investments remained unchanged, except for the shareholding in SunWest that decreased from 14,6% to 14,0% due to SunWest shares issued to GPI on the exercising of options held by GPI. The value of Afrisun Leisure has increased from R1 042 million at 30 June 2008 to R1 247 million principally due to the lower discount rate used in the valuations as a result of a decline in long-term interest rates.
DIRECTORATE
Mr DA Hawton will be retiring from the board of the company on 30 June 2009. The position of chairman, following Mr Hawton`s retirement, will be assumed by Mr MV Moosa. Mr RP Becker, who is presently a member of the board, has been appointed financial director with effect from 5 March 2009.
DIVIDEND
Notice is hereby given that an interim dividend of 4 cents (2007: 8 cents) per share for the six months ended 31 December 2008 has been declared, payable to shareholders recorded in the register of the company at the close of business on the record date appearing below. The salient dates applicable to the interim dividend are as follows:
| 2009 | |
| Last day to trade cum interim dividend | Friday, 20 March |
| First day to trade ex interim dividend | Monday, 23 March |
| Record date | Friday, 27 March |
| Payment date | Monday, 30 March |
No share certificates may be dematerialised or rematerialised between Monday, 23 March and Friday, 27 March 2009, both days inclusive. Dividend cheques will be posted and electronic payments made, where applicable, to certificated shareholders on the payment date. Dematerialised shareholders will have their accounts with their Central Securities Depository Participant or broker credited on the payment date.
| For and on behalf of the board | |
| DA Hawton | RP Becker |
| Chairman | Financial Director |
| 6 March 2009 | |
REGISTERED OFFICE
27 Fredman Drive, Sandown, Sandton, 2031
REGISTRAR
Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001
SPONSOR
Investec Bank Limited
DIRECTORS
DA Hawton (Chairman), RP Becker, DC Coutts-Trotter, MJ Leeming, MV Moosa, MMT Ramano
SECRETARIES
Sun International Corporate Services (Pty) Limited