ANNUAL FINANCIAL STATEMENTS

Notes to the Annual Financial Statements

for the year ended 30 June 2008


		2008	2007	2008	2007
			Restated		Restated
		R	R	R	R
11	Investments in subsidiaries
	GPI Slots	–	–	100	100
	BVI	–	–	1 000 000	100
		–	–	1 000 100	200
	GPI took up all the shares from a rights issue by their 100% held subsidiary, BVI.

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	RAH GPI acquired a 30,6% interest in RAH for R600,6 million. The impairment loss has been calculated using relevant market rates. Market rates at year-end were significantly lower compared to the prevailing rates when the original price was paid. Based on the decrease in market rates the investment was impaired.

	SunWest SunWest was accounted for as an available-for-sale investment in 2007. The additional shares purchased at a cost of R240,4 million resulted in the group increasing its holding to 26,41% (2007: 19,8%) and its effective voting rights to 50,001% (2007: 33,941%). In view of the fact that both board and shareholder resolutions of SunWest require a 60% majority and therefore GPI does not exercise outright control over SunWest, it was decided that the most appropriate mechanism to reflect the trading results of SunWest for 2008 was to account for it as an investment in associate.

		R
	Share of fair value of net assets on acquisition	1 231 250 046
	Negative goodwill on acquisition	(784 087 333)
	Total consideration	447 162 713
	Cash consideration	447 162 713
	Cash paid in previous years	206 722 482
	Cash paid during the current year	240 440 231
	Negative goodwill arising on the acquisition of the investment has been recognised immediately in profit.

	Akhona GPI
	GPI holds a 50% (2007: Nil) interest in Akhona GPI.

	Thuo Gaming WC
	GPI Slots has a 25,1% (2007: 25,1%) stake in Thuo Gaming WC.

	Worcester Casino During the year additional shares were issued by Worcester Casino to a third party. This resulted in a dilution of GPI’s shareholding from 38% to 36,7%.


	2008	2007
	R	R
Akhona GPI	7 014 000	–
SunWest	90 148 109	–
RAH	513 990 108	–
Worcester Casino	–	750 380
– cost	600 640 285	–
– impairment of investment in associate	(86 650 177)	(750 380)

	611 152 217	–

13	Related party loans GPI and its subsidiary companies, in the ordinary course of business, entered into various service and investment transactions.

		2008	2007	2008	2007
		R	R	R	R
	Loans receivable/(payable)
	Akhona GPI	8 118 000	–	8 118 000	–
	BVI	–	–	23 753 673	10 583 698
		8 118 000	–	31 871 673	10 583 698
	GPI Slots	–	–	(565 081)	5 271 000
	Thuo Gaming WC	–	5 947 677	–	–
		8 118 000	5 947 677	31 306 592	15 854 698
	Related party loans are unsecured, interest free and payable on demand.
14	Share capital and premium
	Authorised
	2 000 000 000 ordinary shares of 0,00025 cent each	500 000	500 000	500 000	500 000
	Opening balance – 1 July	112 283 566	92 723 584	112 283 566	92 723 584
	Shares issued before share split	175 599 071	19 559 982	175 599 071	19 559 982
	Shares issued after share split	461 350 092	–	461 350 092	–
	Share issue expenses	(8 397 240)	–	(8 397 240)	–
	Closing balance (issued and fully paid) – 30 June	740 835 489	112 283 566	740 835 489	112 283 566
	Reconciliation of number of shares in issue
	Opening balance – 1 July	83 009 513	80 000 000	83 009 513	80 000 000
	Issued before share split	10 670 519	3 009 513	10 670 519	3 009 513
	Share split	281 040 096	–	281 040 096	–
	Issued after share split	94 308 226	–	94 308 226	–
	Closing balance – 30 June	469 028 354	83 009 513	469 028 354	83 009 513
15	Cash and cash equivalents
	Cash at bank and deposit bank accounts consist of Money Market call accounts with floating interest rates that fluctuated between 8% and 12% during the year.	81 834 197	69 710 295	44 478 668	28 943 558
16	Cumulative redeemable preference share capital and premium
16.1	Redeemable at the option of the group – Equity
	Authorised
	2008: Nil (2007: 230 595 redeemable preference shares of R1 per share)
	Issued preference shares
	Opening balance	57 797 500	115 297 500	–	–
	Preference shares redeemed during the year	(57 797 500)	(57 500 000)	–	–
	Closing balance	–	57 797 500	–	–
	During the current year all outstanding preference shares in respect of SISA were redeemed at R500 each.
16.2	Redeemable at the option of the holder – Debt
	Authorised
	203 356 redeemable preference shares of R1 per share (2007: Nil).
	Issued preference shares
	Preference shares issued – par value	203 356	–	–	–
	Preference share premium	203 152 643	–	–	–
	Share issue expenses	(1 957 891)	–	–	–
	Closing balance	201 398 108	–	–	–
	New preference shares were issued to Standard Bank and Depfin. Interest is calculated at 75% of the prime rate. Preference interest is paid semi-annually on 31 March and 30 September. The preference shares are redeemable from 2011.


		Computer			Furniture	Leasehold
		equipment	Software	Audiovisual	and fittings	improvements	Total
		R	R	R	R	R	R
17	Plant and equipment
	2008
	Beginning of year
	– Cost	32 166	7 513	979	–	–	40 658
	– Accumulated depreciation	(11 614)	(4 383)	(979)	–	–	(16 976)
	Net book value	20 552	3 130	–	–	–	23 682
	Current year movements
	Additions	121 045	–	–	394 976	544 201	1 060 222
	Depreciation	(25 262)	(3 130)	–	(51 214)	(67 889)	(147 495)
	Balance at end of year	116 335	–	–	343 762	476 312	936 409
	Made up as follows:
	– Cost	153 211	7 513	979	394 976	544 201	1 100 880
	– Accumulated depreciation	(36 876)	(7 513)	(979)	(51 214)	(67 889)	(164 471)
	Net book value	116 335	–	–	343 762	476 312	936 409
	2007
	Beginning of year
	– Cost	32 166	7 513	979	–	–	40 658
	– Accumulated depreciation	(893)	(626)	–	–	–	(1 519)
	Net book value	31 273	6 887	979	–	–	39 139
	Current year movements
	Depreciation	(10 721)	(3 757)	(979)	–	–	(15 457)
	Balance at end of year	20 552	3 130	–	–	–	23 682
	Made up as follows:
	– Cost	32 166	7 513	979	–	–	40 658
	– Accumulated depreciation	(11 614)	(4 383)	(979)	–	–	(16 976)
	Net book value	20 552	3 130	–	–	–	23 682


		2008	2007	2008	2007
			Restated		Restated
		R	R	R	R
18	Trade and other receivables
	Trade receivables	5 664 138	5 535 539	255 138	599 997
	Prepayments	9 380	–	9 380	–
		5 673 518	5 535 539	264 518	599 997
19	Trade and other payables
	Trade payables	7 664 841	2 358 657	1 404 540	2 015 047
	Operating lease accrual	33 655	–	33 655	–
		7 698 496	2 358 657	1 438 195	2 015 047
20	Operating leases Operating lease payments represent rentals payable for office premises. The office premises are leased in terms of a sublease agreement. Leases are negotiated on an average term of four years and rentals are variable. No contingent rent is payable.
	Rentals due within 1 year	448 418	–	448 418	–
	Due within 1 to 5 years thereafter	1 209 363	–	1 209 363	–
		1 657 781	–	1 657 781	–
21	Segmental information Based on their assessment of 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 the provision of investment and management expertise to the gaming and leisure industry and the disclosure for the primary segment has already been given in these financial statements. The secondary reporting format is considered to be a geographical analysis by origin and destination. Since the group’s business operations are conducted exclusively in South Africa, a segment report has not been presented.
22	Financial instruments The group’s principal financial instruments comprise cumulative redeemable preference shares, trade and other payables and related party loans payable. The main purpose of these instruments is to raise finance for the group’s operations and investments. The group has financial assets such as available-for-sale investments, trade and other receivables and cash which arise directly from its operations. The main risks arising from financial instruments are market risk (comprising interest rate risk and other price risk), liquidity risk and credit risk. The fair values of each class of financial instrument approximate the carrying amounts.


				Non-
	Investments	Loans and	Available-	financial
	in associates	receivables	for-sale	assets	Total
	R	R	R	R	R
Financial assets
2008
Cash and cash equivalents	–	81 834 197	–	–	81 834 197
Related party loans	–	8 118 000	–	–	8 118 000
Trade and other receivables	–	5 664 138	–	9 380	5 673 518
Available-for-sale investments	–	–	20 329 677	–	20 329 677
Investments in associates	1 675 120 542	–	–	–	1 675 120 542
Total	1 675 120 542	95 616 335	20 329 677	9 380	1 791 075 934
2007
Cash and cash equivalents	–	69 710 295	–	–	69 710 295
Related party loans	–	5 947 677	–	–	5 947 677
Trade and other receivables	–	5 535 539	–	–	5 535 539
Available-for-sale investments	–	–	227 571 431	–	227 571 431
Investments in associates	369 468	–	–	–	369 468
Total	369 468	81 193 511	227 571 431	–	309 134 410

			Financial
			liabilities
			measured at	Non-
			amortised	financial
			cost	liabilities	Total
			R	R	R
Financial liabilities
2008
Trade and other payables			7 664 841	33 655	7 698 496
Preference shares			201 398 108	–	201 398 108
Dividends payable			3 866 268	–	3 866 268
Total			212 929 217	33 655	212 962 872
2007
Trade and other payables			2 358 657	–	2 358 657
Dividends payable			3 757 380	–	3 757 380
Total			6 116 037	–	6 116 037


			Non-
	Investments	Loans and	financial
	in subsidiaries	receivables	assets	Total
	R	R	R	R
Financial assets
2008
Cash and cash equivalents	–	44 478 668	–	44 478 668
Related party loans	–	31 871 673	–	31 871 673
Trade and other receivables	–	255 138	9 380	264 518
Investments in subsidiaries	1 000 100	–	–	1 000 100
Total	1 000 100	76 605 479	9 380	77 614 959
2007
Cash and cash equivalents	–	28 943 558	–	28 943 558
Related party loans	–	15 854 698	–	15 854 698
Trade and other receivables	–	599 997	–	599 997
Investments in subsidiaries	200	–	–	200
Total	200	45 398 253	–	45 398 453

		Financial
		liabilities
		measured at	Non-
		amortised	financial
		cost	liabilities	Total
		R	R	R
Financial liabilities
2008
Trade and other payables		1 404 540	33 655	1 438 195
Related party loans		565 081	–	565 081
Dividends payable		3 866 268	–	3 866 268
Total		5 835 889	33 655	5 869 544
2007
Trade and other payables		2 015 047	–	2 015 047
Dividends payable		3 757 380	–	3 757 380
Total		5 772 427	–	5 772 427
Investments in associates and subsidiaries do not form part of the subsequent disclosure and analyses. Market risk Market risk is the risk that the fair vale of future cash flows of the financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. The group does not have any exposure to currency risk. Interest rate risk Interest rate risk is the risk that the cash flows of a financial instrument will fluctuate due to changes in market interest rates. The group’s exposure to the risk of changes in interest rates relates primarily to the group’s obligation in terms of the preference shares and bank accounts. The group manages this by ensuring that sufficient available funds are maintained in bank accounts. The table below reflects the interest rate sensitivity analysis. The analysis was calculated by increasing or decreasing the group’s interest rate by 100 basis points assuming all other variables remains constant.


	Increase in	Effect on	Decrease in	Effect on
	basis points	pre-tax profit	basis points	pre-tax profit
		R		R
Current year	100	508 390	(100)	(508 390)
Prior year	100	697 103	(100)	(697 103)


	Increase in	Effect on	Decrease in	Effect on
	basis points	pre-tax profit	basis points	pre-tax profit
		R		R
Current year	100	444 787	(100)	(444 787)
Prior year	100	289 436	(100)	(289 436)


Other price risk Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in the cash flows received from the investment. Discounted cash flows have been used in order to determine the fair values of unlisted investments. The valuation requires management to make estimates about the expected future cash flows of the shares which are discounted at current rates. The fair value of the investment was calculated with reference to the growth in the cash flows to be received from the investment. The fair value sensitivity analysis was calculated by increasing or decreasing the group’s growth on investment by 1% assuming that all other variables remain constant.

	Increase in	Effect on	Decrease in	Effect on
	growth rate	equity	growth rate	equity
	%	R	%	R
Current year	1	9 466 832	1	1 467 784
Prior year	1	5 756 613	1	(1 385 805)

Collateral pledged
The SunWest shares held by GPI have been ceded to Standard Bank and Depfin as security in respect of the preference shares. The total number of shares held by GPI at year-end amounts to 801 404 shares. This represents 5,72% of the group’s total investment of 26,41% in SunWest. Furthermore the shares held by GPI in BVI as well as the claims have been ceded to Standard Bank and Depfin in respect of the preference shares that have been issued. The preference shares are redeemable after a period of three years.

Credit risk
Credit risk is the risk of financial loss caused by the inability or unwillingness of a counterparty to a financial instrument to discharge its contractual obligations. The group does not have “normal” trade receivables. The majority of the trade receivables relate to current account balances with companies within the group. No allowance account has been made use of during the year. No financial assets were past due or impaired at year-end.

The group only deposits cash surpluses with major banks of high quality and credit standing. At year-end, the group did not consider there to be any significant concentration of credit risk which has not been adequately provided for.

The group’s maximum exposure to credit risk in terms of cash and cash equivalents, loans and receivables equals the carrying amounts of these instruments as disclosed above.

Liquidity risk
Liquidity risk is the risk that the group will encounter difficulty in raising funds to meet commitments associated with financial liabilities.

The group monitors its risk to a shortage of funds based on future cash flow commitments. The group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans.

The group has minimised its liquidity risk by ensuring that it has adequate banking facilities.

The following table presents the contractual maturity analysis of financial liabilities.


	On	Less than	3 - 12	1 - 2
	demand	3 months	months	years	> 2 years	Total
	R	R	R	R	R	R
2008
Trade and other payables	–	7 664 841	–	–	–	7 664 841
Preference shares	–	–	–	–	203 356 000	203 356 000
Interest on preference shares	–	11 894 129	24 220 667	24 220 667	67 222 775	127 558 238
Non-financial liabilities	–	33 655	–	–	–	33 655
Dividends payable	3 866 268	–	–	–	–	3 866 268
Total	3 866 268	19 592 625	24 220 667	24 220 667	270 578 7756	342 479 002
2007
Trade and other payables	–	2 358 657	–	–	–	2 358 657
Dividends payable	3 757 380	–	–	–	–	3 757 380
Total	3 757 380	2 358 657	–	–	–	6 116 037


	On	Less than	3 - 12	1 - 2
	demand	3 months	months	years	> 2 years	Total
	R	R	R	R	R	R
2008
Trade and other payables	–	1 404 540	–	–	–	1 404 540
Related party loan	565 081	–	–	–	–	565 081
Non-financial liabilities	–	33 655	–	–	–	33 655
Dividends payable	3 866 268	–	–	–	–	3 866 268
Total	4 431 349	1 438 195	–	–	–	5 869 544
2007
Trade and other payables	–	2 015 047	–	–	–	2 015 047
Dividends payable	3 757 380	–	–	–	–	3 757 380
Total	3 757 380	2 015 047	–	–	–	5 772 427

	Gains and losses on financial instruments The table below summarises the gains and losses on financial instruments.

		Fair value	Interest	Interest
		movement	income	expense	Total
		R	R	R	R
	2008
	Loans and receivables	–	10 429 084	–	10 429 084
	Available-for-sale investments	(446 574)	–	–	(446 574)
	Financial liabilities at amortised cost	–	–	(8 934 260)	(8 934 260)
	Total	(446 574)	10 429 084	(8 934 260)	1 048 250
	2007
	Loans and receivables	–	5 806 191	–	5 806 191
	Available-for-sale investments	3 679 034	–	–	3 679 034
	Financial liabilities at amortised cost	–	–	(35 980)	(35 980)
	Total	3 679 034	5 806 191	(35 980)	9 449 245


		Fair value	Interest	Interest
		movement	income	expense	Total
		R	R	R	R
	2008
	Loans and receivables	–	7 891 925	–	7 891 925
	Total	–	7 891 925	–	7 891 925
	2007
	Loans and receivables	–	2 627 737	–	2 627 737
	Financial liabilities at amortised cost	–	–	(35 980)	(35 980)
	Total	–	2 627 737	(35 980)	2 591 757


		2008	2007	2008	2007
		R	R	R	R
23	Directors’ emoluments
	Executive directors
	– directors’ fees	1 228 500	1 583 000	1 228 500	1 583 000
	– salary	225 000	–	225 000	–
	Non-executive directors
	– directors’ fees	1 707 000	825 000	1 707 000	825 000
		3 160 500	2 408 000	3 160 500	2 408 000
	Paid by:
	– the company	3 160 500	2 408 000	3 160 500	2 408 000
24	Dividends declared and paid
	Final dividend in respect of the 2007
	financial year of 30 cents
	(2006: 18 cents per share)
	(pre the 4:1 share split)	24 902 854	14 400 051	24 902 854	14 400 051
	The final dividend in respect of the 2008 financial year of 10 cents per share was declared on 2 September 2008.
25	Notes to the cash flow statement
25.1	Taxation paid
	Taxation – beginning of the year	2 424 125	368 701	732 262	214 168
	Amount per income statement (note 6)
	– current year	7 984 844	6 159 569	1 780 292	660 557
	– prior-year underprovision	92 8511	52 898	-	52 898
	– STC	1 315 501	1 505 829	–	71 705
	Taxation – closing balance for the year	(3 673 291)	(2 424 125)	(1 836 278)	(732 262)
		8 144 030	5 662 872	676 276	267 066
25.2	Dividends paid
	Opening balance	3 757 380	2 569 258	3 757 380	2 569 258
	Dividends declared	24 902 854	14 400 051	24 902 854	14 400 051
	Closing balance	(3 866 268)	(3 757 380)	(3 866 268)	(3 757 380)
		24 793 966	13 211 929	24 793 966	13 211 929


		Balance (owed)/	Receipts/	Balance (owed)/	Receipts/
		receivable	(payments)	receivable	(payments)
		2008	2008	2007	2007
		R	R	R	R
26	Related party transactions
	Nadesons (Pty) Ltd	11 750	(481 512)	–	(872 109)
	Hofmeyr Herbstein & Gihwala Inc.	(181 255)	(242 650)	(242 650)	(1 240 179)
	Shares issued to directors	–	41 938	–	13 039 988
	Proman Project Management Services(Pty) Ltd	44 804	(770 684)	–	–
	Asch Consulting Engineering (Pty) Ltd	(100)	(153 883)	–	(12 000)
	Short-term employee benefits	–	(3 160 500)	–	(2 408 000)


		Balance (owed)/	Receipts/	Balance (owed)/	Receipts/
		receivable	(payments)	receivable	(payments)
		2008	2008	2007	2007
		R	R	R	R
	Nadesons (Pty) Ltd	11 750	(481 512)	–	(872 109)
	Hofmeyr Herbstein & Gihwala Inc.	(181 255)	(242 650)	(242 650)	(1 240 179)
	Shares issued to directors	–	41 938	–	13 039 988
	Proman Project Management Services(Pty) Ltd	44 804	(770 684)	–	–
	Asch Consulting Engineering (Pty) Ltd	(100)	(153 883)	–	(12 000)
	Short-term employee benefits	–	(3 160 500)	–	(2 408 000)
	Nadesons (Pty) Ltd is a consulting company that provides administration services to Grand Parade Investments Limited. A director of Nadesons (Pty) Ltd, Mr Hassen Adams, is also a director of the company. These fees are for normal operating expenses such as rent, stationery, travel and staff-related expenses. Hofmeyr Herbstein & Gihwala Inc. is a firm of attorneys that provides legal services to the company. Directors of Hofmeyr Herbstein & Gihwala Inc., Messrs Alexander Abercrombie and Charl Williams, are also directors of the company. Grand Parade Investments Limited rents office space from Proman Project Management Services (Pty) Ltd. Mr Hassen Adams, a director of the company, is also a director of Proman Project Management Services (Pty) Ltd. Asch Consulting Engineers are engineering consultants. Asch Consulting Engineers provides Grand Parade Investments Limited with IT support services. Mr Hassen Adams, a director of the company, is also a director of Asch Consulting Engineers. Of the available cash balances at year-end, R20 million has been invested with Grindrod Bank. A director of Grand Parade Investments Limited, Mr Hassen Adams, is also a director of Grindrod Bank.
27	Capital management
	The primary objective of the group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximise shareholders’ value. The group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The primary source of capital is issued share capital and preference share capital.
28	Capital redemption reserve fund
	In terms of section 98 of the Companies Act of South Africa No. 61 of 1973, a capital redemption reserve fund must be created for the par value of the preference shares redeemed during the year.