Chief Executive Officer's Report

It is an honour to have taken over the reigns from Richard Hoption, who played a pivotal part in GPI’s listing. I am most grateful to him for his sterling work and for giving me a solid foundation from which to begin mine. Richard will continue to focus on new investments and strategy for the company.

I intend to use my experience, much of which was gained at the “coal face” of Sun International’s casino operations within South Africa and abroad, to guide GPI’s quest to repeat the phenomenal growth it has experienced since its inception in 1997.

I am pleased to report that the company has had a landmark year with several major acquisitions, the appointment of new board members and the listing on the JSE.

JSE listing

The listing was a coming of age for the company when 11 years earlier, GPI had started as an empowerment vehicle for SunWest, the winning bidder for the Cape Metropole’s only casino licence.

The listing was finally effected on 6 June 2008 and affords GPI the opportunity to access funding for further acquisition opportunities.

GPI is now a fully-fledged investment company, well on its way to becoming a major player in the South African tourism, leisure and gaming industry. After listing, thousands of its initial shareholders progressed to a new corporate listed environment, with an opportunity to participate in the continued growth and development of GPI.

Review of operations

RAH acquisition

With growth in mind, GPI was firmly on the acquisition trail in 2008, both before and after the listing. In June the company purchased a 23% stake in RAH, giving it a share in Gauteng’s Carnival City Casino & Entertainment World, KwaZulu-Natal’s Sibaya Casino & Entertainment Kingdom and the Eastern Cape’s Boardwalk Casino & Entertainment World. Four days after its listing, GPI announced that it had increased its stake in RAH to 30,6%, allowing it to exert significant influence as a material shareholder.

Increased stake in SunWest

In July post-balance sheet, GPI announced that it was increasing its direct shareholding in SunWest from 26,41% to 29,24%, in a R92,4 million purchase of 560 000 shares. It is also most pleasing that as a result of the RAH transaction, GPI’s effective stake in SunWest has increased to 33,7%.

Expanding GPI’s LPM footprint

GPI acquired a 50% economic stake and minority voting stake in Akhona GPI which holds a 20% stake in Thuo Gaming KZN. This transaction had the added benefit of increasing GPI’s exposure to the highly lucrative Sibaya Casino through a 6% stake in Dolcoast and Dolcoast’s 22% stake in Afrisun KZN.

Trading performance

We announced our maiden annual financial results on 2 September 2008 as a listed company and it is notable that shareholders were informed that they were to receive a 10 cents-per-share dividend, a 33% increase on the previous year and the sixth year running that they receive a dividend. Headline earnings per share increased by 13% (or 20% if the once-off listing fees of R5 million is excluded) and net asset value increased to 335 cents per share.

Strengthening the board

Dr Norman Maharaj and Mr Charl Williams were appointed as non-executive independent directors, effective 1 August 2008.

Norman’s extensive public service experience will help broaden the GPI board’s analytical and decision-making abilities.

Charl’s legal expertise, in particular, will also add to the skills base of the GPI board.

"Grand Hotel" – GrandWest Casino

Sustainability

Sustainability is core to our investment strategy, which is to invest in assets where we can exercise significant influence. It is from this position that we ensure that our underlying investments focus on excellence with respect to the triple bottom line. We believe that over the long term shareholder value will be optimised by having this focus on sustainability. It is for this reason that we ensure that all our investments have formalised CSI committees in place and that these committees receive a portion of the profits to invest in the communities in which they operate. Please also refer to the sustainability report.

Future focus

We will focus on consolidating and leveraging full value from our existing investments, as well as bedding down our most recent acquisitions. Especially while the world economy is in an incredibly volatile phase, we will continue to seek out opportunities to acquire further high-quality assets to complement our existing portfolio. We will also continue to pursue further opportunities in the LPM market, which is still very much in the “greenfield” stage of its life cycle.

From small beginnings, GPI has come a long way, but remains true to its original objective: the empowerment and creation of wealth for all its shareholders.

Adrian Funkey
16 October 2008