Reviewed Final Results for the year ended 30 June 2009

General Overview | for the year ended 30 June 2009

INVESTMENT HIGHLIGHTS
During the year under review GPI increased its direct stake in SunWest (Proprietary) Limited (SunWest) by 2,83% at a cost of R92,4 million by exercising 560 000 of its 700 000 SunWest share options at an exercise price of R165 per SunWest share. GPI through its associate Akhona Gaming Portfolio Investments Holdings (Proprietary) Limited (Akhona GPI), increased its indirect stake in the exceptionally well-positioned Sibaya Casino. GPI provided Akhona GPI with the funds to exercise its pre-emptive rights in acquiring additional Dolcoast Investments Limited (Dolcoast) shares. As a consequence, GPI’s effective economic stake in Akhona GPI increased to 75% with its voting rights increasing to 49,99%. It is noted that Akhona Investment Holdings Limited, the other shareholder of Akhona GPI, was granted an option to call a portion of these shares so issued in order to restore the economic shareholding to parity. GPI increased its indirect stake in Thuo Gaming KwaZulu-Natal (Proprietary) Limited (Thuo KZN) through Akhona GPI’s acquisition of Wild Rush Trading 97 (Proprietary) Limited (Wild Rush), which owns 10% of Thuo KZN at a cost of R6 million. In accordance with the GPI board’s previously stated view that GPI’s share price is trading at a substantial discount to its underlying value, GPI has, through the market, acquired some 19,4 million shares during the reporting period at an average cost of R2,24 cents per share. In addition, the Grand Parade Share Incentive Trust (GPSIT), with the assistance of GPI, acquired a further 7,6 million shares in GPI at R2,00 per share. The combined average price per share of these buy backs amounts to R2,18 per share. Key executives of GPI, in accordance with the rules of the GPSIT, were granted and exercised options over 1,8 million of these shares during the year, with the remaining 5,8 million shares held as treasury shares. The following table reflects GPI’s direct holding in its various investments.

Direct interest (%)	30 June 2009	30 June 2008
SunWest	29,24	26,41
Real Africa Holdings Limited (RAH)	30,57	30,57
Akhona GPI	75,00	50,00
Worcester Casino (Proprietary) Limited (Golden Valley/Worcester Casino)	36,70	36,70
Thuo Gaming Western Cape (Proprietary) Limited (TGWC)	25,10	25,10
National Casino Resort Management Company (Proprietary) Limited (National Manco)	5,67	5,67
Western Cape Casino Resort Manco (Proprietary) Limited (Western Cape Manco)	50,00	50,00

COMMENTARY ON GPI’S FINANCIAL PERFORMANCE AND POSITION
1	Revenue Revenue comprises GPI’s share of management fee revenue generated by WC Manco, dividends received from National Manco, dividends received from preference share investments and interest earned on positive cash balances. Revenue has decreased mainly due to lower interest received as a result of lower average cash balances during the reporting period and lower revenues generated by Western Cape Manco.

2	Operating costs Operating costs were well controlled and savings of 7% were achieved on last year’s costs. This was despite the additional demands of being a listed company with a larger portfolio of investments.

3	Share of profit from associates GPI’s share of associate income increased substantially this year. In the case of SunWest this growth is attributed to its increased stake for the full year. Profit from RAH has been accounted for the full current reporting period, compared to one month in the previous year. Thuo WC performed well during the year, growing its revenues by 12%. Due to substantially more administration and personnel costs, as well as higher capital charges incurred in introducing new slot machines and undertaking extreme makeovers on selected Limited Payout Machine (LPM) sites, attributable profits from this associate declined slightly compared to last year. The increase in earnings from Akhona GPI is due to accounting for a full year of earnings and the increase in GPI’s economic stake which increased from 50% to 75% for six months of the year.

4	Impairment of investment in associates In terms of IAS 36 – Impairment of Assets, an entity must determine whether there is any indication of impairment at each balance sheet date. IAS 36 requires that the higher of the fair value less cost to sell or the value in use be used to assess whether any impairment is necessary. Based on discounted free cash flow valuations prepared by management and reviewed by the independent auditors, the board of GPI is satisfied that no impairment is required.

5	Negative goodwill from associates In terms of IFRS 3 – 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 SunWest was conducted at the time of this transaction and this confirmed a fair value per SunWest share of R359,27. An R80,6 million negative goodwill adjustment has therefore been accounted for.

6	Finance costs and activities The increase in GPI’s finance costs is attributed to higher levels of interest-bearing debt during the reporting period. GPI utilised this debt to fund its long-term acquisitions this year and in the prior year and still has substantial capacity for additional acquisitions. GPI is well positioned with its relatively low gearing in this challenging environment. The interest-bearing Sun International Limited (Sun International) preference shares were repaid on 25 October 2007. In the prior year the coupon on these preference shares was reflected as dividends paid as the terms of these preference shares resulted in this source of funds being treated as share capital. During the current period, an additional R105 million of preference share funding was raised with the coupon determined at 83% of the prime lending rate.

7	Headline earnings and HEPS Headline earnings increased from R84,8 million to R96,7 million for the year ended June 2009. This represents a 14% increase on the prior year. Headline earnings per share decreased by 9,7%. This is due to the increased weighted average number of shares in issue this year.

Reviewed

Audited

30 June 2009

30 June 2008

Drivers of headline earnings

R’000s

R’000s

Headline earnings

96 677

84 764

Associates

– SunWest*

85 298

79 873

– RAH

28 109

5 482

– TGWC

4 566

4 738

– Akhona GPI

218

Joint venture

WC Manco

20 115

21 734

Other^#

5 242

(2 015)

Operating costs

(14 932)

(16 137)

Finance costs

(31 939)

(8 934)

*	This amount includes the reversal of the BEE transaction charge in respect of the options granted by SunWest to GPI last year.
^#	Other includes interest received, tax paid and other adjustments to headline earnings.

Related party transactions
The GPI group, in the ordinary course of business, entered into various transactions with related parties. All transactions were concluded at arm’s length. Any intra-group related party transactions and outstanding balances are eliminated in the preparation of the consolidated financial statements of the group as presented.

Ordinary dividend declaration
Notice is hereby given of the declaration of an ordinary cash dividend of 7,5 cents per share (2008: 10 cents per share). The following salient dates will apply to the dividend:

–	Last date to trade “cum” the dividend	Friday, 27 November 2009
–	Trading commences “ex” the dividend	Monday, 30 November 2009
–	Record date	Friday, 4 December 2009
–	Date of payment of the dividend	Monday, 7 December 2009

Share certificates cannot be dematerialised or rematerialised between Monday, 30 November 2009 and Friday, 4 December 2009, both days inclusive.

Subsequent events
There were no material events subsequent to the balance sheet date.

Directorate
During the financial year Richard Hoption was appointed as Financial Director. He has also assumed the responsibilities of Company Secretary with effect from 25 June 2009.

Review results
The GPI group auditors Ernst & Young Inc have reviewed the condensed consolidated financial information for compliance with IFRS and the Companies Act of South Africa for the year ended 30 June 2009. Their unqualified review opinion is available for inspection at the registered office of the company.

Prospects
GPI’s healthy portfolio of highly cash-generative assets have proved resilient during the unfolding global economic storm. These assets have provided GPI with an excellent platform on which to build on GPI’s enviable track record. Mindful of the needs of our shareholders and our commitment to be a dividend active company, provision has been made for the payment of a dividend. The retained cash in the business as well as its strong balance sheet places GPI in a good position to expand its interests in the tourism and leisure sector, including the urban casino industry and the LPM market. During this recessionary period, where many businesses are waiting for the economic storm to abate, GPI is firmly on the move and taking advantage of its opportunities.

For and on behalf of the board

H Adams	A Funkey
Chairman	Chief Executive Officer
2 September 2009
Cape Town

GRAND PARADE INVESTMENTS LIMITED (Incorporated in the Republic of South Africa) Registration number 1997/003548/06 Share code GPL ISIN ZAE00119814 Directors H Adams (Chairman))^#, A Abercrombie^#, A W Bedford^#, A Funkey, R Freese^#, R Hoption , Dr N Maharaj^#, N Mlambo^#, C Williams^# (^#non-executive * independent) Registered office 15th Floor Triangle House, 22 Riebeek Street, Cape Town, 8001 PO Box 7746, Roggebaai, 8012 Transfer secretaries Computershare Investor Services (Proprietary) Limited 70 Marshall Street, Johannesburg, 2001 Attorneys Bernadt Vukic Potash & Getz Attorneys Corporate advisers Leaf Capital (Proprietary) Limited Sponsor PSG Capital (Proprietary) Limited Company Secretary Richard Hoption