contents · carnival city. through its acquisition of rah, gpi has increased its exposure to other...
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Vision and mission 1
Highlights and graphs 2
Four-year financial review 3
Chairman’s message 4
Chief executive’s review 6
Financial director’s report 10
Directorate and management 12
Corporate governance report 14
Group structure 19
Sustainability report 20
Annual financial statements 25
Shareholders’ information 55
Notice of AGM 56
Company information 60
Shareholders’ diary 61
Glossary of terms 62
Form of proxy attached
ContentsVision and Mission
To become a major force in the gaming, tourism and leisure industry in Africa.
To promote Broad-based Black Economic Empowerment (BBBEE) in a meaningful way, by being as inclusive as possible.
Offering ordinary people a platform to enter the corporate environment in a sustainable and responsible manner, and fostering crucial human capacity and skills.
Our philosophy of empowerment is to create corrective action to allow people to graduate from an abnormal environment to an equitable one, and in so doing embrace all shareholders.
To fulfil the promise to its many shareholders, we will conduct operations in line with best business practice, uphold the highest legal, ethical and moral standards, and engage and develop the best managerial and operational skills.
It is through solid investment in the finest people and assets that GPI’s shareholders will reap the highest rewards.
The Cape Town International Convention Centre has proven to be of enormous economic value to Cape Town and South Africa. It is now rated as one of the top convention centres in the world and attracts large numbers of overseas conference delegates to South Africa.
Sibaya Casino, Boardwalk Casino and Carnival City. Through its acquisition of RAH, GPI has increased its exposure to other high-quality “urban casino” assets which include Carnival City in Gauteng, Sibaya Casino in KwaZulu-Natal and Boardwalk Casino in Port Elizabeth.
Grandslots is the trading brand of Thuo Gaming WC in which GPI has a significant stake.
Kingdomslots is the trading brand of Thuo Gaming KZN. Through its stake in Akhona GPI, GPI has an indirect stake in Thuo Gaming KZN and Sibaya Casino.
Grand Parade Annual Report 2009 I 1
Highlights and Graphs
HEADLINE EARNINGS PER SHARE
NET ASSET VALUE PER SHARE
DIVIDENDS PER SHARE*
30
25
20
15
10
5
0
30
25
20
15
10
5
0
cent
s pe
r sha
re
cent
s pe
r sha
re
years
2006
12,5
2007
20,5
2008
23,2
2009
20,9
400
350
300
250
200
50
0
cent
s pe
r sha
re
cent
s pe
r sha
reyears
100
150
400
350
300
250
200
50
0
100
150
2003 2004 2005 2006 2007 2008
66 69 73 88 90
335
2009
370
12
10
8
6
4
2
0
cent
s pe
r sha
re
cent
s pe
r sha
re
years
1
10
12
10
8
6
4
2
0
23
4,5
7,5
2003 2004 2005 2006 2007 2008 2009
7,5
120
100
80
60
40
20
0
120
100
80
60
40
20
0
R m
illio
n
R m
illio
n
years
2006
34,3
2007
66,2
2008
84,7
2009
96,5
HEADLINE EARNINGS
NET ASSET VALUE
1 600
1 400
1 200
1 000
800
200
0
R m
illio
n
R m
illio
n
years
400
600
1 800
1 600
1 400
1 200
1 000
800
200
0
400
600
1 800
2006
165
2007
240
2008
1 573
2009
1 640
Headline earnings increased by 14%
Dividends of 7,5 cents per share declared
Net asset value per share increased to 370 cents
Increased GPI’s direct shareholding in SunWest by 2,83%
Repurchased 27 million shares at R2,18 per share
Acquired an additional 25% interest in Akhona GPI
Increased GPI’s indirect stake in Sibaya Casino
Increased GPI’s indirect stake in Thuo Gaming KZN
t
t
t
t
t
t
t
t
2 I Grand Parade Annual Report 20093 I Grand Parade Annual Report 2009
Four-year Financial Review
CONSOLIDATED INCOME STATEMENTS 2009 2008 2007 2006 Notes R R R R
Revenue 1 27 246 155 34 032 163 90 409 714 55 901 315Operating costs (14 931 509) (16 136 711) (9 194 173) (3 960 830)
Profit from operations 12 314 646 17 895 452 81 215 541 51 940 485Impairment of investment in associates – (92 131 891) (750 380) –Finance costs (31 938 621) (8 934 260) (35 980) (2 360) Negative goodwill from associates 2 80 622 752 784 087 333 – –Share of profit from associates 1 118 190 856 47 051 571 366 958 –
Profit before taxation 179 189 633 747 968 205 80 796 139 51 938 125Taxation (7 469 723) (9 385 063) (7 718 013) (6 241 518)
Profit for the year 171 719 910 738 583 142 73 078 126 45 696 607Attributable to ordinary shareholders 171 719 910 738 583 142 73 078 126 45 696 607Headline earnings 3 96 472 972 84 763 045 66 217 162 34 299 303Adjusted headline earnings 3 96 515 692 84 763 045 66 217 162 34 299 303
General:
1. Revenue from associates is disclosed as share of profit from associates.2. Negative goodwill arose as a result of purchasing additional shares in SunWest International (Pty) Limited (“SunWest”).3. Headline earnings is the profit attributable to ordinary shareholders after reversing the adjustments detailed in note 6 of
the annual financial statements. Adjusted headline earnings has been adjusted for the consolidation of the Employee Share Trust as the group does not receive the economic benefits of the trust.
CONSOLIDATED BALANCE SHEETS 2009 2008 2007 2006 R R R R
Non-current assets 1 872 354 303 1 696 386 628 227 964 581 188 775 151Current assets 84 017 538 95 625 715 81 193 511 98 176 416
Total assets 1 956 371 841 1 792 012 343 309 158 092 286 951 567
Shareholders’ interest 1 639 715 475 1 572 534 408 239 897 827 165 374 470Preference share capital 285 123 865 201 398 108 57 797 500 115 297 500Deferred tax liability 2 371 973 2 841 772 2 922 603 2 323 973Current liabilities 29 160 528 15 238 055 8 540 162 3 955 624
Total equity and liabilities 1 956 371 841 1 792 012 343 309 158 092 286 951 567
SHARE STATISTICS 2009 2008 2007 2006 R R R R
Shares in issue at year-end (before deducting the treasury shares) 449 581 319 469 028 354 332 038 052 320 001 140Shares in issue at year-end (after deducting the treasury shares)** 443 761 319 – – –Weighted average number of shares in issue 462 033 176 365 766 533 323 010 368 273 779 140Adjusted weighted average number of shares in issue 462 033 176 365 766 533 323 010 368 273 779 140Basic and diluted earnings per share (cents) 37,17 200,98 20,34 12,53 Headline earnings per share (cents) 20,88 23,17 20,50 12,53 Adjusted headline earnings per share (cents)** 20,89 23,17 20,50 12,53Proposed dividends per share (cents)* 7,5 10,0 7,5 4,5Net asset value per share (cents) 370 335 90 88
* Dividends declared in respect of the year-end.
** The consolidation of the Employee Share Trust is reversed as the group does not receive the economic benefits of the Trust.
2 I Grand Parade Annual Report 20093 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 3
Message from the Chairman I Hassen Adams
THE ENVIRONMENTA year has passed since Grand Parade Investments Limited
(“GPI”) listed on the Johannesburg Stock Exchange (“JSE”)
and our maiden year as a listed company has come at an
extremely challenging economic period. The South African
economy has seen its first recession in 17 years. The hotel
industry saw its occupancies slump and gaming revenues
did not escape the downturn’s wrath as disposable income
declined.
FINANCIAL PERFORMANCEGiven this environment, we are particularly pleased that
we have been able to grow our earnings and perhaps most
importantly the reported value of GPI’s shares. Consequently,
GPI has been positive throughout this period and has been
quite resilient in ensuring that the company remains a sound
investment. GPI’s healthy portfolio of highly cash-generative
assets has placed us in a position to honour our commitment
of being dividend active and has also allowed us to seek
further opportunities in the gaming and leisure sector.
GPI will be paying a sizeable dividend to our shareholders
and in the context of the challenging environment in which
GPI has traded, where some companies are not declaring
dividends at all, this is a most pleasing outcome.
SUSTAINABILITY AND GOVERNANCEDuring this period we have maintained our commitment to
investing in transformation, sustainability and an integrated
approach to good governance, which is over and above the
standard financial and regulatory requirements of corporate
governance. I am pleased to report that the board-appointed
sub-committees have performed their duties competently
and diligently during this past year.
In terms of our focus on sustainability, I am especially pleased
to see the communities benefit from GPI’s investments, the
most significant of them being SunWest, which has, since
inception, made significant contributions to corporate social
investment and enterprise development.
The local and national economies have also benefited
handsomely from SunWest’s activities and, importantly,
the commitments we gave when the licence was secured.
It’s pleasing, then, to note the passion and vigour of the
shareholders, board, management and staff of SunWest in
ensuring the exceptional delivery of these commitments.
GPI’s sustainability report highlights this important economic
contribution, which has been significantly boosted by the
gaming tax rates in place in the Western Cape, which are
substantially higher than the rates applicable in the rest of
South Africa. In this regard, the regulatory and government
role-players should be complimented for the gaming structure
in place in the Western Cape that underpins this incredibly
positive economic impact. What is possibly most satisfying to
all stakeholders in the industry is the fact that it has been
achieved without leading to an overstimulation of the latent
demand for gambling in the province, a critically important
founding principle governing the process of legalising the
South African gaming industry.
GAMING LICENCEGrandWest Casino and Entertainment World’s (“GrandWest”)
gaming licence was issued by the Western Cape Gambling
and Racing Board and is a licence issued in perpetuity.
GrandWest was granted exclusivity for a 75 km radius from the
Cape Town City Hall for a duration of 10 years which will be
reviewed in December 2010.
All the other casino licences in the Western Cape also enjoy
the benefit of exclusivity in their respective demarcated zones.
MAJOR EVENTSDuring the financial year under review, we bought back GPI
shares at an excellent price and increased our direct stake in
SunWest. We also further increased our indirect stake in Sibaya
Casino and Entertainment Kingdom (“Sibaya Casino”) and
4 I Grand Parade Annual Report 20095 I Grand Parade Annual Report 2009
Thuo Gaming KwaZulu-Natal (Pty) Limited (“Thuo KZN”). In
addition, I am pleased to report that we commenced with the
implementation of our key employee share incentive scheme.
In this regard we have established a scheme that is scaleable
and will provide for the incentivisation of key staff at GPI for
years to come, as well as taking into account our planned
growth from an operational perspective. In this regard, we
issued our first tranche of shares to our Chief Executive,
Financial Director and Group Financial Manager during the
year, the details of which can be found elsewhere in this
report (refer to page 28 – directors’ report).
LOOKING AHEAD We are confident of the year ahead and, as demonstrated in
the past year, we will continue to grow GPI in a responsible
way. We plan to increase our footprint in the gaming and
leisure sector to the extent that we will endeavour to create
opportunities that bring our management skills to bear on
future projects, while also allowing us to be in control of
operations.
It is our continued intention to achieve our stated mission of
becoming a major force in the gaming, tourism and leisure
industry in Africa. GPI is on the move!
IN APPRECIATIONSpecial thanks are due to our attorneys, Bernadt Vukic Potash
& Getz Attorneys, to Leaf Capital our advisers and to PSG,
our sponsor, for their loyal service and wise counsel. I must
also record our gratitude to our shareholders, funders, our
fellow directors and, in particular, our staff for their ongoing
dedication and commitment to the success of GPI in these
difficult times.
Hassen Adams
Chairman
Cape Town
23 September 2009
The Board I 2009
Standing: Richard Hoption, Anthony Bedford, Charl Williams, Hassen Adams, Ralph Freese. Seated: Dr Norman Maharaj, Nombeko Mlambo, Adrian Funkey, Alexander Abercrombie
4 I Grand Parade Annual Report 20095 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 5
Chief Executive’s Review I Adrian Funkey
INTRODUCTIONThis annual report covers my first full year as GPI’s Chief
Executive and I have been privileged in that time to work with
a team whose loyalty and enthusiasm has been a source of
great support to me. It is a measure of that dedication that, in
a period of the most severe economic stringency, GPI has been
able to grow its headline earnings and its net asset value.
FINANCIAL REVIEWDuring the year under review GPI’s headline earnings grew
by 14%, although headline earnings per share decreased
by 9,9% due to the increased weighted average number of
shares in issue. Revenues declined and this is primarily due to
lower management fee income generated by Western Cape
Casino Resort Manco (Pty) Limited (“Western Cape Manco”).
Operating costs, however, reflect a saving compared to last
year, which is pleasing given that 2009 was GPI’s first full year
as a listed company with a larger portfolio of assets.
GPI’s share of associate income increased substantially this
year. This growth is attributed to GPI’s increased stake in
SunWest and a full year of earnings from Real Africa Holdings
Limited (“RAH”). Thuo Gaming Western Cape (Pty) Limited
(“Thuo Gaming WC”) performed well during the year,
growing its revenues by 12%, although earnings declined
slightly due to increased administration and personnel costs,
as well as higher capital charges incurred on introducing
new slot machines and refurbishing selected Limited Pay-out Machines (“LPM”) sites.
Of course, GPI has not been immune to the impact of the global economic slow-down and the erosion of household disposable income. However, GPI’s increased exposure to SunWest more than off-set the negative impact of the decline in GrandWest’s revenue and profit.
Our balance sheet remains essentially healthy, with GPI’s net asset value per share growing by 11%. GPI’s relatively low level of debt will also enable us to take full advantage of opportunities for further growth and expansion when they arise. This will stand us in good stead for when the economic environment improves, as we believe it must inevitably do within the medium term.
INVESTMENT REVIEWDuring the past year, GPI has continued to increase its stake in the casino and the LPM sectors, and details of these transactions are contained in this annual report, with the highlights briefly as follows:
Increased stake in SunWestGPI increased its direct stake in SunWest – which owns and operates GrandWest Casino and The Table Bay Hotel – by 2,83% at a cost of R92,4 million, bringing our directly owned stake to 29,24%. The option price of R165 per SunWest share represents a substantial discount to the underlying fair value of these shares. The group’s effective interest including the share held by RAH equals 33,52%.
Increased stake in Thuo Gaming KZN and Sibaya CasinoThrough our associate, Akhona Gaming Portfolio Investments Holdings (Pty) Limited (“Akhona GPI”), we increased our indirect stake in the Sibaya Casino and Thuo Gaming KZN. Akhona GPI is comprised of a powerful women’s group in the KZN market led by Gugu Nzimande. They were part of the original consortia to invest in Dolcoast Investments Limited (“Dolcoast”), Sun International’s empowerment partner in the exceptionally well-positioned Sibaya Casino in KZN. GPI advanced the funds required for Akhona GPI to follow its pre-emptive rights in Dolcoast and for it to acquire 100% of the shares in Wild Rush, which owns 10% of Thuo Gaming KZN. In return Akhona GPI issued GPI additional shares, with GPI’s economic stake increasing from 50% to 75% during the year.
Share buy-backDuring 2009 it became obvious to the management and board of GPI that the most attractive investment available, and which also carried the lowest level of risk, was to buy back our own shares. We did this successfully and managed to buy back 27 million GPI shares at an average price of R2,18
per share.
6 I Grand Parade Annual Report 20097 I Grand Parade Annual Report 2009
OPERATIONAL REVIEWGrandWest
2009 proved to be a challenging year for GrandWest. Fresh
from an expansion to its footprint and the inclusion of the state-
of-the-art Grand Arena, which seats more than 5 000 people,
GrandWest was unable to escape the clutches of the global
economic downturn. Furthermore, with Cape Town, the bedrock
of South Africa’s international tourist market, absorbing the full
brunt of the slow-down in tourism, revenues unfortunately
declined for the first time.
The management team at GrandWest has been proactive
in focusing on extracting better levels of productivity and
operational efficiency. It is through this focus that much of
the damage to GrandWest’s earnings as a consequence of
the decline in revenue was curtailed. It has also afforded
the team with the opportunity to take stock of its strengths,
weaknesses, opportunities and threats and we are confident
that the resulting strategy will see a far greater focus on
providing customer value throughout the guest experience
in the next few years. We are confident that, by rewarding
GrandWest’s guests with a much enhanced overall experience,
they too will reward GrandWest with much more of their
discretionary spend.
GPI extends its appreciation and thanks for the hard
work and dedication of the outgoing General Manager,
Graham Vass who has retired, and extends a warm welcome
to his replacement, Mike van Vuuren, who comes with a
wealth of knowledge and experience in the urban casino
industry. We are confident that Mike will bring fresh energy
and creativity to the GrandWest team and that GrandWest
will flourish under his leadership.
I would also like to thank GPI’s non-executive directors on
the SunWest board, Alex Abercrombie, Nombeko Mlambo,
Ralph Freese and our Chairman, Hassen Adams, for the
incredible contribution and support shown for this business
during this difficult time and for the leadership and direction
they have provided through their participation on this board.
It is also important to thank our partners Sun International
Limited (“Sun International”) for their support and focus on
this very important asset in both our respective portfolios.
The Table Bay Hotel
The Table Bay Hotel’s occupancy came under pressure with
the fall in overseas visitors to Cape Town. This was, however,
to an extent mitigated by a higher room rate, which grew
by 11% compared to last year. Higher operating costs did,
however, result in a decline in operating profits from this
operation.
RAH
The RAH investment which occurred in the last month of the
2008 financial year was pivotal in securing GPI’s listing. It is
most pleasing that RAH has performed relatively well during
the year, as it comprises the best of the new urban casino assets
within the Sun International portfolio. It is interesting that both
Carnival City and Sibaya Casino managed to grow revenues
in 2009 despite the poor conditions and, as a consequence,
GPI will receive a substantial dividend from this investment in
respect of its 2009 performance.
6 I Grand Parade Annual Report 20097 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 7
Chief Executive’s Review I Adrian Funkey continued
Worcester Casino
While Worcester Casino (Pty) Limited (“Golden Valley”) has
yet to make a contribution to GPI’s earnings, which is due to
the fact that it has operated from inception with no equity
contributions from the shareholders, it grew its revenues by
25% and its EBITDA by 42% in 2009. The new hotel was
incredibly well received and has been instrumental in allowing
Golden Valley to tap into the lucrative Cape Town market.
Akhona GPI
While Akhona GPI’s contribution to earnings is still small, it is
well positioned for good growth in the short to medium term
due to its stake in Dolcoast (Sibaya Casino) and the fact that
Thuo Gaming KZN is still in the very early stages of its
development.
Thuo Gaming WC
As I have already mentioned, Thuo Gaming WC enjoyed a
good year from a revenue growth perspective. However,
much of this was off-set by higher operating costs and
capital charges. A lot of focus is now being placed on cost-
effectiveness and efficiency in the year ahead, given that the
roll-out of machines is nearing capacity.
GPI MANAGEMENT AND SYSTEMS REVIEWHuman capital and systemsOn the human capital front, Richard Hoption has been
appointed as Financial Director of GPI and has also
assumed the responsibilities of Company Secretary from
Ralph Freese, who has performed this role with distinction
since 27 December 2002. Much work has gone into the
development of new and improved systems to ensure that GPI
maintains the highest standards of governance. Knowledge
management is key in an organisation like ours and we have
focused our attention on developing GPI’s knowledge base
and systems. We operate with a small team and are mindful
of the importance of containing the growth in operating
costs. Nevertheless, leveraging this know-how is critical.
During the year we established an operating company, GPI
Management Services (Pty) Limited (“GPI Management
Services”). It is our intention to grow GPI’s revenues in future
and we will look to position the business to achieve this in a
responsible and commercially sound manner.
Share incentive trustAt the last AGM our shareholders approved the Grand Parade
Share Incentive Trust (“GPSIT”) and I am pleased to report
that GPI commenced with the implementation of this scheme
during the financial year. My executive team and I would like
to take this opportunity to thank you, our shareholders, for
approving the scheme and the GPI remuneration committee
and board for seeing to it that the scheme was properly
implemented during the year, culminating in the grant and
exercise of share options to key executives and management.
The scheme was designed with growth in mind and
considerable attention is being paid to taking this scheme to
a much higher level in terms of best practice. We hope, in
so doing, to ensure that we have an efficient and effective
means of incentivising and retaining GPI’s key management
and staff as the business grows into the future.
CHALLENGES AND RISKSSome challenges and risks do face us going forward:
• Beinginthemidstofarecessionhasbeenachallengeand
while we are confident that the worst is behind us from
the credit crisis perspective there is still much uncertainty
regarding the pace of a recovery. This will clearly impact
on our results either way.
8 I Grand Parade Annual Report 20099 I Grand Parade Annual Report 2009
• We have mitigated our minority position through our
participative philosophy and we feel that through our
knowledge and experience in the gaming and leisure
industry and through our representation and participation
on the board of these entities, together with ensuring the
necessary protections in our shareholder’s agreements
with our majority partners, that this risk has been
significantly curtailed.
SUSTAINABILITY
As is clear from our sustainability report, sustainability is core
to our investment and operating strategies. For this reason,
the sustainability report is integral to communicating how GPI
is facilitating transformation within the company, as well as
its social and environmental performance in the communities
and economies in which the group conducts its business.
It provides our stakeholders with a more detailed and
comprehensive account of GPI’s corporate social responsibility
activities. It thus constitutes the company’s non-financial
audit of our sustainability policies and practices, allowing
us to benchmark more accurately our performance and our
future planning.
THE FUTUREAs for our future focus, GPI will continue to take a medium-
to long-term view with regard to expanding its portfolio,
taking advantage of strategic investment opportunities that
present themselves, as we have in several instances over
the past year. We are fortunate in that we are in a position
to be selective about where we invest, which places the
company in a competitive position. As always, our strategy
will be to provide stable and sustainable performance for our
shareholders, and for that reason we shall continue to invest
in companies and ventures where GPI can hold significant
influence and which are strongly cash-generative.
I have no doubt that next year’s 2010 Soccer World Cup will
not only accelerate South Africa’s economic recovery, but
will act as a boost to our investments in the hotel and leisure
sector. Since its establishment as a black-owned and controlled
investment group in 1997, GPI has firmly established itself
as a substantial player in South Africa’s tourism, leisure and
gaming sectors. Our 2008 listing on the JSE marked a further
step towards corporate maturity, opening new opportunities
for our thousands of investors to participate in the continued
growth and development of GPI.
In terms of our more specific strategic business objectives
for the coming year, we are confident that our increased
exposure to carefully chosen urban casinos and the LPM
industry positions GPI well for growth when the economy
turns. We have a strong balance sheet with low levels of debt,
which is a good position to be in, particularly in a pressing
economic environment.
IN SUMMARY GPI has continued to display resilience in the face of the current
recession. While many companies at home and abroad have
been able to do little more than stand still and await a return
to profitability and an end to the world’s current economic
crisis, GPI has maintained an active programme of growth
and expansion and is firmly on the move.
I believe that GPI’s long-term prospects remain positive. We
have a stable of great investments with upside potential and a
number of further opportunities have presented themselves.
We’re in the perfect position to take advantage of these and
to continue to generate cash from our current investments to
the benefit of all our shareholders.
IN CONCLUSIONIn conclusion, I would like to thank all our stakeholders for
your support and also a special thanks to the management
and staff of all the business operations we are invested in for
their continued loyalty, dedication, passion and commitment
in advancing the interest of their key stakeholders and GPI in
particular.
Adrian Funkey
Chief Executive Officer
Cape Town, 23 September 2009
8 I Grand Parade Annual Report 20099 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 9
Financial Director’s Report I Richard Hoption
Revenue EBITDA Operating profit2009 2008 % 2009 2008 % 2009 2008 %
R million R million change R million R million change R million R million change
GrandWest 1 642 1 756 (6,5) 675 738 (8,5) 535 591 (9,5)Carnival City 997 954 4,5 351 329 6,7 267 252 6,0Sibaya Casino 810 782 3,6 295 294 0,3 233 224 4,0Boardwalk Casino 418 451 (7,3) 172 185 (7,0) 142 156 (9,0)Table Bay 199 197 1,0 65 69 (5,8) 33 36 (8,3)Golden Valley 109 87 25,3 34 24 41,7 14 10 40,0Thuo Gaming WC 188 167 12,6 40 38 5,3 28 30 (6,7)Thuo Gaming KZN 63 33 90,9 3 (9) n/a (5) (13) n/a
Source: Sun International Limited SENS announcement/calculations based on Thuo Gaming management accounts
The GPI group results, as set out in these annual financial
statements, present for the first time the group’s full year
performance as a listed entity.
The accounting policies applied to these financial statements
are consistent in every material respect with the audited
consolidated financial statements for the year ended
30 June 2008. As more fully detailed in note 2 to these
annual financial statements, there are a number of new and
amended accounting standards or interpretations, which
become effective in the new financial year. These have not
been adopted early and are not expected to have a material
effect on GPI’s results.
When analysing and comparing GPI’s performance, headline
earnings, and not net profit, is the most appropriate measure
to use since headline earnings removes distortions caused
by International Financial Reporting Standards (“IFRS”)
adjustments, such as the negative goodwill from associates
and the prior year impairment of investment in associates.
The headline earnings of R96,5 million increased by 14%
from last year’s R84,8 million. This was mainly due to the
contributions that the additional SunWest shares and the full
year benefit of RAH shares have made. This was, however,
off-set to an extent by the increased finance costs associated
with the preference share borrowings made to finance these
acquisitions. The revenue performance of GPI’s main asset,
GrandWest, ended the year approximately 6,5% below the
prior year, translating into a 9,5% reduction in its operating
profit.
Headline earnings per share decreased by 9,9%, mainly due
to the increase in the weighted average number of shares in
issue from the previous year. More significantly, the group’s
net asset value per share has increased by 11% from the
previous year.
10 I Grand Parade Annual Report 200911 I Grand Parade Annual Report 2009
The requirements of being a listed company, together with
the need to align GPI with its strategies, has necessitated
continual changes and improvements to GPI’s accounting and
reporting systems. Nevertheless, operating costs were kept at
7% below those of the last financial year.
Finance costs have increased significantly as a result of
the preference shares issued late in the prior financial year
(March 2008: R203 million) and early in this financial year
(December 2008: R105 million). R22 million of the preference
share debt was repaid in March 2009 and interest rates, on
which the preference share dividends payable are based, have
dropped significantly by some 4,5%. The debt equity ratio of
17,5% as at 30 June 2009 reflects the low level of gearing
and shows that there is capacity for further borrowings should
the need arise. We monitor our debt covenants and maintain
regular communication with our funders.
Cash flow from interest and dividends received increased
to R135,3 million compared to R81,8 million in the prior
year, mainly due to the prior year SunWest share premium
distribution of R43,6 million disclosed in cash flow from
investing activities and the first dividends received from RAH
in the current year.
The interest cover, based on cash flow from operations
before working capital changes plus interest and dividends
received, as well as actual finance charges paid, is 5,6 times
(2008: 13,2 times). This cover reduces to 4,4 times when
both accrued and paid finance charges are used (2008: no
change). The reduction in this cover ratio is primarily due
to the additional preference shares referred to earlier in this
report.
The GPI group holds a large number of Secondary Tax on
Companies (“STC”) credits. The change to the dividends tax
regime, which has been legislated but not yet implemented,
will increase cash flow through the group, although the tax
incidence will then fall on the ultimate shareholder.
During the year GPI acquired a further 2,83% of SunWest
at a significantly discounted cost of R92,4 million (being the
exercise of an option granted to GPI) and increased its stake
in Akhona GPI to 75%. Akhona GPI, in turn, increased its
investment in Thuo Gaming KZN and Sibaya Casino in the
sum of approximately R26 million.
The GPSIT was registered on 25 March 2009. Effective
30 June 2009, the GPSIT purchased 7,6 million GPI shares
for R2,00 per share, financed by a loan from GPI. In line with
the rules governing the GPSIT, key executives of GPI were
granted options, which they exercised, thereby purchasing
1,78 million of these shares at R2,12 with loans advanced by
the GPSIT. The remaining shares have been treated as treasury
shares.
The total cost of the GPI shares bought back during the year,
which have either been cancelled or are being cancelled, and
the treasury shares remaining, as described above, amounted
to R55,3 million. The effect of the buy-back programme on
HEPS will only be fully felt in the new financial year. The buy-
back programme has, however, had a positive impact on the
net asset value per share.
In conclusion, I would like to thank all who have supported me
over the last financial year and look forward to the challenges
that the new year ending 30 June 2010 may bring.
Richard Hoption CA(SA)
Financial Director
Cape Town
23 September 2009
10 I Grand Parade Annual Report 200911 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 11
Directorate and Management I 2009
Hassen Adams H. Dip Civil Engineering (PenTech), Pr. Tech. Eng.
Hassen is a civil engineer by training and has many years’ experience as a professional consulting engineer/project manager. He has many years’ extensive business experience and is chairman of Asch Professional Engineers and Proman Projects Management Services. His other directorships include Cape Town Fish Market, Retail Corporation, Gold Circle and Grindrod Limited. His skills and experience are used in making strategic investment decisions for GPI.
Adrian Funkey B.Com Hons, CA(SA), CIMA (UK)
Adrian is a Chartered Accountant (SA) and a member of the Chartered Institute of Management Accountants in the United Kingdom. He combines sound commercial and financial knowledge with excellent strategic planning and leadership experience. His passion for business has been moulded with blue chip service companies.
Previously Adrian was the commercial manager of the Gaming South division of Sun International and was responsible for the commercial and financial affairs of casino/hotel operations throughout South Africa and in Chile. Of these operations he was intimately involved in the planning, preparation and opening of the GrandWest, Boardwalk Casino and Entertainment World (“Boardwalk Casino“), Flamingo, Windmill and Golden Valley casinos and was involved in developing and planning the operation of the new Grand Casino Monticello in Chile.
Richard Julian Hoption B.Com, Dip.Acc (UND), CA(SA)
Richard is a qualified Chartered Accountant (SA) and articled at Deloitte & Touche (1983 – 1986). Post-articles he joined Smiths Manufacturing SA (Proprietary) Limited serving as internal auditor, financial controller and financial manager. Then, after a period of freelance consulting and involvement in the establishment of a small audit practice, Richard joined NBS Bank Limited (which became BoE Bank Limited and ultimately Nedbank Limited). He had various roles within their specialist property equity (investment and development) division as financial manager, senior operations manager and regional investment manager KZN. His functions included being director of a number of the property development and investment companies that the Bank had an investment in. Richard was the CEO of GPI at the time of its listing and remained an executive director post-listing. Richard has recently been appointed Financial Director and Company Secretary.
Alexander Abercrombie Att.Adm.Dipl. (UWC), PgD (Company Law) (US), Cert (Sports Law) (UCT)
Alex is an admitted attorney and a qualified conveyancer. He is a director at DLA Cliffe Decker Hofmeyr. Alex has been appointed to act as a judge of the High Court of South Africa. He has a number of business interests and he is well respected in both legal and sports circles.
Charl Williams BA (Law) (UWC), LLB (UWC), LLM (UCT)
Charl is an admitted attorney and director of the law firm DLA Cliffe Dekker Hofmeyr. Charl practises in all aspects of commercial law including, but not limited to, providing strategic advice and structuring of commercial transactions. He holds BA (Law), LLB and LLM degrees, obtained from the Universities of the Western Cape and Cape Town respectively.
Adrian FunkeyHassen Adams Alexander AbercrombieRichard Hoption Charl Williams
12 I Grand Parade Annual Report 200913 I Grand Parade Annual Report 2009
Anthony William Bedford B.Admin (Hons) (Industrial Psychology) (UNISA), N.Dip (States Accounts & Finance) (PenTech)
Tony has extensive business management and public service experience on local and international levels. Having completed a six-year spell in the Public/Finance/Treasury and Training department, Tony in 1978 embarked on a 20-year career in the Fruit Canning and Food Processing Industry. As part of Del Monte Food International he successfully headed the Human Resource function, spearheading the affirmative action programmes under the Sullivan Code of Conduct. He concluded a UK assignment as Director of the Human Resources Department Direct International Remuneration Practices, Project Assignments and the UK Personnel functions.
As managing director of the SA-based company, on his return from the UK Tony served on all the fruit canning boards, labour, and international sales and marketing committees, and ensures that business plans are successfully executed.
Since 1998 he commenced his career in the defence industry at Denel (Pty) Limited as the General Manager, Director at Ordinance level, Middle East and Asia Pacific. In these capacities he was responsible for all strategic areas of business including manufacturing, international sales and marketing, and oversight of manufacturing processing units of Pyrotechnics, small arms, ammunition and mine clearing.
Since April 2008 Tony strategically directs his own enterprises in property, commodity trading and strategic investments.
Tony serves on a number of other boards in the food, gaming, property and engineering sectors.
Dr Norman Maharaj MB, ChB
Norman has until recently been a commissioner in the Public Service Commission and was an honorary director of Bush Radio. He is a qualified medical doctor and has held senior executive management positions at a number of Western Cape government hospitals, including Groote Schuur, GF Jooste and Red Cross Children’s Hospitals. He has extensive trade union movement experience in the public service sector. His public service experience and involvement in the Public Service Commission will help broaden the GPI board’s analytical and decision-making abilities, with particular reference to matters of good corporate governance and ethics. He is very well known in the Western Cape and through his work in the public service sector on the continent and abroad.
Nombeko Mlambo BA (UNISA), B.Ed (UCT), MA in Counselling Psychology (Durham University)
Nombeko started her teaching career in 1966. She co-founded the Council for Black Education & Research Trust, an educational NGO, in 1982. She is involved in The Trust for Education Advancement in South Africa, the Business Skills & Development Centre and the Community Plough Back Movement. Nombeko served on the Western Cape Cultural Commission from 2002 to 2005.
Ralph Gordon FreeseRalph was born on the Cape Flats, educated by diverse teachers and experiences, and now serves on boards of both developmental NGOs (arts, housing and financial) and businesses. He enjoys complex processes, reads widely (science and novels), and loves the mountains, beaches and wines of the Cape.
Nombeko MlamboAnthony Bedford Ralph FreeseDr Norman Maharaj
12 I Grand Parade Annual Report 200913 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 13
Corporate Governance Report
The board of GPI endorses the application of the principles recommended in the King Report on Corporate Governance (“King II”). The board is satisfied that the company is compliant with the King Code in most material aspects and with the related Listings Requirements of the JSE.
The extent of the company’s compliance with the Code and related Listings Requirements of the JSE is dealt with under appropriate sections throughout this report.
BOARD OF DIRECTORSThe board is the focal point of the company’s corporate governance system which is ultimately accountable and responsible for the key governance processes and the performance and affairs of the company.
BOARD CHARTER The board subscribes to a charter which regulates how business is to be conducted by the board in accordance with the principles of good corporate governance.
The charter regulates and deals with, inter alia:
• retainingfullandeffectivecontroloverthecompanyandmonitoring management in implementing board plans and strategies;
• ensuringethicalbehaviourandcompliancewithrelevantlaws and regulations, audit and accounting principles, and the company’s own governing documents and codes of conduct;
• defining levels of materiality, reserving specific powersto the board and delegating other matters with the necessary written authority to management and instituting effective mechanisms that ensure board responsibility for management performance of its functions;
• actingresponsiblytowardsthecompany’sstakeholders;
• being aware of, and committing to, the underlyingprinciples of good governance;
• reviewing the strategic direction of the company andadopting business plans proposed by management for the achievement thereof;
• approving specific financial and non-financial objectivesand policies proposed by management;
• reviewingprocessesfortheidentificationandmanagementof business risk and processes for compliance with key regulatory and legal areas;
• delegatingauthorityforcapitalexpenditureandreviewinginvestment, capital and funding proposals reserved for board approval; and
• providing oversight of performance against targets andobjectives.
BOARD CHAIRMANThe board has been chaired by Mr H Adams, a non-executive Chairman. The Chairman of the board is responsible, inter alia, for ensuring the integrity and effectiveness of the board’s governance processes.
BOARD COMPOSITIONGPI has a unitary structure comprising a mix of executive and non-executive directors. Procedures for appointment to the board are formal and transparent and a matter for the board as a whole. The board is assisted in this process by the remuneration and nomination committee. The board also consults independent experts as and when required.
The board presently comprises two executive directors and seven non-executive directors, of whom two are considered independent in terms of the definitions contained in the Code. The non-executive directors have the necessary skills and experience, as is evidenced from their CVs.
DIRECTORS’ PERIOD OF OFFICE AND RETIREMENTIn terms of the company’s articles, new non-executive directors may only hold office until the next annual general meeting at which they will be required to retire and may offer themselves for re-election. One-third of the directors are subject to retirement by rotation at least once a year. The retirement age for a director is 70.
Adrian Funkey (CEO) and Richard Hoption (Financial Director) are the only two executive directors who have employment agreements with GPI containing terms and conditions that are normal for such contracts.
The directors who offer themselves for re-election at the next annual general meeting are set out in the notice of the annual general meeting in the annual report.
BOARD NOMINATIONSAppointments to the board are referred to the remuneration and nominations committee. The remuneration and nominations committee assesses the qualifications and skills of the proposed director. The remuneration and nominations committee recommends all possible directors to the board. The board then decides on the appointment of the directors.
INDUCTION OF DIRECTORSOn appointment, all directors are provided with materials aimed at broadening their understanding of the group and the business environment and markets in which the group operates. All directors are expected to keep abreast of changes and trends in the business and in the group’s environments and markets, including changes and trends in the economic, political, social and legal climate.
ACCESS TO COMPANY INFORMATION AND CONFIDENTIALITYProcedures are in place, through the board Chairman and the company secretariat, enabling the directors to have access, at reasonable times, to all relevant company information to assist them in the discharge of their duties and responsibilities and to enable them to make informed decisions. Directors are expected to strictly observe the provisions of the statutes applicable to the use and confidentiality of information.
INDEPENDENT PROFESSIONAL ADVICE AND COMPANY SECRETARIATA procedure is in place for directors to take independent advice, for the furtherance of their duties, if necessary, at the company’s expense, subject to prior notification to the board Chairman or the Company Secretary.
14 I Grand Parade Annual Report 200915 I Grand Parade Annual Report 2009
The Company Secretary provides a central source of advice to the board on the requirements of the Code on Corporate Governance and, in addition to the Company Secretary’s statutory and other duties, provides the board as a whole, directors individually and the committees with guidance as to how their responsibilities should be discharged in the best interest of the company. The appointment and removal of the company secretariat is a matter for the board as a whole.
CONFLICT OF INTERESTDirectors are required to inform the board of any conflicts or potential conflicts of interest which they may have in relation to particular items of business. Directors are required to recuse themselves from discussions or decisions on those matters where they have conflict or potential conflicts of interest and the board may, if it deems appropriate, request a director to recuse himself/herself from the meeting for the duration of the matter under discussion. If material, the matter is put to the shareholders for approval in accordance with the Listing Requirements of the JSE.
BOARD MEETINGSA minimum of four board meetings is scheduled per financial year to consider, deal with and review, inter alia, strategic and key issues, financial issues, the review of operational performance and any specific proposals for capital expenditure relative to the company and the group.
Official board Special board meetings* meetings#
A Abercrombie 6 2H Adams 6 2A W Bedford 5 1R G Freese 5 2A Funkey** 5 2N V Maharaj 4 –N Mlambo 6 1R Hoption 6 2C W Williams 4 –
* Total number of board meetings attended during the year.
** Did not attend one board meeting as this was held before date of appointment.# Total number of special board meetings attended during the year.
BOARD COMMITTEESThe board is authorised to form committees to assist in the execution of its duties, powers and authorities. The board has three standing committees, namely the audit and risk, remuneration and nomination, and investment committees. The terms of reference and composition of the committees were determined and approved by the board during the financial period and have been adopted by the committees. The terms of reference of the committees will be subject to review and amendments on an annual basis. The chairmen of the committees report to the board on a regular basis.
AUDIT AND RISK COMMITTEEComposition: Messrs R G Freese (chairman), N V Maharaj and C W WilliamsThe audit and risk committee consists of three non-executive directors of whom two are independent. The audit and risk committee is primarily responsible for overseeing the
company’s financial reporting process on behalf of the board, and assists the board in discharging its fiduciary duties relating to the safeguarding of assets, the operation of adequate systems, control processes and the preparation of accurate financial reporting and statements in compliance with all applicable legal requirements and accounting standards.
The mandate of the audit and risk committee includes:
• considerationoftheannualappointmentandevaluationof the external auditors, the audit plan and audit fees;
• evaluationoftheindependenceandeffectivenessoftheexternal auditors;
• considerationofnon-auditservicesperformedbytheminrespect of which a policy has been established;
• review of the interim report and annual financialstatements, including the valuation of unlisted investments and loans, prior to submission to the board;
• discussion of problems arising from external audit andreview of the external auditors’ interim and final reports and identification of key issues;
• considerationofmajorfindingsofinternalinvestigationsand management responses;
• reviewoftheadequacyofthesystemsofinternalcontroland any legal matters which could significantly impact on the group’s financial statements;
• review of compliance with the King Code and ListingsRequirements of the JSE in so far as these relate to the financial statements; and
• considerationoftheappropriatenessoftheexpertiseandexperience of the Financial Director.
The audit committee officially changed to the audit and risk committee during the year. For the 2009 financial year the committee operated under its existing charter as detailed above. However, the committee is in the process of revising its existing charter in order to include risk management principles. This charter will, however, only be effective for the next financial year.
All members of the audit and risk committee are directors and are financially literate. The chairman of the audit and risk committee, or in his absence another member of the committee nominated by him, attends the annual general meeting to answer questions falling under the mandate of the committee.
The audit and risk committee is required to meet at least four times a year. Meeting attendances are detailed below.
Total number of meetings
attendedRalph Freese 4Norman Maharaj 3Charl Williams 4
14 I Grand Parade Annual Report 200915 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 15
REPORT OF THE AUDIT AND RISK COMMITTEEIn terms of sections 269A and 270A of the Companies Act, 1973 (No. 61 of 1973) as amended, the audit and risk committee of the company and the group including wholly-owned subsidiaries, disc`harged it functions as follows:
• considered the annual appointment and evaluated theexternal auditors, the audit plan and audit fees;
• evaluated the independence and effectiveness of theexternal auditors;
• considerednon-auditservicesperformedbytheexternalauditors;
• reviewed the interim report and annual financialstatements, including the valuation of unlisted investments and loans, prior to submission to the board. In the course of the review the audit and risk committee:
– took appropriate steps to ensure that the annual financial statements are prepared in accordance with IFRS and the Companies Act, 1973 (No. 61 of 1973) of South Africa as amended, and
– considered and made recommendations, where appropriate, on internal controls;
• discussed problems arising from the external audit andreview of the external auditors’ interim and final reports and identification of key issues;
• consideredmajorfindingsof internal investigations andmanagement responses;
• reviewedtheadequacyofthesystemsofinternalcontroland any legal matters which could significantly impact on the group’s financial statements;
• reviewed compliance with the King Code and ListingsRequirements of the JSE in so far as these relate to the financial statements; and
• reviewed the risk management framework and maderecommendations, where appropriate, to the board.
In terms of the JSE Listing Requirement 3.84(h), the audit and risk committee satisfied itself that the group financial director has appropriate experience and expertise.
The chairman of the audit and risk committee is required to report to the board of directors on matters attended to by that committee, which he has done and board members received a copy of audit and risk committee minutes.
REMUNERATION AND NOMINATION COMMITTEEComposition: Messrs A W Bedford (chairman), A Abercrombie and Ms N MlamboThe members of the committee are non-executive directors. For as long as the committee also performs a nomination function, the chairman is to be appointed by the committee. The remuneration and nomination committee reviews the design and management of executive salary structures and policies. The group is primarily an investment company where its subsidiaries and investment companies have their own remuneration committees. The committee also regularly reviews the composition of the board and makes recommendations to the board on its composition, the appointment of non-executive directors, the re-election of retiring directors and the composition of the board committees, in terms of the prerequisites set out in the board charter.
A Abercrombie was appointed as a committee member during the year.
The mandate of the remuneration and nomination committee requires the committee, inter alia, to:
• ensurethatcompetitiverewardstrategiesandprogrammesare in place in support of realising corporate objectives and in safeguarding shareholders’ interests;
• recommendthelevelofnon-executivedirectorandboardcommittee fees to the board, having received the proposals/recommendations of the executive directors, and where appropriate, independent remuneration consultants for consideration and approval by shareholders;
• ensure consideration is given to succession planning inthe group; and
• reviewanddeterminetheremunerationoftheexecutivedirectors, subject to consideration of the short- and longer-term components of remuneration and individual contributions and performance.
No executive director is present at meetings of the remuneration and nomination committee when his own remuneration is discussed or considered. The chairman of the remuneration and nomination committee, or in his absence another member of the committee, is required to attend the annual general meeting to answer questions on the subject of remuneration.
The remuneration and nomination committee is required to meet formally at least once a year. The committee met twice during the year. A number of informal meetings were held during the year.
Total number of meetings
attendedAnthony Bedford 2Nombeko Mlambo 2
Corporate Governance Report I continued
16 I Grand Parade Annual Report 200917 I Grand Parade Annual Report 2009
Directors’ fees
Executive directors
SalaryR
Director’s fees
R
Audit committee
R
Remuneration and nomination
committeeR
Investment committee
R
Total remuneration
2009R
Total remuneration
2008R
H Adams – – – – – – 1 213 500
A Funkey 1 254 000 – – – – 1 254 000 –
R Hoption 776 923 – – – – 776 923 240 000
2 030 923 – – – – 2 030 923 1 453 500
Non-executive directorsA Abercrombie – 80 000 – – – 80 000 397 500
H Adams – 905 958 – – – 905 958 404 500
A W Bedford – 80 000 – 30 000 – 110 000 247 500
R G Freese – 80 000 30 000 – – 110 000 547 500
N Mlambo – 80 000 – 15 000 – 95 000 110 000
N V Maharaj – 80 000 15 000 – – 95 000 –
C W Williams – 80 000 15 000 – – 95 000 –
– 1 385 958 60 000 45 000 – 1 490 958 1 707 000
2 030 923 1 385 958 60 000 45 000 – 3 521 881 3 160 500
INVESTMENT COMMITTEEComposition: Messrs H Adams (chairman), R G Freese and A AbercrombieGPI’s investment policy is to achieve above average returns for its shareholders by investing in undertakings and entering into joint ventures and other similar alliances, whereby it forms partnerships with entities contributing not only to capital, but also providing strategic managerial input, a high profile corporate identity, and, most importantly, impeccable empowerment credentials. The investment committee meets formally twice a year, and engages in regular informal discussions.
Total number of meetings
attendedHassen Adams 2Ralph Freese 2Alex Abercrombie 2
RISK MANAGEMENT, ACCOUNTABILITY AND AUDITRisk managementThe directors of GPI have committed the group to a process of risk management that is aligned to the principles of the King II Report. Effective risk management is imperative to a group with GPI’s risk profile. The realisation of the business strategy depends on GPI being able to take calculated risks in a way that does not jeopardise the direct interests of stakeholders. Sound management of risk enables GPI to anticipate and respond to changes in the business environment, as well as take informed decisions under conditions of uncertainty. Every key risk in each part of the group is included in a structured and systematic process
of risk management. All key risks are managed within a unitary framework that is aligned to the group’s corporate governance responsibilities.
The nature of the group’s risk profile demands that GPI adopts a prudent approach to corporate risk and GPI’s decisions around risk tolerance and risk mitigation reflect this. Nonetheless, the group’s response to risk remains flexible and dynamic so as not to hinder the group’s growth with inappropriate and burdensome controls. Controls and risk interventions are chosen on the basis that they increase the likelihood that GPI will fulfil its intentions to stakeholders, being the maximising of long-term shareholder value. The risks to which the group’s existing investments are exposed are continuously identified and mitigated in terms of a group process that allocates responsibility, determines the action to be taken and monitors compliance with that action.
This involves managing a changing and challenging gaming environment and industry, as well as pursuing new business opportunities on a continual basis.
ACCOUNTABILITY AND AUDITExternal auditThe primary focus of the external auditors is to express an audit opinion on the group annual financial statements. Whilst performing such duties, the external auditors provide the board and the audit committee with their independent observations and suggestions on the group’s controls, as well as suggestions for the improvement of the financial reporting and operations of the business. The external auditors’ audit approach is risk-based, requiring them to continually identify and assess risk throughout the audit processes. The external
16 I Grand Parade Annual Report 200917 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 17
auditors are reliant on the operating procedures and place emphasis on understanding how management obtains comfort that the business is generating reliable information and then evaluating and validating the basis of this comfort.
Internal controlThe board of directors is responsible for the group’s systems of internal control. These systems are designed to provide reasonable but not absolute assurance as to the integrity and reliability of the financial statements and to safeguard, verify and maintain accountability of its assets and to detect and minimise significant fraud, potential liability, loss and material misstatement while complying with applicable laws and regulations. Due to the size of the entity and the volume of transactions processed, the risk of a material misappropriation of funds is low. In addition, there is a high level of management and board review. Therefore, no internal audit committee is required to be formed at this time. Nothing has come to the attention of the directors to indicate that a material breakdown in the controls within the group has occurred during the year.
Regulatory environmentThe gaming industry in which the group operates is highly regulated and is subject to significant probity and outside regulatory monitoring. This requires the group, its major shareholders, directors, senior management and key employees to observe and uphold the highest levels of corporate governance.
Social responsibilityGPI actively promotes, through its investment in associates and joint venture companies, the upliftment and socio-economic development of the communities in which the group operates by working with community members with the objective of transferring skills. The company is extremely aware of gambling being a problem in such communities and proactively, through its investments in associated and joint venture companies, endorses the National Responsible Gaming Programme (“NRGP”) and interacts with individuals,
industry and government to assist in focusing on this important initiative.
CommunicationsThe board strives to provide its shareholders, employees, government, regulatory bodies, industry analysts, prospective investors and the media with relevant and accurate information, promptly and transparently. In this respect, the regulatory requirements regarding the dissemination of information are strictly observed.
DEALINGS IN SECURITIESDirectors, the Secretary and certain identified senior executives who have access to price-sensitive information and are defined as “insiders” may not deal in shares of the company during the closed periods which fall within the following periods:
• between 1 January and the date on which the interimresults are published;
• between1Julyandthedateonwhichtheyear-endresultsare published; and
• outsideoftheaboveclosedperiodswhilethecompanyisin the process of price-sensitive negotiations, acquisitions, pending any price-sensitive announcements, or while under cautionary.
Directors, secretarial staff and certain identified senior executives are required to obtain prior clearance in writing of any proposed share transactions from the Chairman of the board, or failing him, from the chairman of the remuneration and nomination committee, or failing them, from the chairman of the audit and risk committee. Written requests for clearance should be routed through the Company Secretary who also maintains a written record of requests. Clearance to deal may not be given during closed periods.
Details of any transaction by directors, the Secretary and certain identified senior executives in shares of the company are advised to the JSE through the sponsor for publication on SENS.
Corporate governance report I continued
18 I Grand Parade Annual Report 200919 I Grand Parade Annual Report 2009
Group Structure
* Held 1,29% of GPI’s shares as at 30 June 2009, which eliminate on consolidation.** RAH has a 76,8% stake in Afrisun Leisure which in turn has a direct shareholding in Sibaya Casino, Carnival City and Boardwalk Casino. The percentages
reflected above takes into account the minority stake in Afrisun Leisure.
WILD RUSH TRADING 97
GRAND-WEST
CASINO
CTICC TABLEBAY
HOTEL
GOLDEN VALLEY LODGE
GOLDEN VALLEY CASINO
UTISH (2) GPI Share Incentive Trust* (9)
GPI Management Services (8)
GPI Slots (7)
AKHONAGPI (6)
BV1 575 (5)SUNWEST (4)WORCESTERCASINO (1)
36,7% 100% 9,35% 100% 75% 100% 100% 100%
100% 100% 24,75% 100% 100%
NATIONAL MANCO (10)
25,34% 5,67%
2,8%ZONWABISE
26,8%
7,4%
SIBAYA
13,7%
CARNIVAL CITY
21,6%
BOARDWALK
2,61%
EMFULENIMANCO
50%
20,3%
GAUTENGMANCO
23,04% 50%
AFRISUN KZNMANCO
50% 52,3%
WESTERN CAPEMANCO (11)
50% 50%
THUO GAMING KZN
10% 20%
DOLCOAST
18,5%
29,92%
THUO GAMING WC
25,1%
22,4%
Grand Parade InvestmentsGrand Parade Investments
14%19,89%
3,73%
100%
1. Worcester Casino GPI has a 36,7% interest in Worcester Casino. The group’s effective interest including the share held by RAH equals 38,96%.
2. Utish Utish Investments (Pty) Limited (“Utish”) is a wholly-owned special purpose vehicle established to obtain preference share funding from Sanlam Capital Markets Limited (“Sanlam”).
3. RAHThis acquisition indirectly increased GPI’s investment in urban casinos.
4. SunWestIn July 2008 the group increased its direct economic interest in SunWest by 2,83% to 29,24%.
5. BVIBusiness Venture Investments No. 575 (Pty) Limited (“BVI“) is a wholly-owned special purpose vehicle established to obtain preference share funding from The Standard Bank of South Africa Limited (“Standard Bank”) and Depfin Investments (Pty) Limited (“Depfin”).
6. Akhona GPIGPI holds a 75% interest in Akhona GPI. Akhona GPI owns an 18,5% stake in Dolcoast, which in turn holds a 22,4% stake in Sibaya Casino in KwaZulu-Natal. It also owns a 30% interest in Thuo Gaming KZN.
7. GPI SlotsThrough GPI Slots (Pty) Limited (“GPI Slots”), GPI owns a 25,1% interest in the LPM operations of Thuo Gaming WC.
8. GPI Management ServicesGPI Management Services is a wholly-owned entity established to perform management services for the group and third parties. The company is a strategic component of the group’s longer-term vision.
9. Grand Parade Share Incentive TrustThe GPSIT was established based on the approval received by the shareholders in the annual general meeting on 9 December 2008. The trust was established as an incentive scheme. On 30 June 2009 the trust purchased 7,6 million of GPI’s shares. 1,78 million shares were issued to executive management on 30 June 2009. The balance is available for future issues to staff members.
10. National MancoGPI holds a 5,67% shareholding in National Casino Resort Management Company (Pty) Limited (“National Manco”) and this investment is classified as available-for-sale.
11. Western Cape MancoGPI owns 50% of Western Cape Manco. This investment is accounted for as a joint venture. The group’s effective interest including the share held by RAH equals 57,08%.
RAH** (3)
30,57%
18 I Grand Parade Annual Report 200919 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 19
Sustainability Report
INTRODUCTIONGPI owes its existence to the outcome of a meaningful
commitment to empowerment and sustainability. It is now a
substantially empowered, black-controlled listed company but
it grew from small beginnings. That is why its commitment to
triple bottom line reporting is so strong and its economic, social
and environmental impact so positive. Indeed, sustainability is
central to its vision, mission and business purpose. A key part
of this strategy is the channelling of resources into entities
where GPI is able to exercise significant influence.
From this position GPI is able to encourage its underlying
investments to grow in a sustainable manner, mindful of the
interests of all its stakeholders.
BEE CREDENTIALSFrom a black economic empowerment perspective GPI has
impeccable credentials. GPI’s preliminary score, which is
reflected in the table below is in the final stages of assessment.
Western Cape’s independent BEE verification agency, SERA is
in the process of verifying GPI’s score of 98%.
This score was derived using GPI’s four strongest categories
of empowerment and is due to the fact that GPI is classified,
based on its reported revenues for 2009, as a qualifying small
entity.
2009
%
Ownership 25,00
Management and control 24,95
Employment equity 25,00
Preferential procurement 23,31
Skills development –
Social development –
Enterprise development –
Total 98,26
EMPLOYMENT EQUITYGPI’s underlying investments operate employment equity
committees. They ensure that employment equity and
succession planning strategies are focused on the businesses
core functions. The employment equity plans for 2010 reflect
the plans in place to aid with recruitment and development.
This doubles as a departmental measurement and guide
towards ensuring that employment equity targets are
attained.
SHAREHOLDER EMPOWERMENTGPI is a business with 100% black origins and was therefore transformed at “birth”. GPI is SunWest’s biggest local stakeholder in terms of shareholder empowerment: it now owns an effective stake of 33,52% in SunWest, thus fulfilling the terms of the original bid to secure the licence for the Western Cape-based operation. GPI now has 6 300 direct shareholders, most of whom are members of historically disadvantaged communities. The founding consortia themselves account for thousands of previously disadvantaged shareholders which means that indirectly the previously disadvantaged shareholder base of GPI is substantially more.
These shareholders invested their savings in GPI and have since been rewarded with a substantial return on their investment. GPI now holds over 50% of the SunWest voting shares and will use this position to ensure that shareholder interests are maintained over the long term.
As mentioned above, GPI’s continued participation in the benefits flowing from the activities of SunWest is central to SunWest’s sustainability strategy. It is for this reason that GPI has managed to achieve a BEE lock-in of more than 28% of its share capital until at least 2012.
ECONOMIC IMPACTGPI’s portfolio of assets has contributed substantially to the local economies within which it operates, the biggest contributor being the Western Cape-based SunWest investment.
Economic impact of SunWestSunWest has made a significant economic contribution to the province and the country, making a cumulative contribution to Gross Domestic Product (“GDP”) between 1997 and 2008 of over R15,8 billion.
In 2008 SunWest contributed over R2,8 billion to GDP.
This comprised the following:
• R338,7 million from ongoing capital expenditure atGrandWest due to the expansion of the facilities;
Table Bay CSI marine outing
20 I Grand Parade Annual Report 200921 I Grand Parade Annual Report 2009
• R1,46billionfromtherunningofGrandWest;
• R148,3 million from the concessionaires operating atGrandWest;
• R13,6 million from ongoing capital expenditure at TheTable Bay Hotel;
• R253,6millionfromtherunningofthehotel;
• R5,7 million from the concessionaires operating at thehotel; and
• R645,5 million from the Cape Town InternationalConvention Centre (Pty) Limited (”CTICC“). This last part of the contribution has a variety of sources and includes construction and maintenance expenditure, operational expenditure, spending by exhibitors, spending by delegates and induced tourism spending.
In addition, by 2008, SunWest had contributed over R600 million to Gross Geographic Product (“GGP”). This is made up of the following:
• R61,6 million in ongoing capital expenditure atGrandWest;
• R252,2millionfromtherunningofGrandWest;
• R27,7 million from the concessionaires operating atGrandWest;
• R2,5 million from ongoing capital expenditure at TheTable Bay Hotel;
• R44,9millionfromtherunningofthehotel;
• R1,0 million from the concessionaires operating at thehotel; and
• R210,9millionfromtheCTICC.
To summarise, between 1997 and 2008, SunWest made a cumulative contribution to GGP of nearly R3,2 billion.
Furthermore, in 2008 SunWest paid R429,1 million in casino levies and VAT, R287,2 million in other forms of direct taxes (such as income and corporate tax) and R24,4 million in licence fees. This resulted in a total of R740,7 million being paid into the fiscus in various forms of direct taxes, while an additional R286,1 million in indirect taxes was also generated during that year.
Job creationSunWest has, since its inception, spawned many new business opportunities and created employment for thousands of people from its surrounding communities and beyond. Sustainable jobs created include employment provided by the CTICC, which SunWest played a pivotal role in launching by
providing considerable intellectual and financial support. The spin-off benefit of this world-class international convention centre to Cape Town and South Africa has been substantial and is continuing to grow over time.
In 2001, at the peak of the construction of GrandWest, SunWest created or sustained 7 102 direct jobs and 7 455 indirect jobs, resulting in a total of 14 558 jobs created or sustained. By 2008 SunWest activities was sustaining 5 781 direct jobs and 5 235 indirect jobs. This is a total of 11 017 sustainable jobs due to the activities of SunWest.
In addition, GrandWest has 27 concessionaires ranging from fast food outlets and restaurants to entertainment and retail. These provide jobs for over 1 000 people. At the same time, there are eleven outsourced service providers, with the largest being the providers of catering, security and cleaning services. In total these service providers employ more than 1 600 people, most of whom never had jobs before.
The Table Bay Hotel has two concessionaires who employ a total of 37 people and five service providers who employ in excess of 400 people. The CTICC currently has five concessionaires and 22 service providers.
In the 2008 financial year, GrandWest spent over R130 million in purchasing goods and services in the local economy, and because 60% of tracked procurement was placed with the BEE sector, GrandWest has substantially advanced the provincial government’s agenda in respect of transformation in the Western Cape leisure industry.
Economic impact of Worcester CasinoIn 2009 Worcester Casino made the following contributions to GDP:
• R8millionfromongoingcapitalexpenditure;
• R104millionfromrunningthecasinoandlodgein2009;and
• Total capital investment for the lodge and casino wasR225 million.
Worcester Casino currently employs 135 direct staff and has appointed three major service providers in the categories of catering, cleaning and security, creating employment for 214 people.
Economic impact of LPM InvestmentsOver the past year, Thuo Gaming WC and Thuo Gaming KZN have made a substantial economic impact. All venues through which the LPM machines are operating are subject to strict regulations and accordingly fall within the tax net. Many of the venues received substantial upgrades and the activities associated with these upgrades provided an important
economic benefit.
20 I Grand Parade Annual Report 200921 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 21
Sustainability Report I continued
The nature of route operations is that they are geographically dispersed throughout the provinces within which they operate and accordingly the benefit of the network is shared as opposed to being concentrated for the exclusive benefit of the big urbanised cities.
An updated economic assessment of the economic benefits of these operations is under way and through this we will be able to confirm and provide a report on how the actual benefit stacks up against the projected benefits at the inception of these businesses.
CORPORATE SOCIAL INVESTMENTGPI’s most important investment, SunWest, has built up an enviable track record in terms of its focus on sustainability, as has Thuo Gaming WC. Both entities allocate a substantial percentage of their profits to corporate social investment and the uplifting of the communities within which they operate.
SunWest
GrandWest’s Corporate Social Investment (“CSI”) contribution has become increasingly prominent in the social investment landscape of Cape Town and the operation boasts numerous
CSI projects and achievements in its portfolio.
GPI can take much of the credit for SunWest’s achievements in
this regard through its representation on the SunWest board
and the role of Western Cape Manco, which is jointly controlled
by GPI and Sun International. Western Cape Manco is
responsible for the management of SunWest’s empowerment
policy, which covers all aspects of empowerment including
community empowerment, shareholder empowerment,
procurement empowerment and, importantly, employee
empowerment.
By 2007 GrandWest’s CSI committee, under the guidance of
GPI representatives who serve on the Western Cape Manco
board, had overseen the allocation of R25 million to social
investment projects. The expansion at GrandWest further
increased CSI spending by an additional R1,7 million, which is
set to rise to a potential R14,7 million in 2015.
Since 2000, GrandWest CSI has invested its R25 million
CSI budget in local community projects and programmes,
concentrating on those that are viable and sustainable in the
long term and those that empower local communities.
The allocation of CSI is managed across different category
types which are weighted according to needs and community
priorities.
Some of the projects and programmes that have benefited
from GrandWest CSI include:
• BlistersforBread–acharityfamilyfunwalkwhichraises
money to feed hungry Cape Peninsula schoolchildren:
more than 15 000 walkers take part;
• Ruyterwacht Community Learning Centre – a wireless
network facility with computers and internet where the
people of Ruyterwacht are able to acquire skills, tuition,
life skills training, career guidance and also have access to
employment opportunities;
• Zeekoevlei Environmental Education programme –
enabling disadvantaged children to acquire environmental
and social life skills and receive a certificate at the end of
the course;
• Soundtrack4Life–GrandWestCSI’ssuccessfullifeskills
programme which uses theatre to empower learners with
the behavioural skills necessary to deal with social issues
such as HIV: the programme has already reached over
100 000 Cape Peninsula learners;
• Red Cross Society – GrandWest CSI has provided field
kitchens which offer relief to poor Western Cape
communities devastated by floods, fire and other natural
disasters;
Greening of schools
GrandWest communicare launch
22 I Grand Parade Annual Report 200923 I Grand Parade Annual Report 2009
• The GrandWest CSI-SHAWCO mobile community
health clinics – these provide primary health care to an
ever-increasing number of Cape Metropole citizens.
R5,1 million has been spent to date on this project;
• SHARELiteracyProject–anadultbasiceducationproject
in Somerset West providing real life experience training;
• NoluthandoSchoolfortheDeaf–based inKhayelitsha,
this school also accommodates learners with other
physical challenges: GrandWest CSI funded the equipping
of a sewing room;
• WesternCapePrimaryScienceprogramme–theteaching
of science is a problem area in schools: GrandWest CSI
funded the translation of a series of books into Xhosa, as
well as the production of a DVD that would benefit both
educators and learners;
• Ntwasahlobo Primary, Litha Primary, Siyanda Educare
and Siphamandla Educare – GrandWest CSI funded
reading materials, mattresses, educational toys, musical
instruments, tables and desks;
• GrandWest’s CSI committee has always recognised and
valued the immense part education plays in transforming
our society, and supports a number of education-related
projects and programmes in the Western Cape.
Motivated by the announced shortage of skilled engineers
and scientists in the province, the GrandWest CSI Bursary
Fund was launched in August 2007 aimed at Western Cape
tertiary students studying in the disciplines of mathematics,
science or technology, as well as FET (Further Education and
Training) students who are bridging towards a university
education. The Bursary Fund makes R5 million’s worth of
bursaries available over a five-year period.
To date the GrandWest CSI Bursary Fund has awarded
bursaries to 150 students and many of these early bursars
are already achieving impressive academic results at their
various institutions;
• SOSChildren’sVillage,Thornton–GrandWestCSIadopted
House 13 and House 15 in 2005 and besides initially
purchasing appliances, from time to time has taken care
of the two homes’ needs: SOS children are also included
in Christmas parties, visits to the Aquarium, shows at the
Grand Arena and other activities;
• Home of Hope – this project is involved with childprotection and the provision of safety, well-being and protection of all children in communities such as Table View, Du Noon, Joe Slovo and Doorbach: GrandWest CSI responded to the Homes’ need for a vehicle to transport social workers and provide supplies to areas of need.
The Table Bay HotelIn the 2009 financial year, The Table Bay Hotel spent over R133 000 on corporate social investment, with this being fairly evenly spread between health and welfare projects, educational projects and community development.
The Golden Valley Casino and LodgeAlthough The Golden Valley Casino is not yet in a profit-generating position, the unit is assisting the local community with meal and accommodation vouchers, as well as a considerable amount of management’s time and energy. In 2009 Golden Valley made a cash contribution of R50 000 to the Pioneer Rally. The main beneficiary of the Rally is the Pioneer School for the Blind in Worcester. At a gala banquet
an additional R200 000 was raised.
LPM Investments/Thuo GamingThuo Gaming WC has committed to invest at least 5% of its pre-tax profits on CSI projects. Priority is given to programmes which uplift and support the communities in the categories of community development, health and welfare, and education. Those which benefited during the past year are:
• TheSomersetHospital, towhoseboardadonationofR1 million was made to rebuild their trauma unit. The new unit will be three times larger and is expected to be completed by March 2010. Thuo’s contribution will aid short-term job creation during the construction phase and long-term employment for doctors, nurses and hospital administrative staff. The facility will furthermore be a training ground for intern doctors.
22 I Grand Parade Annual Report 200923 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 23
Sustainability Report I continued
• The Chaeli Campaign, which will use their R200 000donation to enable people with various disabilities to support themselves. Programmes offered by Chaeli include:
– physiotherapy and occupational therapy to children with various disabilities;
– a resource centre for parents, siblings, students and visitors;
– therapist training;
– family and parent support groups and social worker services; and
– upkeep of therapy equipment.
• Noah, which received an amount of R30 000 assponsorship of a home for the aged in Atlantis for a period of one year.
• Girls’&Boys’ Town,whowere recipientsof aR20799donation that will cover the cost of education for three youngsters for a period of one year.
• The Marsh Memorial Home, which offers sanctuary toabused and neglected children placed there by the court. The home has received R18 709.
• TheStGeorge’sHomeforGirlsalsoreceivedR18709forcontinued well-being of girls placed in the Home’s care.
Thuo Gaming KZN is still in its start-up phase and is accordingly not in a profit-making position yet. We are confident that this business will become profitable in the next two years and will therefore commence making a meaningful contribution to community social development and enterprise development in the short to medium term.
ENTERPRISE DEVELOPMENTGPI is reviewing its investment in community projects and will
be reprioritising the allocation of a portion of GrandWest’s
funding to enterprise development initiatives, in accordance
with the new code.
ENVIRONMENTAL SUSTAINABILITYGrandWestGrandWest first implemented the National Heritage
Environmental Management System in May 2006, for which
the complex was awarded a Silver rating. In March 2009
GrandWest was awarded a Gold rating.
In addition to improving on set targets for the elimination of
waste and the reduction of the company’s carbon footprint,
refuse and any wasteful use of water and energy, GrandWest
is also committed to applying its environmental policy
principles to surrounding areas. These include Goodwood,
Thornton and Ruyterwacht.
Table Bay HotelAmong its most important conservation efforts are electricity,
gas, water and waste saving. Energy-saving electric light bulbs
have been fitted and water is saved with the introduction
of dual-flushing toilet tanks and showerheads that mix the
water with air.
In just under two years of adhering to the principles of the
National Heritage Programme, The Table Bay Hotel’s Silver
status was upgraded to Gold. In its audit report on the hotel,
the Heritage Programme said that one of the most impressive
aspects of the hotel’s conservation work was the degree to
which suppliers were advised of the hotel’s environmental
policies.
Worcester CasinoWorcester Casino is also a member of the National Heritage
Environmental Management System. The property’s efforts
are focused on reducing water and energy consumption at
the complex in order to safeguard Africa’s most precious
resources.
THE WAY FORWARDGPI will continue to ensure that its underlying investments
focus on excellence with respect to the triple bottom line. GPI
firmly believes that, over the long term, shareholder value will
be optimised through this focus on sustainability.
24 I Grand Parade Annual Report 2009
Annual Financial Statements I
Directors’ approval 26
Declaration by the company secretary 26
Independent auditor’s report 27
Directors’ report 28
Consolidated income statements 32
Consolidated balance sheets 33
Consolidated statement of changes in equity – Group 34
Statement of changes in equity – Company 34
Consolidated cash flow statements 35
Notes to the annual financial statements 36
Contents
Grand Parade Annual Report 2009 I 25
Directors’ Approval
The directors are responsible for the preparation of the annual financial statements and other information contained in this annual report. In their opinion, the financial statements set out in this report fairly represent the state of affairs of the company and of the group. The financial statements have been prepared in accordance with IFRS and in the manner required by the Companies Act, 1973 (No. 61 of 1973), as amended.
The external auditors are responsible for conducting an independent audit of the annual financial statements of the company and its subsidiaries in accordance with International Standards on Auditing and reporting their opinion to shareholders. Their report is presented on page 27.
The directors have reviewed the group’s budget and cash flow forecast for the year to 30 June 2010. On the basis of this review, and in the light of the current financial position and existing borrowing facilities, the directors are satisfied that the group is a going concern and have continued to adopt the going concern basis in preparing the financial statements.
The financial statements were approved by the board on 23 September 2009 and are signed on its behalf by:
H Adams A FunkeyChairman Chief Executive Officer
Declaration by the Company Secretary
To the members of Grand Parade Investments LimitedPursuant to section 268G(d) of the Companies Act, 1973 (No. 61 of 1973), as amended, I confirm that, to the best of my knowledge and belief, all returns required of the company, in terms of the said Act, have been duly lodged with the Registrar of Companies, and all such returns are true, correct and are now up to date.
R HoptionCompany Secretary
23 September 2009
26 I Grand Parade Annual Report 200927 I Grand Parade Annual Report 2009
Independent Auditor’s Report
To the members of Grand Parade Investments LimitedReport on the financial statementsWe have audited the annual financial statements and the group annual financial statements of Grand Parade Investments Limited, which comprise the directors’ report, the balance sheets as at 30 June 2009, the income statements, the statements of changes in equity and cash flow statements for the year then ended, a summary of significant accounting policies and other explanatory notes, as set out on pages 28 to 54.
Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with IFRS and in the manner required by the Companies Act of South Africa, as amended. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the company and the group as at 30 June 2009, and of the financial performance and their cash flows for the year then ended in accordance with IFRS and in the manner required by the Companies Act of South Africa, as amended.
Ernst & Young Inc.Registered Auditor
Cape Town23 September 2009
26 I Grand Parade Annual Report 200927 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 27
Directors’ Report I for the year ended 30 June 2009
The directors present their report on the activities of the company and the group for the year ended 30 June 2009.
Nature of the business of the companyThe nature of the business is to act as an investment holding company. The group also provides management services to the gaming industry.
EarningsThe results of the company and the group are set out in the income statement on page 32. Headline earnings per share decreased 10% from 23,17 cents per share to 20,88 cents per share.
DividendsA dividend totalling 7,5 cents per share (2008: 10 cents) has been declared by the directors in respect of the year under review. This final dividend will be accounted for in the 2010 annual financial statements as it was declared subsequent to the year-end.
Review of operations and future developmentsDetailed commentary on the nature of the business of the company, subsidiaries, acquisitions, future developments and prospects of the group is given in the Chairman’s, Chief Executive’s and Financial Director’s Reports.
Share capitalGPI repurchased its own shares in terms of its general authority granted by shareholders at the annual general meeting on 9 December 2008. 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. The outstanding shares at year-end amounted to 449 581 319 before deducting the 5 820 000 treasury shares.
In addition, the GPSIT, with the assistance of GPI, acquired a further 7 600 000 shares in GPI at R2,00 per share. Key executives of GPI, in accordance with the rules of the GPSIT, were granted and exercised options over 1,7 million of these shares during the year, with the remaining 5 820 000 shares held as treasury shares. Therefore, overall GPI and the GPSIT repurchased 27 million shares at an average of R2,18 per share.
Preference sharesNew preference shares classified as debt of R105 725 757 were issued to Sanlam by wholly-owned subsidiary Utish. The salient features are as follows:
• thepreferencesharesarevariablerate,cumulative,redeemablepreferencesharesandhaveadividendrateof83%oftheprimerate;
• Utishmayredeemthepreferencesharesatitschoice,butsubjecttoapredeterminedredemptionprofile;
• GPIguaranteesthefulfilmentbyUtishofitsobligationsintermsofthepreferenceshares;and
• Utishhaspledgedthe30,57%interestitholdsinRAHassecurity.
R22 million of the preference shares held by BVI with Standard Bank and Depfin were redeemed. The capital due at the year-end after this repayment on these preference shares was R181 million.
Subsidiary companiesAt the year-end, the group consisted of GPI and its wholly-owned subsidiaries, namely BVI, Utish, GPI Management Services, GPI Slots and GPSIT.
Ordinary share capital and premium
Percentage held
Profit after tax
2009 2008 2009 2008 2009 2008
R R % % R R
Direct subsidiary companies
BVI 1 000 000 1 000 000 100 100 63 119 654 88 492 236
GPI Slots 100 100 100 100 4 524 281 4 806 360
Utish 100 – 100 – (1 635 104) –
GPI Management Services 100 – 100 – – –
Special purpose entities
Ordinary share capital and premium
Percentage held
Profit after tax
2009 2008 2009 2008 2009 2008
R R % % R R
GPSIT 1 000 – 100 – 161 980 –
GPSIT is consolidated in terms of SIC 12 – Special Purpose Entities. The consolidation of this trust is, however, reversed to calculate the adjusted headline earnings as the group does not receive the economic benefits of the trust.
28 I Grand Parade Annual Report 200929 I Grand Parade Annual Report 2009
Investments, associates and joint venturesEconomic
percentageVoting
percentage2009 2008 2009 2008
% % % %
Direct interest (held by GPI)SunWest 9,35 5,72 0,04 0,03Akhona GPI 75,00 50,00 49,99 25,00Worcester Casino 36,70 36,70 36,70 36,70
Indirect interest (held by subsidiaries)RAH 30,57 30,57 30,57 30,57SunWest 19,89 20,69 49,98 49,98National Manco 5,67 5,67 5,67 5,67Thuo Gaming WC 25,10 25,10 25,10 25,10Western Cape Manco 50,00 50,00 50,00 50,00
SubsidiariesBVI 575 BVI 575 is a wholly-owned special purpose vehicle established to obtain preference share funding from Standard Bank and Depfin.
GPI Slots GPI Slots is a wholly-owned subsidiary with a significant stake in Thuo Gaming WC.
Utish Utish is a wholly-owned special purpose vehicle established to obtain preference share funding from Sanlam.
GPI Management ServicesGPI Management Services was registered during the year. GPI Management Services is a wholly-owned entity established to perform management services for the group and third parties. The company is a strategic component of the group’s longer-term vision.
Special purpose entities GPSITThe trust was established based on the approval received by the shareholders in the annual general meeting on 9 December 2008. The trust was established as an incentive scheme. On 30 June 2009 the trust purchased 7,6 million of GPI shares. 1,78 million shares were issued to executive management on 30 June 2009. The balance of 5,82 million shares is available for future issues to staff members. This trust is consolidated as required by IFRS.
Investments, associates and joint venturesGPI has investments in SunWest, RAH, Akhona GPI and Thuo Gaming WC which it accounts for as associates. It jointly controls Western Cape Manco which it proportionately consolidates. GPI also owns a relatively small percentage in National Manco which it accounts for as an available-for-sale investment.
SunWestDuring the period under review GPI increased its direct stake in SunWest by 2,83% at a cost of R92,4 million by exercising 560 000 of its 700 182 SunWest share options at an exercise price of R165 per SunWest share. As a result of accounting for the business combination in terms of IFRS 3 – Business Combinations, an adjustment of R80,6 million has been made for negative goodwill. The exercising of these options diluted the direct shareholding held by BVI. (Refer to note 11.)
On 17 August 2007, GPI concluded an agreement with SunWest and Sun International South Africa Limited (“SISA”) which provided GPI with an option to increase its shareholding in SunWest. The salient features of this agreement are as follows:
• SunWestgrantedGPIoptionstosubscribeforbetween500131and700182newSunWestNordinaryshares.
• ThesubscriptionpricewasR165perSunWestshare,irrespectiveofthedateofexerciseoftheoption.
• Theoptionsexpireon30June2010.
• ThegrantingoftheoptionsissubjecttoGPIlockinginbetween25%and35%ofitsshareholdinginthehandsofblackshareholders.The take-up of between 500 131 and 700 182 N ordinary shares is based on a sliding scale, with the minimum number of 500 131 shares available for take-up should GPI lock in 25% of its shareholding in the hands of black shareholders.
Of the available options, GPI can exercise a further 140 182 SunWest shares before the expiry date.
Akhona GPIGPI, through its associate Akhona GPI, increased its indirect stake in the well positioned Sibaya Casino. GPI provided Akhona GPI with the funds to exercise its pre-emptive rights in acquiring additional Dolcoast shares.
As a consequence, GPIs economic stake increased to 75% and its voting rights to 49,99% in Akhona GPI. Akhona GPI in turn owns an 18,5% stake in Dolcoast, which in turn holds a 22,4% stake in Sibaya Casino in KwaZulu-Natal, together with a 30% shareholding in Thuo Gaming KZN. Akhona Investments 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. They are able to exercise this option over a period of three years at a price of prime +5%.
Worcester Casino GPI’s stake in Worcester Casino remained unchanged at 36,7%. This investment is accounted for as an associate.
28 I Grand Parade Annual Report 200929 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 29
Directors’ Report I for the year ended 30 June 2009 continued
RAHIn order to secure the preference share funding from Sanlam, GPI had to transfer the stake it held in RAH at that time to Utish.
National MancoGPI holds a 5,67% shareholding in National Manco that was initially purchased at a cost of R57,00. This investment is classified as available-for-sale, and has been revalued in terms of IAS 39 – Financial Instruments: Recognition and Measurement.
Thuo Gaming WCGPI Slots accounts for its 25,1% stake in Thuo Gaming WC as an associate investment. Its share of associate net income amounted to R4,5 million (2008: R4,7 million).
Western Cape MancoGPI owns 50% of Western Cape Manco. This investment is accounted for as a joint venture.
Directors and secretaryParticulars of the present directors and Secretary are given on page 60.
Directors’ dealingsDirectors’ interest in contractsMessrs Abercrombie, Williams and Adams have material direct interests in the following contracts entered into between the group and the companies listed below:
Mr Abercrombie– DLA Cliffe Dekker Hofmeyr
Mr C W Williams– DLA Cliffe Dekker Hofmeyr
Mr Adams– Asch Professional Services (Pty) Limited– Proman Project Management Services (Pty) Limited
No other director has a material interest in the period under review.
30 I Grand Parade Annual Report 200931 I Grand Parade Annual Report 2009
Directors’ shareholdingAs at 30 June 2009, the directors of the company beneficially held direct and indirect ordinary shares in the issued capital of the company as follows:
2009 2008
A Abercrombie** 3 434 634 3 193 285
H Adams 24 309 363 22 809 363
A W Bedford 3 471 780 4 951 420
R G Freese 2 740 923 2 740 923
N Mlambo 56 900 56 900
A Funkey 1 180 000 –
R Hoption 450 000 –
N V Maharaj – –
C W Williams – –
35 643 600 33 751 891
The following direct/indirect share purchases were made by directors during the year:
H Adams 1 500 000A W Bedford 20 000A Funkey* 1 180 000R Hoption* 450 000
* These shares were purchased from the GPSIT.** Increased shareholding in indirect beneficiary.
The following indirect sale was made during the year:
A W Bedford 1 500 000
Subsequent eventsThere were no material events subsequent to the balance sheet date.
30 I Grand Parade Annual Report 200931 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 31
Consolidated Income Statements I for the year ended 30 June 2009
GROUP COMPANY 2009 2008 2009 2008 Note R R R R
Revenue 3 27 246 155 34 032 163 56 197 057 53 763 359Operating costs (14 931 509) (16 136 711) (12 548 486) (12 961 624)
Profit from operations 12 314 646 17 895 452 43 648 571 40 801 735Impairment of investment in associates 11 – (92 131 891) (176 856 812) (86 650 177)Finance costs 7 (31 938 621) (8 934 260) (2 089 389) –Negative goodwill from associates 11 80 622 752 784 087 333 – –Share of profit from associates 11 118 190 856 47 051 571 – –
Profit/(loss) before taxation 4 179 189 633 747 968 205 (135 297 630) (45 848 442)Taxation 5 (7 469 723) (9 385 063) (522 034) (1 772 159)
Profit/(loss) for the year 171 719 910 738 583 142 (135 819 664) (47 620 601)
Attributable to: Ordinary shareholders 171 719 910 738 583 142 – –
Cents Cents Basic and diluted earnings per share 6 37,17 200,98 – –Headline earnings per share 6 20,88 23,17 – –Adjusted headline earnings per share 6 20,89 – – –
32 I Grand Parade Annual Report 200933 I Grand Parade Annual Report 2009
Consolidated Balance Sheets I at 30 June 2009
GROUP COMPANY 2009 2008 2009 2008 Note R R R R
ASSETS Non-current assets 1 872 354 303 1 696 386 628 209 587 493 613 093 101
Plant and equipment 16 1 179 757 936 409 1 179 757 936 409Investments 9 16 685 000 20 329 677 – –Investments in subsidiaries 10 – – 1 000 300 1 000 100Investments in associates 11 1 854 489 546 1 675 120 542 207 407 436 611 152 217Deferred tax asset 5 – – – 4 375
Current assets 84 017 538 95 625 715 302 941 609 76 614 859
Trade and other receivables 17 8 544 110 5 673 518 2 660 452 264 518 Related party loan 12 19 719 023 8 118 000 295 988 124 31 871 673Cash and cash equivalents 14 55 754 405 81 834 197 4 293 033 44 478 668
Total assets 1 956 371 841 1 792 012 343 512 529 102 689 707 960
EQUITY AND LIABILITIES Capital and reservesOrdinary share capital and premium 13 697 381 738 740 835 489 697 177 038 740 835 489Treasury shares 13 (11 669 100) – – –Accumulated profit/(loss) 939 401 191 813 984 851 (240 934 585) (58 833 351)Available-for-sale investments’ fair value reserve 14 349 051 17 483 473 – –Capital redemption reserve fund 252 595 230 595 – –
Total equity 1 639 715 475 1 572 534 408 456 242 453 682 002 138
Non-current liabilities 287 495 838 204 239 880 36 081 –
Deferred tax liability 5 2 371 973 2 841 772 36 081 –Cumulative redeemable preference share capital and premium 15.2 285 123 865 201 398 108 – –
Current liabilities 29 160 528 15 238 055 56 250 568 7 705 822
Trade and other payables 18 24 213 283 7 698 496 17 215 755 1 438 195Related party loan 12 – – 34 660 152 565 081 Dividends payable 25.2 4 245 736 3 866 268 4 245 736 3 866 268Taxation 25.1 701 509 3 673 291 128 925 1 836 278
Total equity and liabilities 1 956 371 841 1 792 012 343 512 529 102 689 707 960
Cents Cents Net asset value and net tangible asset value per share 370 335 – –
32 I Grand Parade Annual Report 200933 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 33
Consolidated Statements of Changes in Equity I for the year ended 30 June 2009
GR
OU
P
Cap
ital
rede
mpt
ion
rese
rve
fund R
Ord
inar
ysh
are
capi
tal R
Shar
epr
emiu
m R
Trea
sury
sh
ares R
Rede
emab
lepr
efer
ence
shar
e ca
pita
l R
Ava
ilabl
e-fo
r-sa
lefa
ir va
lue
rese
rve R
Acc
umul
ated
profi
ts RTo
tal R
Bal
ance
at
30 J
un
e 20
07 1
15 0
00
83
009
112
200
557
–
57
797
500
17
930
047
109
569
214
2
97 6
95 3
27
Profi
t fo
r th
e ye
ar –
–
–
–
–
–
738
583
142
7
38 5
83 1
42
Unr
ealis
ed f
air
valu
e lo
ss o
n av
aila
ble-
for-
sale
inve
stm
ents
–
–
–
–
–
(519
272
) –
(5
19 2
72)
Def
erre
d ta
x ch
arge
d di
rect
ly t
o eq
uity
––
––
–72
698
–72
698
Tota
l inc
ome
and
expe
nses
for
the
yea
r –
–
–
–
–
(4
46 5
74)
738
583
142
7
38 1
36 5
68
Shar
e of
loss
fro
m a
ssoc
iate
prio
r to
bec
omin
g an
ass
ocia
te –
–
–
–
–
–
(5 6
67 6
44)
(5 6
67 6
44)
Ord
inar
y di
vide
nds
paid
–
–
–
– –
–
(24
902
854)
(24
902
854)
Pref
eren
ce d
ivid
ends
pai
d –
–
–
–
–
–
(3 4
81 4
12)
(3 4
81 4
12)
Pref
eren
ce s
hare
s re
deem
ed –
–
–
–
(57
797
500)
–
–
(57
797
500)
Tran
sfer
to
capi
tal r
edem
ptio
n re
serv
e fu
nd 1
15 5
95
–
–
– –
–
(1
15 5
95)
–
Shar
e ca
pita
l rai
sed
–
34
248
636
914
915
–
–
–
–
636
949
163
Shar
e is
sue
expe
nses
–
–
(8 3
97 2
40)
– –
–
–
(8
397
240
)
Bal
ance
at
30 J
un
e 20
08 2
30 5
95
117
257
7
40 7
18 2
32
–
–
17
483
473
813
984
851
1
572
534
408
Profi
t fo
r th
e ye
ar–
––
––
– 1
71 7
19 9
10
171
719
910
Unr
ealis
ed f
air
valu
e lo
ss o
n av
aila
ble-
for-
sale
inve
stm
ents
–
––
––
(3 6
44 6
77)
– (3
644
677
)
Def
erre
d ta
x ch
arge
d di
rect
ly t
o eq
uity
––
––
–51
0 25
5–
510
255
Tota
l inc
ome
and
expe
nses
for
the
yea
r –
–
–
–
–
(3
134
422
) 1
71 7
19 9
10
168
585
488
Ord
inar
y di
vide
nds
paid
–
–
–
– –
–
(4
6 28
1 57
0) (4
6 28
1 57
0)
Trea
sury
sha
res
purc
hase
d–
––
(15
238
000)
––
– (1
5 23
8 00
0)
Trea
sury
sha
res
issu
ed–
–20
4 70
0 3
568
900
–
––
3 77
3 60
0
Tran
sfer
to
capi
tal r
edem
ptio
n re
serv
e fu
nd 2
2 00
0 –
––
––
(22
000)
–
Shar
es r
epur
chas
ed–
(4 8
62)
(43
653
589)
––
––
(43
658
451)
Bal
ance
at
30 J
un
e 20
09 2
52 5
95
112
395
69
7 26
9 34
3 (1
1 66
9 10
0) –
14
349
051
939
401
191
1 6
39 7
15 4
75
CO
MPA
NY
Ord
inar
ysh
are
capi
tal R
Ord
inar
y sh
are
prem
ium R
Acc
umul
ated
pr
ofit/
(loss
) R
Tota
leq
uity R
Bal
ance
at
30 J
un
e 20
0783
009
112
200
557
13 6
90 1
0412
5 97
3 67
0
Loss
for
the
yea
r–
–(4
7 62
0 60
1)(4
6 62
0 60
1)
Ord
inar
y di
vide
nds
paid
––
(24
902
854)
(24
902
854)
Shar
e ca
pita
l rai
sed
34 2
4863
6 91
4 91
5–
636
949
163
Shar
e is
sue
expe
nses
–(8
397
240
)–
(8 3
97 2
40)
Bal
ance
at
30 J
un
e 20
0811
7 25
774
0 71
8 23
2(5
8 83
3 35
1)68
2 00
2 13
8
Loss
for
the
yea
r–
–(1
35 8
19 6
64)
(135
819
664
)
Ord
inar
y di
vide
nds
paid
––
(46
281
570)
(46
281
570)
Shar
es r
epur
chas
ed(4
862
)(4
3 65
3 58
9)–
(43
658
451)
Bal
ance
at
30 J
un
e 20
0911
2 39
569
7 06
4 64
3(2
40 9
34 5
85)
456
242
453
34 I Grand Parade Annual Report 200935 I Grand Parade Annual Report 2009
Consolidated Cash Flow Statements I for the year ended 30 June 2009
GROUP COMPANY 2009 2008 2009 2008 Note R R R R
Cash flows from operating activities Profit/(loss) before taxation 179 189 633 747 968 205 (135 297 630) (45 848 442)Adjustments for: Depreciation 310 291 147 495 310 291 147 495Interest received (3 235 132) (10 429 084) (1 315 483) (7 891 925)Dividends received (3 650 353) (1 524 722) (54 635 904) (45 528 076)Impairment of investment in associates – 92 131 891 176 856 812 86 650 177Finance costs 31 938 621 8 934 260 2 089 389 –Negative goodwill from associates (80 622 752) (784 087 333) – –Profit on sale of investments (213 245) – (213 245) –Loss on sale of plant and equipment 12 701 – 12 701 –Share of profit from associates (118 190 856) (47 051 571) – –
Operating cash flows before working capital changes 5 538 908 6 089 141 (12 193 069) (12 470 771)(Increase)/decrease in trade and other receivables (1 641 035) (137 979) (2 395 935) 335 479Increase/(decrease) in trade and other payables 9 856 174 (401 389) 15 777 560 (576 851)
Cash flows from operations 13 754 047 5 549 773 1 188 556 (12 712 143)Income taxes paid 25.1 (10 401 049) (8 144 030) (2 188 931) (676 276)
Net cash (outflow)/inflow from operating activities 3 352 998 (2 594 257) (1 000 375) (13 388 419)
Cash flows from investing activities Proceeds on sale of Wild Rush 6 298 478 – 6 298 478 –Purchase of plant and equipment (566 340) (1 060 222) (566 340) (1 060 222)Loans repaid/(advanced) – GPI Slots – 5 947 677 (78 738) 5 836 081– BVI – – 57 927 482 (13 169 975)– Akhona GPI (7 817 989) (8 118 000) (7 817 989) (8 118 000)– Utish – – (264 652 135) –– Employee loans (3 783 034) – – –– GPSIT – – (15 400 000) –Investments (made)/received – SunWest – share premium distribution – 43 580 073 – –– SunWest (92 400 000) (240 440 231) (92 400 000) (3 088 128)– RAH (9 998) (139 290 193) 337 123 298 (139 290 193)– Akhona GPI (17 835 328) (7 014 000) (17 835 328) (7 014 000)– Wild Rush (6 085 233) – (6 085 233) –– BVI – – – (999 900)– Utish – – (100) –– GPI Management Services – – (100) –
Net cash (outflow)/inflow from investing activities (122 199 444) (346 394 896) (3 486 705) (166 904 337)
Cash flows from financing activities Shares bought back – treasury shares (15 238 000) – – –Shares bought back (43 658 451) – (43 658 451) –Capital raised – treasury shares reissued 3 773 600 – – –Capital raised – ordinary shares issued – 167 201 831 – 167 201 831Preference shares redeemed (22 000 000) (57 797 500) – –Preference shares issued 105 725 757 201 398 108 – –Ordinary dividends paid to equity holders of parent 25.2 (45 902 102) (24 793 966) (45 902 102) (24 793 966)Preference dividends paid – (3 481 412) – –Interest received 3 235 132 10 429 084 1 315 483 7 891 925Finance costs (25 280 009) (3 193 031) (2 089 389) –Dividends received 132 110 727 71 349 941 54 635 904 45 528 076
Net cash inflow/(outflow) from financing activities 92 766 654 361 113 055 (35 698 555) 195 827 866
Net increase/(decrease) in cash and cash equivalents (26 079 792) 12 123 902 (40 185 635) 15 535 110Cash and cash equivalents at the beginning of the year 81 834 197 69 710 295 44 478 668 28 943 558
Cash and cash equivalents at the end of the year 14 55 754 405 81 834 197 4 293 033 44 478 668
34 I Grand Parade Annual Report 200935 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 35
Notes to the Annual Financial Statements I for the year ended 30 June 2009
1 Accounting policies1.1 Basis of preparation of financial results
The consolidated and separate financial statements have been prepared on the historical cost basis, except where otherwise stated or disclosed.
The separate and consolidated financial statements are prepared on the going concern basis. Except as otherwise disclosed, these accounting policies are consistent with those applied in the prior year.
Company financial statementsInvestments in subsidiaries, associates and joint ventures in the separate financial statements presented by the company are recognised at cost less accumulated impairment loss.
Recognition of assets and liabilitiesAssets are recognised if it is probable that future economic benefits associated with the asset will flow to the group and the cost or fair value can be measured reliably.
Liabilities are recognised if it is probable that an outflow of resources embodying economic benefits will result from the settlement of the present obligation and the amount at which the settlement will take place can be reliably measured. Financial instruments are recognised when the entity becomes a party to the contractual provisions of the instrument.
The gain or loss on derecognition of the financial asset or liability is treated as income or expense in the income statement as appropriate.
1.2 Statement of complianceThe consolidated and separate financial statements are prepared in compliance with IFRS and Interpretations of those Standards as adopted by the International Accounting Standards Board, and the South African Companies Act, 1973 (No. 61 of 1973), as amended.
1.3 Basis of consolidationThe consolidated financial statements include the results, financial position and cash flows of the GPI Group.
All financial results are consolidated with similar items on a line-by-line basis except for investments in associates and joint ventures, which are included in the group’s results as set out below.
Where necessary, adjustments are made to the financial results of subsidiaries, associates and joint ventures to bring their accounting policies and year-end in line with those used by the group. The group uses the purchase method to account for the acquisition of subsidiaries, associates and joint ventures.
Business combinationsBusiness combinations are accounted for by using the purchase method by allocating the cost of the business combination to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition.
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested annually for impairments. Negative goodwill arising on an acquisition is recognised directly in the income statement.
SubsidiariesSubsidiaries are fully consolidated from the date of acquisition, being the date on which the group obtains control, and continue to be consolidated until the date that such control ceases.
All intra-group balances, transactions, income, expenses and unrealised profits and losses are eliminated in full on consolidation.
AssociatesUnder the equity method, the investment in the associate is carried in the balance sheet at cost plus post-acquisition changes in the group’s share of net assets of the associate.
Goodwill relating to an associate is included in the carrying amount of the investment.
After application of the equity method, the group assesses whether there is any objective evidence that the investment in the associate is impaired.
If any such indication exists, the entire carrying amount of the investment in the associate is tested for impairment by comparing the recoverable amount with its carrying amount, to determine whether it is necessary to recognise any impairment losses. As goodwill is included in the carrying amount of the investment, it is not tested for impairment separately.
The income statement reflects the share of the results of operations of the associates. Where there has been a change recognised directly in the equity of the associate, the group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity.
Losses of an associate in excess of the group’s interest in the associate (which includes any long-term interest that, in substance, forms part of the group’s net investment in the associate) are not recognised unless the group has a legal or constructive obligation in respect of those associates. If the associate subsequently reports profits, the group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.
Where a group entity transacts with an associate, unrealised profits and losses are eliminated to the extent of the group’s interest in the associate.
The associate is equity accounted until the date on which the group ceases to have significant influence over the associate.
Joint ventureThe group has an interest in a joint venture which is a jointly-controlled entity, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. The group recognises its interest in the joint venture using proportionate consolidation. The group combines its share of each of the assets, liabilities, income and expenses of the joint venture with similar items, line by line, in its consolidated financial statements. The financial statements of the joint venture are prepared for the same reporting period as the parent company. Adjustments are made where necessary to bring the accounting policies into line with those of the group.
Adjustments are made in the group’s financial statements to eliminate the group’s share of unrealised gains and losses on transactions between the group and its jointly-controlled entity. Losses on transactions are recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment loss. The joint venture is proportionately consolidated until the date on which the group ceases to have joint control over the joint venture.
1.4 Change in accounting policyThe accounting policies adopted are consistent with those of the previous year, except that during the current financial year the group and the company have adopted and implemented the following accounting statements and amendments to existing standards and interpretations.
36 I Grand Parade Annual Report 200937 I Grand Parade Annual Report 2009
The changes in accounting policies result from the adoption of the following new accounting standards, interpretations and amendments to the standards that are applicable to the company and the group.
Adoption of these statements, amendments and interpretations have had the following effect on the financial statements of the group and the company and have also resulted in additional disclosures. The principal effects of these changes are as follows:
IFRIC 12 – Service Concession ArrangementsThe International Financial Reporting Interpretations Committee (“IFRIC”) issued IFRIC 12 in November 2006. This interpretation applies to service concession operators and explains how to account for the obligations undertaken and rights received in service concession arrangements. No member of the group is an operator and, therefore, this interpretation has no impact on the group.
IFRIC 14 and IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their InteractionIFRIC 14 provides general guidance on how to assess the limit in IAS 19 employee benefits on the amount of the surplus that can be recognised as an asset. It also explains how the pension’s asset or liability may be affected where there is a statutory or contractual minimum funding requirement. The interpretation will standardise practice and ensure that entities recognise an asset in relation to a surplus on a consistent basis.
IAS 39 and IFRS 7 – Amendments to IAS 39 – Financial Instruments: Recognition and Measurement and IFRS 7 – Financial Instruments: Disclosures – Reclassification of Financial AssetsThe amendments introduces the possibility of reclassifications for certain financial assets previously classified as “held for trading” or “available-for-sale” to another category under limited circumstances. Various disclosures are required where a reclassification has been made. Derivatives and assets designated as “fair value through profit and loss” under the fair value option are not eligible for this reclassification.
1.5 Significant accounting judgements and estimatesIn the preparation of the annual financial statements, management is required to make estimates and assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements within the next financial period.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and judgements concerning the future. Estimates and judgements are continually evaluated and are based on historical factors coupled with expectations about future events that are considered reasonable.
In the process of applying the group’s accounting policies, management has made the following judgements. Estimates that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next year and key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year as they involve assessments or decisions that are particularly complex or subjective, are also discussed below.
Depreciation charges and residual valuesThe depreciation method reflects the pattern in which economic benefits attributable to the asset flow to the entity. The useful lives
of these assets can vary depending on a variety of factors, including but not limited to: technological obsolescence, maintenance programmes, refurbishments, product life cycles and the intention of management.
The estimation of the useful life and residual values of an asset is a matter of judgement based on the past experience of the group with similar assets, and the intention of management. (Refer to note 16.)
Deferred tax assetsBefore any deferred tax asset is recognised judgement, coupled with estimates based on forecasts and budgets, is required to determine if the various companies showing deferred tax assets will make an appropriate level of taxable profit in the foreseeable future. (Refer to note 5.)
Fair value of unquoted equity instrumentsThe fair value of unquoted equity instruments has been valued based on expected cash flows discounted at current market rates applicable for items with similar terms and risk characteristics. The valuation requires the group to make estimates about expected future cash flows and discount rates. (Refer to note 9.)
Value in use of investments in associateIn assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
1.6 Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be measured reliably.
Revenue is measured at the fair value of the consideration received or receivable, net of any discounts, rebates and related taxes. Revenue is recognised on the bases set out below:
Dividend incomeDividend income is recognised when the shareholder’s right to receive payment is established.
Interest incomeInterest income is recognised in the income statement on an accrual basis using the effective interest rate method.
Management feesManagement fees are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of actual services provided as a proportion of the total services to be provided.
1.7 Plant and equipmentPlant and equipment are initially recognised at cost, being the cash price equivalent at the recognition date. The cost of an asset comprises directly attributable costs and any costs incurred in bringing the asset to the location and condition necessary for it to operate as intended by management.
Plant and equipment are subsequently stated at historic cost less accumulated depreciation and accumulated impairment in value. Subsequent costs are included in the asset’s carrying amount or are recognised as separate assets, as appropriate, only when it is probable that future economic benefits will flow to the group and the cost of the item can be measured reliably.
Maintenance and repairs, which do not meet these criteria, are charged against income as incurred.
Plant and equipment are depreciated on the straight-line basis over the estimated useful lives of the assets to the current values of their expected residual values. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
36 I Grand Parade Annual Report 200937 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 37
Notes to the Annual Financial Statements I for the year ended 30 June 2009
Depreciation and impairment losses are included in the income statement.
An item of plant and equipment is derecognised upon disposal or when future economic benefits are expected from its use or disposal. Gains and losses on derecognition of assets are included in the income statement in the year that the asset is derecognised.
The useful lives are as follows: Audiovisual – 3 yearsComputer equipment – 3 yearsSoftware – 2 yearsLeasehold improvements – 4 yearsFurniture and fittings – 5 years
1.8 Impairment of non-financial assetsThe group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. When the carrying amount exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Impairment losses are recognised in profit or loss. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case then the asset’s carrying amount is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit and loss.
1.9 Financial instrumentsThe group classifies financial instruments or their component parts on initial recognition as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual agreement. Financial instruments are initially measured at fair value. A financial asset or liability not at fair value through profit or loss are measured at transaction costs that are directly attributable to acquisition or incurral of the financial asset or liability. Subsequent to initial recognition, these instruments are measured as set out below. All regular way purchases and sales of financial assets are recognised on the trade date, i.e. the date that the group commits to purchase the asset. Regular way purchases or sales of financial assets require delivery of assets within the period generally established by regulation or convention in the market-place.
Financial assetsLoans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and include related party loans receivable and certain trade and other receivables. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in income when the loans and receivables are derecognised or impaired, as well as through the amortisation process.
Cash and cash equivalentsCash and cash equivalents are measured at amortised cost and consist of cash on hand and balances at banks, net of outstanding bank overdrafts.
Trade and other receivablesTrade receivables are measured subsequently at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit and loss when there is objective evidence that the asset is impaired.
Available-for-sale investmentsAvailable-for-sale investments consist of investments in unlisted equity instruments. After initial recognition available-for-sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income statement.
The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. The fair value of investments in equity instruments that do not have a quoted market price in an active market is measured using valuation techniques.
Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured shall be measured at cost.
Financial liabilitiesTrade and other payablesTrade and other payables are subsequently measured at amortised cost using the effective interest rate method.
Gains and losses are recognised in the income statement when the trade and other payables are derecognised and through interest based on the effective interest rate method.
Trade and other payables are short term in nature and are classified as current liabilities in the balance sheet. Related party loans are payable on demand and are classified as current liabilities in the balance sheet.
Preference sharesPreference shares that are redeemable on a specific date or at the option of the shareholder are classified as financial liabilities and are held at amortised cost using the effective interest method. The dividends on these preference shares are recognised in the income statement as an interest expense.
1.10 Impairment of financial assetsAll financial assets are reviewed (individually or collectively) for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Where the carrying value of these instruments exceeds the recoverable amount, the asset is written down to the recoverable amount.
Impairment losses are recognised in the income statement.
Financial assets carried at amortised costIf there is objective evidence (such as uncreditworthiness of the third party) that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced by any impairment loss. The amount of the loss is recognised in profit or loss.
The group first assesses whether objective evidence of impairment exists individually for the financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant.
If it determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.
38 I Grand Parade Annual Report 200939 I Grand Parade Annual Report 2009
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
Available-for-sale investmentsWhen a decline in the fair value of an available-for- sale financial asset has been recognised directly in equity and there is objective evidence (such as changes in discounted cash flows) that the asset is impaired, the cumulative loss that had been recognised directly in equity is removed from equity and recognised in profit or loss.
If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss the impairment loss is reversed with the amount of the reversal recognised in profit or loss. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale are not reversed through profit or loss.
1.11 Derecognition of financial assets and liabilitiesFinancial assetsA financial asset or portion of a financial asset is derecognised where:
– the rights to receive cash flows from the asset have expired;
– the group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without any material delay to a third party under a pass-through arrangement; or
– the group has transferred its rights to receive cash flows from the asset and either (i) has transferred substantially all rights and rewards of the asset or (ii) has neither transferred nor retained substantially all the rights and rewards of the asset but has transferred control of the asset.
Financial liabilityA financial liability is derecognised when the obligation under the liability is discharged, cancelled or has expired.
1.12 Offsetting of financial assets and liabilitiesFinancial assets and liabilities are off-set and the net amount reported on the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to realise the assets and settle the liabilities on a net basis.
1.13 Borrowing costsBorrowing costs are recognised as an expense when incurred.
1.14 LeasesLeases are classified as finance leases where substantially all the risks and rewards associated with ownership have transferred from the lessor to the lessee. The group does not have any finance leases.
All other leases are treated as operating leases and the relevant rentals are recognised as an expense in profit or loss on a straight-line basis over the lease term.
1.15 TaxesCurrent income taxCurrent income tax assets and liabilities for the current year and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred taxDeferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and
the corresponding tax base used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised, except:
• where the deferred tax asset relating to the deductibletemporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor the taxable profit or loss; and
• inrespectofdeductibletemporarydifferencesassociatedwith investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on tax rates/laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
STCSTC is recognised as part of the current tax charge in the income statement when the dividend is declared.
1.16 Dividends payableDividends payable and the related taxation thereon are recognised as liabilities in the period in which the dividends are declared. A dividend declared subsequent to period-end is not charged against total equity at the balance sheet date as no liability exists.
1.17 Segment reportingA business segment is a group of assets and operations engaged in providing products or services that are subject to risks and return that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments.
38 I Grand Parade Annual Report 200939 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 39
Notes to the Annual Financial Statements I for the year ended 30 June 2009
2 Standards issued not yet effectiveAt the date of authorisation of these financial statements, the following standards which are relevant to the group were in issue but not yet effective and have not been early adopted in these financial statements.
Standard or Interpretation Effective date*
IFRS 3 Business Combinations – revised 1 July 2009
IAS 27 Consolidated and Separate Financial Statements – amended 1 July 2009
IAS 39 Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items 1 July 2009
IFRS 1 Amendments to IFRS 1 – First-time Adoption of International Financial Reporting Standards 1 July 2009
IFRIC 17 Distribution of Non-cash Assets to Owners 1 July 2009
IFRIC 18 Transfer of Assets from Customers 1 July 2009
IFRS 8 (AC 145) Operating Segments 1 January 2009
IAS 1 (AC 101) Presentation of Financial Statements – revised 1 January 2009
IAS 23 (AC 114) Borrowing Costs – revised 1 January 2009
IFRS 2 (AC 139) Amendments to IFRS 2 (AC 139) – Share-based Payment – Vesting Conditions and Cancellations 1 January 2009
IAS 32 (AC 125) and IAS 1 (AC 101)
Amendments to IAS 32 (AC 125) – Financial Instruments: Presentation and IAS 1 (AC 101) Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation 1 January 2009
IFRS 7 (AC 144) Amendments to IFRS 7 (AC 144) – Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments 1 January 2009
* Effective for years commencing on or after this date.
The group will adopt the above standards and amendments on the effective date. The directors do not expect that the adoption thereof will have a material impact on the financial performance or position of the group. Certain other IFRS amendments and IFRIC interpretations that have been issued and are not yet effective have not been disclosed by the group as they are not applicable to its activities.
IFRS 3: This standard will apply prospectively. Therefore changes to the standard will only apply in the following financial year.
IAS 27: This standard requires that when an entity accounts for a subsidiary at fair value in its separate financial statements, this treatment continues when a subsidiary is subsequently classified as held for sale.
IAS 39: This standard will not be applicable to the group as it has not entered into any hedging arrangements or transactions during the current year.
IFRS 1: This standard will not be applicable to the group as it has already adopted IFRS 1.
IFRIC 17: This standard will not be applicable to the group as it has not made any non-cash asset distribution to the owners.
IFRIC 18: This standard will not be applicable to the group as no customers have transferred assets in terms of IFRIC 18 in the current year.
IFRS 8 (AC 145): IFRS 8 sets out requirements for disclosure of information about an entity’s operating segments and also about the entity’s products and services, the geographical area in which it operates and its major customers.
IAS 1 (AC 101): The changes relate to disclosure in the financial statements and are unlikely to have a significant impact on the company’s financial statements.
IAS 23 (AC 114): Borrowing costs that are directly attributed to the acquisition, construction or production of a qualifying asset form part of the cost of that asset and may no longer be expensed. Other borrowing costs are recognised as an expense.
IFRS 2 (AC 139): IFRS 2 was amended to provide more clarity on vesting conditions and cancellations.
IAS 32 (AC 125) and IAS 1 (AC 101): The amendment relates to disclosure of puttable instruments and obligations arising on liquidation. As the company does not have any puttable instruments and obligations the amendments are not applicable.
IFRS 7 (AC 144): The amendments require enhanced disclosures about fair value measurements and liquidity risk.
40 I Grand Parade Annual Report 200941 I Grand Parade Annual Report 2009
GROUP COMPANY 2009 2008 2009 2008
R R R R
3 Revenue Bank interest received 3 235 132 10 429 084 1 315 483 7 891 925 Dividends received 3 650 353 1 524 722 54 635 904 45 528 076 Management fees 20 115 000 21 734 999 – – Other income 245 670 343 358 245 670 343 358
27 246 155 34 032 163 56 197 057 53 763 359
4 Profit/(loss) before taxation Profit/(loss) before taxation is stated after: Expenses Depreciation 310 291 147 495 310 291 147 495
– Computer equipment 77 539 25 262 77 539 25 262 – Software 30 235 3 130 30 235 3 130 – Leasehold improvements 110 292 67 889 110 292 67 889 – Furniture and fittings 92 225 51 214 92 225 51 214
Operating lease rentals – premises 619 223 289 490 619 223 289 490 Impairment of investment in associates – 92 131 891 176 856 812 86 650 177 Loss on disposal of plant and equipment 12 701 – 12 701 – Auditor’s remuneration Audit fees – current year 785 831 678 947 541 472 517 443 – prior year underprovision 248 923 278 800 248 923 217 080 – other services 106 066 450 870 106 066 450 870
Staff costs 4 720 054 3 459 612 4 720 054 3 459 612
– Salaries and wages 1 198 173 299 112 1 198 173 299 112 – Directors’ remuneration 3 521 881 3 160 500 3 521 881 3 160 500
Number of employees 8 6 8 6
5 Taxation South African normal tax – current year 6 066 036 7 984 844 332 347 1 780 292 – prior year underprovision – 92 851 – – STC 1 363 231 1 315 501 149 231 – Deferred tax 40 456 (8 004) 40 456 (8 004) Tax rate change – (129) – (129)
7 469 723 9 385 063 522 034 1 772 159
Standard rate (%) 28,00 28,00 (28,00) (28,00) Exempt income (%) (31,60) (31,17) (11,34) (27,80) Non-deductible expenses (%) 4,41 4,24 39,62 59,67 STC (%) 3,36 0,18 0,11 –
Effective tax rate (%) 4,17 1,25 0,39 3,87
Deferred taxation: Deferred tax asset 12 113 9 423 12 113 9 423 Deferred tax liabilities (2 384 086) (2 851 195) (48 194) (5 048)
(2 371 973) (2 841 772) (36 081) 4 375
The deferred tax balance is made up as follows: Deferred tax assets: Operating lease 12 113 9 423 12 113 9 423 Deferred tax liabilities: Prepayments (39 069) (2 626) (39 069) (2 626) Plant and equipment (9 125) (2 422) (9 125) (2 422) Revaluation of available-for-sale investments (2 335 892) (2 846 147) – –
(2 371 973) (2 841 772) (36 081) 4 375
Unrecognised deferred tax assets relate to unused STC credits available to the group which amount to R257 million (2008: R176 million). The STC on dividends declared for the year ending 30 June 2009 amounts to R3,3 million (2008: R4,6 million). This has not been accounted for in the current year’s tax amount.
40 I Grand Parade Annual Report 200941 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 41
Notes to the Annual Financial Statements I for the year ended 30 June 2009
6 Basic and diluted earnings per share Basic earnings per share amounts are calculated by dividing net profit for the year attributable to the ordinary equity holders of the parent
by the weighted average number of ordinary shares in issue during the year. The company has no dilutive potential ordinary shares. Basic and diluted earnings per share are therefore the same.
Basic and diluted earnings per share reconciliation
2009 Gross
R
2009 Net
R
2008 Gross
R
2008 Net
R
Attributable profit per income statement 171 719 910 738 583 142
Preference dividends paid – (3 481 412)
Attributable profit after preference dividend 171 719 910 735 101 730
Number of shares for basic EPS calculation
Weighted average number of shares in issue 462 033 176 365 766 533
Basic and diluted earnings per share (cents) 37,17 200,98
Headline earnings per share reconciliation
Attributable profit after preference dividends – 171 719 910 – 735 101 730
Negative goodwill from associates (80 622 752) (80 622 752) (784 087 333) (784 087 333)
Profit on sale of investments (213 245) (153 536) – –
Loss on sale of plant and equipment 12 701 9 145 – –
Impairment of investment in associates – – 92 131 891 92 131 891
Associates 5 547 652 5 520 205 41 053 655 41 616 757
– Impairment of casino licence 3 612 763 3 612 763 – –
– BEE transaction – – 43 064 735 43 064 735
– (Loss)/gain on disposal of plant and equipment 53 000 38 160 (60 795) (43 772)
– Gain on disposal of investments recycled to income statement (869 411) (882 018) (2 312 455) (1 766 376)
– Provisions for pension fund exposure 2 751 300 2 751 300 362 170 362 170
Headline earnings 96 472 972 84 763 045
Reversal of employee share trust consolidated* 42 720 –
Adjusted headline earnings 96 515 692 84 763 045
Number of shares for headline EPS calculation
Weighted average number of shares in issue 462 033 176 365 766 533
Adjusted weighted average number of shares in issue 462 033 176 365 766 533
Headline earnings per share (cents) 20,88 23,17
Adjusted headline earnings per share (cents) 20,89 23,17
* The consolidation of the employee share trust is reversed as the group does not receive the economic benefits of the trust.
42 I Grand Parade Annual Report 200943 I Grand Parade Annual Report 2009
GROUP COMPANY 2009 2008 2009 2008 R R R R
7 Finance costs Bank loans and overdraft 2 089 418 2 623 031 2 089 389 – Preference shares – raising fee 1 250 000 570 000 – – Preference shares – interest 28 599 203 5 741 229 – –
31 938 621 8 934 260 2 089 389 –
8 Finance income Bank interest 3 235 132 10 429 084 1 315 483 7 891 925
9 Investments Available-for-sale investments National Manco 16 685 000 20 329 677 – –
16 685 000 20 329 677 – –
Discounted cash flows have been used in order to determine the fair values of unlisted investments. Management estimated the expected future cash flows which were discounted at current rates. Expected future cash flows were determined by applying growth rates to the underlying investments in which the entity has a stake. The discount rate is based on the company’s weighted average cost of capital adjusted for a risk premium.
10 Investments in subsidiaries GPI Slots – – 100 100 Utish – – 100 – GPI Management Services – – 100 – BVI – – 1 000 000 1 000 000
– – 1 000 300 1 000 100
Special purpose entity During the year, a R1 000 donation was made to the GPSIT in terms of the Trust Deed approved by the shareholders at the annual general
meeting dated 9 December 2008. This has been expensed in the company’s financial statements. The GPSIT is consolidated in terms of SIC 12 in the group accounts.
42 I Grand Parade Annual Report 200943 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 43
Notes to the Annual Financial Statements I for the year ended 30 June 2009
SunWest RAH 2009 2008 2009 2008 GROUP R R R R
11 Investments in associates Carrying amount of the investment 1 148 985 444 – 513 990 108 – Cost of investment – for cash 92 400 000 447 162 713 9 998 139 290 193 Cost of investment – for shares – – – 461 350 092 Post-acquisition profits – beginning of year – – – – Share of profit from associates 85 298 343 36 808 335 28 108 504 5 481 714 Negative goodwill from associates 80 622 752 784 087 333 – – Dividends received (103 817 864) (69 825 220) (22 107 066) – Share premium distribution – (43 580 073) – – Share of loss from associate prior to becoming an associate – (5 667 644) – – Impairment of investment in associates – – – (92 131 891)
1 303 488 675 1 148 985 444 520 001 544 513 990 108
Share of associates’ balance sheet Current assets 16 813 585 23 928 781 9 727 068 13 723 334 Non-current assets 425 775 043 413 785 278 250 323 056 304 149 937 Current liabilities (179 725 999) (213 119 192) (429 203) (6 137 607) Non-current liabilities (113 537 165) (98 680 173) (3 764 696) (15 972 464)
Net asset/(liabilities) 149 325 464 125 914 694 255 856 225 295 763 200
Share of associates’ revenue and profits Revenue 538 420 097 515 690 639 23 551 434 1 356 120 Profit/(loss) 85 298 343 36 808 335 28 108 504 5 481 714
RAH In order to secure the preference share funding from Sanlam, GPI had to transfer the stake it held in RAH at the time to Utish.
SunWest During the period under review GPI increased its direct stake in SunWest by 2,83% at a cost of R92,4 million by exercising 560 000 of its
700 182 SunWest share options at an exercise price of R165 per SunWest share. As a result of accounting for the business combination in terms of IFRS 3 – Business Combinations, an adjustment of R80,6 million has been made for negative goodwill.
2009 2008 R R
Share of fair value of net assets on acquisition 173 022 752 1 231 250 046 Negative goodwill on acquisition (80 622 752) (784 087 333)
Total consideration 92 400 000 447 162 713
Cash consideration 539 562 713 447 162 713
Cash paid in previous years 447 162 713 206 722 482 Cash paid during the current year 92 400 000 240 440 231
Negative goodwill arising on the acquisition of the investment has been recognised immediately in profit.
Akhona GPI
GPI holds a 75% (2008: 50%) interest in Akhona GPI.
Thuo Gaming WC
GPI Slots has a 25,1% (2007: 25,1%) stake in Thuo Gaming WC.
Worcester Casino
GPI has a 36,7% (2008: 36,7%) direct interest in Worcester Casino.
2009 2008 COMPANY R R
Akhona GPI 24 849 328 7 014 000 SunWest 182 548 110 90 148 109 Worcester Casino – – RAH 9 998 513 990 108
– cost 513 990 108 600 640 285 – sale of investment (337 123 298) – – impairment of investment in associate (176 856 812) (86 650 177)
207 407 436 611 152 217
The price of a RAH share at year-end traded at R2,50 (2008: R4,65) per share.
44 I Grand Parade Annual Report 200945 I Grand Parade Annual Report 2009
Akhona GPI Thuo Gaming WC Worcester Casino Total 2009 2008 2009 2008 2009 2008 2009 2008 R R R R R R R R
7 037 504 – 5 107 486 – – – 1 675 120 542 – 17 835 328 7 014 000 – 2 510 – – 110 245 326 593 469 416 – – – – – – – 461 350 092 – – – 366 958 – – – 366 958 217 776 23 504 4 566 233 4 738 018 – – 118 190 856 47 051 571 – – – – – – 80 622 752 784 087 333 – – (3 765 000) – – – (129 689 930) (69 825 220) – – – – – – – (43 580 073) – – – – – – – (5 667 644) – – – – – – – (92 131 891)
25 090 608 7 037 504 5 908 719 5 107 486 – – 1 854 489 546 1 675 120 542
4 999 998 1 017 785 5 322 867 6 790 111 2 572 246 6 044 490 39 435 764 51 504 501 33 599 027 10 302 374 9 973 105 8 072 776 75 078 735 78 197 791 794 748 966 814 508 156 (2 211 911) (82 150) (6 005 137) (6 587 492) (47 796 612) (43 169 109) (236 168 862) (269 095 550) (16 339 491) (6 984 000) (3 382 116) (3 167 909) (40 404 621) (47 770 922) (177 428 089) (172 575 468)
20 047 623 4 254 009 5 908 719 5 107 486 (10 550 252) (6 697 750) 420 587 779 424 341 639
1 517 459 140 391 458 104 355 410 709 493 39 906 503 31 835 415 1 061 499 848 959 732 058 217 776 23 504 4 566 233 4 738 018 – – 118 190 856 47 051 571
44 I Grand Parade Annual Report 200945 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 45
Notes to the Annual Financial Statements I for the year ended 30 June 2009
GROUP COMPANY 2009 2008 2009 2008 R R R R
12 Related party loans GPI and its subsidiary companies, in the ordinary course
of business, entered into various service and investment transactions.
Employee loans 3 783 034 – – –
– Non-directors 318 795 – – – – Directors 3 464 239 – – –
GPSIT – – 15 400 000 – Akhona GPI 15 935 989 8 118 000 15 935 989 8 118 000 Utish – – 264 652 135 – BVI – – – 23 753 673
Total current assets 19 719 023 8 118 000 295 988 124 31 871 673
BVI – – (34 173 809) – GPI Slots – – (486 343) (565 081)
Total current liabilities – – (34 660 152) (565 081)
Employee loans are secured by the shares issued to employees.
Other related party loans are unsecured, interest free and payable on demand.
13 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 740 835 489 112 283 566 740 835 489 112 283 566 Shares issued before share split – 175 599 071 – 175 599 071 Shares issued after share split – 461 350 092 – 461 350 092 Share issue expenses – (8 397 240) – (8 397 240) Gain on treasury shares issued 204 700 – – – Shares repurchased (43 658 451) – (43 658 451) –
Closing balance (issued and fully paid) – 30 June 697 381 738 740 835 489 697 177 038 740 835 489
Reconciliation of number of shares in issue Opening balance – 1 July 469 028 354 83 009 513 469 028 354 83 009 513 Issued before share split – 10 670 519 – 10 670 519 Share split – 281 040 096 – 281 040 096 Issued after share split – 94 308 226 – 94 308 226 Shares repurchased (19 447 035) – (19 447 035) –
Closing balance – 30 June 449 581 319 469 028 354 449 581 319 469 028 354
Treasury shares Opening balance – 1 July – – – – Shares repurchased (15 238 000) – – – Shares issued 3 568 900 – – –
Closing balance – 30 June (11 669 100) – – –
Reconciliation of number of treasury shares Opening balance – 1 July – – – – Shares repurchased (7 600 000) – – – Shares issued 1 780 000 – – –
Closing balance – 30 June (5 820 000) – – –
46 I Grand Parade Annual Report 200947 I Grand Parade Annual Report 2009
GROUP COMPANY 2009 2008 2009 2008 R R R R
14 Cash and cash equivalents Cash at bank and deposit bank accounts consist of Money
Market call accounts with floating interest rates that fluctuated between 10,46% and 8,77% during the year. 55 754 405 81 834 197 4 293 033 44 478 668
15 Cumulative redeemable preference share capital and premium15.1 Redeemable at the option of the group – equity
Authorised 2009: Nil (2008: Nil redeemable preference shares of R1 per share) Issued preference shares Opening balance – 57 797 500 – – Preference shares redeemed during the year – (57 797 500) – –
Closing balance – – – –
15.2 Redeemable at the option of the holder – debt
15.2.1 Authorised 203 356 redeemable preference shares of
R1 per share (2008: 203 356) Issued preference shares – Standard Bank/ Depfin Balance at beginning of year – 1 July 201 398 108 – – – Preference shares issued – par value – 203 356 – – Preference share premium – 203 152 643 – – Preference shares redeemed (22 000 000) – – – Share issue expenses – (1 957 891) – –
Closing balance – 30 June 179 398 108 201 398 108 – –
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.
This facility is secured by SunWest ordinary shares.
15.2.2 Authorised 200 redeemable preference shares of R0,01
per share (2008: Nil).
Issued preference shares – Sanlam Balance at beginning of year – 1 July – – – – Preference shares issued – par value* 1 – – – Preference share premium 105 725 756 – – –
Closing balance – 30 June 105 725 757 – – –
Total closing balance – 30 June 285 123 865 201 398 108 – –
New preference shares were issued to Sanlam. Interest is calculated at 83% of the prime rate. Preference interest is paid semi-annually on 31 March and 30 September. This facility is secured by 110 535 507 RAH ordinary shares.
* The par value of the preference shares issued to Sanlam is less than R1. It has therefore been rounded to R1.
46 I Grand Parade Annual Report 200947 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 47
Notes to the Annual Financial Statements I for the year ended 30 June 2009
Computer Furniture Leasehold equipment Software Audiovisual and fittings improvements Total GROUP/COMPANY R R R R R R
16 Plant and equipment 2009 Beginning of year – 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
Current year movements – Disposal cost (21 430) – – – – (21 430) – Disposal accumulated depreciation 8 729 – – – – 8 729 – Additions 224 968 245 237 – 85 751 10 384 566 340 – Depreciation (77 539) (30 235) – (92 225) (110 292) (310 291)
Balance at end of year 251 063 215 002 – 337 288 376 404 1 179 757
Made up as follows: – Cost 356 749 252 750 979 480 727 554 585 1 645 790 – Accumulated depreciation (105 686) (37 748) (979) (143 439) (178 181) (466 033)
Net book value 251 063 215 002 – 337 288 376 404 1 179 757
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
GROUP COMPANY 2009 2008 2009 2008 R R R R
17 Trade and other receivables Trade receivables 5 904 578 5 664 138 20 920 255 138 Prepayments 139 532 9 380 139 532 9 380 Related party – Akhona GPI 2 500 000 – 2 500 000 –
8 544 110 5 673 518 2 660 452 264 518
No debtors were past due nor impaired.
18 Trade and other payables Trade payables 8 887 496 7 664 841 1 889 968 1 404 540 Operating lease accrual 78 353 33 655 78 353 33 655 Amounts owed to third parties 15 247 434 – 15 247 434 –
24 213 283 7 698 496 17 215 755 1 438 195
19 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 489 879 448 418 489 879 448 418 Due within 1 to 5 years 719 484 1 209 363 719 484 1 209 363
1 209 363 1 657 781 1 209 363 1 657 781
48 I Grand Parade Annual Report 200949 I Grand Parade Annual Report 2009
GROUP COMPANY 2009 2008 2009 2008 R R R R
20 InvestmentsInterest in joint venture
GPI has a 50% interest in Western Cape Manco, a jointly-controlled entity whose principal activity is the management of the empowerment aspects of GrandWest.
The share of the assets, liabilities, income and expenses of the jointly-controlled entity, which are included in the consolidated financial statements, are as follows:
Current assets 4 654 000 5 409 000 – – Current liabilities (626 500) (1 539 500) – –
Net current assets 4 027 500 3 869 500 – –
Revenue 20 115 000 21 735 000 – – Net operating costs (1 742 500) (2 005 500) – – Interest received 398 500 326 000 – –
Net profit before tax 18 771 000 20 055 500 – – Taxation (6 469 500) (6 931 000) – –
Net profit after tax 12 301 500 13 124 500 – –
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 liabilities 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 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- Loans and Available- financial receivables for-sale assets Total R R R R
Financial assets – GROUP 2009 Cash and cash equivalents 55 754 405 – – 55 754 405 Related party loans 19 719 023 – – 19 719 023 Trade and other receivables 8 404 578 – 139 532 8 544 110 Available-for-sale investments – 16 685 000 – 16 685 000
Total 83 878 006 16 685 000 139 532 100 702 538
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
Total 95 616 335 20 329 677 9 380 115 955 392
48 I Grand Parade Annual Report 200949 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 49
Notes to the Annual Financial Statements I for the year ended 30 June 2009
Financial liabilities measured at Non- amortised financial cost liabilities Total R R R
22 Financial instruments continued Financial liabilities – GROUP 2009 Trade and other payables 24 134 930 78 353 24 213 283 Dividends payable 4 245 736 – 4 245 736 Preference shares 285 123 865 – 285 123 865
Total 313 504 531 78 353 313 582 884
2008 Trade and other payables 7 664 841 33 655 7 698 496 Dividends payable 3 866 268 – 3 866 268 Preference shares 201 398 108 – 201 398 108
Total 212 929 217 33 655 212 962 872
Non- Loans and financial receivables assets Total R R R
Financial assets – COMPANY 2009 Cash and cash equivalents 4 293 033 – 4 293 033 Related party loans 295 988 124 – 295 988 124 Trade and other receivables 2 520 920 139 532 2 660 452
Total 302 802 077 139 532 302 941 609
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
Total 76 605 479 9 380 76 614 859
Financial liabilities measured at Non- amortised financial cost liabilities Total R R R
Financial liabilities – COMPANY 2009 Trade and other payables 17 137 402 78 353 17 215 755 Related party loans 34 660 152 – 34 660 152 Dividends payable 4 245 736 – 4 245 736
Total 56 043 290 78 353 56 121 643
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
50 I Grand Parade Annual Report 200951 I Grand Parade Annual Report 2009
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 remain constant.
Increase in Effect on Decrease in Effect on basis points pre-tax profit basis points pre-tax profit GROUP R R
Current year 100 2 649 733 (100) (2 649 733) Prior year 100 508 390 (100) (508 390)
COMPANY Current year 100 42 930 (100) (42 930) Prior year 100 444 787 (100) (444 787)
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 GROUP % R % R
Current year 1 1 401 629 1 1 611 544 Prior year 1 9 466 832 1 1 467 784
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.
50 I Grand Parade Annual Report 200951 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 51
Notes to the Annual Financial Statements I for the year ended 30 June 2009
22 Financial instruments continued The following table presents the contractual maturity analysis of financial liabilities.
On Less than 3 – 12 demand 3 months months 1 – 2 years > 2 years Total GROUP R R R R R R
2009 Trade and other payables – 24 134 930 – – – 24 134 930 Preference shares – – 46 000 000 30 207 000 210 874 757 287 081 757 Interest on preference shares – 6 376 015 14 442 775 42 787 461 20 510 767 84 117 018 Dividends payable 4 245 736 – – – – 4 245 736
Total 4 245 736 30 510 945 60 442 775 72 994 461 231 385 524 399 579 441
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 Dividends payable 3 866 268 – – – – 3 866 268
Total 3 866 268 19 558 970 24 220 667 24 220 667 270 578 775 342 445 347
COMPANY 2009 Trade and other payables – 17 137 402 – – – 17 137 402 Related party loan 34 660 152 – – – – 34 660 152 Dividends payable 4 245 736 – – – – 4 245 736
Total 38 905 888 17 137 402 – – – 56 043 290
2008 Trade and other payables – 1 404 540 – – – 1 404 540 Related party loan 565 081 – – – – 565 081 Dividends payable 3 866 268 – – – – 3 866 268
Total 4 431 349 1 404 540 – – – 5 835 889
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 GROUP R R R R
2009 Loans and receivables – 3 235 132 – 3 235 132 Available-for-sale investments (3 134 422) – – (3 134 422) Financial liabilities at amortised cost – – (31 938 621) (31 938 621)
Total (3 134 422) 3 235 132 (31 938 621) (31 837 911)
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
COMPANY 2009 Loans and receivables – 1 315 483 (2 089 389) (773 906)
Total – 1 315 483 (2 089 389) (773 906)
2008 Loans and receivables – 7 891 925 – 7 891 925
Total – 7 891 925 – 7 891 925
52 I Grand Parade Annual Report 200953 I Grand Parade Annual Report 2009
GROUP COMPANY 2009 2008 2009 2008 R R R R
23 Directors’ emoluments Executive directors – directors’ fees – 1 228 500 – 1 228 500 – salary 2 030 923 225 000 2 030 923 225 000 Non-executive directors – directors’ fees 1 490 958 1 707 000 1 490 958 1 707 000
3 521 881 3 160 500 3 521 881 3 160 500
Paid by: – the company 3 521 881 3 160 500 3 521 881 3 160 500
24 Dividends declared and paid Final dividend in respect of the 2008 financial year of 10 cents (2007: 30 cents per share) (pre the 4:1 share split) 46 281 570 24 902 854 46 281 570 24 902 854
The final dividend in respect of the 2009 financial year of 7,5 cents per share was declared on 2 September 2009.
25 Notes to the cash flow statement25.1 Taxation paid
Taxation – beginning of the year 3 673 291 2 424 125 1 836 278 732 262 Amount per income statement (note 5) – current year 6 066 036 7 984 844 332 347 1 780 292 – prior year underprovision – 92 851 – – – STC 1 363 231 1 315 501 149 231 – Taxation – closing balance for the year (701 509) (3 673 291) (128 925) (1 836 278)
10 401 049 8 144 030 2 188 931 676 276
25.2 Dividends paid Opening balance 3 866 268 3 757 380 3 866 268 3 757 380 Dividends declared 46 281 570 24 902 854 46 281 570 24 902 854 Closing balance (4 245 736) (3 866 268) (4 245 736) (3 866 268)
45 902 102 24 793 966 45 902 102 24 793 966
52 I Grand Parade Annual Report 200953 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 53
Notes to the Annual Financial Statements I for the year ended 30 June 2009
Balance (owed)/ Receipts/ Receipts/ Balance (owed)/ receivable (payments) (payments) receivable 2009 2009 2008 2008 GROUP R R R R
26 Related party transactions Nadesons (Pty) Limited – – (481 512) 11 750 DLA Cliffe Dekker Hofmeyr – – (242 650) (181 255) Shares purchased by directors – 7 250 600 98 420 – Shares sold by directors – (3 750 000) – – Proman Project Management Services (Pty) Limited 49 183 (619 223) (770 684) 44 804 Joint ventures – 12 143 500 – 12 422 000 GPSIT loans to directors 3 464 239 3 464 239 – – Asch Consulting Engineering (Pty) Limited (7 757) (136 129) (153 883) (100) Short-term employee benefits – (3 521 881) (3 160 050) –
COMPANY Nadesons (Pty) Limited – – (481 512) 11 750 DLA Cliffe Dekker Hofmeyr – – (242 650) (181 255) Shares purchased by directors – 7 250 600 98 420 – Shares sold by directors – (3 750 000) – – Proman Project Management Services (Pty) Limited 49 183 (619 223) (770 684) 44 804 Asch Consulting Engineering (Pty) Limited (7 757) (136 129) (153 883) (100) Subsidiaries 245 391 983 114 929 905 23 188 592 (7 333 894) Special purpose entities 15 400 000 15 400 000 – – Short-term employee benefits – (3 521 881) (3 160 000) –
Third parties DLA Cliffe Dekker Hofmeyr (formerly known as Hofmeyr Herbstein & Gihwala Inc.) is a firm of attorneys that provides legal services
to the group. No transactions occurred during the year. Directors of DLA Cliffe Dekker Hofmeyr, Messrs Alexander Abercrombie and Charl Williams, are also directors of the company.
GPI rents office space from Proman Project Management Services (Pty) Limited. Mr Hassen Adams, a director of the company, is also a director of Proman Project Management Services (Pty) Limited.
Asch Consulting Engineers are engineering consultants. Asch Consulting Engineers provides GPI 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, R25 million has been invested with Grindrod Bank. A director of GPI, Mr Hassen Adams, is also a shareholder of Grindrod Bank.
Subsidiaries Refer to note 12 for balances owed/due to subsidiaries.
Associates Refer to note 11 for transactions and balances relating to associates.
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, 1973 (No. 61 of 1973), as amended, a capital redemption reserve fund must
be created for the par value of the preference shares redeemed during the year.
29 Breaches During the year the convenants on both preference shares were breached, marginally and for approximately a week each, which can be
attributed to the market uncertainty caused by the financial crisis. These breaches have since been remedied with the SISA and RAH share prices rallying above the breach ratio for each of the respective preference shares.
54 I Grand Parade Annual Report 200955 I Grand Parade Annual Report 2009
Number of Number of % of total shareholders shares owned shares issued
Size of shareholding1 - 1 000 119 78 022 0,031 001 - 10 000 4 167 21 498 287 4,7810 001 - 100 000 1 871 52 437 331 11,66100 001 - 1 000 000 154 39 268 007 8, 73More than 1 000 000 48 336 299 672 74,80
6 359 449 581 319 100,00
Number of % number of shareholders shareholders
Shareholder spread Public 6 352 92,07Non-public– Directors of company and its associates 7 7,93
6 359 100
Number of % of total shares owned shares issued
Distribution of shareholders BEE empowerment 296 474 130 65,94 Banks 2 160 000 0,48 Brokers 22 582 584 5,02 Close corporations 891 732 0,20 Endowment funds 1 078 000 0,24 Individuals 37 544 823 8,35 Insurance companies 99 499 0,02 Investment companies 15 673 372 3,49 Medical aid schemes 21 656 0,01 Mutual funds 20 394 711 4,54 Nominees and trusts 22 230 786 4,94 Pension funds 6 247 641 1,39 Private companies 23 985 535 5,34 Public companies 196 850 0,04
449 581 319 100,00
Beneficial shareholders holding 3% or moreThe GPI SPV Trust 38 728 436 8,61Quintessance Opportunities Limited 27 186 788 6,05Sancino Projects Limited 25 943 236 5,77Trilinear Empowerment Trust 19 387 860 4,31Midnight Storm Investment 387 (Pty) Limited 19 195 402 4,27Rowmoor Investments 769 (Pty) Limited 18 000 000 4,00Chandos Trust 17 886 842 3,98Sanlam 13 717 937 3,05
180 046 501 40,04
Note 1: The above analysis is based on a report compiled by an independent contractor and by using judgement reclassified for the BEE empowerment category.
Note 2: The above information is based on the shareholder register dated 26 June 2009 and does not reflect the GPSIT transaction. The 5,8 million balance of the shares at year-end are disclosed as treasury shares.
Shareholders’ Information
54 I Grand Parade Annual Report 200955 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 55
Notice is hereby given that the annual general meeting of shareholders
of the company will be held at Market Hall, GrandWest Casino,
Goodwood on Wednesday, 9 December 2009 at 18h00 to consider,
propose and/or conduct the following business (registration closes
15 minutes before the meeting commences):
1. To transact such other business as may be transacted at an
annual general meeting.
2. Ordinary Resolution Number One
To re-elect Hassen Adams as director of the company.
“RESOLVED THAT Hassen Adams who retires by rotation in terms
of the articles of association of the company and being eligible
for re-election, be and is hereby reappointed as director of the
company.” A summary of the curriculum vitae of Hassen Adams
is provided on page 12.
3. Ordinary Resolution Number Two
To re-elect Anthony Bedford as director of the company.
“RESOLVED THAT Anthony Bedford who retires by rotation
in terms of the articles of association of the company and
being eligible for re-election, be and is hereby reappointed as
director of the company.” A summary of the curriculum vitae of
Anthony Bedford is provided on page 13.
4. Ordinary Resolution Number Three
To re-elect Nombeko Mlambo as director of the company.
“RESOLVED THAT Nombeko Mlambo who retires by rotation
in terms of the articles of association of the company and
being eligible for re-election, be and is hereby reappointed as
director of the company.” A summary of the curriculum vitae of
Nombeko Mlambo is provided on page 13.
5. Ordinary Resolution Number Four
To receive, consider and adopt the annual financial statements of
the company and the group for the year ended 30 June 2009.
“RESOLVED THAT the audited financial statements in respect
of the company and the group for the financial year ended
30 June 2009 be and are hereby confirmed and approved.”
6. Ordinary Resolution Number Five
To approve the directors’ fees as disclosed in the annual financial
statements of the company and the group for the year ended
30 June 2009.
“RESOLVED THAT the directors’ fees for the year ended
30 June 2009 be and are hereby approved.”
7. Ordinary Resolution Number Six
To reappoint Ernst & Young Inc. as auditors for the ensuing
financial year.
“RESOLVED THAT Ernst & Young Inc. be reappointed as the
auditors of the company and the group until the company’s next
annual general meeting.”
8. Ordinary Resolution Number Seven
To authorise the directors to determine and pay the auditors’
remuneration for the past audit.
“RESOLVED THAT the directors of the company be and are
hereby authorised to determine and pay the remuneration of
the company’s and the group’s auditors for the services provided
during the financial year ended 30 June 2009.”
9. Ordinary Resolution Number Eight
To consider and if deemed fit, to pass the following ordinary
resolution with or without modification:
To place the unissued shares of the company under the directors’
control.
“RESOLVED THAT the unissued share capital of the company
from time to time be and is hereby placed under the control
of the directors of the company until the next annual general
meeting of the company, with the authority to allot and issue all
or part thereof in their discretion, subject to sections 221 and 222
of the Companies Act, 1973 (No. 61 of 1973), as amended, the
articles of association of the company and the provisions of the
Listings Requirements of the JSE Limited.”
10. Ordinary Resolution Number Nine
To consider and if deemed fit, to pass the following ordinary
resolution with or without modification:
To issue shares for cash as contemplated in terms of the Listings
Requirements of the JSE.
“RESOLVED THAT the directors of the company be and are hereby
authorised by way of a general authority, to allot and issue for
cash any of its unissued shares placed under their control as they
in their discretion may deem fit, without restriction, subject to
the provisions of the Listings Requirements of the JSE Limited,
the Companies Act, 1973 (No. 61 of 1973), as amended, and the
articles of association of the company, and subject to the proviso
that the aggregate number of ordinary shares able to be allotted
and issued in terms of this resolution, shall be limited to 15% of
the issued share capital at 30 June 2009, provided further that:
• theapprovalshallbevaliduntil thedateof thenextannual
general meeting of the company, provided it shall not extend
beyond fifteen months from the date of this resolution;
• apaidpressannouncementgiving fulldetails, including the
impact on net asset value and earnings per share, will be
published after any issue representing, on a cumulative basis
within any one financial year, 5% or more of the number of
shares in issue prior to such issue;
• thegeneralissuesofsharesforcashintheaggregateinany
one financial year may not exceed 15% of the applicant’s
issued share capital (number of securities) of that class. The
securities of a particular class will be aggregated with the
securities that are compulsorily convertible into securities
of that class; and, in the case of the issue of compulsorily
Notice of Annual General Meeting I for the year ended 30 June 2009
56 I Grand Parade Annual Report 200957 I Grand Parade Annual Report 2009
convertible securities, aggregated with the securities of that
class into which they are compulsorily convertible. The number
of securities of a class which may be issued shall be based on
the number of securities of that class in issue at the date of
such application less any securities of the class issued during
the current financial year, provided that any securities of that
class to be issued pursuant to a rights issue (announced and
irrevocable and underwritten) or acquisition (concluded up to
the date of application) may be included as though they were
securities in issue at the date of application;
• in determining the price at which an issue of shares will
be made in terms of this authority the maximum discount
permitted will be 10% of the weighted average traded price
of such shares, as determined over the 30 trading days prior
to the date that the price of the issue is agreed between the
directors and the subscriber (the committee of the JSE should
be consulted for a ruling if the applicant’s securities have not
traded in such 30-business day period);
• any such issue will only be made to public shareholders as
defined in paragraph 4.22 of the Listings Requirements of the
JSE and not to related parties; and
• any such issue will only be securities of a class already in
issue.”
At least 75% of the shareholders present in person or by proxy
and entitled to vote at the annual general meeting must cast
their vote in favour of this resolution.
11. Special Resolution Number One
To consider and if deemed fit, to pass the following special
resolution with or without modification.
To authorise the company to purchase its own shares and/or
shares in any of its subsidiaries in accordance with the provisions
of sections 85 to 88 of the Companies Act, as amended.
“RESOLVED THAT as a special resolution the company be and is
hereby authorised, as a general approval, to repurchase any of the
shares issued by the company and/or any of its subsidiaries, upon
such terms and conditions and in such amounts as the directors
may from time to time determine, but subject to the provisions of
sections 85 to 88 of the Companies Act, 1973 (No. 61 of 1973),
as amended, the articles of association of the company and the
Listings Requirements of the JSE provided that:
• the general authority shall be valid until the next annual
general meeting of the company or for 15 months from the
passing of this resolution (whichever period is shorter);
• thegeneralauthoritybelimitedtoamaximumof20%ofthe
issued share capital of that class in one financial year;
• repurchasesshallnotbemadeatapricemorethan10%above
the weighted average of the market value of the securities
traded for the five business days immediately preceding the
date on which the transaction was effected. The JSE should be
consulted for a ruling if the securities have not traded in such
five-business day period;
• the general repurchase of securities being implemented
through the order book operated by the JSE’s trading
system (open market) and without any prior understanding
or arrangement with any counterparty (reported trades
prohibited);
• thecompanywill,atanypointintime,appointonlyoneagent
to effect the repurchase(s) on the company’s behalf;
• aftersuchrepurchase(s),at least300publicshareholders,as
defined in the Listings Requirements of the JSE, continue to
hold at least 20% of the company’s issued shares;
• thecompanymaynoteffectarepurchaseduringanyprohibited
period as defined in terms of the Listings Requirements of the
JSE unless there is a repurchase plan in place as contemplated
in terms of paragraph 5.72(g) of the Listings Requirements of
the JSE;
• anannouncementmustbepublishedassoonasthecompany
has acquired shares constituting, on a cumulative basis, 3%
of the number of shares in issue at the time that the general
authority is granted, pursuant to which the aforesaid 3%
threshold is reached, containing full details thereof, as well
as for each 3% in aggregate of the initial number of shares
acquired thereafter; and
• a certificate by the company’s sponsor in terms of
paragraph 2.12 of the Listings Requirements confirming the
statement by the directors regarding working capital referred
to hereunder in this notice convening the meeting, be issued
before commencement of any repurchase.”
12. Special Resolution Number Two
To consider and if deemed fit, to pass the following special
resolution with or without modification.
To authorise the company’s subsidiaries to purchase shares
in the company and/or their own shares in accordance with
the provisions of sections 85 to 89 of the Companies Act, as
amended.
“RESOLVED THAT as a special resolution the company, in so far
as it may be necessary to do so, hereby approves, as a general
approval, and authorises the acquisition by any subsidiary of
the company of shares issued by such subsidiary and/or by the
company, upon such terms and conditions and in such amounts
as the directors may from time to time determine, but subject to
the provisions of sections 85 to 89 of the Companies Act, 1973
(No. 61 of 1973), as amended, the articles of association of the
company and the Listings Requirements of the JSE, provided that:
56 I Grand Parade Annual Report 200957 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 57
• the general authority shall be valid until the next annual
general meeting of the company or for 15 months from the
passing of this resolution (whichever period is shorter);
• the general authority be limited to a maximum of 20% of
the issued share capital of that class in one financial year
of the acquiree company’s issued share capital at the time
the authority is granted, subject to a maximum of 10% in
aggregate in the event that it is the company’s share capital
that is repurchased by a subsidiary;
• repurchasesshallnotbemadeatapricemorethan10%above
the weighted average of the market value of the securities
traded for the five business days immediately preceding the
date on which the transaction was effected. The JSE should be
consulted for a ruling if the securities have not traded in such
five-business day period;
• the general repurchase of securities being implemented
through the order book operated by the JSE’s trading
system (open market) and without any prior understanding
or arrangement with any counterparty (reported trades
prohibited);
• thecompanywill,atanypointintime,appointonlyoneagent
to effect the repurchase(s) on the company’s behalf;
• aftersuchrepurchase(s),at least300publicshareholders,as
defined in the Listings Requirements of the JSE, continue to
hold at least 20% of the company’s issued shares;
• thecompanymaynoteffectarepurchaseduringanyprohibited
period as defined in terms of the Listings Requirements of the
JSE unless there is a repurchase plan in place as contemplated
in terms of paragraph 5.72(g) of the Listings Requirements of
the JSE;
• anannouncementmustbepublishedassoonasanysubsidiary
has acquired shares constituting, on a cumulative basis, 3% of
the number of shares of the acquiree company in issue at the
time that the general authority is granted, pursuant to which
the aforesaid 3% threshold is reached, containing full details
thereof, as well as for each 3% in aggregate of the initial
number of shares acquired thereafter; and
• a certificate by the company’s sponsor in terms of
paragraph 2.12 of the Listings Requirements confirming the
statement by the directors regarding working capital referred
to hereunder in this notice convening the meeting, be issued
before commencement of repurchase.”
13. Ordinary Resolution Number Ten
To consider and if deemed fit, to pass the following ordinary
resolution with or without modification:
Granting the directors of the company and the Company
Secretary general authority to implement all of the aforesaid
resolutions.
“RESOLVED THAT the directors of the company and the Company
Secretary be and are hereby authorised to do all such things and
sign all documents and take all such action as they consider
necessary to give effect to and implement the resolutions set out
in the notice convening the annual general meeting at which this
Ordinary Resolution Number Ten will be considered.”
EXPLANATORY NOTES
Reason for and effect of the special resolutions
The reasons for and effects of Special Resolutions Numbers 1 and
2 are:
To grant the directors a general authority in terms of the
Companies Act, 1973 (No. 61 of 1973), as amended, (“the Act”)
for the acquisition by the company/subsidiary of shares issued by
it on the basis reflected in such special resolutions.
The board does not intend to use such power unless prevailing
circumstances (including the relevant tax dispensations and
market conditions) warrant such a step. All required certificates
and relevant statements shall be issued. The effect thereof will be
that the directors will have the authority to implement a general
repurchase of shares in accordance with the provisions of the
Act, the articles of association of the company and the Listings
Requirements of the JSE.
The directors are of the opinion, after considering the effect of a
maximum repurchase of shares, that:
• thecompanyandthegroupwillbeable,intheordinarycourse
of business, to pay its debts for a period of twelve months
from the date of the notice of this annual general meeting;
• the assets of the company and the group fairly valued in
accordance with IFRS, will be in excess of the liabilities of the
company for a period of twelve months from the date of the
notice of this annual general meeting;
• thecompanyandthegroupwillhaveadequatecapitalfora
period of 12 (twelve) months after the date of this notice of
the annual general meeting; and
• the working capital of the company and the group will be
adequate for a period of 12 (twelve) months after the date of
this notice of the annual general meeting.
The special resolutions are a renewal of the resolution
approved at the previous annual general meeting held on
9 December 2008.
Information relating to the special resolutions
The following general information is reflected in the annual report:
• directorsandmanagementof thecompanyand itssubsidiaries
(refer to page 12)
• majorshareholdersofthecompany(refertopage55)
• director’sinterestsinthecompany’ssecurities(refertopages55
and 31)
• sharecapitalofthecompany(refertopage46)
Notice of Annual General Meeting I for the year ended 30 June 2009
58 I Grand Parade Annual Report 200959 I Grand Parade Annual Report 2009
The directors, whose names are given on page 60 of this annual
report, collectively and individually accept full responsibility for the
information given in this notice and certify that to the best of their
knowledge and belief there are no facts that have been omitted,
which would make any statement false or misleading and that all
reasonable enquiries to ascertain such facts have been made.
There have been no material changes in the financial trading position
of the group since the publication of the financial results for the
period ended 30 June 2009.
The directors are not aware of any information on any legal or
arbitration proceedings, including any proceedings that are pending
or threatened, that may have had, in the previous 12 months, a
material effect on the company’s or the group’s financial position.
Voting and proxies
Shareholders entitled to attend and vote at the annual general
meeting may appoint one or more proxies to attend, speak and vote
in his/her stead. A proxy need not be a member of the company.
A form of proxy, in which is set out the relevant instructions for its
completion, is enclosed for use by a certificated or dematerialised
shareholder with own name registration who wishes to be represented
at the general meeting. Completion of a form of proxy will not
preclude such shareholder from attending and voting (in preference
to that shareholder’s proxy) at the annual general meeting.
A form of proxy is attached for the convenience for all of those
shareholders who wish to be so represented. Duly completed forms
of proxy together with the documents conferring the authority to
the signatory and under which it is signed (if any) must be forwarded
to the transfer secretaries by not later than 18h00 on Tuesday,
8 December 2009, in accordance with the instructions therein.
Any shareholder who has dematerialised his/her shares (other than
those with “own name registration”), who wishes to attend the
annual general meeting must instruct his/her Central Securities
Depository Participant (”CSDP“) or broker to issue them with the
necessary written authority in terms of the custody agreement
entered into between the shareholder and his/her CSDP or broker,
in order to attend the annual general meeting, or if such shareholder
wishes to vote by way of proxy they should provide the CSDP or
broker with their voting instruction.
By order of the board
Grand Parade Investments Limited
58 I Grand Parade Annual Report 200959 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 59
Directors (at date of Directors’ Report)A AbercrombieH Adams (Chairman)A W BedfordR G FreeseN MlamboR Hoption (Financial Director)N V Maharaj C W Williams A Funkey (Chief Executive)
Nature of businessInvestment holding company
Company secretaryR Hoption
Public officerS Petersen
Transfer secretariesComputershare Investor Services (Pty) LimitedPO Box 61051Marshalltown, 2107
AuditorsErnst & Young Inc.
AttorneysBernadt Vukic Potash & Getz
BankersThe Standard Bank of South Africa Limited
Corporate advisersLeaf Capital (Pty) LimitedPO Box 3377Cape Town, 8000
SponsorsPSG Capital (Pty) LimitedPO Box 7403Stellenbosch, 7599
Registered office15th Floor, Triangle House22 Riebeek StreetCape Town, 8001
Registration number1997/003548/06
Share codeGPL
ISINZAE00119814
Domicile and country of incorporationSouth Africa
Company Information
60 I Grand Parade Annual Report 200961 I Grand Parade Annual Report 2009
Annual general meeting
Wednesday, 9 December 2009 at 18h00
Market Hall, GrandWest Casino, Goodwood
Reports/activity
Announcement of interim results for the half-year ended 31 December 2008 March 2009
Announcement of annual results and declaration of final dividend for the year ended 30 June 2009 September 2009
2009 annual report published September 2009
Annual general meeting December 2009
Final dividends – payable on or about December 2009
Announcement of interim results for the half-year ended 31 December 2009 March 2010
Announcement of annual results for the year ended 30 June 2009 September 2010
Annual general meeting December 2010
Shareholders’ Diary
60 I Grand Parade Annual Report 200961 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I 61
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BBBEE Broad-based Black Economic Empowerment
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CSDP Central Securities Depository Participant
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GDP Gross Domestic Product
GPI Slots GPI Slots (Proprietary) Limited
GPSIT Grand Parade Share Incentive Trust
GPI Grand Parade Investments Limited
GGP Gross Geographic Product
GPI Management Services GPI Management Services (Proprietary) Limited
GrandWest GrandWest Casino and Entertainment World
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
JSE Johannesburg Stock Exchange / JSE Limited
King II King Report on Corporate Governance
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National Manco National Casino Resort Management Company (Proprietary) Limited
NRGP National Responsible Gambling Programme
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Standard Bank Standard Bank of South Africa Limited
STC Secondary Tax on Companies
SunWest SunWest International (Proprietary) Limited
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Thuo Gaming WC Thuo Gaming Western Cape (Proprietary) Limited
Thuo Gaming KZN Thuo Gaming KwaZulu-Natal (Proprietary) Limited
Utish Utish Investments (Proprietary) Limited
Western Cape Manco Western Cape Casino Resort Manco (Proprietary) Limited
Wild Rush Wild Rush Trading 97 (Proprietary) Limited
Glossary of Terms
62 I Grand Parade Annual Report 200963 I Grand Parade Annual Report 2009
GRAND PARADE INVESTMENTS LIMITED(Incorporated in the Republic of South Africa)(Registration Number: 1997/003548/06) (Share code: GPL)(ISIN: ZAE00119814) (“GPI” or “the company”)
A shareholder who is entitled to attend and vote at the annual general meeting is entitled to appoint a proxy to attend, speak and vote thereat in his/her/its stead and that proxy need not also be a member of the company.
All forms of proxy must be lodged with the transfer secretaries of the company, Computershare Investor Services (Pty) Limited of 70 Marshall Street, Johannesburg, 2001 in order to be received by no later than 18h00 on Tuesday, 8 December 2009. Facsimile number 011 686 5238.
I/We (name/s in block letters)
of (address)
being a member of Grand Parade Investments Limited, hereby appoint
1 of or failing him/her
2 of or failing him/her
3 of or failing him/her
the chairperson of the meeting as my/our proxy, to vote for me/us and on my/our behalf at the annual general meeting of the company to be held at 18h00 on Wednesday, 9 December 2009 at Market Hall, GrandWest Casino, Goodwood and at any adjournment thereof as follows:
For Against Abstain
Ordinary Resolution Number 1: To re-elect H Adams as director of the company.
Ordinary Resolution Number 2: To re-elect A Bedford as director of the company.
Ordinary Resolution Number 3: To re-elect N Mlambo as director of the company.
Ordinary Resolution Number 4: Adoption of the annual financial statements for the year ended 30 June 2009.
Ordinary Resolution Number 5: To approve the directors’ fees as disclosed in the annual financial statements for the year ended 30 June 2009.
Ordinary Resolution Number 6: To reappoint Ernst & Young Inc. as auditors for the ensuing financial year.
Ordinary Resolution Number 7: To authorise the directors to determine and pay the auditors’ remuneration for the past audit.
Ordinary Resolution Number 8: To place the unissued shares of the company under the directors’ control.
Ordinary Resolution Number 9: To issue shares for cash as contemplated in terms of the Listings Requirements of the JSE Limited.
Special Resolution Number 1: To authorise the company to repurchase its own shares and/or shares in any of its subsidiaries in accordance with the provisions of sections 85 to 88 of the Companies Act.
Special Resolution Number 2: To authorise the company’s subsidiaries to repurchase their own shares and/or shares in the company in accordance with the provisions of sections 85 to 89 of the Companies Act.
Ordinary Resolution Number 10: To grant the directors of the company and the Company Secretary general authority to implement the aforesaid resolutions.
(Indicate instruction to proxy by way of a cross in the space provided above)
Unless otherwise instructed, my proxy may vote as he/she thinks fit.
Signed at this day of 2009.
Signature
Please read the notes on the reverse side hereof.
Form of Proxy
62 I Grand Parade Annual Report 200963 I Grand Parade Annual Report 2009 Grand Parade Annual Report 2009 I
A member entitled to attend and vote at the annual general meeting is entitled to appoint a proxy or proxies to attend, speak and vote in his stead.
A proxy need not be a member of Grand Parade Investments Limited.
Every person present and entitled to vote at the annual general meeting as a member or as a proxy or as a representative of a body corporate shall, on a show of hands, have one vote only, irrespective of the number of shares such person holds or represents, but in the event of a poll, a member holding shares will be entitled to one vote per share held.
Please insert the relevant number of shares in the appropriate spaces on the voting section, indicating how you wish your votes to be cast at the annual general meeting. If you return this form duly signed without any specific instructions, the proxy will vote or abstain from voting at the proxy’s discretion.
1. A shareholder may insert the name of a proxy or the names of two alternative proxies of his/her choice in the spaces provided with or without deleting “the chairman of the annual general meeting”, but any such deletion must be initialled by the shareholder. The person whose name appears first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.
2. Please insert the number of shares in the relevant spaces according to how you wish your votes to be cast. If you wish to cast your votes in respect of a lesser number of shares exercisable by you, indicate the number of shares held in respect of which you wish to vote. Failure to comply with the above will be deemed to authorise and compel the chairman, if the chairman is an authorised proxy, to vote in favour of the resolutions, or to authorise any other proxy to vote for or against the resolutions or abstain from voting as he/she deems fit, in respect of all of your shareholder votes exercisable thereat. A shareholder or its/his/her proxy is not obliged to use all the votes exercisable by the shareholder or its/his/her proxy, but the total of the votes cast and in respect whereof abstention is recorded may not exceed the total of the votes exercisable by the shareholder or its/his/her proxy.
3. Forms of proxy must be lodged with the transfer secretaries, Computershare Investor Services (Pty) Limited of 70 Marshall Street, Johannesburg, 2001 to be received by no later than 18h00 on 8 December 2009.
4. Any alteration or correction made to this form of proxy must be initialled by the signatory(ies).
5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the company’s transfer secretaries or waived by the Chairman of the annual general meeting.
6. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so.
7. The Chairman of the annual general meeting may accept or reject any form of proxy which is completed and/or received other than in accordance with these notes and instructions, provided that the Chairman is satisfied as to the manner in which the shareholder wishes to vote.
8. Joint holders – any such persons may vote at the annual general meeting in respect of such joint shares as if he/she were solely entitled thereto; but if more than one of such joint holders are present or represented at the annual general meeting, the one of the said persons whose name stands first in the register in respect of such shares or his/her proxy, as the case may be, is alone entitled to vote in respect thereof.
9. Shareholders who hold shares in GPI that have been dematerialised, and are registered by the CSDP on the sub-register in their own name kept by that CSDP, will be entitled to attend the annual general meeting in person or, if they are unable to attend and wish to be represented thereat, then they must complete and return this form of proxy to the transfer secretaries in accordance with the time specified herein.
10. Shareholders who hold shares in the company through a nominee should advise their nominee or, if applicable, their CSDP or broker, timeously of their intention to attend and vote at the annual general meeting or to be represented by proxy thereat in order for their nominee or, if applicable, their CSDP or broker, to provide them with the necessary authorisation to do so or should provide their nominee or, if applicable, their CDSP or broker, timeously with their voting instructions should they not wish to attend the annual general meeting in person, in order for their nominee to vote in accordance with their instructions at the annual general meeting.
Notes
64 I Grand Parade Annual Report 2009