CHIEF
FINANCIAL
OFFICER’S REVIEW
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| The board has declared dividends totalling 480 cents per share. This is 20% ahead of last year's dividends, and in line with the group's stated intention to continue increasing the dividends payable to shareholders. |
The group achieved satisfactory growth in revenue and EBITDA despite the tough trading environment experienced over the last year. Adjusted headline earnings of R720 million were 12% below the previous year primarily due to the increased interest charge as a result of the share buy back in July 2007. Diluted adjusted headline earnings per share of 739 cents were 3% ahead of last year due to the lower number of shares in issue as a result of the share buy back. |
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| The income statements have been presented on the basis of the group's election to disclose items of income and expenditure
by nature in terms of IAS 1. However, management continues to monitor financial performance by analysing direct and indirect costs
and measuring EBITDA and adjusted headline earnings achievements. This additional disclosure is provided below: |
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2008
Rm |
% |
2007
Rm |
|
| Revenue |
|
7 618 |
10 |
6 937 |
|
| Casino |
|
5 845 |
9 |
5 359 |
|
| Slots |
|
5 002 |
9 |
4 609 |
|
| Tables |
|
843 |
12 |
750 |
|
| Rooms |
|
881 |
14 |
776 |
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| Food and beverage |
|
528 |
10 |
479 |
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| Other |
|
364 |
13 |
323 |
|
| Direct costs |
|
(3 098) |
(11) |
(2 780) |
|
| Casino –Levies and VAT |
|
(1 244) |
(10) |
(1 133) |
|
| –Other |
|
(1 026) |
(13) |
(907) |
|
| Rooms |
|
(190) |
(16) |
(164) |
|
| Food and beverage |
|
(418) |
(11) |
(378) |
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| Other |
|
(220) |
(11) |
(198) |
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| Gross profit |
|
4 520 |
9 |
4 157 |
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| Indirect costs |
|
(1 684) |
(6) |
(1 596) |
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| EBITDA |
|
2 836 |
11 |
2 561 |
|
| Depreciation and amortisation |
|
(568) |
(10) |
(518) |
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| Property and equipment rental |
|
(102) |
(38) |
(74) |
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| Operating profit |
|
2 166 |
10 |
1 969 |
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| Foreign exchange profits/(losses) |
|
58 |
>100 |
(8) |
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| Interest income |
|
79 |
3 |
77 |
|
| Interest expense |
|
(571) |
(98) |
(288) |
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| Profit before tax |
|
1 732 |
(1) |
1 750 |
|
| Tax |
|
(714) |
(9) |
(654) |
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| Profit after tax |
|
1 018 |
(7) |
1 096 |
|
| Minorities' interests |
|
(298) |
(6) |
(282) |
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| Adjusted headline earnings |
|
720 |
(12) |
814 |
|
| Headline and adjusted headline earnings adjustments |
|
(263) |
>(100) |
(16) |
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| Profit attributable to ordinary shareholders |
|
457 |
(43) |
798 |
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The impact of the tough economic environment on disposable
income and consumer spending resulted in a slowdown in gaming
revenue growth to 9% following three consecutive years of over
18% growth in these revenues.
Rooms revenue of R881 million was 14% ahead of the previous year
with overall occupancy of 76% (74%) and the average room rate
achieved of R850 ahead by 7%. The good revenue performance by the hotels and resorts was attributable to strong growth in
international visitor numbers across all major market segments.
The gross margin at 59,3% was 0,6 percentage points down on
last year. The decrease is due to increased direct marketing and
promotional expenses. Gaming levies were 10% up on last year
and continue to grow ahead of the growth in gaming revenue,
primarily as a result of fiscal drag. |
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Indirect costs increases have been contained at 6%, resulting in
the group EBITDA margin improvement of 0,3 percentage points
to 37,2% and an increase of 11% in EBITDA to R2,8 billion.
Profit before tax at R1 732 million was 1% below last year.
Depreciation and amortisation charges were 10% up on the
previous year while the net interest charge has increased by
R281 million over last year to R492 million arising primarily from
the additional preference share funding in respect of the
R2,3 billion share buy back on 30 July 2007 and higher prevailing
interest rates. Rand weakness during the year resulted in an
exchange gain of R58 million, compared with a loss of R8 million
in the previous year. Exchange gains and losses relate primarily to
exchange rate movements on converting foreign cash balances.
Tax at R714 million was 9% higher than last year. The overall
effective tax rate increased significantly to 41,2% primarily due
to the significant additional preference share dividends. The nondeductibility
for tax purposes of these dividends together with
certain material costs in our business, which include casino bid
costs, depreciation on non-hotel buildings, plus STC on dividend
payments will result in the effective tax rate remaining above the
statutory tax rate.
Headline and adjusted headline earnings adjustments of
R263 million include the BEE transaction charge of R182 million
which reflects the difference between the price at which GPI was
granted an option over 5% of the equity in SunWest and the
estimated fair value, tax on share premium distributions of R48
million, pre-opening expenses of R8 million, a pension fund
surplus recognition of R12 million and the realisation of the
Zimbali management contract of R13 million. |
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The Employee Share Trusts have not been consolidated in terms
of SIC12 in the above disclosure on the basis that the group does
not receive any of the economic benefits from the trusts.
The board has declared dividends totalling 480 cents per share.
This is 20% ahead of last year's dividends, and in line with the
group's stated intention to continue increasing the dividends
payable to shareholders. |
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