Gold Reef Resorts (GRR), which has interests in seven South African casino resorts, today published its reviewed financial results for the year ended 31 December 2008. Total revenue for the Group rose 29.1% to R2.2 billion (US$222.4 million), largely attributed to the first full year of trading of Silverstar Casino, which broadens GRR participation in the lucrative Gauteng gaming market. In response to the challenging operating environment, the company states its focus has been directed to controlling costs in order to preserve margins.

Steven Joffe, CEO of Gold Reef Resorts commented, “Our overall performance has been impacted by weaker consumer spend with our revenue mix changing and trading volumes contracting in line with the deteriorating economic environment. This, however, has been partially offset by the opening of a new casino. Silverstar Casino made a pleasing contribution to revenue and profit in its first full year of operation and broadens our participation in the Gauteng gaming market. The inclusion of Silverstar in our portfolio has also reduced our dependence on Gold Reef City in our overall revenue and EBITDAR mix.”

Notwithstanding the impact of the deteriorating global economy, GRR says it is well positioned to benefit from decreasing interest rates and reduced inflation. Silverstar is expected to contribute further in the coming year. The Group enjoys strong cash flow generation and the Board believes that its businesses are conservatively geared. As four of the Group's interest rate hedge contracts expire during 2009, Gold Reef will benefit from the decreasing interest rate cycle anticipated in 2009.

Following the acquisition by Tsogo Sun of a 23% stake in GRR from various Black Economic Empowerment (BEE) shareholders, the Board has petitioned the various gaming boards to confirm that the various empowerment commitments relating to shareholding specified in the Group’s various gaming licenses remain adequate after the Tsogo Sun acquisition.

With all of its properties expected to be newly refurbished or recently opened by the end of 2009, limited capital expenditure is anticipated in the short term. This, coupled with degearing, which is expected to enhance earnings growth, will result in increased cash resources. GRR continues to pursue its application for a licence in the Sasolburg area through a controlling stake in Vaal River Casino Company (Proprietary) Limited.

Steven Joffe summed up, “As anticipated, the increased number of shares in issue following the share exchange and top-up transactions in 2007 continued to impact our per share performance though at a reducing rate as contributions from these underlying operations improve over time. Looking forward, we expect inflation to moderate and interest rates to continue declining. We enjoy strong cash flow generation and our businesses are appropriately geared without onerous debt requirements. Continuing efforts to grow revenue and protect margin will underpin earnings growth, benefiting from a reduction in gearing.”
(E-03.16.09)

© Copyright 2009 CasinoCompendium



>>> return to archives
>>> return to frontpage