GOLD REEF RESORTS REVITALISES CASINOS TO BOOST GROWTH   

Gold Reef Resorts has maintained its positive growth cycle with strong interim
results for the six months to June 2007. Robust trade and expansion developments
at most of Gold Reef Resort’s casinos boosted revenue 17,9% to R839,2 million,
generating bottom line profitability of R138,2 million which was 25,4% higher than
June 2007. The group earlier this month announced an acquisition offer which may see
it acquired and de-listed by a private equity consortium including its own management
and BEE shareholders.

Following landmark BEE transactions concluded during the period, the group now boasts
a direct black shareholding in excess of 25,1% made up of former black partners in its
casino operations.

Headline earnings per share (HEPS) for the interim period grew by 21,0% to 68,6 cents
from 56,7 cents in the previous comparative period. EBITDA of R358,1 million, which
was up by 22,9%, represented a 42,7% margin on revenue.

CEO Steven Joffe says upbeat market conditions and new developments were the key
revenue drivers. However he highlights that strict processes and controls by management
were critical, with all expansion programmes concluded on time and within budget.
Flagship Gold Reef City Casino grew revenue 13,7% to 505,2 million despite the
disruption to trade caused by its revamp and upgrade. Joffe says the long-term benefits
outweigh the short-term minor sacrifice of market share. “The new smoking casino
hosting 570 slot machines and 15 tables, is already experiencing significantly higher
trading levels.” He adds that the expansion programme should be complete by October
2007, bringing on stream new restaurants, a 1 100-seater theatre and a ceiling over the
main casino floor. In addition the casino should have introduced a completely cashless
casino floor by that time, bringing Gold Reef City in line with international standards.
He is confident that the ongoing revitalisation of the Theme Park has started to pay off
for the group, with a pleasing financial performance.

Garden Route Casino was the group’s star performer, with a 21,3% leap in revenue to
R81,2 million from R67,0 million. A 24,7% increase in EBITDA to R40,6 million
reflected a healthy EBITDA: Revenue ratio of 50,0%. Gold Reef Financial Director
Jarrod Friedman attributes the casino’s growth partly to the opening of an adjacent
signature golf course that is attracting new and higher-spend patrons. Additional slot
machines and tables helped support the increase in footfall.
Revenue at Golden Horse Casino in Pietermaritzburg, which saw the completion of
renovations worth R8,9 million in the period, was up 15,3% to R111,5 million on the
back of robust trading. In the Western Cape Mykonos Casino managed to post a 16,6%
increase in revenue to R57,7 million off a high base. “Management is currently
considering expansion proposals to deal with capacity constraints due to thriving
demand,” says Friedman.

During the period Goldfields Casino was upgraded to a permanent casino and still
achieved a 15,9% increase in revenue to R51,7 million, with EBITDA of R24,1 million
representing a 46,6% margin on revenue. The existing facilities were refurbished and new
facilities added. The permanent casino now offers 250 slots and nine tables.
Gold Reef’s newest casino Silverstar, set to garner a greater share of the lucrative
Gauteng gaming market for the group, is under construction. “To date the development
has cost the group R281 million with a total anticipated cost of R1,2 billion on
completion in early 2008,” says Friedman. He is confident the casino will start impacting
positively on the group’s results from next year.

New developments that will further extend Golf Reef’s footprint and position the group
to exploit new markets, are in progress. The group is invested in the licence holder for the
Queenstown Casino in the Eastern Cape and holds a controlling stake in the Vaal River
Casino Company, which will expose Gold Reef to the Sasolburg area.
Looking ahead Joffe says the revitalisation of the portfolio with refurbishments and new
properties has positioned the group for considerable growth. “The Silverstar and
Queenstown casinos under development, the new permanent Goldfields Casino and the
upgraded Gold Reef City Casino represent the majority of Gold Reef’s portfolio and are
effectively like new properties.” He adds that as ongoing development projects are being
funded partly though external debt, the earnings growth should strengthen further going
forward as the subsequent de-gearing impact starts to take effect. In addition, the group
will benefit further from the positive impact of the Theme Park’s revitalisation
programme.

Gold Reef continues to trade under cautionary, pending an expected announcement by the
consortium of a firm intention to acquire Gold Reef at R34,00 a share. Gold Reef shares
closed yesterday at R 30,75.

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