Performance from Gold Reef Resorts up despite tough trading conditions
27 August 2009

Gaming and Entertainment Group, Gold Reef Resorts, today announced its results for the six months ended 30 June 2009.

The Group produced a positive set of results compared to the same period last year with a particularly strong performance in Gauteng. Total revenue was up 3% to R1.1bn while earnings before interest, tax, depreciation, amortisation and rentals (EBITDAR) increased by 4% to R410m on the back of an active focus on cost controls. Cash flows also remained strong with cash generated from operations of R406m.

Commenting on the results, Steven Joffe, CEO of Gold Reef Resorts, said: “We are delighted with these results which were achieved despite a deterioration in footfall as consumers continued to feel the pressure of high interest rates and the inflationary environment. In particular we are pleased with the performance in Gauteng which managed to grow its market share from 24,5% to 25,6%.”

With the phased opening of Silverstar Casino completed by September last year, the markets for Silverstar Casino and Gold Reef City Casino have now stabilised. Revenue at Gold Reef City increased 2% with Silverstar Casino up 12%. Going forward, plans are to leverage each casino’s strong market position with joint marketing promotions.

The theatre performance showed a marked improvement with losses substantially reduced from R14m to R5m following a successful change in its production mix. Trading at the Theme Park was adversely affected by difficult economic conditions. A refurbishment of the hotel has recently commenced.

All properties within the group will be recently opened or newly refurbished by the end of 2009. The Garden Route Casino in the Western Cape is to undergo a major refurbishment, while the current refurbishment at the Golden Horse Casino in Kwazulu-Natal is expected to be completed on budget within the current quarter. Goldfields Casino in the Free State is expected to benefit from an upgrade to the adjacent shopping complex. In addition, the company is also embarking on the conversion of all remaining properties to smart card gaming, which should be completed in the first half of 2010.

The group’s balance sheet is strong with a conservative level of gearing which will see Gold Reef well positioned to pursue other initiatives within its current casino portfolio. Overall net external debt amounted to R1,3bn on 30 June 2009, comprising mainly Silverstar Casino’s debt of R1.2bn, which peaked in the final quarter of 2008 and is repayable over 10 years. Three of the company’s interest rate hedges have expired after period end with a further one due to expire in November 2009.

In conclusion, Joffe commented: “While we have not yet seen any uptick in consumer activity, which remains subdued, Gold Reef is well placed to benefit from an improvement in economic conditions. Going forward our priorities will remain focused on cost controls and enhancing our current strong portfolio of casinos.”

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