ANNUAL REPORT 2010 - d2qk001qea2413.cloudfront.net · ANNUAL REPORT 2010. CONTENTS 01 / Definitions...

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ANNUAL REPORT 2010

CONTENTS

01 / Definitions

03 / 9-yearReview

04 / GoldReefResorts’InvestmentPortfolio

05 / Directorate

08 / Chairman’sReport

11 / ChiefExecutiveOfficer’sReport

14 / CorporateGovernanceReport

18 / RemunerationReport

26 / AnnualFinancialStatements

114/ AnalysisofShareholders

116/ Shareholders’Diary

117/ CorporateInformation

118/ NoticeofAnnualGeneralMeeting

122/ FormofProxy(attached)

124/ AnnexureA:ChangeofCompanyname

126/ AnnexureA:FormofSurrender(attached)

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“Adjusted EBITDAR”“Adjusted HEPS”

“AGM”“Akani Egoli”

“Akani Egoli Management”“Akani Leisure Investment Casino Management”

“Akani Leisure Goldfields Investments”“Akani Leisure Investments” or “ALI”

“Akani Leisure Investment Hotels Management”“Akani Leisure Msunduzi Investments”

“Akani Leisure Silverstar Holdings”“Akani Msunduzi” or “Golden Horse Casino”

“Akani Msunduzi Management”“Aldiss Investments”“B-BBEE” or “BEE”

“the Board”“CAGR”“capex”“CASA”“CEO”“CFO”“CGT”

“Competition Authorities”

“COO”“CSDP”

“CSI”“EBITDAR”

“EPS”“Exchange Agreement”

“FEC”“FIFO”

“Gambling Board”

“Garden Route Casino”“GGR”

“Goldfields Casino”

“Gold Reef ” or “the Company” or “GRR”“Gold Reef City Theme Park” or “Theme Park”

“Gold Reef Management”“Gold Reef Resorts Training Institute”

or “Training Institute”

Adjusted earnings before interest, tax, depreciation, amortisation and rentalsAdjusted headline earnings per shareAnnual General MeetingAkani Egoli (Pty) Limited (which operates Gold Reef City Casino and Theme Park) and its subsidiariesAkani Egoli Management (Pty) LimitedAkani Leisure Investment Casino Management (Pty) Limited ( formerly Akani Leisure Casinos (Pty) Limited)Akani Leisure Goldfields Investments (Pty) LimitedAkani Leisure Investments (Pty) LimitedAkani Leisure Investment Hotels Management (Pty) LimitedAkani Leisure Msunduzi Investments (Pty) LimitedAkani Leisure Silverstar Holdings (Pty) LimitedAkani Msunduzi (Pty) Limited (which operates Golden Horse Casino)Akani Msunduzi Management (Pty) LimitedAldiss Investments (Pty) LimitedBroad-based black economic empowerment or black economic empowermentThe Board of directors of Gold ReefCompound Annual Growth RateCapital expenditureCasino Association of South AfricaChief Executive OfficerChief Financial OfficerCapital Gains TaxCollectively, the Competition Commission, the Competition Tribunal and/or the Competition Appeal Court, as the case may beChief Operating OfficerCentral Securities Depository ParticipantCorporate Social InvestmentEarnings before interest, tax, depreciation, amortisation and rentalsEarnings per shareThe written agreement entered into between Gold Reef, Tsogo, SABSA Holdings(Pty) Ltd, Hosken Consolidated Investments Ltd, Tsogo Investment HoldingCompany (Pty) Ltd and Tsogo Sun Gaming (Pty) Ltd dated Wednesday,17 February 2010 (as amended on Thursday, 1 April 2010) which agreement setsout the terms and conditions and governs, inter alia, the implementation of theproposed transactionForward exchange contractFirst in first outCollectively, the Eastern Cape Gambling and Betting Board, the Free State Gambling and Racing Board, the Gauteng Gambling Board, the KwaZulu-Natal Gambling Board, the Western Cape Gambling and Racing Board and the Mpumalanga Gambling BoardGarden Route Casino (Pty) Limited (which operates Garden Route Casino)Gross Gaming RevenueGoldfields Casino and Entertainment Centre (Pty) Limited (which operates Goldfields Casino)Gold Reef Resorts LimitedGold Reef City Theme Park (Pty) Limited and its subsidiariesGold Reef Management (Pty) LimitedGold Reef Resorts Training Institute (Pty) Limited

DEFINITIONS

02

“Gold Reef shareholders”

“the Group”“HCI”

“HEPS”“HR”“IAS”

“IASB”“IFRIC”

“IFRS”“Indol” or “Masa Casino”

“Inkonka Investments”“ISIN”

“JIBAR”“JSE”

“King III Report”“LTIP”

“Lukhanji Leisure” or “Queens Casino”“Mogale Silverstar Holdings”

“the prior year”“NAV”

“Newshelf 786”“NRGP”“NTAV”

“Richard Moloko Consortium”“Richard Moloko Consortium Holdings”

“SA”“SABM”

“SABSA”“SARS”“SENS”

“Service Agreements”

“SIC”“Silverstar Casino”

“STC”“Tanglepark Trading”

“TIH” or “Tsogo Investment”“Tsogo Sun”

“Tsogo Sun Expansion”“Tsogo Sun Gaming”

“Tsogo Group”“UK”“VAT”

“VWAP”“West Coast Leisure” or “Mykonos Casino”

“the year”

Registered holders of Gold Reef shares, including certificated shareholders,dematerialised shareholders with own name registration and dematerialisedshareholders through a Central Securities Depository Participant or brokerGold Reef Resorts Limited and its subsidiaries and associateHosken Consolidated Investments LimitedHeadline earnings per shareHuman ResourcesInternational Accounting StandardsInternational Accounting Standards BoardInternational Financial Reporting Interpretations CommitteeInternational Financial Reporting StandardsIndol (Pty) Limited (which operates Masa Casino) Inkonka Investments (Pty) LimitedInternational Securities Identification NumberJohannesburg Inter-bank Agreed RateJSE LimitedThe King Report on Corporate Governance for South Africa 2009Long-term Incentive PlanLukhanji Leisure (Pty) Limited (which operates Queens Casino & Hotel)Mogale Silverstar Holdings (Pty) LimitedGold Reef ’s financial year ended 31 December 2009Net Asset ValueNewshelf 786 (Pty) LimitedNational Responsible Gambling ProgrammeNet Tangible Asset ValueRichard Moloko Consortium (Pty) LimitedRichard Moloko Consortium Holdings (Pty) LimitedSouth AfricaSABMiller plcSABSA Holdings (Pty) LimitedSouth African Revenue ServicesThe Securities Exchange News Service of the JSEThe service agreements entered into by S B Joffe, J S Friedman, C Neuberger and T M Sadiki during August 2009 and amendment in February 2010Standing Interpretations CommitteeSilverstar Casino (Pty) Limited (which operates Silverstar Casino) and its subsidiariesSecondary Tax on CompaniesTanglepark Trading (Pty) LimitedTsogo Investment Holding Company (Pty) Limited Tsogo Sun Holdings (Pty) LimitedTsogo Sun Expansion No.1 (Pty) Limited (previously Main Street 581 (Pty) Limited)Tsogo Sun Gaming (Pty) LimitedTsogo Sun, its subsidiaries and associates from time to time;United KingdomValue Added TaxVolume Weighted Average PriceWest Coast Leisure (Pty) Limited (which operates Mykonos Casino)Gold Reef ’s financial year under review ended 31 December 2010

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2010 2009 2008 2007 2006 2005 2004 2003 2002

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

9-YEARREVIEW

INCOMESTATEMENTRevenue 2210872 2229230 2196735 1701518 1517113 1165422 1056683 903903 787125EBITDARorAdjustedEBITDAR 823253 883619 903550 764411 623658 488091 442193 349020 308515Operatingprofit 576754 691170 704834 413682 506500 387310 351579 259230 222048Netfinancecosts 114562 132358 133904 22454 25003 116 4700 31070 50879Attributableprofitfortheyear 280964 360630 357833 145814 254312 230732 192208 125069 101357Headlineearnings 281101 363210 357665 183878 259762 209494 185879 131431 107437Numberofsharesinissue(000) 292344 291990 291990 291990 220603 220603 220003 217860 213542Weightedaveragenumberofshares(000) 276487 275291 274006 238388 203961 205260 203938 202031 213542EPS(cents) 101,6 131,0 130,6 61,2 124,7 112,4 94,2 61,9 47,5HEPSorAdjustedHEPS(cents) 108,8 126,9 136,8 151,5 127,4 102,1 91,1 65,1 50,3EBITDARorAdjustedEBITDARpershare(cents) 297,8 321,0 329,8 320,7 305,8 237,8 216,8 172,8 144,5Dividendpershare(cents) – 65,0 65,0 65,0 55,0 51,0 48,0 27,0 15,0Specialdividendpershare(cents) – – – 35,0 – – – – – BAlANCEShEET Interestbearingborrowings 1324873 1511927 1694800 1448620 471297 60682 56698 203482 365284Totalliabilities 1628030 1780699 1968998 1752195 825241 257007 247522 353418 461295Netcashandcashequivalents 420086 440073 442998 316596 62722 109362 104604 65791 153365Totalassets 4426294 4456650 4422943 4154649 2210385 1396157 1309054 1239603 1281178 FINANCIAlRATIOS Returnonequity(%) 10,2 13,7 14,8 6,2 21,4 22,1 20,6 15,3 15,4Gearing(%) 48,1 57,5 70,3 61,1 39,7 5,8 6,1 24,9 26,0NetDebt:EBITDAR(times) 1,1 1,2 1,4 1,5 0,7 (0,1) (0,1) 0,4 0,7Interestcover(times) 5,0 5,2 5,3 18,4 20,3 N/A 73,7 8,3 4,4Dividendcover(times) – 2,0 2,1 2,3 2,3 2,0 2,0 2,4 3,4NAVpershare(cents) 995,6 955,9 880,0 994,2 582,6 508,0 456,5 401,7 356,7NTAVpershare(cents) 568,0 525,6 446,8 495,3 350,8 442,2 441,0 362,4 312,1

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INVESTMENTPORTFOlIO

CASINOINTERESTS GOLDREEFMANAGEMENT

100%INAKANIEGOLIINCORPORATINGGold Reef City Casino & Theme ParkJohannesburg, Gauteng

100%INAKANIMSUNDUZIINCORPORATINGGolden Horse CasinoPietermaritzburg, KwaZulu-Natal

70,36%INWESTCOASTLEISUREINCORPORATINGMykonos CasinoLangebaan, Western Cape

85%INGARDENROUTECASINOINCORPORATINGGarden Route CasinoMossel Bay, Western Cape

100%INGOLDFIELDSCASINOINCORPORATINGGoldfields CasinoWelkom, Free State

100%INSILVERSTARCASINOINCORPORATINGSilverstar CasinoWest Rand, Gauteng

25,10%INLUKHANJILEISUREINCORPORATINGQueens CasinoQueenstown, Eastern Cape

100%OFMANAGEMENTCONTRACTFOR:Gold Reef City CasinoGold Reef City Theme ParkGolden Horse CasinoMykonos CasinoGarden Route CasinoGoldfields Casino

55%OFMANAGEMENTCONTRACTFORQueens Casino

(NomanagementcontractexistsforSilverstarCasino)

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DIRECTORATE

JAMABUZA(53)Chief Executive Officer

JACOPElYN(60)BA(honsB.Proc)

Chairman of the Board, Non-executive director

and a member of the Remuneration Committee

MNVONAUlOCK(37)CA(SA)

Chief Financial Officer

Jabu Mabuza was appointed Chief Executive of Tsogo Sun in 2006. Jabu joined theTsogoSunGroup in1995 fromSouthAfricanBrewerieswherehehadservedasGroupAdvancementManager foraperiodofthreeyearsandwasapartoftheteamassembledtobid foranddevelopthegroup’scasinooperationsunder thenewcasinodispensation.Jabuhashelddirectorships forvarious companies including:AmalgamatedRetailsLtd.,AssociatedFurnitureCompaniesLtd,BoymansLtd,HomeLoansGuaranteeCompany,MarconiCommunications,AmalgamatedBanksofSouthernAfrica,OKBazaars,AfricanRenaissanceHoldingsandAmalgamatedBeverageIndustriesLtd.JabuservedasChairmanofMpumalangaDevelopmentCorporation,FutureBankLtd,andwasChiefExecutiveoftheSouthAfricanBlackTaxiAssociationandChiefExecutiveoftheFoundationforAfricanBusiness and Consumer Services. Jabu has also served as Chairman of the MarketingFederationofSouthernAfrica.JabuhasservedasChairmanoftheCasinoAssociationofSouthAfrica,and iscurrentlyChairmanoftheSouthAfricanTourismBoard.

JohnCopelynjoinedHCIasChiefExecutiveOfficerin1997.Hewasgeneralsecretaryofvariousunionsintheclothingandtextileindustryfrom1974beforebecomingamemberofparliamentin1994.Heholdsvariousdirectorshipsandisnon-executivechairmanofe.tv.

MarcelvonAulockservedhisarticlesatPricewaterhouseCoopers,wherehespecialisedinthehospitalityindustry.HejoinedtheSouthernSunGroupasGroupFinancialManagerin1999,apositionhehelduntil2004,whenhewaspromotedtothepositionofGroupStrategicPlanningDirectoroftheTsogoSunGroup,responsibleforallcorporatefinanceactivities of the group, both local and as part of the group’s international expansionactivities.In2009,hewasappointedasChiefFinancialOfficerofthegroup,withresponsibilityfortheoverallfinancialfunction,riskmanagement,treasuryandcorporatefinanceactivities.

FOllOWINGThEMERGEROFGOlDREEFANDTSOGOSUN,ThEFOllOWINGAPPOINTMENTSTOThEBOARDWEREEFFECTIVEFROM24FEBRUARY2011ANDCONSEQUENTlYThEBOARDISCONSTITUTEDASFOllOWS:

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RACOllINS(49)

BCom(legal),BComhons(Marketing),hDipTaxlaw,

hDipCompanylawManaging Director – Tsogo Sun Gaming

RobCollinswasappointedManagingDirectorofTsogoSunGamingin2006.HejoinedInterleisureLtdasGroupTaxandLegalAdvisorafterleavingDeloitte&Touchein1991.In1993,hemovedintotheentertainmentarenaasDistributionDirectorofSter-KinekorPicturesandwasappointedChiefExecutiveOfficerofSter-KinekorPicturesin1995.In1998hewasappointedChiefExecutiveOfficerofPrimovie(Pty)Ltd,headinguptheSter-Kinekor Group in Southern Africa. In January 2000, Rob was appointed as ChiefExecutive Officer of MGM Grand South Africa, which provided casino managementservices toTsogoSun.On the acquisitionof theMGMGrandmanagement contract byTsogoSun,hewasappointedChiefOperatingOfficerofTsogoSunGaming,apositionheoccupieduntil2006whenhewasappointedManagingDirector.

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GIWOOD(41)CA(SA)

Managing Director – Southern Sun Hotels

Graham Wood was appointed Managing Director of Southern Sun Hotels South Africain2008.Grahambeganhiscareerinthehospitalityindustryin1996whenhewashiredas aproject accountant at SunCityResort. Successivepositionshave includedFinancialManager – Operations Sun City Resort, Chief Financial Officer – Sun City Resort,RegionalFinancialManager–SunInternationalResortsandDirectorofOperations–SunCityResort.

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MJAGOlDING(50)BA(hons)

Non-executive director

JMKAhN(71)BA(law),MBA

DCom(hc),SOENon-executive director

EAGMACKAY(61)BSc(Eng),BCom

Non-executive director and member

of the Remuneration Committee

VEMPhANDE(52)Elec.Eng.(dip)


AVANDERVEEN(40)CA(SA),CFA


MIWYMAN(64)CA(SA)


Marcel Golding joined HCI as Chairman in 1997. Prior to this he was a member ofparliamentandDeputyGeneralSecretaryof theNationalUnionofMineworkers.He isalso Chief Executive Officer of e.tv, Chairman of Johnnic Holdings Limited and holdsdirectorshipsinnumerouscompanies.

MeyerKahnjoinedtheSABGroupin1966andoccupiedexecutivepositionsinanumberofthegroup’sformerretailinterestsbeforebeingappointedtotheBoardofSABLtdin1981.HewasappointedGroupManagingDirectorin1983andExecutiveChairmanin1990.In1997,hewassecondedfull-timetotheSouthAfricanPoliceServiceasitsChiefExecutive,servingfortwoandahalfyears.HewasappointedChairmanofSouthAfricanBreweriesplcuponitslistingontheLondonStockExchangein1999.Amongotherawards,heholdsanhonorarydoctorateincommercefromtheUniversityofPretoriaandwasawarded“TheSouthAfricanPoliceStarforOutstandingService”in2000.

GrahamMackayjoinedtheSABGroupin1978andhasheldanumberofseniorpositionsin the group, including Executive Chairman of the beer business in South Africa. HewasappointedGroupManagingDirector in1997andChiefExecutiveofSouthAfricanBreweriesplcupon its listingon theLondonStockExchange in1999.He is theSeniorIndependentnon-executivedirectorofReckittBenckiserGroupplcandadirectorofPhilipMorrisInternationalInc.

EliasMphandewasGroupChiefExecutiveofVukaniGamingCorporation(Pty)Ltdbeforehisretirementlastyear.HewasappointedtotheBoardofHCIasnon-executivedirectorinJanuary1997,andservedasanexecutivedirectorofHCIfromOctober2004toJune2009.HeisChairmanofGoldenArrowBusServices(Pty)Limitedandholdsdirectorshipsine.tv,CloverSAandJohnnicHoldingsLimited.

AndrevanderVeenjoinedHCIin2004aftertheiracquisitionofMettle.HewasappointedChiefExecutiveOfficerofJohnnicHoldingsLimitedinNovember2006,apositionhestillholds.

MalcolmWymanjoinedtheSABGroupin1986,andjoinedtheBoardasGroupCorporateFinance Director in 1990. He was appointed to the Board of South African Breweriesplcupon its listingon theLondonStockExchange in1999.HebecameChiefFinancialOfficerin2001,withresponsibilityforthegroup’sfinanceoperations,corporatefinanceanddevelopment,andgroupstrategy.PriortojoiningSAB,hewasanexecutivedirectorofUALMerchantBank,SouthAfrica.

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RGTOMlINSON(48)BachelorofCommerce,higher

DiplomainPersonnelManagement,StanfordExecutiveProgrammeIndependent non-executive director, Lead

independent director, Chairman of the Audit

and Risk Committee and a member of the

Remuneration Committee

In1985,RexTomlinsonjoinedShell&BPSouthAfricanPetroleumRefineriesasPersonnelProjectsManager.In1986,RexreceivedabursaryfromCGSmithSugar(BarlowRandGroup)todoanhonourslevelprogrammeattheWitsBusinessSchoolwhichhereceivedcum laude. Within the Barlow Rand Group of Companies, Rex held various HumanResource Managerial and Board positions. Rex agreed to join the Liberty Group in2004 to assist the then Group Chief Executive with the re-engineering of the businessandwasappointedDeputyChiefExecutiveafter12monthsandtotheLibertyHoldingsBoard in 2006. During his time at Liberty, Rex was responsible for Human Resourcesand Stakeholder Management, Information Technology, Corporate Benefits, LibertyProperties,RestofAfrica,Marketing,SalesandDistribution,LibertyHealth,CorporateFinance,StrategicInitiativesandSTANLIB.

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JGNGCOBO(60)Independent non-executive director

and member of the Audit and Risk Committee

and a member of the Remuneration Committee

PJVENISON(69)BA

Independent non-executive director,

Chairman of the Remuneration Committee

and member of the Audit and Risk Committee

JabuNgcobowas the regional secretary forAfricaof the InternationalTextileGarmentandLeatherWorkersFederation.PriortothisappointmentheheldthepositionofGeneralSecretaryoftheSouthernAfricanClothingandTextileWorkersUnionforsixyears.JabuwasappointedtotheBoardofHCIasanon-executivedirectorinOctober2004.

Peterhasover45yearsofexperienceinthehotelandcasinoindustry,havingheldanumberofseniorpositionsatvariousinternationalgroups,includingtheHotelCorpofAmerica,Southern Sun, Sun International and Kerzner International. He was appointed to theBoardofTsogoSunHoldingsasanindependentnon-executivedirector in2003,holdsanon-executivedirectorship inMAFProperties inDubaiand isa foundingtrusteeoftheInternationalGolfforYouthCharity,basedintheUKfortheDukeofEdinburgh.PetercurrentlyworksasanindependentHotelandCasinoconsultantadvisingonvariousprojectsaroundtheworld.Hehaswrittenthreebooksforhotelschoolsandtravelledtoover120countries.

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SBJoffe(Chief Executive Officer)

JSFriedman(Chief Financial Officer)

CNeuberger(Chief Operating Officer)

TMSadiki(Human Resources Director)

PCMSeptember(Non-executive director)

PVallet(Non-executive director)

ENBanda(Chairman)

MGDiliza(Independent non-executive director)

JCFarrant(Independent non-executive director)

MZKrok(Independent non-executive director)

ZJMatlala(Independent non-executive director)

SKrok(Alternate director)

ThEFOllOWINGDIRECTORSRESIGNEDFROMThEBOARD

WIThEFFECTFROM24FEBRUARY2011:

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GChAIRMAN’S

REPORT

Likewise I express the hope that its shareholders will appreciatethe opportunity to benefit from its strong earnings as well as thegeographicalandmarketsegmentdiversification.

ThEBOARDIwouldliketotaketheopportunitytothanktheoutgoingBoardoftheCompanywhosawitthroughtheyearunderreviewanduntilthemerger’scompletion.MostoftheindividualsonthenewBoardwhichtookofficeon24February2011,servedontheBoardofTsogoSunprior to themerger and this shouldprovide theGroupwith strongcontinuity.Iwouldinparticularliketowelcometwonewlyappointedindependentdirectors,JabuNgcoboandRexTomlinson,whojointheGroupforthefirsttimeasBoardmembers.MrTomlinsonhasbeenappointedastheGroup’sleadindependentdirectorinviewofthefactthatIamanexecutivedirectoroftheGroup’slargestshareholder.

FINANCIAlhIGhlIGhTSOF2010WhilethemergerhaslargelyalteredtheGroupfrom2011,wereportonthefinancialpositionoftheGrouppriortothiswatershedevent.Theyear2010sawthecontinuationofthedifficultmacroeconomicconditionssparkedbyconditionsofworldrecessionthathaveplaguedallbusinessoverthelasttwoyears.

Added to that, the Group had to endure the uncertainties of theprotractedregulatoryapprovalprocessforthemerger.InthatcontexttheAdjustedHEPSof108,8centsweresatisfactoryalbeitsome14,3%lowerthanthepreviousyear.Theunderlyingbusinessremainedstrongwithgoodcostcontrol,strongcashflowsandaconsequentdecreaseinoveralldebt.

KEYREGUlATORYChAllENGESFACEDBYThEGROUPThe combinedTsogo Sun and Gold Reef Group has the SouthernAfricanClothingandTextileWorkersUnionasitslargestshareholdervia theHCI41%shareholding.BothTsogoSunandGoldReefhavebeen committed to empowerment since the launch of the Gamingindustry in South Africa and the combined Group reaffirms itscommitmentinthisregard.

The key businesses making up the combined entity have achievedenviableratingsonB-BBEE.TsogoSunGamingwasawardedaLevel2contributorstatusin2010,whilstGoldReefandSouthernSunHotelswereawardedLevel3respectively.

Despitetheseachievementsareasofimprovementhavebeenidentifiedand focus will be placed on these areas in order to ensure that theGroup continues to enhance its empowerment profile.These areasinclude improving the representation of previously disadvantagedindividuals in management with more emphasis placed on black

old Reef Resorts, currently being renamedTsogoSunHoldingsLtd,wasfundamentallychangedbythemergerwithTsogoSun.

Theagreementforthemergerwasconcludedduringtheyearunderreviewandattendingtotheplethoraofregulatoryandotherapprovalsneededforitsimplementation,includingJSE,shareholder,GamblingBoard and the Competition Authorities dominated the Company’sactivity throughout 2010 and early 2011.The merger was finallyimplementedon24February2011.

ThemergerhastransformedtheCompanyintothepremiergamingandhotelcompanyinSouthAfricawithsome94hotelsand14casinosundermanagement.Themerger increased the sizeof theCompanyapproximatelyfourfoldbringingittowithinahair’sbreadthofbeingoneofthe40largestcorporationsontheJSE.

Theresponsibilitiesofbeingaleadingcorporationinthesesectorsaresignificant. Our Company directly employs over 13 000 employeesin itsoperations,besides indirectlyprovidingemployment for some5000furtheremployees.

Southern Sun Hotels played a central role in guaranteeingaccommodationfortouristsvisitingthecountryduringtheFIFA2010SoccerWorldCupandwereinfactacentralpartoftheplatformforthe successful bid itself.Likewise,our casinos are a keypartof therevenuesofseveralregionsinthecountry.

NotonlyistheGroupanenormousgeneratoroftaxesbutitislikewisealeaderinthestandardsofresponsiblegambling,amajorcontributortothedevelopmentofentertainmentinseveralurbancommunitiesaroundthecountry,creatingconventionandconferencingspaces,amajornationalmuseum,theatres,cinemas,largenumbersofrestaurantsandathemepark,andmorerecentlydevelopingpremiumofficeaccommodation.

Its property portfolio is one of a handful of the largest propertyportfoliosinthecountry.Ithasemergedasoneoftwoorthreenationalfrontrunners generating a significant capital base for empowermentshareholders as well as assisting diverse BEE groupings to grow asminoritypartnersinvariouscasinosaroundthecountry.

It is my privilege to be able to congratulate the executive teamsand major shareholder groups that succeeded in achieving thismergerandtoexpressthehopethattheGroupwillmeetthespecialresponsibilitiesincumbentuponit.Moreimportantlythananyotherpieceofthemergerpuzzle,IhopeallitsemployeesareinspiredbytheGroupandgainfromthediverseopportunitiessuchamergerofferseachandeveryonetobuildtheircareerstherein.

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APPRECIATIONJabuMabuzahasannouncedhisintentiontoretirefromhisexecutiveresponsibilitiesasCEOattheendofSeptember2011.JabuhasplayedanirreplaceableroleinbringingtheCompanyandthegamingindustryasawholetoitscurrentposition,bothasManagingDirectorofTsogoSunGamingformorethanadecadeandCEOoftheTsogoSunGroupoverthelastfiveyears.IamdelightedthatJabuhasagreedtoretainhisassociationwiththeCompanyandlookforwardtohiscontinuedcontributioninhisnewrole.

PeterVenisonhasindicatedthathewillberetiringfromtheBoardwitheffectfromtheAGMandsteppingdownasamemberoftheAuditandRiskCommittee and theRemunerationCommittee.PeterhasbeenassociatedwithTsogoSunsince2003asanindependentnon-executivedirectorandwethankhimforhisadviceandcounselovertheyears.

It is intended thatYunis Shaik will be joining the Board with effectfromtheAGMandwillserveontheAuditandRiskCommitteeaswellasChairmanoftheRemunerationCommittee.

Finally I would like to extend my appreciation to the directors ofSABMiller plc who have been solid partners in theTsogo businesssince its inceptionandhaveprovideduntold support,bothfinancialandintellectualindevelopingtheGrouptowhatitistoday.

JOhNCOPElYNChairman of the Board

women,creatingemploymentforthedisabled,focussedallocationoftrainingspendinordertoimproveskillsdevelopmentandincreasingprocurementfromempoweredsmallbusinesses.

WithoutdetractingfromourcommitmenttoB-BBEE,theGroupisconcernedaboutandengagingwiththerelevantregulatoryauthoritiesonproposalstomaketheachievementofLevel2aconditionoflicenceinrelationtoanumberofcasinoproperties.

EmpowermentisabusinessethosandalongtermcommitmenttotheupliftmentofpreviouslydisadvantagedSouthAfricans.Difficultiesinrelationtothistargetlevelareheightenedbythefactthatcompliancetargets under the code are significantly increased with effect from2012andmaywellbefurtheradjustedbyGovernmentfromtimetotime.LessthantwopercentofJSElistedcompanieshaveachievedaLevel2B-BBEEstatusandeffortstocriminalisea failuretoachievesuchanexceptionallyhightargetby2015isunrealistic.

Weareintensivelyengagedwithregulatorstoensureamorerealisticstandardofcompliancebutregret toadvisewehavecurrentlybeenobligedtocommencelitigationwithoneregionalgamingboardwherewe have been singularly unsuccessful in this endeavour.We remainconfident that sense will ultimately prevail in the effort to procurereasonablestandardsofcompliancethatwillnotadverselyaffectthebusiness.

suchsuch

wewe havehave beenbeen singularlysingularlyconfidentconfident sensesense willwillreasonablereasonable ofof compliancecompliancebusiness.business.

standardstandardstandardstandardtoto

singularlysingularlyconfidentconfidentreasonablereasonable standardsstandards compliancecompliancebusiness.business.business.business.

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Silverstar CasinoWest Rand, Gauteng

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TChIEFEXECUTIVEOFFICER’SREPORT

VATandcostsattributabletocorporateactivity)increasingby5,9%fromthepreviousyear.Themaincontributorstothisincreasebeingdepreciation,utilityandemployeecosts.

Following the Group refurbishment cycle, which included capitalexpenditure at Golden Horse Casino and theTheme Park in thecurrent financial year, depreciation and amortisation increased by11,0% to R205,6 million. Employee costs increased by 8,8% toR521,6million.

Legal and corporate advisory fees include non-recurring items ofR21,7 million relating to the merger withTsogo as well as legalproceedingsrelatingtotheCarteBlanchedispute.

ThedeclineinHEPSof22,9%to101,7centsisinlinewiththehalf-year performance and is due to the trading circumstances outlinedabove.Excludingtheeffectsofthenon-recurringlegalandadvisorycosts,AdjustedHEPSfell14,3%to108,8cents.

Net finance costs decreased by R17,8 million to R114,6 million asa result of the combination of declining interest rates and net debtreduction of R167,1 million to R904,8 million. Cash flows in theGroupremainedstrong,generatingnetcashfromoperatingactivitiesofR545,5millionfortheyear,priortothepaymentofdividends.

TotalcapexfortheyearwasR188,4million,ofwhichR130,5millionwasoperationalinordertomaintainthestandardsoftheproperties.ThedevelopmentalcapexofR57,9millionwaslargelyinrelationtotheGoldenHorseCasinorefurbishmentwhichwascompletedduringthe2010financialyear.

GautengTotalGrossGamingRevenue(“GGR”)inGautengincreasedby1,1%fromthepreviouscomparativeperiodwiththemajorityofthegrowthattributabletoslotsrevenue.

GoldReefCityTotal revenue at Gold Reef City declined 3,6% to R925,2 millionwhichisinlinewiththedeclineinGGRfollowingthemarkedabsenceof high roller activity during the first half of the year.As a result,AdjustedEBITDARfellby9,0%toR330,1millionandtheAdjustedEBITDARmarginreducedto35,7%from37,8%achievedin2009.

ThehotelrefurbishmentwassuccessfullycompletedwithtotalcapexofR16,3millionincurredthisyear.Thecontributionofhotelrevenueinthefourthquarterof2010resultedinThemeParkrevenueincreasingby 11,2% from the previous year to R93,1 million. Excluding theeffectsoftheonce-offlegalcostsrelatingtoCarteBlanche,Adjusted

he conclusion of the merger ofTsogoSun and Gold Reef represents a significantmilestoneinthehistoryofboththesegroups.

The transaction has two distinct components, being the acquisitionandintegrationoftheGoldReefResortscasinosintotheTsogoSunGamingportfolio,aspartofthegrowthstrategypursuedbyTsogoSunoverthepastfewyears;andtheeffectivelistingoftheTsogoSunassetsviatheGoldReefvehicle.

Current management focus is on bedding down the integration ofGoldReef.HoweversignificantopportunitiesstillexistwithinSouthAfricafornewcasinoandhoteldevelopments,industryconsolidationandre-investment inourportfolio.TheGroup iswellpositionedtodeliver both organic and non-organic growth in the coming yearsthroughthediligentmanagementofitsunparalleledassetbase.

Shareholdersareremindedthatthefinancialinformationcontainedinthese consolidatedfinancial statements relate toGoldReefprior tothemerger.

OPERATIONSAs expected, the difficult trading conditions persisted in 2010althoughthereweresignsofeconomicimprovementduringthefinalquarter, with trading levels at most Group casinos showing signsof improvement. Overall the year was challenging with consumerdisposable income being impacted by high levels of household debtandincreasedutilityandmunicipalcharges.Despitethis,therecentimprovement in retail spending statistics is indicative of increasingconsumer confidence and potentially further economic recovery inthemediumterm.

With these challenging economic conditions,GoldReefperformedwell although Gold Reef City was particularly impacted in tablesrevenue, which fell significantly in the Privé leading to tables windecreasingby21,6%incomparisontothepriorcomparativeperiod.Solidperformancesbyallunitsinthefourthquarterof2010resultedintotalGrouprevenuesremainingflatatR2,2billion,withfoodandbeveragesrevenuesincreasingby7,4%andhotelrevenuesup56,1%followingthesuccessfulre-launchoftheGoldReefCityThemeParkHotelduringSeptember2010.AdjustedEBITDARdecreased6,8%to R823,3 million as a result of the operational gearing within thebusiness,arisingfromfixedcapacityandaconsequentialinflexiblecostbase.TheAdjustedEBITDARmargindeclinedto37,2%from39,6%inthepriorcomparativeperiod.

The Company continued its focus on containing costs throughouttheGroupwith total operating expenses (excludingGaming levies,

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choosing to travel, Garden Route Casino’s revenue levels suffered.Totalrevenuefell4,4%toR152,9millionandAdjustedEBITDARfell10,2% toR64,2million resulting in anAdjustedEBITDARmarginof42,0%.

FreeStateGoldfields CasinoRevenueatGoldfieldsCasinoincreasedmarginallytoR120,3million.The cost impact of introducing smart-card gaming causedAdjustedEBITDAR to decline by 2,6% to R50,5 million resulting in anAdjustedEBITDARmarginof42,0%.

TheadjacentshoppingcentredevelopmentwassuccessfullycompletedandopenedfortradeduringOctober2010.Eventhoughfootfalltothe casino has not increased significantly, the centre is expected toattractpatrons fromareas surroundingWelkom,andover time, thiswillhopefullyhaveapositiveimpactonthecasino.

EBITDAR declined by only R0,9 million to R5,8 million. Themajority of the decrease relates to an adjustment in property rateswhichincreasedutilitycostsandisnotexpectedtorecur.

SilverstarCasinoSilverstar Casino’s performance was disappointing notwithstandingthedifficulttradingenvironment,producingGGRgrowthof0,6%incomparisontothegrowthintheGautengmarketof1,1%.ThisunitwasalsoimpactedbyadeclineinPrivéactivity.Inlinewiththisresult,totalrevenueat thecasino increased0,5%toR545,9million.Operatingcosts were well maintained, however cost pressures still resultedin margin erosion and Adjusted EBITDAR decreased by 2,0% toR203,8milliontranslatingtoanAdjustedEBITDARmarginof37,3%.

Total net debt at Silverstar Casino reduced by R107,7 million toR812,0million.

KwaZulu-NatalGolden Horse Casino GGR growth at the casino was in line with the provincial marketgrowth of 4,4%. Revenue of R253,9 million was up 2,4% for theyearwithAdjustedEBITDARdecliningby2,3%toR108,3million.TheAdjustedEBITDARmargincamein2,0pplowerfortheyearat42,7%.

WesternCapeTotalGGRintheWesternCapegrewby1,9%from2009levelsandby4,5%inthesecondhalfof2010,whichisanencouragingsignofeconomicrecoverygiventhatthiswasthefirstprovincetobeimpactedbytheeconomicrecession.

Mykonos CasinoMykonosCasinoperformedwellwithGGRgrowthof4,4%fortheyearexceedingthemarketaverage.Totalrevenueincreasedby3,5%toR118,2millionwiththecasinomaintainingitsAdjustedEBITDARatR46,5million.TheslightdeclineintheAdjustedEBITDARmarginto39,4%wasmainlyduetocostsassociatedwiththeintroductionofsmart-cardgaming.

Garden Route CasinoGardenRouteCasinodidnotbenefitfromthegrowthinthemarketduring the second half of 2010 and in fact experienced its mostchallengingtradingconditionsover thisperiodwithtablesandslotsGGRdecliningby7,8%and8,1%respectively.

ThiscasinoordinarilytradeswellovertheDecemberperiodfollowingan influxofholiday-makers to thearea.Giventhatconsumerswerecautiouswiththeirdisposableincomeoverthefestiveseasonwithfew

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Governmentandtheindustryneedtoguardagainsterosionoftheseachievements through short-term reactions to reduced Gaming taxrevenueandmisinformedpositionsonthesocialillsofgaming.

APPRECIATIONIwouldliketoexpressmyappreciationtotheBoard,executiveandemployeesofbothTsogoSunandGoldReef for thededicationandcommitment shown over the past year in managing the businesses.Any form of corporate action can be unsettling and disruptive toan organisation and the manner in which the businesses withinour organisation have continued to deliver high quality customerexperiencesduringthisperiodisatributetoyourprofessionalism.

After16yearswithTsogoSun,Ihavedecidedthatthetimehascomeforme toretireandhandover thereigns to thenextgenerationofleadership.Accordingly,IwillbesteppingdownasCEOwitheffectfrom30September2011andamdelightedtoannouncethatIwillbereplacedbyMarcelVonAulockwhohasworkedcloselywithmeoverthelastdecadeinthedevelopmentoftheTsogoSunGroup.

JABUMABUZAChief Executive Officer

EasternCapeQueens Casino Queens Casino performed satisfactorily with GGR increasing by4,6%.Totalrevenueincreased3,3%toR53,0millionwhileAdjustedEBITDAR remained flat at R12,4 million.TheAdjusted EBITDARmarginincreasedmarginallyfrom22,7%in2009to23,4%.

STRATEGYANDOPPORTUNITIESThelargestopportunitiesforgrowthinearningswithinthecombinedGroup arises from potential organic growth through increasedconsumer spend on leisure activities and a return to normaliseddemandforhotelaccommodationwithinthecorporatesector.Withaportfolioof14casinosand94hotelsandhighlevelsofoperationalgearing,theGroupiswellplacedtobenefitfromanimprovementingrowthintheSouthAfricaneconomy,shouldthisbeachievedinthemedium-term.

The Group remains alert to the potential for non-organic growththrough additional industry consolidation, the development oracquisition of hotels and the ability to re-invest capital at attractiveratesofreturninourqualityportfolio.

Therearehoweverrisks facingthe industry.Particularlyconcerningareproposalsrelatingtoadditionaltaxesongaming,targetedatboththeoperatorandthecustomer.

TheregulatoryenvironmentinwhichcasinosoperateinSouthAfricahasbeenwelldesignedandisamodelforthedevelopmentofaviable,job-creatingindustryintheworld.SincethenewGamingregulatoryenvironmentwasintroducedin1994,theCasinoindustryhascreatedover27000jobs,investedinexcessofR20billionininfrastructure,aswellasprovidedanenvironmentforthepromotionanddevelopmentofpreviouslyunviableorstrugglingindustriessuchastheatre,cinema,large scale leisure activities,museumsand the like. In this regard, IurgeyoutoreadThe2010SurveyofCasinoEntertainmentinSouthAfrica,availableontheCASAwebsiteatwww.casasa.org.za

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TCORPORATE

GOVERNANCE

RACollins....... ManagingDirector–TsogoSunGamingGIWood.......... ManagingDirector–SouthernSunHotelsMJAGolding.... Non-executivedirectorJMKahn.......... Non-executivedirectorEAGMackay.... Non-executivedirectorVEMphande..... Non-executivedirectorJGNgcobo....... Independentnon-executivedirectorRGTomlinson... Independentnon-executivedirectorAvanderVeen... Non-executivedirectorPJVenison........ Independentnon-executivedirectorMIWyman....... Non-executivedirector

MrPJVenisonintendstoretireattheforthcomingAGManditwillbeproposedthatMrYShaikbeappointedtotheBoardinhisstead.

MrJAMabuzahasannouncedhisintentiontoretireasCEOoftheCompanywitheffectfrom30September2011butwillcontinuetoserveasadirectorof theCompany.MrMabuzawillbereplacedasCEObyMrMNvonAulock.

TheBoardmeetsatleastquarterlywithadditionalmeetingsconvenedwhen necessary. Directors are comprehensively briefed in advanceof Board meetings and are provided with all necessary informationto enable them to discharge their responsibilities. All directorshaveunrestricted access to the advice and servicesof theCompanySecretary and to Company records, information, documents andproperty. Non-executive directors also have unfettered access tomanagement at any time.All directors are entitled, at Gold Reef’sexpense, to seek independent professional advice on any matterspertainingtotheGroupwheretheydeemthistobenecessary.

BOARDPROCESSESOngoingcorporategovernanceeducationThe Company Secretary is responsible for informing directors onanongoingbasisofmajorregulatoryandlegislativedevelopmentsinordertokeeptheBoardabreastofcurrentrequirements.

ConflictofinterestsDirectors are required to disclose at each Board meeting theirshareholding, additional directorships and any potential conflicts ofinteresttotheChairmanandtheCompanySecretary.

SharedealingAGroup-widesharetradingpolicy is inplacewherebyalldirectorsand employees who have access to financial results and other pricesensitiveinformationareprohibitedfromdealinginGoldReefsharesduring‘closedperiods’asdefinedorwhiletheCompanyisoperatingunderacautionaryannouncement.

he directors of the Company arecommittedtothepracticeofgoodcorporate

governance,including,whereapplicabletheprinciplesascontainedinthethirdreportofthe

King Committee on Corporate Governance,KingIII.

TheBoardmonitorscompliancetoensureongoing improvementofoperationalandcorporatepracticesandthattheaffairsoftheGroupareconductedwithtransparencyandintegrity.

The Company utilises consultants with expertise in the corporategovernancefield, inadditionto itsownin-houseexpertise, toassisttheBoard in implementing the required frameworks,processes andprocedurestoadequatelyaddresstherequirementsofKingIIIwhereapplicable.

ThEBOARDChARTERTheBoardisregulatedbyaformalBoardcharter,whichsetsouttheroleoftheBoardandtheresponsibilitiesofthedirectors.TheBoardmaintainsfullandeffectivecontroloverGoldReefandisaccountableand responsible for Gold Reef’s performance.The Board chartercodifiestheBoard’sauthorities,responsibilitiesandprocessesandsetsoutthefiduciarydutiesofthedirectorstotheCompany.Itprovidesthe Board with a mandate to exercise leadership; determine theGroup’svisionandstrategyandmonitoroperationalperformance.

ThEBOARDThemergerofGoldReefandtheTsogoGroup,whichbecameeffectivefrom24February2011,resultedinthereconstitutionoftheBoardofdirectorswhichnowcomprisesfourexecutiveand10non-executivedirectors,withthreebeingindependentnon-executivedirectors.

The composition of the Board is determined by the shareholders’agreementbetween the twomajority shareholdersTIHandSABSA.TheBoard appointed JACopelyn asChairman.MrCopelyn isnotanindependentdirectorandaccordinglyMrRGTomlinsonhasbeenappointedasleadindependentdirector.

TheBoardisstructuredsoastoensurecleardivisionofresponsibilitiesatBoardleveltoensureabalanceofpowerandauthority,suchthatnooneindividualhasunfetteredpowersofdecisionmaking.

The following appointments were made to the Board on24February2011:JACopelyn....... Chairmanandnon-executivedirectorJAMabuza........ ChiefExecutiveOfficerMNvonAulock. ChiefFinancialOfficer

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Additional responsibilities include recommending the appointmentofinternalauditors,recommendingtheappointmentoftheexternalauditors, establishing principles for utilisation of external auditorsfornon-audit services, assessing theperformanceandcredentialsoftheCFOaswell as reviewing theGroup’s compliancewithvariousapplicableActsandcodes.

Subject to overall Board responsibility, the committee is furtherresponsible for risk management. It continually assesses the majorbusiness and operational risks faced by the Group and recommendsand monitors appropriate risk management strategies. Key risks arecontinuallymonitoredandformallyassessedatleasttwiceperannum.Theriskprocessandrationaleusedintheaboveisadequatelydocumented.Inanattempttocombat fraud,whistleblower/crimehot lineshavebeenestablishedandofferthecallersanonymityandconfidentiality.

There are Audit and Risk Committees in place and active at allthe operating subsidiary companies in the Group where externalshareholdersarerepresented.TheexternalauditorsreporttotheAuditandRiskCommitteetoconfirmthattheyhaveremainedindependentfromGoldReefanditssubsidiariesfortheyear.TheAuditandRiskCommittee is satisfied that the auditorshave remained independentthroughouttheyear.Thecommitteeconductsself-evaluationexercisesassetoutinitsCharter.

CompanySecretaryTheroleofCompanySecretary isseenaspivotal ingoodcorporategovernance.TheCompanySecretaryistaskedwithprovidingguidancetodirectorswithregardtodischargingtheirduties.Hemaintainsanopendoorpolicy and is a central sourceofguidance andadviceonethicsandgoodgovernance.

ManagementOperational management is appointed by the Board based on theappropriate skills andexperiencenecessary toperformthe relevantfunctions. Processes have been formalised to promote interactivedialogue and decision-making between management and executivedirectors.This also facilitates the disclosure to the directors of anyconflictorpotentialconflictof interestonthepartofmanagement.TheperformanceofseniormanagersisindependentlyreviewedbytheCompany’sexecutivedirectors.

ACCOUNTINGANDAUDITINGExternalauditGold Reef’s external auditors are responsible for providing anindependent audit opinion on whether the financial statements arefairly presented in compliance with IFRS.The preparation of thefinancial statementsand theeffectiveoperationof internalcontrols,

TheseemployeesareexpresslyinformedwhentheGroupisenteringa‘closed period’ and that dealing in Gold Reef shares during thatperiodisprohibited.Further,directorsareobligedtoobtainwrittenclearancepriortodealinginthesharesoftheCompanyandtoreportanysharedealingstotheCompanySecretarywho,togetherwiththesponsor,ensuresthattheinformationispublishedonSENS.

AnnualGeneralMeetingThe notice for any general meeting of shareholders includes anexplanationofthereasonfor,andtheeffectof,anyproposedspecialresolution.TheCompany’stransfersecretariesattendeachmeetingtoassistwiththerecordingofshareholders’attendanceandtocountthevotes.TheChairmanconfirmsatthemeetingwhetherthevoteswillbecountedbywayofashowofhandsorapoll.

BoardCommitteesAllcommitteeshavesatisfiedtheirresponsibilitiesduringtheyearincompliancewiththeirCharters.Thechairpersonsofthecommitteesor another committee member nominated by them attend theCompany’sAnnualGeneralMeeting.

The key sub-committees of the Board are the Audit and RiskCommittee and the Remuneration Committee.The report of theRemunerationCommitteeissetoutonpage18.

AuditandRiskCommitteeTheAudit and Risk Committee is chaired by an independent non-executivedirector,RGTomlinsonandmembershipcomprisesbothotherindependentnon-executivedirectors.

Thecommitteemeetsthreetimesduringtheyear,whichthedirectorsbelieve is sufficient for thepurposesofdischarging thecommittee’sresponsibilities. Additional special meetings are convened as andwhenrequired.TheCEO,CFO,GroupDirectorofRisk,OutsourcedInternalAudit Manager and external auditors are invited to attendeverymeetingandmanagementmembersattendasrequired.

As set out in its formal Charter theAudit and Risk Committee isresponsible forassistingtheBoard infulfilling itsfiduciaryoversightresponsibilitiesforthefollowing:1. financialreportingprocess;2. systemofriskmanagement;3. systemofinternalcontrols;4. internalauditprocess;5. the annual independent audit of the Company’s and Group’s

financialstatements;and6. engagement of other external audit firms (e.g. for fair and

reasonableopinions).

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integrityandreliabilityofthefinancialstatementsandtosafeguardandmaintainaccountabilityoftheGroup’sassets.

Thesesystemsprovidereasonablebutnotabsoluteassuranceregardingthe safeguarding of assets against unauthorised disposal or use,compliancewithstatutorylawsandregulationsandthemaintenanceofproperaccountingrecordsaswell as theadequacyandreliabilityoffinancial information.Thedirectorshave satisfied themselves thatadequatesystemsofinternalcontrolareinplacetomitigatesignificantrisks identified to an acceptable level. Nothing has come to theirattentiontoindicatethatamaterialbreakdowninthefunctioningofthesesystemswithintheGrouphasoccurredduringtheyear.

TheGroup’ssystemsofinternalcontrolarefurtherdesignedtodetectand minimise significant fraud, potential liability, loss and materialmisstatement.There are inherent limitations to the effectiveness ofany system of internal control, including the possibility of humanerrorandthecircumventionoroverridingofcontrols.Thesystemisthereforedesignedtomanageratherthaneliminateriskoffailureandopportunityrisk.

TheGroup’sriskregisterisupdatedeverysixmonths,ormoreoftenif required, and the reports are submitted to the Audit and RiskCommitteeforreview.TheAuditandRiskCommitteereportstotheBoardwhich is responsible forassessing therisks thatarecontinuallyidentified through the risk management process.Together with theAuditandRiskCommittee,theBoardmonitorstheimplementationoftheappropriateriskmanagementstrategiesandresponsesthroughouttheGroup.

DISClOSURESTATEMENTThe annual report deals adequately with disclosures pertaining tothe annual financial statements, auditors’ responsibility, accountingrecords, internal controls, risk management, accounting policies,adherence to accounting standards, going concern issues andadherencetocodesofgovernance.

PRINCIPlESOFEThICAlCONDUCTCompliancewiththelawWerespectandcomplywith the lawsof thecountries inwhichweoperate.Thisincludescorporatelaws,commonlawaswellasspecificlaws,includingregulationsofallthegamblingboards.Wewillstrivetobeagoodcorporatecitizenofthecountryinwhichwedobusiness.

CompetitionandmarketingWe will respect the rights of competitors, patrons and suppliers.The only competitive advantages we seek are those gained throughsuperiorandinnovativeproductsandservices.Inouradvertisingand

remains the responsibilityof thedirectors andmanagement. In linewithitsCharter,theAuditandRiskCommitteehas:1. evaluated the independence and effectiveness of the external

auditors;2. satisfied itself that the previous Audit and Risk Committee

members considered and approved the audit fee payable to theexternalauditorsaheadoftheannualauditaswellastheirtermsofengagement,takingintoconsiderationfactorssuchasthetimingoftheaudit,theextentofworkrequiredandthescopeoftheaudit;

3. ensuredandsatisfieditselfthattheappointmentsoftheexternalauditors,thedesignatedauditorandIFRSadvisorareincompliancewith theCompaniesAct,TheAuditingProfessionAct,2005andtheListingsRequirementsoftheJSELimited;

4. satisfied itself that the previous Audit and Risk Committeemembers considered and pre-approved all audit and non-auditservices provided by the external auditors exceeding R250 000foranysingleengagement,ensuringthattheindependenceoftheexternalauditorsisnotcompromised;

5. reviewed and assessed the Company’s risk identification,measurement,andcontrolsystemsandtheirimplementation;and

6. reviewedandapprovedtheGroupaccountingpolicies.

InternalauditSubsequent to the finalisation of the merger, KPMG,Tsogo Sun’sexistingoutsourcedinternalauditfunction,hasreplacedGoldReef’sprevious in-house internal audit team.TheGroupDirectorofRisk,in conjunction with the divisional Financial Directors, co-ordinatesthisprocess.HealsoreportsatGoldReefAuditandRiskCommitteemeetingsandhasdirectaccesstotheChairmanoftheAuditandRiskCommittee. Unrestricted consultation is encouraged between theinternal audit function anddirectors,management andGoldReef’sexternalauditors.

The internal auditplan follows a risk-based approach.The scopeofthefunctionincludescomplianceauditingofspecificareasstipulatedby the relevant gambling boards as well as assessing the adequacyof internal controls, fraud prevention, risk management and thesafeguardingofassets.

TheinternalauditfunctionisoperatedinaccordancewiththetermsofreferencesetoutinanInternalAuditCharter.ThefunctionisasenvisagedintheStandardsfortheProfessionalPracticeofInternalAuditing,whichisfullyendorsedbytheapplicablecodesoncorporategovernance.

InternalControlsandtheGovernanceofRiskTheBoardisresponsiblefortheGroup’ssystemsofinternalcontrolandfortheGovernanceofRisk.Thesystemsof internalcontrolaredesigned toprovide reasonablebutnot absolute assuranceas to the

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ResponsibilitiestolocalcommunitiesTheGroupiscommittedtotheupliftmentanddevelopmentoflocalcommunities.TothisendtheGroupsetsasideaportionofitsprofitsfor initiatives aimed at improving and developing the communitieswithinwhichitoperates.Incertaincircumstances,communitytrustshavebeenestablishedforthispurpose.

RiskmanagementManagingriskeffectivelyisanintegralpartoftheGroup’soperations.Executivedirectorsareinvolvedincontinuousandconsistenteffortsto identify,assess,manageandmonitorall formsofrisksacross theGroup.ThisisdoneviatheGroup’sRiskdepartmentwhichassesseseachoperation, identifiesrisksandrankseachaspect intermsof itspotential to disrupt or cause loss to the Group’s business. DetailedreportsaresubmittedtoboththeexecutivedirectorsandtheAuditand Risk Committee where all forms of risks are assessed andinterventions tomitigate the risks identified.While thegeneral anddetailed risk assessment is done twice a year, financial and treasuryrisksareassessedandmanagedregularlywithinsetguidelines.

Safety,healthandenvironmentRealising its obligations as a corporate citizen of the country, theGroupstrivestofullycomplywithallthelawsgoverningsafety,healthandenvironment.AllemployeesareinformedoftheGroup’spoliciesgoverningtheseareasandaretrainedontheirresponsibilitiesinthisregard.Toenhancethewellbeingofitsemployees,theGrouphasputinplacestaffwelfareprogrammesincludingaccesstoclinicfacilitiesatsomeofitsproperties.ThesefacilitiesarealsoavailabletotheGroup’spatronswhenurgentmedicalassistanceisrequiredduringavisittoitsproperties.WhiletheGroup’smainbusinessactivitiesposeminimalrisk to the environment, environmentalmanagementpractices havebeenintegratedaspartofitsoperation.

CodeofconductInlinewiththeprinciplesinthiscode,itisexpectedofalldirectors,managersandemployeestobeaccountablefortheiractionsandactinamannerthatwillpositiontheCompanyasbeing:• Transparent,honestandfrankinitsdealingswithstakeholders;• Consistent and committed in honouring its legal and moral

obligations;• Committedtoupholdingthehigheststandardsofethics;• Well-respectedwithregardstointegrityandcredibility;anda• Responsiblecorporatecitizenofthecountryinwhichitoperates.

otherpubliccommunicationswewillavoidnotonlyuntruths,butalsoexcessiveexaggerationandoverstatementthatmaymisleadmembersofthepublic.Ouradvertisingandpublicstatementswillcomplywiththe minimum standards set by the advertising authorities and thegamblingboardsofalltheprovinces.

ConflictofinterestWeexpectalldirectors,managersandemployeestoavoidanyconductwhich might lead to a conflict with their responsibilities to theCompany.Itisalsoexpectedofeverydirector,managerandemployeetobeinfluencedinallthedecisionstheymake,bytheinterestsoftheCompanyandnotpersonalgain.

All directors, managers and employees may not use their positionswithintheCompanyforpersonalgain.Itisexpectedofeverydirectorto regularlydeclare theirbusiness interests anddirectorships to theBoard.

PaymentstogovernmentpersonnelWedonotmakeillegalpaymentsorgivegiftsofsubstantialvaluetogovernmentofficialsofanycountry.

KickbacksandgratuitiesWedonotofferoracceptkickbacksorbribes.Wedonotacceptoroffergiftsofsubstantialvalueunlessthis isdeclared intermsoftheCompany’spolicies.

PoliticalcontributionsandactivitiesThe Group does not, directly or indirectly, participate in politicalactivities nor does the Group provide substantial support to anypoliticalpartiesorindividuals.However,recognisingthehistoryofourcountryand theneed to foster theprinciplesofdemocracyboth inourcountryandtheAfricancontinent,theGroupmaymakepoliticaldonationstoidentifiedpoliticalparties.AnydecisiontodonatecashtoapoliticalpartyshallrequiretheBoard’spriorapproval.

EmploymentpracticesTheGroup’spolicyisnotonlytocomplywiththeemploymentlawsof our country but to uphold international best practices in peoplemanagement.WebelievethatthesustainablegrowthofourCompanydependsasmuchonourpeopleasitdoesonouroperationalexpertise.

To this end our employment policies are designed to empoweremployees, develop them and create an environment in whicheachemployeecanperformandgrowtohisorher fullestpotentialregardlessofrace,genderordisability.Wealsostrive toattractandretain the highest calibre staff while at the same time redressinghistoricimbalances,wheretheyexist.

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FREMUNERATION

REPORT

ShouldMrShaik’sappointmentasadirectorbeapproved,itisintendedto appoint him as a member and Chairman of the RemunerationCommittee.

ThecompositionofthecommitteecomplieswiththeKingIIIReportand the Board considers the composition of the committee to beappropriate in termsof thenecessaryblendofknowledge, skill andexperienceofitsmembers.

The committeemeets twiceper year and theCEOandGroupHRDirectorbothattended themeetingsexceptwhen issuesrelating totheirowncompensationarediscussed.

REMUNERATIONPOlICYANDEXECUTIVEREMUNERATIONRemunerationPolicyThepolicyhasbeenalignedwithbestpracticestandardsbasedonthefollowingprinciples:• Total rewards are set at levels that are competitive within the

gaming,entertainmentandhospitalitysectors;• Guaranteedpackagesaresetgenerallyatthemedianofthemarket

with high performing individuals in key roles positioned at theupperquartile;

• Incentive-based rewards in general are earned through theachievement of demanding performance conditions consistentwithshareholderinterestsovertheshort,mediumandlongterm;

• Annual cash incentives, performance measures and targets arestructuredtorewardeffectiveoperationalperformance;and

• Long-term (share-based) incentives are designed to addresssustained Company performance over time in the interests ofshareholdersandtheretentionofkeyindividualsandtalent.

Elementsofexecutiveremuneration• Basesalaries• Benefits• Annualcashincentives• Long-termshare-basedincentives• GoldReefShareScheme

Thecommitteeseeks toensureanappropriatebalancebetweenthefixed and performance-related elements of executive remunerationand between those aspects of the package linked to short-termfinancial performance and those linked to longer-term shareholdervaluecreation.

The committee considers each element of remuneration relative tothemarketandtakesintoaccounttheperformanceoftheCompanyandtheindividualexecutiveindeterminingbothquantumanddesign.

ollowingthemergerwithTsogoSun, theGold Reef remuneration policy has been

amendedtoconformtotheexistingTsogoSunpolicy.

Thephilosophy towards remuneration and thepoliciesdescribed inthisreportarethosethatwillbeappliedtothemergedentitygoingforward.

Details of directors’ remuneration included in this report relate tothosedirectors inofficefortheperiodunderreview,beingtheyearended31December2010.Inaddition,disclosurehasbeenmadeofthe terminationpaymentsmade to theexecutivedirectors in termsoftheiremploymentcontractsonconclusionandimplementationofthemerger.

ThEREMUNERATIONCOMMITTEEThe Remuneration Committee is a sub-committee of the Board ofdirectorsand,intermsofitsCharter,isresponsiblefordeterminingthe terms of employment and remuneration of the Company’sexecutivedirectorsandseniormanagement,includinganassessmentofrewardandanevaluationofperformance.

Itspurposeistosetremunerationpackagesforexecutivedirectorsandtodetermineoverallpolicy for the remunerationof theCompany’semployees including, but not limited to, basic salary, performance-based short-term and long-term incentives, pensions and otherbenefitsandthedesignandoperationof theCompany’sshare-basedincentiveschemesandshareappreciationbonusschemes.

MEMBERShIPOFThEREMUNERATIONCOMMITTEEDuringtheyearunderreviewanduptotheconclusionofthemergerwithTsogoSun,themembershipwas:• MrsZJMatlala,Chairperson;• MrJCFarrant;and• DrENBanda

With effect from 24 February 2011, the committee has beenreconstitutedtoconsistoffivenon-executivedirectorsthemajorityofwhom,includingtheChairman,areindependent:• MrPJVenison,Chairman;• MrJACopelyn;• MrEAGMackay; • MrJGNgcobo;and • MrRGTomlinson

MrPJVenisonintendstoretireattheforthcomingAGManditwillbeproposedthatMrYShaikbeappointedtotheBoardinhisstead.

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recognisesthattheplan isessentiallya“phantom”versionofasharescheme.Eachunit(whetheranappreciationunit,performanceunitorabonusunit)isineffectlinkedtoanunderlyingshareinGoldReef.

The combined, weighted implementation of the three elementsdescribedbelowwillallowGoldReeftoremaincompetitiveinannualand share-based incentives, reward long-term sustainable Companyperformance,actasaretentiontool,andensurethatexecutivesandkey talent share a significant levelofpersonal risk/rewardwith theCompany’sshareholders.

Appreciation units Annual allocations of appreciation units are made to executivesand selectedmanagers.Theyareavailable tobe settledon the thirdanniversariesof their allocationbutneednotbeexerciseduntil thesixthanniversary,atwhichtimetheymustbeexercisedortheywilllapse.AllocationsmadetoTsogoSunexecutivesandmanagerspriorto31March2008wereavailableforsettlementoveraperiod,being25%,25%and50%onthethird,fourthandfifthanniversary,respectivelyandneednotbeexerciseduntiltheeighthanniversary,atwhichtimetheymustbeexercisedortheywilllapse.

On settlement, the value accruing to participants will be the fullappreciationofGoldReef’s shareprice,whichvaluewillbe settledincash.

Appreciationunitsaretheonlysharebasedrewardmechanismutilisedby theTsogoSunGroupprior to themerger,under theTsogoSunshareappreciationbonusplan.

GoldReefhasinadditionutilisedperformanceunitsandbonusunits.

Performance unitsAnnualconditionalawardsofperformanceunitsaremadetoexecutivesand selected managers. The performance units vest after a three-year period subject to the Company’s achievement against selectedperformance measures over the intervening period. Settlement willbe incash, thevalueofwhichwillbe theproductof thenumberofperformanceunitsvestingand thevalueof aGoldReef shareat thetimeofvesting.

TheBoardsetandcommunicatetheperformancecriteriaatthetimeofeachaward.Attheinception,thevestingoftheperformanceunitswillbedefinedintermsoftheCompany’sCAGRinHEPSoverthethreeyearperiodfromtheawarddatetothevestingdate.HEPSgrowthhasbeenchosen as thepreferredmetric, rather than any share-orientedmetric,asitisconsideredthatsustainedearningsgrowthwillcontinuetobethemajorvaluedriverintheforeseeablefuture.

Thepolicyrelatingtoeachcomponentofremunerationissummarisedbelow.

BasesalariesBasesalariesofexecutivesaresubjecttoannualreview.GoldReef’spolicyistobecompetitiveatthemedianlevelwithreferencetomarketpractice in companies comparable in terms of size, market sector,business complexity and international scope.However,base salariesof individuals and incumbents inkey roles are aligned to theupperquartile level of the market. Company performance, individualperformance and changes in responsibilities are also taken intoconsiderationwhendeterminingincreasestobasesalaries.

BenefitsBenefits for executives include non-contributory membership to aCompanyapprovedretirementfundandmedicalaid.ContributionstothesefundsaremadebytheCompanyandincludedintheexecutive’sguaranteedpackage.AnnualcashincentivesAllexecutivesareeligibletoparticipate intheshort-termincentiveplaninwhichperformanceagainsttargets,setintermsofcomparativeandabsolutemetrics,isrewarded.

Target bonus percentages are set in terms of Gold Reef’s overallrewardstrategybutthebonuspayableatyearenddependsonactualCompany, subsidiary aswell as the individual’sperformance againstthefollowingparameters:Executive directors and senior managementBonusesarelinkedtotheperformanceoftheindividualaswellastothe performance of the entity. In terms of individual performance,pre-determined measurable performance criteria are establishedlinkedtopersonalobjectives.

Entity-specific performance considerations include the extent ofachievement of the entity’s budgets for the year. Thresholds andtargetsaresetthatchallengeCompanyandindividualperformances.Thecommitteereviewsmeasuresannuallytoensurethatthese,andthe targets set,areappropriategiventheeconomiccontextandtheperformanceexpectationsfortheCompany.

Long-term share-based incentivesBothGoldReefandTsogoSunhaveoperatedphantomshareschemeswith cash settlement designed to align the interests of participantswiththoseoftheCompany’sshareholders.

The essential elements of these schemes are summarised in theparagraphs below. Note that the use of the word unit throughout

20

ShAREOPTIONS ShAREOPTIONS ShAREOPTIONSDIRECTOR ShAREOPTIONS GRANTEDDURING EXERCISEDDURING NOTEXERCISED AT1JANUARY2010 ThEYEAR ThEYEAR AT31DECEMBER2010

AVERAGE AVERAGE AVERAGE AVERAGE STRIKE STRIKE STRIKE STRIKE NUMBER PRICE NUMBER PRICE NUMBER PRICE NUMBER PRICE (R) (R) (R) (R) VESTED VESTED

ShARE AVERAGE AVERAGE PERFOR- AVERAGE APPRECIATION STRIKE BONUS STRIKE MANCE STRIKE UNITS PRICE UNITS PRICE UNITS PRICE (R) (R) (R)

Noretestingagainsttheperformancecriteriaisallowed.Anyperformanceunitswhichdonotvestattheendofthethreeyearperiodwilllapse.

Bonus UnitsAnnually,executivesreceivedagrantofbonusunitsthatmatch,accordingtoaspecifiedratio,aportionoftheannualcashincentiveaccruingtotheparticipant.Thesebonusunitswillbesettledtoparticipantsafterthreeyears,conditionaloncontinuedemployment.Settlementwillbeincash,thevalueofwhichwillbetheproductofthenumberofbonusunitsoriginallygrantedandthevalueofaGoldReefshareatthetimeofvesting.

Grantsofbonusunitsprovideforshare-basedretentiontothoseexecutiveswho,throughtheirperformanceonanannualbasis,havedemonstratedtheirvaluetotheCompany.

InformationinrespectofthepreviousGoldReefexecutivedirectors’participationintheLTIPisasfollows:

Cash–settledunitsat1January2010 123359 16,00 85782 – 83016 – Grantedduringtheyear^^ 114130 18,86 97070 76803 –JSFriedman 26246 18,86 20209 – 15748 –SBJoffe 41622 18,86 41230 – 33298 –CNeuberger 28897 18,86 22269 – 17338 –TMSadiki 17365 18,86 13362 – 10419 –Cash-settledunitsat31December2010 237489 17,37 182852 – 159819 –

^^ In terms of the executives’ Settlement Agreements, the cash–settled units granted in 2010 would be forfeited upon successful implementation of the merger and

accordingly, did not form part of the termination payments detailed on page 22.

GoldReefShareSchemeTheGroupoperatesanequity-settled,share-basedcompensationplanestablishedinSeptember1999.OptionsaregrantedtopermanentemployeesatthediscretionofthedirectorsintermsofwhichsharesinGoldReefmaybeacquiredbasedonpricesprevailingatthedatesofgrantingtheoptions.Deliveryofthesharessoacquirediseffectedinthreeequaltranchesvestingoverfouryears.Sharesacquiredthroughtheshareschemehavetobepaidforbytheemployeesatthesubscriptionpricesasdeterminedintheoptioncontracts.

InformationinrespectofthepreviousGoldReefexecutivedirectors’outstandingoptionsat31December2010isasfollows:

JSFriedman 210435 17,00 – – (210435) 17,00 – –SBJoffe 389565 17,00 – – (389565) 17,00 – –CNeuberger 231884 17,00 – – (231884) 17,00 – –TMSadiki 139130 17,00 – – (139130) 17,00 – –Total 971014 17,00 – – (971014) 17,00 – –

GAINS ON BASIC RETIRE- PERFOR- VESTED DIRECTORS REMUNER- MENT/ MANCE ShARE TOTAl TOTAlDIRECTORS FEES ATION MEDICAl INCENTIVES OPTIONS 2010 2009 R’000 R’000 R’000 R’000 R’000 R’000 R’000

21

Cash-settledshare-basedretentionprovisionOn3September2008,theRemunerationandNominationsCommitteeapprovedashareappreciationschemeforcertainexecutivedirectors,namelySBJoffe,JSFriedmanandCNeuberger.Intermsoftheshareappreciationscheme,eachexecutivedirectorwouldbeentitledtoacashpayment,linkedtothenumberofunitsgranted,theincreaseinthesharepriceaswellastheachievementoftheperformancecriteria.Theperformancecriteria,whichweresetbytheRemunerationandNominationsCommittee,weremeasuredattheendofthreeandfiveyearsrespectivelywithreferencetothepercentageoftheannualperformancebonuswhichtheexecutivedirectorreceivedduringsuchperiod.Refertopage73forfurtherinformationrelatingtothisscheme.Subsequenttoyear-end,followingtheterminationoftheexecutive’sServiceAgreements,thisschemewassettledandclosed-out.Refertopage22.

DIRECTORS’EMOlUMENTSFORThEYEARENDED31DECEMBER2010Thefollowingpaymentswhichrelatetotheperiod1January2010to31December2010weremadetodirectors:

EXECUTIVEPaidbytheCompanyJSFriedman – – – – 311^ 311 542SBJoffe – – – – 518^ 518 1102CNeuberger – – – – 311^ 311 542TMSadiki – – – – 52^ 52 104Paidbysubsidiaries JSFriedman – 1696 284 1386 – 3366 3592SBJoffe – 2643 497 2198 – 5338 5783CNeuberger – 1896 284 1526 – 3706 3889TMSadiki – 1098 212 917 – 2227 1942 NONEXECUTIVE PaidbytheCompany AJAaron – – – – – – 32ENBanda 696 – – – – 696 462MGDiliza 142 – – – – 142 163JCFarrant 388 – – – – 388 326MKrok – – – – – – 76MZKrok 248 – – – – 248 162JLeutgeb – – – – – – 32ZJMatlala 361 – – – – 361 328PCMSeptember 271 – – – – 271 141PVallet 283 – – – – 283 76PaidbysubsidiariesAJAaron – – – – – – 35MGDiliza 30 – – – – 30 30PCMSeptember 41 – – – – 41 46 2460 7333 1277 6027 1192 18289 19405

^This relates to gains on share options which have been exercised and have vested but remain unsold. Consequently, the directors will only receive the economic benefits once the shares are sold on the open market. Subsequent to year end, on termination of the Service Agreements, these share options vested, the loan balances with the Company were repaid and the pledges over the shares were released.

ACCElE- RATED BASIC RETIRE- CONTRACT VESTING REMUNER- lEAVE MENT/ SETTlE- OFShARE TOTAlDIRECTORS ATION PAY MEDICAl MENT OPTIONS 2010 R’000 R’000 R’000 R’000 R’000 R’000

22

OThERMATTERSAFFECTINGREMUNERATIONOFDIRECTORSExecutivedirectorsSummary of Executives directors’ Service AgreementsTheexecutivedirectorshadservicecontractswithGoldReef,whichwereenteredintoinAugust2009,andaddendatotheseservicecontractsweresignedon17February2010.Thesecontractswereterminatedwitheffectfrom24February2011andaccordinglythefollowingpayments,whichrelatetotheperiod1Januaryto24February2011,weremadetotheexecutivedirectorsterminatedatthatdate:

EXECUTIVE PaidbytheCompany JSFriedman – – – – 168 168SBJoffe – – – – 312 312CNeuberger – – – – 186 186TMSadiki – – – – 111 111

Paidbysubsidiaries JSFriedman 275 169 51 10473 – 10968SBJoffe 435 332 83 19490 – 20340CNeuberger 313 79 47 11500 – 11939TMSadiki 181 77 35 6950 – 7243 1204 657 216 48413 777 51267

GAINS PERFOR- ON BASIC RETIRE- MANCE VESTED DIRECTORS OThER REMUNER- OThER MENT/ INCEN- ShARE TOTAlDIRECTORS FEES SERVICES ATION BENEFITS MEDICAl TIVES OPTIONS 2010 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

23

NON–EXECUTIVEDIRECTORSPriortothesuccessfulimplementationofthemergeron24February2011,theCompanyheldaspecialBoardmeetingaswellasaRemunerationCommitteemeeting.Thepaymentstothedirectorsinrespectofthesemeetingsaredealtwithinthetablebelow:

NON–EXECUTIVE PaidbytheCompany ENBanda 101 – – – – – – 101MGDiliza 35 – – – – – – 35JCFarrant 48 – – – – – – 48MZKrok 35 – – – – – – 35ZJMatlala 54 – – – – – – 54PCMSeptember 35 – – – – – – 35PVallet 35 – – – – – – 35 Paidbysubsidiaries MGDiliza 10 – – – – – – 10PCMSeptember 13 – – – – – – 13 366 – – – – – – 366

PROPOSED R’000

24

BOARDPOSITIONChairmanoftheBoard 700ChairmanoftheAuditandRiskCommittee 400ChairmanoftheRemunerationCommittee 300Non-executivedirectorandmemberofAuditandRiskorRemunerationCommittee 250Non-executivedirector 200

Proposedfeesfornon-executivedirectorsincludeattendanceatallmeetingsoftheBoardandsub-committeeswhereapplicable.

Non-executivedirectorsTheBoard,inreviewingnon-executivedirectors’fees,takesintoaccountfeespayabletonon-executivedirectorsofcomparablecompaniesandtheimportanceattachedtotheattractionandretentionofhigh-calibreindividualsasnon-executivedirectors.Levelsoffeesarealsosetbyreferencetotheresponsibilitiesassumedbythenon-executivedirectorsinchairingtheBoardandinchairingorparticipatinginitscommittees.AnyincreaseswillbemotivatedtotheshareholdersattheCompany’sAnnualGeneralMeetingandreflectthemarketdynamicsandtheincreasinglyheavydemandsbeingmadeontheindividuals.

Non-executivedirectors’feesrelatetoattendancefeesforBoardandsub-committeemeetingsinordertoensuretheacquisitionandretentionofindividualskills/eminencerequiredinmakingamaterialcontributiontotheCompany’sstrategicdirectionandtocompensatetheindividualfortimeinvestedinstayingaufaitwiththeCompany’sstrategiesandoperationsandforrepresentingtheCompany’sinterests.

Proposednon-executivedirectors’feesfortheperiodending31March2012appearinthetablebelow:

ANNUAlFINANCIAl

STATEMENTS2010

27 / Directors’StatementofResponsibility

27 / DeclarationbytheCompanySecretary

28 /ReportoftheAuditandRiskCommittee

29 /ReportoftheIndependentAuditors

30 /Directors’Report

35 /AccountingPolicies

49 /GroupIncomeStatement

50 /GroupStatementofComprehensiveIncome

51 /GroupBalanceSheet

52 /GroupStatementofChangesinEquity

53 /GroupCashFlowStatement

54 /GroupAdditionalInformation

56 /GroupSegmentalAnalysis

59 /NotestotheGroupFinancialStatements

94 / CompanyStatementofComprehensiveIncome

95 / CompanyBalanceSheet

96 / CompanyStatementofChangesinEquity

97 / CompanyCashFlowStatement

98 / NotestotheCompanyFinancialStatements

27

DIRECTORS’STATEMENTOFRESPONSIBIlITY

DEClARATIONBYThECOMPANYSECRETARY

Thedirectorsareresponsibleforthepreparation,integrity,andfairpresentationofthefinancialstatementsofGoldReefResortsLimitedanditssubsidiaries.Thefinancialstatementspresentedonpages26to113havebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS),andincludeamountsbasedonjudgementsandestimatesmadebymanagement.

Thedirectorsconsiderthatinpreparingthefinancialstatementstheyhaveusedthemostappropriateaccountingpolicies,consistentlyappliedandsupportedbyreasonableandappropriatejudgementsandestimates.ThedirectorsaresatisfiedthattheinformationcontainedinthefinancialstatementsfairlypresenttheresultsofoperationsfortheyearandthefinancialpositionoftheGroupatyearend.

Thedirectorsalsopreparedtheotherinformationincludedintheannualfinancialstatementsandareresponsibleforbothitsaccuracyanditsconsistencywiththefinancialstatements.Thedirectorshaveresponsibilityforensuringthataccountingrecordsarekept.TheaccountingrecordsshoulddisclosewithreasonableaccuracythefinancialpositionoftheCompanyandtheGrouptoenablethedirectorstoensurethatthefinancialstatementscomplywiththerelevantlegislation.ThedirectorstakeresponsibilityfortheaccuracyofthefinancialstatementswhichhavebeenpreparedunderthesupervisionofMrMNvonAulock,ChiefFinancialOfficer.

Gold Reef Resorts Limited and its subsidiaries operate in a well established control environment, which is well documented and regularlyreviewed. This incorporates risk management and internal control procedures, which are designed to provide reasonable, but not absolute,assurancethatassetsaresafeguardedandtherisksfacingthebusinessarebeingcontrolled.

Thegoingconcernbasishasbeenadoptedinpreparingthefinancialstatements.ThedirectorshavenoreasontobelievethattheGroupwillnotbeagoingconcernintheforeseeablefuture,basedonforecastsandavailablecashresources.ThesefinancialstatementssupporttheviabilityoftheGroup.

TheGroup’sexternalauditors,PricewaterhouseCoopersInc.,auditedthefinancialstatementsandtheirreportispresentedonpage29.

ThefinancialstatementswereapprovedbytheBoardofdirectorson13May2011andaresignedonitsbehalf:

JAMABUZA MNVONAUlOCKChief Executive Officer Chief Financial Officer

JOhANNESBURG13May2011

IdeclarethattothebestofmyknowledgetheCompanyhas lodgedwiththeRegistrarofCompaniesallsuchreturnsasrequiredofapublicCompanyintermsoftheSouthAfricanCompaniesActandthatallsuchreturnsaretrue,correctanduptodate.

WJVANWYNGAARDTCompany Secretary


28

REPORTOFThEAUDIT&RISKCOMMITTEE

FORTHEYEARENDED31DECEMBER2010

DuringtheyearunderreviewanduptotheconclusionofthemergerwithTsogoSun,themembershipoftheAuditandRiskCommitteewas:• MrJCFarrant,Chairman;• MrsZJMatlala;and• MrPVallet,Alternatemember

Witheffectfrom24February2011,thecommitteehasbeenreconstitutedtoconsistofthefollowingindependentnon-executivedirectors:• MrRGTomlinson,Chairman;• MrJGNgcobo;and• MrPJVenison

PJVenisonintendstoretireattheforthcomingAGManditwillbeproposedthatMrYShaikbeappointedasamemberoftheAuditandRiskCommitteeinhisstead.

Thecommitteeissatisfiedthatinrespectofthefinancialyearithasperformedallthefunctionsrequiredbylawtobeperformedbyanauditandriskcommittee,includingassetoutbysection270A(1)(a)to(h)oftheCompaniesActandintermsofthecommittee’stermsofreferenceandasmorefullysetoutinthecorporategovernancereport.Inthisconnectionthecommitteehas:• evaluatedtheindependenceandeffectivenessoftheexternalauditors,PricewaterhouseCoopersInc,andissatisfiedthattheexternalauditors

are independentof theCompany,havinggivendueconsideration to theparametersenumeratedunder section270A(5) (a) to (d)of theCompaniesAct.ThecommitteeaccordinglynominatesPricewaterhouseCoopersIncasindependentauditorstocontinueinofficeuntiltheconclusionofthe2011AnnualGeneralMeeting,notingthatNLForsteristheindividualregisteredauditorandmemberoftheaforegoingfirmwhoundertakestheaudit;

• satisfieditselfthatthepreviousAuditandRiskCommitteemembersconsideredandapprovedtheauditfeepayabletotheexternalauditorsinrespectof theaudit for theyearended31December2010aheadof theannualauditaswellas their termsofengagement, taking intoconsiderationfactorssuchasthetimingoftheaudit,theextentofworkrequiredandthescopeoftheaudit;

• ensuredandsatisfieditselfthattheappointmentsoftheexternalauditors,thedesignatedauditorandIFRSadvisorareincompliancewiththeCompaniesAct,TheAuditingProfessionAct,2005andtheListingsRequirementsoftheJSELimited;

• satisfieditselfthatthepreviousAuditandRiskCommitteemembersconsideredandpre-approvedallauditandnon-auditservicesprovidedby the external auditors exceeding R250 000 for any single engagement, ensuring that the independence of the external auditors is notcompromised;

• reviewedandassessedtheCompany’sriskidentification,measurement,andcontrolsystemsandtheirimplementation;and

• reviewedandapprovedtheGroupaccountingpolicies(refertopage35).

ThecommitteehasalsoconsideredandsatisfieditselfoftheappropriatenessoftheexpertiseandexperienceoftheChiefFinancialOfficer.

RGTOMlINSONChairman, Gold Reef Resorts Audit and Risk Committee


29

REPORTOFThEINDEPENDENTAUDITORS

INDEPENDENTAUDITOR’SREPORTTOThEMEMBERSOFGOlDREEFRESORTSlIMITEDWe have audited the Group annual financial statements and annual financial statements of Gold Reef Resorts Limited, which comprise theconsolidatedandseparatebalancesheetsasat31December2010,andtheconsolidatedandseparatestatementsofincome,comprehensiveincome,changesinequityandcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatorynotes,andthedirectors’report,assetoutonpages26to113.

Directors’ResponsibilityfortheFinancialStatementsTheCompany’sdirectorsareresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithInternationalFinancialReportingStandardsandinthemannerrequiredbytheCompaniesActofSouthAfrica,andforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatements,whetherduetofraudorerror.

Auditor’sResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance withInternationalStandardsonAuditing.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

OpinionInouropinion,thefinancialstatementspresentfairly,inallmaterialrespects,theconsolidatedandseparatefinancialpositionofGoldReefResortsLimitedasat31December2010,anditsconsolidatedandseparatefinancialperformanceanditsconsolidatedandseparatecashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandardsandinthemannerrequiredbytheCompaniesActofSouthAfrica.

PRICEWATERhOUSECOOPERSINCDIRECTOR:NlFORSTERRegistered Auditor


30

DIRECTORS’REPORT


NATUREOFBUSINESSGoldReefisagamingandentertainmentcompanyincorporatedinSA.DuringtheyearunderreviewitsinterestsincorporatedAkaniEgoliwhichoperatesGoldReefCityCasinoandThemePark,SilverstarCasinowhichoperatestheSilverstarCasino,AkaniMsunduziwhichoperatesGoldenHorseCasino,West Coast Leisure which operates Mykonos Casino, Garden Route Casino which operates Garden Route Casino, Goldfields Casino which operatesGoldfieldsCasinoandLukhanjiLeisurewhichoperatesQueensCasino.

GoldReefalsoownsGoldReefManagementwhichcurrentlyprovidesmanagementservicestotheGroup’sownproperties.

SUBSEQUENTEVENTSCorporateactivityThemergerofGoldReefandTsogoSunbecameeffectiveon24February2011withthenewmajorityshareholdersbeingTIHandSABSA.

On24February2011,theCompanyissued888261028ordinarysharesasconsiderationfortheacquisitionoftheentireissuedsharecapitalinTsogoSunfromTIHandSABSA.TIHwasissued453013124ordinarysharesresultinginashareholdinginGoldReefof41,3%(excludingtreasuryshares).SABSAwasissued435247904ordinarysharesresultinginashareholdinginGoldReefof39,7%(excludingtreasuryshares).Onthesamedate,the69205093sharespreviouslyheldbyTsogoSunExpansionbecameGoldReeftreasuryshares.

Asoftheeffectivedateofthemerger,theServiceAgreementsenteredintobyGoldReefwereterminated.ThisterminationresultedintotalpaymentstotheexecutivedirectorsofR51,3million.Forfurtherdetailrelatingtotheterminationpayments,refertopage22oftheRemunerationReport.Directors’DealingsOn23March2011,MrJACopelynacquiredadirectbeneficialinterestintheCompanyfollowingthepurchaseof167775ordinaryGoldReefsharesataVWAPofR14,18.Therequisitepriorwrittenclearancetodealinthesesecuritieswasobtainedforthistransaction.

FINANCIAlRESUlTSTheannualfinancialresultsoftheGroupandCompanyfortheyeararesetoutintheannualfinancialstatementsandaccompanyingnotes.

ShARECAPITAlOn1January2010theauthorisedsharecapitaloftheCompanycomprised590000000ordinarysharesofwhich291990220wereissued.ForthepurposesofimplementingthemergerwithTsogoSun,aspecialresolutionwaslodgedon7May2010toincreasetheauthorisedsharecapitaloftheCompanyto1200000000ordinaryshares.DuringtheyeartheGroupissued353677furtherordinaryshares.At31December2010theaggregatenumberofordinarysharesinissuewas292343897.

TheCompany’sauthorisedbutunissuedsharecapitalwasplacedunderthecontrolofthedirectorsuntiltheforthcomingAnnualGeneralMeetingwithauthoritytoallotandissueanysharesrequiredtobeissuedforthepurposeofcarryingoutthetermsoftheGoldReefShareScheme,limitedtoamaximumof3millionshares,intheirdiscretion,subjecttoSections221and222oftheCompaniesActandtheJSEListingsRequirements.

TreasurysharesheldbytheGroupon1January2010numbered14427602(1January2009:14427602).DuringtheyeartheGrouppurchasednofurthertreasuryshares(2009:Nil).Atyear-endtreasurysharesheldbytheGroupnumbered14427602(2009:14427602).

GoldReefsharesheldbytheGoldReefShareSchemeon1January2010numbered1365672(1January2009:2654558).Oftheseshares,748335vestedinAugust2010(2009:1423221)andweretransferredtoemployees.TheGoldReefShareSchemepurchased387011(2009:134335)GoldReefsharesduringtheyear.Atyear-endGoldReefsharesheldbytheGoldReefShareSchemenumbered1004348(2009:1365672).

31

DIRECTORS’REPORTFORTHEYEARENDED31DECEMBER2010

DIRECTORATEThedirectorsoftheCompanyatyear-endaresetoutbelow.ThenumberofBoardandcommitteemeetingsattendedbyeachofthedirectorsfrom1January2010to31December2010isindicatedbelow,withthenumberinbracketsreflectingthetotalnumberofmeetingsheldduringthisperiod.

ThenumberofBoardandcommitteemeetingsattendedbyeachofthedirectorsduringtheperiod1January2011to24February2011isindicatedbelow,withthenumberinbracketsreflectingthetotalnumberofmeetingsheldduringthisperiod.

AUDIT REMUNERATIONDIRECTOR QUARTERlY SPECIAl ANDRISK ANDNOMINATION MEETINGS MEETINGS COMMITTEE COMMITTEE

ENBanda>º(Chairman) – 1(1) – 1(1)MGDiliza> – 1(1) – –JSFriedman(CFO) – 1(1) – –SBJoffe(CEO) – 1(1) – –JCFarrant>++º – 1(1) – 1(1)MZKrok> – 1(1) – –SKrok** – – – –ZJMatlala>ºº – 1(1) – 1(1)CNeuberger(COO) – 1(1) – –TMSadiki(HRDirector) – 1(1) – –PCMSeptember* – 1(1) – –PVallet*+++ – 1(1) – –

* Non–executive

> Independent

** Alternate

+ Audit and Risk Committee

++ Audit and Risk Committee Chairman

+++ Audit and Risk Committee Alternate

º Remuneration and Nomination Committee

ºº Remuneration and Nomination Committee Chairperson

AUDIT REMUNERATIONDIRECTOR QUARTERlY SPECIAl ANDRISK ANDNOMINATION MEETINGS MEETINGS COMMITTEE COMMITTEE

ENBanda>º(Chairman) 4(4) 2(2) – 1(1)MGDiliza> 3(4) 0(2) – –JSFriedman(CFO) 4(4) 2(2) – –SBJoffe(CEO) 4(4) 2(2) – –JCFarrant>++º 4(4) 2(2) 3(3) 1(1)MZKrok> 4(4) 2(2) – –SKrok** – – – –ZJMatlala>ºº 4(4) 2(2) 2(3) 1(1)CNeuberger(COO) 4(4) 2(2) – –TMSadiki(HRDirector) 3(4) 2(2) – –PCMSeptember* 4(4) 2(2) – –PVallet*+++ 4(4) 2(2) 1(3) –

32

DIRECTORS’REPORT


SUBSIDIARIES,JOINTVENTURES,ASSOCIATESANDOThERINVESTMENTSInformationrelatingtotheCompany’sfinancialinterestsinitssubsidiaries,associatesandotherinvestmentsissetoutinNote22totheCompanyfinancialstatements.

COMPANYSECRETARYLFickresignedasCompanySecretaryandwasreplacedbyWJvanWyngaardtwitheffectfrom16March2011.MrvanWyngaardt’sbusinessandpostaladdresses,whicharealsotheCompany’sregisteredaddresses,aresetoutonpage117ofthisannualreport.

AUDITORSPricewaterhouseCoopersInc.willcontinueinofficeinaccordancewiththeCompaniesActsubjecttotheapprovalofshareholdersattheforthcomingAnnualGeneralMeeting.

33

DIRECTORS’REPORTFORTHEYEARENDED31DECEMBER2010

DIRECTORS’ShAREhOlDING

BENEFICIAl NON-BENEFICIAl

DIRECT INDIRECT DIRECT INDIRECT

2010 2009 2010 2009 2010 2009 2010 2009

At31DecemberENBanda^ – – – – – – – –MGDiliza^ – – 7588 7588 – – – –JCFarrant^ – – – – – – – –JSFriedman^++ 2127528 1917093 – – – – – –SBJoffe^> 3889565 3500000 2533333 2533333 – – – –MZKrok^ – – – – – – – –SKrok^ – – – – – – – –ZJMatlala^ – – 148467 148467 – – – –CNeuberger^* 1476884 1245000 – – – – – –TMSadiki^+ 187130 48000 – – – – – –PCMSeptember^ – – 148467 148467 – – – –PVallet^ – – – – – – – 45729464

^ Individuals resigned as directors of the Company effective from 24 February 2011. Refer to pages 5 to 7 for details regarding the reconstituted Board of Gold Reef.

++ As at 31 December 2010, Mr J S Friedman had a loan of R8 438 553 with the Gold Reef Share Scheme and 720 000 shares pledged as security for this loan. A further

210 435 shares were not yet available for sale and his loan of R3 516 156 on these unvested shares was therefore not recognised on the balance sheet in terms of IFRS 2 – Share-

based Payment. On 24 February 2011, the Service Agreement with Mr J S Friedman was terminated and simultaneously, the 210 435 unvested shares vested. Accordingly, the

total loan balance of R11 954 708 was settled and the pledge over the 930 435 shares released.

> As at 31 December 2010, Mr S B Joffe had a loan of R18 558 114 with the Gold Reef Share Scheme and 3 000 000 shares pledged as security for this loan. A further 389

565 shares were not yet available for sale and his loan of R6 509 228 on these unvested shares was therefore not recognised on the balance sheet in terms of IFRS 2 – Share-

based Payment. On 24 February 2011, the Service Agreement with Mr S B Joffe was terminated and simultaneously, the 389 565 unvested shares vested. Accordingly, the total

loan balance of R25 067 372 was settled and the pledge over the 3 389 565 shares released.

* As at 31 December 2010, Mr C Neuberger had a loan of R8 646 604 with the Gold Reef Share Scheme and 1 220 000 shares pledged as security for this loan. A further 231

884 shares were not yet available for sale and his loan of R3 874 542 on these unvested shares was therefore not recognised on the balance sheet in terms of IFRS 2 – Share-

based Payment. On 24 February 2011, the Service Agreement with Mr C Neuberger was terminated and simultaneously, the 231 884 unvested shares vested. Accordingly, the

total loan balance of R12 521 146 was settled and the pledge over the 1 451 884 shares released.

+ As at 31 December 2010, Mr T M Sadiki had a loan of R728 560 with the Gold Reef Share Scheme and 48 000 shares pledged as security for this loan. A further 139 130

shares were not yet available for sale and his loan of R2 324 718 on these unvested shares was therefore not recognised on the balance sheet in terms of IFRS 2 – Share-based

Payment. On 24 February 2011, the Service Agreement with Mr T M Sadiki was terminated and simultaneously, the 139 130 unvested shares vested. Accordingly, the total

loan balance of R3 053 278 was settled and the pledge over the 187 130 shares released.

Therehavebeennootherchanges to thedirectors’ shareholdingsbetweenyear-endand thedateof this report apart fromthepurchaseof sharesbyMrJACopelyn,asdetailedunder“SubsequentEvents”.

DIRECTORS’ANDOFFICERS’INTERESTSINCONTRACTSTheinterestsofdirectorsandofficersinGoldReef’scontractsaresetoutinNote27totheGroupannualfinancialstatements.

34

DIRECTORS’REPORT


SPECIAlRESOlUTIONSForthepurposesofimplementingthemergerwithTsogoSun,aspecialresolutionwaslodgedwiththeRegistrarofCompanieson7May2010toincreasetheauthorisedsharecapitaloftheCompanyto1200000000ordinaryshares.

PROPOSEDNAMEChANGE•IntroductionItwasreferredtoinvariousannouncementsreleasedbyGoldReefandthecirculartoGoldReefshareholdersdated3April2010,thatuponimplementationofthemergeroftherespectiveGoldReefandTsogoSunbusinesses,processeswillbeputinplacetochangethenameoftheCompanytoTsogoSunHoldingsLimited.•ReasonfortheproposednamechangeThereasonfortheproposednamechangeoftheCompanyisthattherespectiveGoldReefandTsogoSunbusinesseswillbestrategicallyrepositionedasacombinedhotelandgamingcompanywithanewsetofmajorityshareholders,beingthemajorityofshareholdersofTsogoSun,collectivelyholdingamajorityofGoldReefordinarysharesintheenlargedissuedsharecapitalofGoldReef.

•NewdetailsoftheCompanyTheCompany’snewdetailswillbeasfollows:

•Importantdatesandtimes 2011AnnualGeneralMeeting........................................................................................................................................ Wednesday,15JuneLastdaytotradesecuritiesundertheoldname,GoldReefResortsLimited,oldJSEsharecodeandoldISIN........................................Friday,8JulyListandtradenewsharesundernewname,TsogoSunHoldingsLimited,newJSEsharecodeandnewISIN..................................... Monday,11JulyRecorddate............................................................................................................................................................... Friday,15JulyIssueofnewsecuritiesundernewname,newJSEsharecodeandnewISIN.............................................................................. Monday,18JulyCertificatesposted/CSDPsandbrokersaccountsupdatedwithnewname,newJSEsharecodeandnewISIN(seeNote4)................... Monday,18July

Notes:1. AnychangestotheabovedatesandtimeswillbereleasedonSENSandpublishedintheSouthAfricanpress.2. AlltimesgiveninthisdocumentarelocaltimesinSouthAfrica.3. ThisdocumentisavailableinEnglishonly.AdditionalcopiesmaybeobtainedfromtheCompany’sregisteredofficeandthetransfersecretaries.4. Certificated shareholders who surrender their existing documents of title after 12h00 on the record date, will have their new share certificates,

reflectingthenewname,posted(withinfivebusinessdaysofreceiptoftheirsurrendereddocuments)bythetransfersecretaries,byregisteredpostinSouthAfrica,attheriskoftheshareholdersconcerned.

•FurtherinformationFurtherinformationcanbefoundinAnnexureAwhichformspartoftheNoticeofAnnualGeneralMeeting.

CURRENT NEW DETAIlS DETAIlS

Name GoldReefResortsLimited TsogoSunHoldingsLimitedJSEsharecode GDF TSHJSEshortname GOLDREEF TSOGOSUNISIN ZAE000028338 ZAE000156238

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1. ACCOUNTINGPOlICIES:SUMMARYOFSIGNIFICANTACCOUNTINGPOlICIESTheprincipalaccountingpoliciesappliedinthepreparationoftheconsolidatedandseparateannualfinancialstatementsaresetoutbelow.ThesepoliciesareintermsofIFRSandhavebeenconsistentlyappliedtoalltheyearspresented,unlessotherwisestated.

1.1BasisofpreparationTheconsolidatedandseparateannualfinancialstatementshavebeenpreparedinaccordancewithIFRSaswellastheAC500standardsasissuedbytheAccountingPracticesBoard.Theconsolidatedandseparatefinancialstatementshavebeenpreparedunderthehistoricalcostconvention,asmodifiedbytherevaluationoffinancialassetsandfinancialliabilities,includingderivativeinstrumentsatfairvaluethroughprofitorloss.

ThepreparationoffinancialstatementsinconformitywithIFRSrequirestheuseofcertaincriticalaccountingestimates.ItalsorequiresmanagementtoexerciseitsjudgementintheprocessofapplyingtheGroup’saccountingpolicies.Theareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptionsandestimatesaresignificanttotheconsolidatedandseparatefinancialstatementsaredisclosedinNote3.

ThetermIFRSincludesInternationalFinancialReportingStandards(“IFRSs”),InternationalAccountingStandards(“IASs”)andInterpretationsissuedbytheInternationalFinancialReportingInterpretationsCommittee(“IFRIC”)ortheformerStandingInterpretationsCommittee(“SIC”).ThestandardsreferredtoaresetbytheInternationalAccountingStandardsBoard(“IASB”).

1.2Standards,amendmentsandinterpretations1.2.1 Standards, amendments and interpretations effective in 2010Thefollowingnewstandardsandamendmentstostandardsaremandatoryforthefirsttimeforthefinancialyearbeginning1January2010:• IFRS 3 (revised), ‘Business combinations’, and consequential amendments to IAS 27, ‘Consolidated and separate financial statements’, IAS 28,

‘Investmentsinassociates’,andIAS31,‘Interestsinjointventures’areeffectiveprospectivelytobusinesscombinationsforwhichtheacquisitiondateisonorafterthebeginningofthefirstannualreportingperiodbeginningonorafter1July2009.

TherevisedstandardcontinuestoapplytheacquisitionmethodtobusinesscombinationsbutwithsomesignificantchangescomparedwithIFRS3.Forexample,allpaymentstopurchaseabusinessarerecordedatfairvalueattheacquisitiondate,withcontingentpaymentsclassifiedasdebtsubsequentlyre-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in theacquireeeitheratfairvalueoratthenon-controllinginterest’sproportionateshareoftheacquiree’snetassets.Allacquisition-relatedcostsareexpensed.

AstheGrouphasadoptedIFRS3(revised),itisrequiredtoadoptIAS27(revised),‘consolidatedandseparatefinancialstatements’,atthesametime.IAS27(revised)requirestheeffectsofalltransactionswithnon-controllingintereststoberecordedinequityifhereisnochangeincontrolandthesetransactionswillnolongerresultingoodwillorgainsandlosses.Thestandardalsospecifiestheaccountingwhencontrolislost.Anyremaininginterestintheentityisre-measuredtofairvalue,andagainorlossisrecognisedinprofitorloss.TherehasbeennoimpactofIAS27(revised)onthecurrentperiod,asnoneofthenon-controllinginterestshaveadeficitbalance.Therehavebeennotransactionswherebyaninterestinanentityisretainedafterthelossofcontrolofthatentity;therehavebeennotransactionswithnon-controllinginterests.

1.2.2 Standards, amendments and interpretations to existing standards effective in 2010 but not relevant to the GroupThefollowingstandards,amendmentsandinterpretationsaremandatoryforaccountingperiodsbeginningonorafter1January2010butarenotrelevanttotheGroup’soperations:• IFRIC17,‘Distributionsofnon-cashassetstoowners’,effectiveforannualperiodsbeginningonorafter1July2009.Thisisnotcurrentlyapplicable

totheGroup,asithasnotmadeanynon-cashdistributions;

• IFRIC18,‘Transfersofassetsfromcustomers’,effectivefortransferofassetsreceivedonorafter1July2009.ThisisnotrelevanttotheGroup,asithasnotreceivedanyassetsfromcustomers;

• ‘Additionalexemptionsforfirst-timeadopters’(AmendmenttoIFRS1)wasissuedinJuly2009.Theamendmentsarerequiredtobeappliedforannualperiodsbeginningonorafter1January2010.ThisisnotrelevanttotheGroup,asitisanexistingIFRSpreparer;and

• ImprovementstoInternationalFinancialReportingStandards2009wereissuedinApril2009.Theeffectivedatesvarystandardbystandardbutmostareeffective1January2010.

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1.2.3 Standards, amendments and interpretations that are not yet effective and have not been early adopted by the GroupThefollowingnewstandards,newinterpretationsandamendmentstostandardsandinterpretationshavebeenissuedbutarenoteffectiveforthefinancialyearbeginning1January2010andhavenotbeenearlyadopted:• IFRS9,‘Financialinstruments’,(issuedinDecember2009).Thisaddressestheclassificationandmeasurementoffinancialassetsandislikelytoaffect

theGroup’saccountingforitsfinancialassets.Thestandardisnotapplicableuntil1January2013butisavailableforearlyadoption.TheGroupisyettoassessIFRS9’sfullimpact.TheGrouphasnotyetdecidedwhentoadoptIFRS9;

• RevisedIAS24,‘Relatedpartydisclosures’,(issuedinNovember2009).ItsupersedesIAS24,‘Relatedpartydisclosures’,issuedin2003.TherevisedIAS24isrequiredtobeappliedfrom1January2011.Earlierapplication,inwholeorinpart,ispermitted;

• ‘Classificationofrightsissues’(AmendmenttoIAS32),(issuedinOctober2009).Forrightsissuesofferedforafixedamountofforeigncurrency,currentpracticeappearstorequiresuchissuestobeaccountedforasderivativeliabilities.Theamendmentstatesthatifsuchrightsareissuedproratatoalltheentity’sexistingshareholdersinthesameclassforafixedamountofcurrency,theyshouldbeclassifiedasequityregardlessofthecurrencyinwhich theexerciseprice isdenominated.Theamendment shouldbeapplied forannualperiodsbeginningonorafter1February2010.Earlierapplicationispermitted;

• ‘Prepaymentsofaminimumfundingrequirement’(AmendmentstoIFRIC14),(issuedinNovember2009).Theamendmentscorrectanunintendedconsequence of IFRIC 14, ‘IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction’. Without theamendments, entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. This was notintendedwhenIFRIC14wasissued,andtheamendmentscorrecttheproblem.Theamendmentsareeffectiveforannualperiodsbeginning1January2011.Earlierapplicationispermitted.Theamendmentsshouldbeappliedretrospectivelytotheearliestcomparativeperiodpresented;and

• IFRIC19,‘Extinguishingfinancialliabilitieswithequityinstruments’.ThisclarifiestherequirementsofIFRSswhenanentityrenegotiatesthetermsofafinancialliabilitywithitscreditorandthecreditoragreestoaccepttheentity’ssharesorotherequityinstrumentstosettlethefinancialliabilityfullyorpartially.Theinterpretationiseffectiveforannualperiodsbeginningonorafter1July2010.Earlierapplicationispermitted.

ImprovementstoInternationalFinancialReportingStandards2010wereissuedinMay2010.Theeffectivedatesvarystandardbystandardbutmostareeffectivefrom1January2010.

1.3ConsolidationTheGrouprecognisesinvestmentsinsubsidiaries,associatesandjointventuresaspertheaccountingpoliciesdetailedbelow.TheCompanyrecognisesthesecategoriesofinvestmentathistoricalcost.Thecostofanacquisitionismeasuredasthefairvalueoftheassetsgiven,equityinstrumentsissuedandliabilitiesincurredorassumedatthedateofexchange,pluscostsdirectlyattributabletotheacquisition.

1.3.1 SubsidiariesSubsidiariesareallentities(includingspecialpurposeentities)overwhichGoldReefhasthepowertogovernthefinancialandoperatingpoliciesgenerallyaccompanyingashareholdingofmorethanonehalfofthevotingrights.TheexistenceandeffectofpotentialvotingrightsthatarecurrentlyexercisableorconvertibleareconsideredwhenassessingwhethertheGroupcontrolsanotherentity.Theresultsofsubsidiariesacquiredordisposedofduringtheyearareincludedintheconsolidatedincomestatementfromtheeffectivedateofacquisitionoruptotheeffectivedateofdisposal,asappropriate.

Non-controllinginterestsinthenetassetsofconsolidatedsubsidiariesareidentifiedseparatelyfromtheGroup’sequitytherein.Non-controllinginterestsconsistoftheamountofthoseinterestsatthedateoftheoriginalbusinesscombinationandthenon-controllinginterest’sshareofchangesinequitysincethedateofthecombination.Lossesapplicabletothenon-controllinginterestinexcessofthenon-controllinginterest’sshareinthesubsidiary’sequityareallocatedagainsttheinterestsoftheGroup.

TheacquisitionmethodofaccountingisusedtoaccountfortheacquisitionofsubsidiariesbytheGroup.Theacquiree’sidentifiableassets,liabilitiesandcontingentassetsandliabilitiesthatmeettheconditionsforrecognitionunderIFRS3(revised)arerecognisedattheirfairvaluesattheacquisitiondate,exceptfornon-currentassets(ordisposalgroups)thatareclassifiedasheld-for-saleinaccordancewithIFRS5,whicharerecognisedandmeasuredatfairvaluelesscoststosell.

If,afterreassessment,theGroup’sinterestinthenetfairvalueoftheacquiree’sidentifiableassets,liabilitiesandcontingentassetsandliabilitiesexceedsthecostofthebusinesscombination,theexcessisrecognisedimmediatelyinprofitorloss.

ACCOUNTINGPOlICIES(CONT.)


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Theinterestofnon-controllingshareholdersintheacquireeisinitiallymeasuredatthenon-controllinginterest’sproportionofthenetfairvalueoftheassets,liabilitiesandcontingentassetsandliabilitiesrecognised.

TheGroupappliesapolicyoftreatingtransactionswithnon-controllinginterestsastransactionswithequityownersoftheGroup.Forpurchasesfromnon-controllinginterests,thedifferencebetweentheconsiderationpaidandtherelevantshareacquiredofthecarryingvalueofnetassetsofthesubsidiaryisdeductedfromequity.Gainsorlossesondisposalstonon-controllinginterestsarealsorecordedinequity.Fordisposalstonon-controllinginterests,differencesbetweenanyproceedsreceivedandtherelevantshareofnon-controllinginterestsarealsorecordedinequity.

Inter-companytransactions,balancesandunrealisedgainsontransactionsbetweenGroupcompaniesareeliminated.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.

1.3.2 AssociatesAnassociateisanentityoverwhichGoldReefhassignificantinfluenceandthatisneitherasubsidiarynoraninterestinajointventure.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutisnotcontrolorjointcontroloverthosepolicies.

AnyexcessofthecostofacquisitionovertheGroup’sshareofthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentassetsandliabilitiesoftheassociaterecognisedatthedateofacquisitionisrecognisedasgoodwill.Thegoodwillisincludedwithinthecarryingamountoftheinvestmentandisassessedforimpairmentaspartoftheinvestment.AnyexcessoftheGroup’sshareofthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesoverthecostofacquisition,afterreassessment,isrecognisedimmediatelyinprofitorloss.

TheGroup’sshareofitsassociates’post-acquisitionprofitsorlossesisrecognisedintheincomestatementanditsshareofpost-acquisitionmovementsinothercomprehensiveincomeisrecognisedinothercomprehensiveincome.Thecumulativepost-acquisitionmovementsareadjustedagainstthecarryingamountoftheinvestment.WhentheGroup’sshareoflossesinanassociateequalsorexceedsitsinterestintheassociate,includinganyotherunsecuredreceivableswhicharenotexpectedtoberecoveredintheforseeablefuture,theGroupdoesnotrecognisefurtherlossesunlessithasincurredobligationsormadepaymentsonbehalfoftheassociate.

UnrealisedgainsontransactionsbetweentheGroupanditsassociatesareeliminatedtotheextentoftheGroup’sinterestintheassociates.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.

1.3.3 Joint VenturesInvestmentsinjointventuresareaccountedforusingtheequitymethodofaccountingandareinitiallyrecognisedatcost.TheGroup’sinvestmentinjointventuresincludesgoodwillidentifiedonacquisition,netofanyaccumulatedimpairmentloss.

TheGroup’sshareofitsjointventure’spost-acquisitionprofitsorlossesisrecognisedintheincomestatement,anditsshareofpost-acquisitionmovementsinothercomprehensiveincomeisrecognisedinothercomprehensiveincome.

Thecumulativepost-acquisitionmovementsareadjustedagainstthecarryingamountoftheinvestment.WhentheGroup’sshareoflossesinajointventureequalsorexceedsitsinterestinthejointventure,includinganyotherunsecuredreceivables,theGroupdoesnotrecognisefurtherlosses,unlessithasincurredobligationsormadepaymentsonbehalfofthejointventure.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint venture.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.

1.4Property,plantandequipmentLandandbuildingscomprisemainlycasinobuildingsandoffices.LandisgenerallyshownatcostexceptforlandwhichwasacquiredatGardenRouteinpreviousyears.Property,plantandequipmentareshownathistoricalcost,lessdepreciationandimpairment.Historicalcostincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheitems.Costmayalsoincludetransfersfromequityofanygains/lossesonqualifyingcashflowhedgesofforeigncurrencypurchasesofproperty,plantandequipment.

Subsequentcostsareincludedintheasset’scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.Allotherrepairsandmaintenancearechargedtotheincomestatementduringthefinancialperiodinwhichtheyareincurred.

ACCOUNTINGPOlICIES(CONT.)FORTHEYEARENDED31DECEMBER2010

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Landisnotdepreciated.Depreciationonotherassetsiscalculatedusingthestraight-linemethodtoallocatetheircosttotheirresidualvaluesovertheirestimatedusefullives.

Allsignificantassets’residualvaluesandremainingusefullivesarereviewedannuallyandestimatedusefullivesareadjustedifappropriate,ateachbalancesheetdate.Thefollowingestimatedusefulliveswereusedinthepreparationoftheseaccounts:• Buildings 50years• Plantandmachinery 5-15years• Casinoequipment 5-6years• ThemeParkrides 6-26years• Vehicles 5years• Furniture,fittingsandotherequipment 5-10years• Computerequipmentandsoftware 2-6years• Computermainframesandservers 5years

Ateachbalancesheetdate,thebuildings’residualvaluesarecomparedtomarketvaluesof50yearoldpropertiesandadjustedaccordingly.

Anasset’scarryingamountiswrittendownimmediatelytoitsrecoverableamountiftheasset’scarryingamountisgreaterthanitsestimatedrecoverableamountandthereductionischargedasanexpenseintheincomestatement.

Leaseholdimprovementsaredepreciatedusingthestraight-linemethodovertheperiodofthelease,adjustedforanydecommissioningcoststobeincurredattheendoftheleaseperiod.

Gainsandlossesondisposalsaredeterminedbycomparingtheproceedswiththecarryingamountandarerecognisedwithinoperatingprofitintheincomestatement.

1.5BorrowingcostsBorrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofqualifyingassets,whichareassetsthatnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendeduseorsale,areaddedtothecostofthoseassets,untilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduseorsale.Investmentincomeearnedonthetemporaryinvestmentofspecificborrowingspendingtheirexpenditureonqualifyingassets isdeductedfromtheborrowingcostseligibleforcapitalisation.

Borrowingcostsincurredfortheconstructionofanyqualifyingassetarecapitalisedduringtheperiodoftimethatisrequiredtocompleteandpreparetheassetforitsintendeduse.

Allotherborrowingcostsarerecognisedinprofitorlossintheperiodinwhichtheyareincurred.

1.6.Intangibleassets1.6.1 GoodwillGoodwillrepresentstheexcessofthecostofanacquisitionoverthenetfairvalueoftheGroup’sshareoftheidentifiableassets,liabilitiesandcontingentassetsand liabilitiesof theacquiredsubsidiary,associateor jointlycontrolledentityrecognisedat thedateofacquisition.Goodwillonacquisitionsofsubsidiariesandjointlycontrolledentitiesisincludedinintangibleassets.Goodwillonacquisitionsofassociatesisincludedininvestmentsinassociates.Goodwillistestedannuallyforimpairmentandcarriedatcostlessaccumulatedimpairmentlosses.Gainsandlossesonthedisposalofanentityincludethecarryingamountofgoodwillrelatingtotheentitysold.

For thepurposeof impairment testing,goodwill is allocated toeachofGoldReef’scash-generatingunitsorgroupsofcash-generatingunits thatareexpectedtobenefitfromthebusinesscombinationinwhichthegoodwillarose,identifiedaccordingtooperatingsegment.Acash-generatingunitisthesmallestidentifiablegroupofassetsthatgeneratescashinflowsthatarelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets.TheGroupconsiderseachexistingbusinessoperationtobeacash-generatingunit.Cash-generatingunitstowhichgoodwillhasbeenallocatedaretestedforimpairmentannually,ormorefrequentlywhenthereisanindicationthattheunitmaybeimpaired.Iftherecoverableamountofthecash-generatingunitislessthanthecarryingamountoftheunit,theimpairmentlossisallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtotheunitandthentotheotherassetsoftheunitpro-rataonthebasisofthecarryingamountofeachassetintheunit.Animpairmentlossrecognisedforgoodwillisnotreversedinasubsequentperiod.



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1.6.2 Trademarks Acquired trademarks are recognised at cost. Trademarks have a definite useful life and are carried at historical cost less accumulated amortisation.Amortisationiscalculatedusingthestraight-linemethodtoallocatethecostoftrademarksovertheirestimatedusefullives.TheestimatedusefullivesoftheGroup’strademarksarebetweenthreeand10years.

1.6.3 Bid costs and casino licencesBidcostsandcasinolicencesareshownathistoricalcostlessaccumulatedamortisation.Capitalisedbidcoststhatrelatetotheexclusivityperiodofthecasinolicenceareamortisedovertheexclusivityperiod.

Bidcostsincurredthatrelatetothecasinolicenceareamortisedovertheperiodofthelicense,orover50yearsforpermanentlicenses.

1.7Impairmentoftangibleanddefinite-livedintangibleassetsexcludinggoodwillAteachbalancesheetdatetheGroupreviewsthecarryingamountsofitstangibleandintangibleassetstodeterminewhetherthereisanyindicationthatthoseassetshavesufferedanimpairmentloss.Ifanysuchindicationexists,therecoverableamountoftheassetisestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).Whereitisnotpossibletoestimatetherecoverableamountofanindividualasset,theGroupestimatestherecoverableamountofthecash-generatingunittowhichtheassetbelongs.

Recoverableamountisthehigheroffairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits).Iftherecoverableamountofacash-generatingunitisestimatedtobelessthanitscarryingamount,thecarryingamountofthecash-generatingunitisreducedtoitsrecoverableamount.Animpairmentlossisrecognisedimmediatelyinprofitorloss,unlesstherelevantassetiscarriedatarevaluedamount,inwhichcasetheimpairmentlossistreatedasarevaluationdecrease.

1.8FinancialassetsTheGroupclassifiesitsinvestmentsinthefollowingcategories:atfairvaluethroughprofitorlossandloansandreceivables.Theclassificationdependsonthepurposeforwhichtheinvestmentswereacquired.Managementdeterminestheclassificationofitsfinancialassetsuponinitialrecognition.

Regularpurchasesandsalesoffinancialassetsarerecognisedonthetradedate–thedateonwhichtheGroupcommitstopurchaseorselltheasset.FinancialassetsarederecognisedwhentherightstoreceivecashflowsfromtheinvestmentshaveexpiredorhavebeentransferredandtheGrouphastransferredsubstantiallyallrisksandrewardsofownership.

1.8.1 Financial assets at fair value through profit or lossFinancialassetsatfairvaluethroughprofitorlossarefinancialassetsheldfortrading.Afinancialassetisclassifiedinthiscategoryifacquiredprincipallyforthepurposeofsellingintheshort-term.Derivativesarealsocategorisedasheldfortradingunlesstheyaredesignatedashedginginstruments.Assetsinthiscategoryareclassifiedascurrentassets.

Gainsor lossesarising fromchanges in the fairvalueof the ‘financial assetsat fairvalue throughprofitor loss’categoryarepresented in the incomestatementwithinfinanceincome/(costs)intheperiodinwhichtheyarise.DividendincomefromfinancialassetsatfairvaluethroughprofitorlossisrecognisedintheincomestatementaspartofotherincomewhentheGroup’srighttoreceivepaymentisestablished.

Financialassetscarriedatfairvaluethroughprofitorlossareinitiallyrecognisedatfairvalue,andtransactioncostsareexpensedintheincomestatement.Financialassetsatfairvaluethroughprofitorlossaresubsequentlycarriedatfairvalue.

1.8.2 Loans and receivablesLoansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Theyareincludedincurrentassets,exceptformaturitiesgreaterthan12monthsafterthebalancesheetdate.Theseareclassifiedasnon-currentassets.TheGroup’sloansandreceivablesarecontainedin‘tradeandotherreceivables’andcashandcashequivalentsinthebalancesheetandaredisclosednetofimpairmentlosses.Loansandreceivablesaresubsequentlycarriedatamortisedcostusingtheeffectiveinterestmethod.


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1.9InventoriesInventoriesarestatedatthelowerofcostandnetrealisablevalue.Costcomprisesdirectmaterialsandrelatedcoststhathavebeenincurredinbringingtheinventoriestotheirpresentlocationandcondition.Costisdeterminedusingthefirst-infirst-out(FIFO)method.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lessapplicablevariablemarketing,sellinganddistributionexpenses.

1.10TradereceivablesTradereceivablesarerecognised initiallyat fairvalueandsubsequentlymeasuredatamortisedcostusingtheeffective interestmethod, lessprovisionforimpairment.AprovisionforimpairmentoftradereceivablesisestablishedwhenthereisobjectiveevidencethattheGroupwillnotbeabletocollectallamountsdueaccordingtotheoriginaltermsofthereceivables.Significantfinancialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyorfinancial reorganisation, anddefaultordelinquency inpayments (more than30daysoverdue) are considered indicators that the tradereceivableisimpaired.Theamountoftheprovisionisthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows,discountedattheoriginaleffectiveinterestrate.Thecarryingamountoftheassetisreducedthroughtheuseofanallowanceaccount,andtheamountofthelossisrecognisedintheincomestatementwithin“otheroperatingexpenses”.Whenatradereceivableisuncollectible,itiswrittenoffagainsttheallowanceaccountfortradereceivables.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedagainst“otheroperatingexpenses”intheincomestatement.

1.11CashandcashequivalentsCashandcashequivalentsincludescashinhand,depositsheldatcallwithbanksandothershort-termhighlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorlessthatarereadilyconvertibleintocashandwhicharesubjecttoaninsignificantriskofchangesinvalue.Bankoverdraftsaredisclosedseparatelyundercurrentliabilities.

1.12SharecapitalOrdinarysharesareclassifiedasequity.

WhereanyGroupcompanypurchasestheCompany’sequitysharecapital(treasuryshares),theconsiderationpaidisdeductedfromequityattributableto the Company’s equity holders until the shares are cancelled, re-issued or disposed of. Where such shares are subsequently sold or re-issued, anyconsiderationreceivedisincludedinequityattributabletotheCompany’sequityholders.CompanysharesconsolidatedintotheGroupaspartoftheGoldReefShareSchemeareaccountedforastreasuryshares.

1.13BorrowingsBorrowingsarerecognisedinitiallyatfairvalue,netoftransactioncostsincurred.Borrowingsaresubsequentlystatedatamortisedcost.Anydifferencebetweentheproceeds(netoftransactioncosts)andtheredemptionvalueisrecognisedintheincomestatementovertheperiodoftheborrowingsusingtheeffectiveinterestratemethod.

BorrowingsareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsafterthebalancesheetdate.

1.14TaxationTheSAnormaltaxcurrentlypayableisbasedontaxableprofitfortheyear.Taxableprofitdiffersfromprofitasreportedintheincomestatementbecauseitexcludesitemsofincomeorexpenditurethataretaxableordeductibleinotheryearsanditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedorsubstantivelyenactedbythebalancesheetdate.

TheSTCtaxconsequenceofdividendsisrecognisedasataxationchargeintheincomestatementinthesameperiodthattherelateddividendisaccruedasaliability.TheSTCliabilityisreducedbydividendsreceivedduringthedividendcycle.Wheredividendsdeclaredexceedthedividendsreceivedduringacycle,STCispayableatthecurrentSTCrateonthenetamount.Wheredividendsreceivedexceeddividendsdeclaredwithinacycle,thereisnoliabilitytopaySTC.ThepotentialtaxbenefitrelatedtoexcessdividendsreceivediscarriedforwardtothenextdividendcycleasanSTCcredit.DeferredtaxassetsarerecognisedonunutilisedSTCcreditstotheextentthatitisprobablethattheGroupwilldeclarefuturedividendstoutilisesuchSTCcredits.

STCiscalculatedinrespectofdividendpaymentsnetofdividendsreceived.IncometaxexpenserepresentsthesumofSAnormaltax,STCanddeferredtax.

Deferredtaxisrecognisedontemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbasesusedinthecomputationoftaxableprofitandareaccountedforusingthebalancesheetliabilitymethod.Deferredtaxliabilitiesaregenerallyrecognisedforalltaxabletemporarydifferencesanddeferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainst which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from



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goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither thetaxableprofitnortheaccountingprofit.Deferredtaxliabilitiesarerecognisedfortaxabletemporarydifferencesarisingoninvestmentsinsubsidiariesandassociatesandinterestsinjointventures,exceptwheretheGroupisabletocontrolthereversalofthetemporarydifferenceanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

Deferredtaxiscalculatedattaxratesenactedorsubstantiallyenactedintheperiodwhentheliabilityissettledortheassetrealised.Deferredtaxischargedorcreditedtoprofitorloss,exceptwhenitrelatestoitemschargedorcrediteddirectlytoothercomprehensiveincome,inwhichcasethedeferredtaxisalsodealtwithinothercomprehensiveincome.DeferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandwhentheyrelatetoincometaxesleviedbythesametaxationauthorityandtheGroupintendstosettleitscurrenttaxassetsandliabilitiesonanetbasis.

Thecarryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.

ThenormalSAtaxrateusedfortheyearending31December2010was28%(2009:28%).Deferredtaxassetsandliabilitiesat31December2010havebeencalculatedusingthisrateasthisistheratethattheGroupexpectstoapplytotheperiodwhentheassetsarerealisedortheliabilitiesaresettled.STCiscalculatedattheprevailingrateof10%.CGTiscalculatedat50%oftheCompanytaxrate.

1.15Employeebenefits1.15.1 Share-based payments – Gold Reef Share SchemeTheGroupoperatesanequity-settled,share-basedcompensationplan.OptionsaregrantedtopermanentemployeesatthediscretionofthedirectorsintermsofwhichsharesinGoldReefmaybeacquiredbasedonpricesprevailingatthedatesofgrantingtheoptions.Deliveryofthesharessoacquirediseffectedinthreeequaltranchesvestingoverfouryears;onethirdaftertwoyears,onethirdafterthreeyearsandonethirdafterfouryears.Sharesacquiredthroughtheshareincentiveschemehavetobepaidforbytheemployeesatthesubscriptionpricesasdeterminedintheoptioncontracts.

OnaGroupleveltheGoldReefShareSchemeisconsolidated.Uponexerciseoftheoptionsthesubscriptionvalueiscreditedtosharecapital(nominalvalue)andsharepremiumanddebitedtoanon-currentasset.Thenon-currentassetisconsideredpayablewhentheemployeesexercisetheoptionsandtheoptionshavevested.

The fair valueof theemployee services receivedby theCompany and/or its subsidiaries in exchange for thegrantof theoptions is recognised as anexpense.ThefairvalueoftheemployeeservicesreceivedbytheCompany’sassociatesinexchangeforthegrantoftheoptionsisrecognisedasanincreaseintheinvestmentinassociate.ThefairvalueoftheemployeeservicesreceivedbytheCompany’sjointventuresinexchangeforthegrantoftheoptionsisrecognisedasanexpensetotheextentthattheventureisconsolidated,anyremainingportionisincludedintheinvestmentinjointventure.

Thetotalamounttoberecognisedoverthevestingperiodisdeterminedbyreferencetothefairvalueoftheoptionsgranted,excludingtheimpactofanynon-marketvestingconditions(forexampleprofitabilityandsalesgrowthtargets).Non-marketvestingconditionsareincludedinassumptionsaboutthenumberofoptionsthatareexpectedtobecomeexercisable.Ateachbalancesheetdatetheentityrevisesitsestimatesofthenumberofoptionsthatareexpectedtobecomeexercisable.Itrecognisestheimpactoftherevisionoforiginalestimates,ifany,intheincomestatementandacorrespondingadjustmenttoequityoverthevestingperiod.Thisequityaccountisincludedintheshare-basedpaymentreserveoftheCompany.

Fairvalue ismeasuredusingamodifiedBinomialpricingmodel.Theexpected lifeused inthemodelhasbeenadjusted,basedonmanagement’sbestestimate,fortheeffectsofnon-transferability,exerciserestrictionsandbehaviouralconsiderations.

1.15.2 Goods or services settled in cashGoodsorservices,includingemployeeservicesreceivedinexchangeforcash-settledsharebasedpayments,arerecognisedatthefairvalueoftheliabilityincurredandareexpensedwhenconsumedorcapitalisedasassets,whicharedepreciatedoramortised.Theliabilityisre-measuredateachbalancesheetdatetoitsfairvalue,withallchangesrecognisedimmediatelyinprofitorloss.

Thefairvalueoftheexecutiveshareappreciationschemeisdeterminedateachbalancesheetdatebyindependentactuaries,usingaMonteCarlovaluationmodel.Theseareadjustedformanagement’sbestestimateoftheappreciationunitsexpectedtovestandmanagement’sbestestimateoftheperformancecriteriaassumption.


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Thefairvalueofthelong-termincentiveplanliabilityisdeterminedateachbalancesheetdatebyindependentactuaries,usingamodifiedbinomialtreevaluationmodel,whichtakesintoaccounttheAmericannatureoftheappreciationunitspostvestingaswellasincorporatingemployeeexercisebehaviourwhenapplicable.Theseareadjustedformanagement’sbestestimatesoftheappreciation,bonusandperformanceunitsexpectedtovestandmanagement’sbestestimateoftheperformancecriteriaassumptionontheperformanceunits.

Theliabilityisincludedincurrentliabilities,exceptformaturitiesgreaterthan12monthsafterthebalancesheetdate.Theseareclassifiedasnon-currentliabilities.1.15.3 Bonus plansTheGrouprecognisesaliabilityandanexpenseforbonuses,basedonaformulathattakesintoconsiderationtheprofitattributabletotheCompany’sshareholders after certain adjustments. The Group recognises the liability where a reliable estimate can be made of the amount to be paid and it iscontractuallyobligedtodosoorthereisapastpracticethathascreatedaconstructiveobligationandthedirectorsareoftheopinionthatitisprobablethatsuchbonuseswillbepaid.

1.15.4 Retirement benefit costsTheGroupoperatesadefinedcontributionplan.TheGroup’scontributiontothedefinedcontributionprovidentplanischargedtotheincomestatementintheperiodtowhichthecontributionrelates.UndertheschemetheGrouppayscontributionsintoaseparateentityandwillhavenolegalorconstructiveobligationstopayfurthercontributionsifthefunddoesnotholdsufficientassetstopayallemployeebenefitsrelatingtoemployeeserviceinthecurrentorpriorperiods.

1.15.5 Employee leave entitlementEmployeeentitlementstoannualleavearerecognisedwhentheyaccruetoemployees.Anaccrualismadefortheestimatedliabilitytotheemployeesforannualleaveuptothebalancesheetdate.Thisliabilityhasbeenincludedintheaccrualsbalanceinthebalancesheet.

1.16TradeandotherpayablesTradeandotherpayablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.Theyareincludedincurrentliabilities,exceptformaturitiesgreaterthan12monthsafterthebalancesheetdate.Theseareclassifiedasnon-currentliabilities.

1.17ProvisionsProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofpastevents,itismorelikelythannotthatanoutflowofresourceswillberequiredtosettletheobligationandtheamounthasbeenreliablyestimated.Restructuringprovisionscompriseleaseterminationpenaltiesandemployeeterminationpayments.Provisionsarenotrecognisedforfutureoperatinglosses.

Wherethereareanumberofsimilarobligations,thelikelihoodthatanoutflowwillberequiredinsettlementisdeterminedbyconsideringtheclassofobligationsasawhole.Aprovisionisrecognisedevenifthelikelihoodofanoutflowwithrespecttoanyoneitemincludedinthesameclassofobligationsmaybesmall.

Provisionsaremeasuredatthepresentvalueoftheexpendituresexpectedtoberequiredtosettletheobligationusingapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheobligation.Theincreaseintheprovisionduetopassageoftimeisrecognisedasaninterestexpense.

1.18RevenuerecognitionGamingrevenuecomprises thenetgamingwingeneratedbycasinooperations. In termsof accounting standards,contracts concludedundergamingoperationsmeetthedefinitionofderivativesandthereforeincomefromgamingoperationsrepresentsthenetpositionarisingfromfinancialinstruments.Netgamingwinismeasuredasthenetcashreceivedfromcasinooperations.Duetotheshort-termnatureoftheGroup’scasinooperations,allincomeisrecognisedinprofitandlossimmediately,atfairvalue.

Promotional allowances for complimentary beverages, meals and/or accommodation are eliminated against the corresponding promotional costsrecognisedingamingexpenses.(RefertoNote4oftheGroupannualfinancialstatements).

IFRIC13clarifies thatwheregoodsor servicesare sold togetherwithacustomer loyalty incentive (forexample loyaltypointsor freeproducts), thearrangementisamultipleelementarrangementandtheconsiderationreceivablefromthecustomerisallocatedbetweenthecomponentsofthearrangementusingfairvalues.TheGroupdeductsthecostofloyaltypointsfromnetgamingrevenueratherthanincludingthiscostinpromotionalandmarketingcosts.(RefertoGroupAdditionalInformationonpage55).



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Revenuearisingfromentrancefees,theatrerevenue,hotelrevenue,parkingrevenue,rental income,managementfeesandcommissionsandfoodandbeveragerevenuearerecordedontheaccrualbasiswhentheamountofrevenuecanbemeasuredreliablyanditisprobablethatfutureeconomicbenefitswillflowtotheGroup.

VATandothertaxesleviedoncasinowinningsareincludedinnetgamingwinandaretreatedasdirectcostsasthesearebornebytheGroupandnotcustomers.VATonallotherrevenuetransactionsisexcludedfromrevenueasthisisconsideredtobeataxcollectedasanagentonbehalfofSARS.

OtherrevenueearnedbytheGroupisrecognisedonthefollowingbases:• royaltyincome:onanaccrualbasisinaccordancewiththesubstanceoftherelevantagreement;• interestincome:asitaccrues(takingintoaccounttheeffectiveyieldontheassets)unlesscollectabilityisindoubt;and• dividendincome:whentheshareholders’rightstoreceivepaymentisestablished.

1.19leasesLeasesinwhichasignificantportionoftherisksandrewardsofownershipareretainedbythelessorareclassifiedasoperatingleases.Paymentsmadeunderoperatingleases(netofanyincentivesreceivedfromthelessor)arechargedtotheincomestatementonastraight-linebasisovertheperiodofthelease.

Leasesofproperty,plantandequipmentwheretheGroupassumessubstantiallyall thebenefitsandrisksofownershipareclassifiedasfinanceleases.Financeleasesarecapitalisedatthelowerofthefairvalueoftheleasedpropertyandtheestimatedpresentvalueoftheunderlyingleasepayments.Eachleasepaymentisallocatedbetweentheliabilityandfinancechargesoastoachieveaconstantrateonthefinancebalanceoutstanding.Thecorrespondingrentalobligations,netoffinancecharges,areincludedininterest-bearingborrowings.Theinterestelementofthefinancechargeischargedtotheincomestatementovertheleaseperiod.Theproperty,plantandequipmentacquiredunderfinanceleasingcontractsaredepreciatedovertheusefullifeoftheassets.

Assetsleasedtothirdpartiesunderoperatingleasesareincludedinproperty,plantandequipmentinthebalancesheet.Theyaredepreciatedovertheirexpecteduseful liveson abasis consistentwith similarownedproperty,plant andequipment.Rental incomearising from the lettingofpremises toconcessionaires(netofanyincentivesgiventolessees)isrecognisedonastraight-linebasisovertheleaseterm.

1.20FinancialguaranteecontractsFinancialguaranteecontractsareinitiallymeasuredatfairvalueandsubsequentlymeasuredatthehigherof(a)thebestestimateoftheobligationand(b)theamountinitiallyrecognisedlesscumulativeamortisationreleasedonasystematicbasisasafunctionofthepassingoftimeandtherepaymentofcapital.

Thefairvalueoffinancialguaranteecontractsenteredintoonbehalfofsubsidiarycompaniesarecapitalisedtothecarryingvalueoftheinvestmentinsubsidiary.Thefairvalueoffinancialguaranteecontractsenteredintoonbehalfofassociatecompaniesareexpensed.Theamortisationofallfinancialguaranteecontractsisaccountedforin‘otherincome’intheincomestatement.

1.21DividenddistributionDividenddistributionstotheCompany’sshareholdersarerecognisedasaliabilityintheGroup’sfinancialstatementsintheperiodinwhichthedividendsareapprovedbytheCompany’sBoardofdirectors.

1.22SegmentalreportingThe standard requires a ‘management approach’underwhich segment information is presentedon the samebasis as thatused for internal reportingpurposes.Operatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothechiefoperatingdecision-maker.Thechiefoperatingdecision-makerhasbeenidentifiedastheGroupexecutivedirectorswhoareresponsibleformakingstrategicdecisions.

2.RISKMANAGEMENT2.1FinancialriskmanagementTheGroup’sactivitiesexposeittoavarietyoffinancialrisks:marketrisk(includingcurrencyriskandcash-flowandfairvalueinterestrisk),creditriskandliquidityrisk.TheGroup’soverallriskmanagementprocessfocusesontheunpredictabilityoffinancialmarketsandseekstominimisepotentialadverseeffectsontheGroup’sfinancialperformance.TheGroupusesderivativefinancialinstrumentstohedgecertainriskexposures.


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2.1.1 Market riska) Currency RiskForeignexchangeriskariseswhenfuturecommercialtransactions(mainlyimporttransactions)whicharerecognisedasassetsorliabilities,aredenominatedinacurrencythatisnottheentity’sfunctionalcurrency.Tomanageitsforeignexchangeriskarisingfromfuturecommercialtransactions,whichresultintheCompanyrecognisingassetsandliabilities,theCompanyusesforwardcontractsandsupplieragreementsdenominatedinRands.

b) Cash flow interest rate riskTheGroup’sinterestrateriskarisesfromlong-termborrowingsissuedatvariablerateswhichexposetheGrouptocashflowinterestraterisk.

TheGroupmanages itscashflowinterestrateriskbyusingfloating-to-fixed interestrateswaps.Such interestrateswapshavetheeconomiceffectofconvertingborrowingsfromfloatingratestofixedrates.Generally,theGroupraiseslong-termborrowingsatfloatingratesandswapsthemintofixedratesthatarelowerthanthoseavailableiftheGroupborrowedatfixedratesdirectly.Undertheinterestrateswaps,theGroupagreeswithotherpartiestoexchange,atspecifiedintervals(primarilymonthly),thedifferencebetweenfixedcontractratesandfloating-rateinterestamountscalculatedbyreferencetotheagreednotionalamounts.

IfJIBARweretoincreaseby1%,financecostswouldhaveincreasedbyR14,3millionperannum.IfJIBARweretodecreaseby1%,financecostswouldhavedecreasedbyR14,3millionperannum.

At31December2010,thefairvalueoftheinterestratehedgeliabilitywouldhavebeenR6,0millionlowerifJIBARhadbeen1%higher,whilethefairvalueadjustmentrecognisedinthehedgingreservewouldhavebeenR6,0millionhigher.

The fair valueof the interest rate hedge liabilitywouldhavebeenR6,0millionhigher if JIBARhadbeen1% lower,while the fair value adjustmentrecognisedinthehedgingreservewouldhavebeenR6,0millionlower,respectively.

c) Fair value interest rate riskTheGroup’sexposuretofairvalueinterestrateriskarisesfromthefixedinterestrateswapderivativesusedtomitigatethecashflowinterestrateriskontheGroup’slong-termborrowings.

TheGroupmanagesitsfairvalueinterestrateriskbydesignatingthesefixedinterestrateswapsashedginginstrumentsinacashflowhedgerelationship.Theeffectiveportionofchangesinthefairvalueofderivativesthataredesignatedandqualifyascashflowhedgesisrecognisedinothercomprehensiveincome.Theamountsaccumulatedinothercomprehensiveincomearerecycledintheincomestatementintheperiodswhenthehedgeditemaffectsprofitorloss.RefertoNote15oftheGroupannualfinancialstatementsfortheinterestratesensitivityanalysis.

2.1.2 Credit riskCreditriskarises fromloansandreceivables,accountsreceivable(excludingprepaymentsandVAT)andcashandcashequivalents.TheGrouphasnosignificantconcentrationsofcreditrisk.Ithaspoliciesinplacetoensurethatthegrantingofcredittocustomersisadequatelycontrolled.Cashinvestmentsareonlyplacedwithreputable,highqualitycommercialbankinginstitutions.

Themaximumexposuretocreditriskisrepresentedbythecarryingamountofeachfinancialassetinthebalancesheet(netofimpairmentlosseswhererelevant).RefertoNote18oftheGroupannualfinancialstatementsfortheageingoftradereceivablebalances.

2.1.3 Liquidity riskTheGroupmakesuseofamixofexternalborrowingsandexistingresourcestofunditsoperationsandexpansions.PrimaryborrowingsarefromNedbankandABSAintheformoflongterminterest-bearingborrowings(seeNote23oftheGroupannualfinancialstatements).TheGroupmanagesliquidityriskbymonitoringcashlevels,undrawnfacilities,loanbalancesandexistingguarantees(seeNote23oftheGroupannualfinancialstatements)onaweeklybasisandbyupdatingkeyratiosandforecastsonamonthlybasis.Keyratiosincludedebt:equity,debt:EBITDAR,interestcoveranddebtservicibilityratios.TheCompany,togetherwithitsbankers,monitorsdefaultlevelsandeventstoensurethatfundsareavailableasintendedperforecastestimates.

ThetableonthefollowingpageanalysestheGroup’sfinancialliabilitiesandnet-settledderivativefinancialliabilitiesintorelevantmaturitygroupingsbasedontheremainingperiodatthebalancesheetdatetothecontractualmaturitydate.Theamountsdisclosedinthetablearethecontractualundiscountedcashflows.Balancesduewithin12monthsequaltheircarryingbalancesastheimpactofdiscountinginnotsignificant.



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Astheamountsincludedinthetablearecontractualundiscountedcashflows,theseamountswillnotnecessarilyreconciletotheamountsdisclosedonthebalancesheetforborrowings,derivativefinancialinstrumentsandtradeandotherpayables.

Thematurityanalysisappliestofinancialinstrumentsonlyandthereforestatutoryliabilitiesarenotincluded.AmaturityanalysisforfinancialguaranteecontractsissuedbytheCompanyinrespectofotherGroupcompanies(referNote16oftheCompanyannualfinancialstatements)hasnotbeendisclosedasthesefinancialguaranteesarenotexpectedtomatureandasaresult,therewillbenocashoutflowfortheCompany.

2.1.4 Capital risk managementForthepurposesofcapitalmanagement,capitalincludessharecapital;sharepremium;retainedearnings;share-basedpaymentreserve;otherreservesandinterest-bearingborrowings.ThecapitalmixisreviewedbytheGroupwhensubstantialchangesoccurinthecapitalrequirementsoftheGroup.Theserequirementscouldbeforsubstantialadditionstoproperty,plantandequipmentorthepaymentofdividendstoshareholders.ThedirectorswillregularlyreviewtheliquidityriskoftheGroupandensuresufficientinformationisavailabletoalterthecapitalmixifrequired.Thisreviewwillincludeareviewofoperations,cashbalances,QuantitySurveyorandprojectreportsandvariancestocashandoperatingbudgets.DirectorsoftheGroupwillconsidertheavailabilityofcapital,thecostofdebtandequityandperformancewhenmakingadecisionthatinfluencessubstantiallythecapitalmake-upoftheCompany.TheGroupmonitorsindicatorsofbreachofcontractordebtcovenantand/ordefaultwithitsbankersandnonehavebeennotedatyear-end.

2.2DerivativefinancialinstrumentsandhedgingactivitiesDerivativesareinitiallyrecognisedatfairvalueonthedateaderivativecontractisenteredintoandaresubsequentlyremeasuredattheirfairvalue.Themethodofrecognisingtheresultantgainorlossdependsonwhetherthederivativeisdesignatedasahedginginstrument,andifso,thenatureoftheitembeinghedged.TheGroupdesignatescertainderivativesashedgesofhighlyprobableforecasttransactions(cashflowhedges).

TheGroupdocumentsattheinceptionofthetransactiontherelationshipbetweenhedginginstrumentsandhedgeditems,aswellasitsriskmanagementobjectiveandstrategyforundertakingvarioushedgetransactions.TheGroupalsodocumentsitsassessment,bothathedgeinceptionandonanongoingbasis,ofwhetherthederivativesthatareusedinhedgingtransactionsarehighlyeffectiveinoffsettingchangesinfairvaluesorcashflowsofhedgeditems.

lESSThAN BETWEEN BETWEEN OVERGROUP 1YEAR 1AND2YEARS 2AND5YEARS 5YEARS R’000 R’000 R’000 R’000

31DECEMBER2010Borrowings(excludingfinanceleaseliabilities) 276782 289671 598859 542720Financeleaseliabilities 223 – – –Derivativefinancialinstruments 27510 – – –Tradeandotherpayables 116170 – – –Amountsduetorelatedparties 652 – – – 31DECEMBER2009Borrowings(excludingfinanceleaseliabilities) 310100 298800 1113601 363002Financeleaseliabilities 417 208 – –Derivativefinancialinstruments 19878 9468 – –Tradeandotherpayables 117304 – – –Amountsduetorelatedparties 558 – – –

lESSThAN BETWEEN BETWEEN OVERCOMPANY 1YEAR 1AND2YEARS 2AND5YEARS 5YEARS R’000 R’000 R’000 R’000

31DECEMBER2010Financialguaranteecontract 103106 – – –Tradeandotherpayables 714 – – –Relatedpartypayables 239471 – – – 31DECEMBER2009Financialguaranteecontract 124702 – – –Tradeandotherpayables 651 – – –Relatedpartypayables 254183 – – –

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ThefairvaluesofvariousderivativeinstrumentsusedforhedgingpurposesaredisclosedinNote15oftheGroupannualfinancialstatements.

Movementsonthehedgingreserveinshareholders’equityareshowninNote21oftheGroupannualfinancialstatements.ThefullfairvalueofahedgingderivativehasbeendisclosedintradeandotherpayablesonthefaceofthebalancesheetasthehedgingcontractexpiresinOctober2011.RefertoNote15oftheGroupannualfinancialstatements.2.2.1 Cash flow hedgeTheeffectiveportionofchangesinthefairvalueofderivativesthataredesignatedandqualifyascashflowhedgesisrecognisedinothercomprehensiveincome.Thegainorlossrelatingtotheineffectiveportionisrecognisedimmediatelyintheincomestatement.

Amountsaccumulatedinothercomprehensiveincomearerecycledintheincomestatementintheperiodswhenthehedgeditemaffectsprofitorloss.Thegainorlossrelatingtotheeffectiveportionof interestrateswapshedgingvariablerateborrowingsisrecognisedintheincomestatementwithin‘financecosts’.Thegainorlossrelatingtotheineffectiveportionisrecognisedintheincomestatement.However,whentheforecasttransactionthatishedgedresultsintherecognitionofanon-financialassetthegainsandlossespreviouslydeferredinothercomprehensiveincomearetransferredfromothercomprehensiveincomeandincludedintheinitialmeasurementofthecostoftheasset.Thedeferredamountsareultimatelyrecognisedincostofgoodssoldinthecaseofinventoryorindepreciationinthecaseoffixedassets.

Whenahedginginstrumentexpiresorissold,orwhenahedgenolongermeetsthecriteriaforhedgeaccounting,anycumulativegainorlossexistinginothercomprehensiveincomeatthattimeremainsinothercomprehensiveincomeandisrecognisedwhentheforecasttransactionisultimatelyrecognisedintheincomestatement.Whenaforecasttransactionisnolongerexpectedtooccur,thecumulativegainorlossthatwasreportedinothercomprehensiveincomeisimmediatelytransferredtotheincomestatement.

2.2.2 Derivatives that do not qualify for hedge accountingCertainderivativeinstrumentsdonotqualifyforhedgeaccounting.Changesinthefairvalueofanyderivativeinstrumentsthatdonotqualifyforhedgeaccountingarerecognisedimmediatelyintheincomestatement.

2.3FairvalueestimationThefollowingtablepresentstheGroup’sassetsandliabilitiesthataremeasuredatfairvalueat31December2010.

Thefairvalueoffinancialinstrumentstradedinactivemarketsisbasedonquotedmarketpricesatthebalancesheetdate.Amarketisregardedasactiveifquotedpricesarereadilyandregularlyavailablefromanexchange,dealer,broker,industrygroup,pricingserviceorregulatoryagencyandthosepricesrepresentactualandregularlyoccurringmarkettransactionsonanarm’slengthbasis.

TOTAl lEVEl1 lEVEl2 lEVEl3 BAlANCE

TOTAl lEVEl1 lEVEl2 lEVEl3 BAlANCE

liabilities Derivativesusedforhedging – 27510 – 27510Totalliabilities – 27510 – 27510

ThefollowingtablepresentstheGroup’sassetsandliabilitiesthataremeasuredatfairvalueat31December2009.

liabilities Derivativesusedforhedging – 27881 – 27881Totalliabilities – 27881 – 27881



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Thefairvalueoffinancialinstrumentsthatarenottradedinanactivemarket(forexampleover-the-counterderivatives)isdeterminedbyusingvaluationtechniques.Thesevaluationtechniquesmaximisetheuseofobservablemarketdatawhereit isavailableandrelyas littleaspossibleonentityspecificestimates.Ifallsignificantinputsrequiredtofairvalueaninstrumentareobservable,theinstrumentisincludedinleveltwo.

Ifoneormoreofthesignificantinputsisnotbasedonobservablemarketdata,theinstrumentisincludedinlevelthree.

Specificvaluationtechniquesusedtovaluefinancialinstrumentsinclude:• Quotedmarketpricesordealerquotesforsimilarinstruments;• Thefairvalueofinterestrateswapsiscalculatedasthepresentvalueoftheestimatedfuturecashflowsbasedonobservableyieldcurves;• Thefairvalueofforwardforeignexchangecontractsisdeterminedusingforwardexchangeratesatthebalancesheetdate,withtheresultingvalue

discountedbacktopresentvalue;and• Othertechniques,suchasdiscountedcashflowanalysis,areusedtodeterminefairvaluefortheremainingfinancialinstruments.

Notethatalloftheresultingfairvalueestimatesareincludedinleveltwo.

TheGroupdidnothaveanylevelthreefinancialinstrumentsmeasuredatfairvalueasatyear-end.

2.4ForeigncurrenciesForthepurposeoftheconsolidatedfinancialstatements,theresultsandfinancialpositionofeachentityareexpressedinSouthAfricanRands,whichisthefunctionalcurrencyoftheCompanyandthepresentationcurrencyfortheconsolidatedfinancialstatements.

Foreigncurrencytransactionsaretranslated intothefunctionalcurrencyusingtheexchangeratesprevailingatthedatesof thetransactions.Foreignexchangegainsandlossesresultingfromthesettlementofsuchtransactionsandfromthetranslationatyear-endexchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognisedintheincomestatement,exceptwhendeferredinequityasqualifyingcashflowhedges.

3.CRITICAlACCOUNTINGESTIMATESANDASSUMPTIONSTheGroupmakesestimates and assumptions concerning the future.The resulting accountingestimateswill,bydefinition, seldomequal the relatedactualresults.Estimatesand judgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandother factors, includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow.

Criticaljudgementsinapplyingtheentity’saccountingpolicies:3.1EstimatedimpairmentofgoodwillandotherintangibleassetsTheGrouptestsannuallywhethergoodwillhassufferedanyimpairment,inaccordancewiththeaccountingpolicystatedinNote1.6.TheGroupconsidersimpairmentindicatorsofotherintangibleassetsonanannualbasisinaccordancewiththeaccountingpolicystatedinNote1.6.Thecurrenteconomicclimateisanindicationthatothertangibleanddefinite-livedintangibleassetsexcludinggoodwill,maybeimpaired.Accordingly,managementhasextendedimpairmenttestingtoincludecash-generatingunitsthatdonotincludegoodwill(thisincludestheassessmentofimpairmentofinvestmentsinsubsidiariesataCompanylevel).

Therecoverableamountsofcash-generatingunitshavebeendeterminedbasedonvalue-in-usecalculations.Thesecalculationsrequiretheuseofestimates.Suchestimatesincludetheuseofpre-taxcashflowprojectionsbasedonfinancialbudgetsapprovedbymanagementcoveringaforecastperiodofnineyears.Cashflowprojectionsforecastinganine-yearperiodisstandardmanagementpractice.Cashflowsbeyondthenine-yearperiodareextrapolatedusinganestimatedperpetualgrowthrateof5,50%whichisbasedontheconsensusforecastofmajorcommercialbanksinSAasatyear-end.

Thekeyassumptionsusedforthevalue-in-usecalculationsareasfollows:

REVENUE EBITDAR AVERAGE AVERAGE AVERAGE AVERAGE GROWThRATE GROWThRATE GROWThRATE GROWThRATE FOR2YEARS FOR7YEARS FOR2YEARS FOR7YEARS % % % %

RevenuegrowthrateonallcasinosexcludingQueensCasino 7,0 7,0 7,0 7,0QueensCasino 7,6 7,9 9,3 10,0


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ThediscountrateappliedtothecashflowprojectionswasbasedontheWeightedAverageCostofCapitalwhichwassetat12,1%forlargetomediumcasinosand15,3%forsmallercasinos.

Basedontheaboveassumptions,inorderforthefirstRandofimpairmenttoberecognisedataGrouplevelagainstgoodwill,thediscountratewouldhavetoincreasebyaminimumof3,4%foralargetomediumcasinoandbyaminimumof2,3%forasmallcasino.

AtCompanylevelanimpairmentchargewasraisedagainsttheinvestmentinQueensCasino(refertoNote10oftheCompanyfinancialstatements).Ifthediscountrateweretoincreaseby1%,theimpairmentchargewouldincreasebyR382173.Ifthediscountrateweretodecreaseby1%,theimpairmentchargewoulddecreasebyR403913.IfrevenuegrowthatQueensCasinowas1%lowerthanestimated,theimpairmentchargewouldbeR656624higher.IfrevenuegrowthatQueensCasinowas1%higherthanestimated,theimpairmentchargewoulddecreasebyR1496418.

3.2FinancialguaranteecontractsThefairvalueofthefinancialguaranteecontractsisdeterminedbasedonthepresentvalueofthespreaddifferentialbetweenthecontractualfundingrateandtheratethatwouldhavebeenrequiredbythefinancierintheabsenceoftheguarantee.Thespreaddifferentialsappliedinthevaluationofthefinancialguaranteecontractsrangebetween1,0%and2,6%.

3.3IncometaxesJudgmentisrequiredindeterminingtheprovisionforincometaxes.Therearemanytransactionsandcalculationsforwhichtheultimatetaxdeterminationisuncertainduringtheordinarycourseofbusiness.TheGrouprecognisesliabilitiesforanticipatedtaxauditissuesbasedonestimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecorded,suchdifferenceswillimpacttheincometaxanddeferredtaxprovisionsintheperiodinwhichsuchdeterminationismade.

3.4Estimatesofresidualvaluesandusefullivesofproperty,plantandequipmentTheGroupreassessesannuallytheresidualvaluesandremainingusefullivesofsignificantassets.TheresidualvaluesoftheseassetshavebeenestimatedastheamountthattheGroupwouldcurrentlyobtainfromdisposalofeachsignificantasset,initscurrentlocation,iftheassetwerealreadyoftheageandintheconditionexpectedattheendofitsusefullife.TheusefullifeisestimatedastheperiodoverwhichanassetisexpectedtobeavailableforusebytheGroup.

3.5GamingprovisionsGamingprovisionsconsistofexpectedfutureobligationstocustomersbasedonpastevents.Thetimingofthepaymentsrequiredtosettletheseobligationsisuncertain,asistheeventualrecipientofthepayment.TheGrouphoweverassumesthattheseamountswillbepaidoutintheongoingoperationsoftherelevantgamingsubsidiariesduringthenext12months.

3.6NetgamingwinTheGroupregardsthenationalVATleviedonnetgamingwintobecomparablewiththegaminglevieswhicharepaidtoprovincialgamingboards.TheseareseenasdirectcostsoftheGroupastheyareborneentirelybytheGroupandhavenoeffectoncasinoactivitiesfromthecustomer’sperspective.Inthecasinoindustrythenatureofbettingtransactionsmakesitdifficulttoseparatebetsplacedbycustomersandwinningspaidtocustomers.Itthereforefollowsthatcasinosexperiencepracticaldifficultiesreflectingoutputtaxseparatelyfrominputtax.Accordingly,SARSallowscasinostoaccountforVATbyapplyingthetaxfractiontothenetbettingtransaction.Provincialgamingleviesarecalculatedonasimilarbasisbyapplyingthetaxfractiontothenetbettingtransaction.AnychangeineithertheVATrateortheprovincialgaminglevieswouldbeabsorbedbytheGroupandwouldnotberecoupedfromthecustomer.TheGroupthustreatsVATandothertaxesleviedoncasinowinningsasdirectcosts.Thesecostsareincludedinnetgamingwinandaredisclosedseparatelyfromotherexpenseitemsonthefaceoftheincomestatement.

3.7FairvalueofderivativesandotherfinancialinstrumentsThefairvalueofderivativesthatarenottradedinanactivemarket(forexampleover-the-counterderivatives)isdeterminedbyusingvaluationtechniques.TheGroupusesitsjudgmenttoselectavarietyofmethodsandmakeassumptionsthataremainlybasedonmarketconditionsexistingateachbalancesheetdate.TheGrouphasuseddiscountedcashflowanalysisforvariousavailable-for-salefinancialassetsthatarenottradedinactivemarkets.

3.8Cash-settledlTIPandExecutiveShareAppreciationSchemeThefairvalueoftheliabilitiesrelatingtothecash-settledLTIPandexecutiveshareappreciationschemeisdeterminedusingvaluationtechniquesperformedbyindependentactuariesthatarebasedonmarketconditionsexistingateachbalancesheetdate.Thefairvalueoftheliabilitiesarealsodependentonmanagementassumptionsrelatingtothenon-marketconditionsonthenumberofunitsthatwillultimatelybepaidandmanagement’sbestestimateoftheperformancecriteriaassumptions.(RefertoNote16oftheGroupannualfinancialstatementsforkeyassumptionsapplied.)



49

2010 2009

Note R’000 R’000

GROUPINCOMESTATEMENTFORTHEYEARENDED31DECEMBER2010

Revenue 4 2210872 2229230Netgamingwin 2033160 2064648ThemePark 74182 72153Foodandbeverage 38097 35462Other 65433 56967Otherincome 4133 14862 2215005 2244092GamingleviesandVAT 4.1 (408048) (411960)Employeecosts 5 (521624) (479643)Promotionalandmarketingcosts 4.2 (144150) (139964)Depreciationandamortisation 4.3 (205602) (185207)Otheroperatingexpenses 4.4 (358827) (336148)Operatingprofit 576754 691170Financeincome 6 29622 38553Financecosts 6 (144184) (170911)Profitbeforeequityaccountedearnings 462192 558812Shareoflossinassociate 13 (3912) (5175)Profitbeforetaxation 458280 553637Taxationexpense 7 (165659) (179686)Profitfortheyear 292621 373951

Profitattributableto: EquityholdersofGoldReef 280964 360630Non-controllinginterest 11657 13321 292621 373951EPS–BasicEPS(cents) 8 101,6 131,0–DilutedEPS(cents) 8 101,6 131,0

The notes on pages 59 to 93 are an integral part of these financial statements.

50

2010 2009

R’000 R’000

GROUPSTATEMENTOFCOMPREhENSIVEINCOME


Profitfortheyear 292621 373951Othercomprehensiveincomefortheyear,netoftax 4898 14392Fairvaluegainoninterestratehedge 5380 6943Fairvaluegain/(loss)onforeignexchangehedge 122 (122)Incometaxrelatingtocomponentsofothercomprehensiveincome (604) 7571Totalcomprehensiveincomefortheyear 297519 388343 Totalcomprehensiveincomeattributableto: 285862 375022EquityholdersofGoldReef 11657 13321Non-controllinginterest 297519 388343


51

2010 2009

Note R’000 R’000

GROUPBAlANCEShEETASAT31DECEMBER2010

ASSETS Non-currentassets Property,plantandequipment 9 2511724 2547199Leaseholdimprovements 10 150915 138464Intangibleassets 11 1182236 1184630Deferredincometaxassets 24 13906 12510Investmentinjointventure 12 6214 –Investmentinassociate 13 23683 22791Sharescheme 16.1 53196 47125 3941874 3952719Currentassets Inventories 17 22307 19250Tradeandotherreceivables 18 39932 42208Currenttaxassets 1367 2225Amountsowingbyrelatedparties 27 310 73Cashandcashequivalents 19 420504 440175 484420 503931Totalassets 4426294 4456650 EQUITYANDlIABIlITIES Capitalandreserves Sharecapital 20 5847 5840Sharepremium 20 1866137 1860132Treasuryshares 20 (53493) (57825) 1818491 1808147Share-basedpaymentreserve 394109 388700Otherreserves 21 (539485) (544808)Retainedearnings 1079705 979386 2752820 2631425

Non-controllinginterest 22 45444 44526Totalequity 2798264 2675951

Non-currentliabilities Interest-bearingborrowings 23 1130936 1324990Deferredincometaxliabilities 24 76115 64480Derivativefinancialinstruments 15 – 8616Cash-settledshareincentiveschemeliability 16.3 4989 3901 1212040 1401987Currentliabilities Tradeandotherpayables 25 167080 153299Provisions 26 48130 33827Currentportionofinterest-bearingborrowings 23 193937 186937Currentincometaxliabilities 5773 3989Amountsowingtorelatedparties 27 652 558Bankoverdraft 19 418 102 415990 378712Totalequityandliabilities 4426294 4456650


52

TOTAlATTRI- ShARE- BUTABlE BASED TOEQUITY NON-CON- ShARE ShARE TREASURY PAYMENT OThER RETAINEDhOlDERSOF TROllING TOTAl CAPITAl PREMIUM ShARES RESERVE RESERVES EARNINGS GOlDREEF INTEREST EQUITY R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Balanceat1January2009 5840 1860132 (70934) 382445 (565066) 798858 2411275 42670 2453945Total comprehensive income for

the year ended 31 December 2009 – – – – 14392 360630 375022 13321 388343Profitfortheyear – – – – – 360630 360630 13321 373951Fairvaluegainoninterestratehedge,netoftax – – – – 14514 – 14514 – 14514Fairvaluelossonforeignexchangehedge,netoftax – – – – (122) – (122) – (122)Recognitionofshare-basedpayments – – – 6255 – – 6255 – 6255Netmovementbetweenshareschemeandparticipants – – 13109 – 5866 – 18975 – 18975Dividendspaid – – – – – (180102) (180102) – (180102)Dividendspaidtonon-controllinginterestsbysubsidiaries – – – – – – – (11465) (11465)Balanceat31December2009 5840 1860132 (57825) 388700 (544808) 979386 2631425 44526 2675951Total comprehensive income for

the year ended 31 December 2010 – – – – 4898 280964 285862 11657 297519Profitfortheyear – – – – – 280964 280964 11657 292621Fairvaluegainoninterestratehedge,netoftax – – – – 4776 – 4776 – 4776Fairvaluegainonforeignexchangehedge,netoftax – – – – 122 – 122 – 122Issueofshares 7 6005 – – – – 6012 – 6012Recognitionofshare-basedpayments – – – 5409 – – 5409 – 5409Netmovementbetweenshareschemeandparticipants – – 4332 – 425 – 4757 – 4757Dividendspaid – – – – – (180645) (180645) – (180645)Dividendspaidtonon-controllinginterestsbysubsidiaries – – – – – – – (10739) (10739)Balanceat31December2010 5847 1866137 (53493) 394109 (539485) 1079705 2752820 45444 2798264 The notes on pages 59 to 93 are an integral part of these financial statements.

GROUPSTATEMENTOFChANGESINEQUITY


53

2010 2009

Note R’000 R’000

GROUPCAShFlOWSTATEMENTFORTHEYEARENDED31DECEMBER2010

Cashflowfromoperatingactivities Profitbeforetaxation 458280 553637Non-cashitemsandotheradjustments 28.1.1 342761 335008 801041 888645Decrease/(increase)innetcurrentassets 28.1.2 12448 (36605)Cashflowfromoperatingactivities 813489 852040Financeincome 6 29622 38553Financecosts 6 (144184) (156043)Taxationpaid 28.2 (153382) (168125)Dividendpaid (180645) (180102)Netcashgeneratedfromoperatingactivities 364900 386323 Cashflowfrominvestingactivities Additionstoproperty,plantandequipment 9 (170684) (185710)Additionstoleaseholdimprovements 10 (17716) (19977)Investmentinintangibles 11 – (140)Proceedsfromdisposalofproperty,plantandequipment 28.3 8026 2232Loans(advancedto)/repaidbyassociate 13 (4804) 3366Investmentinjointventure 12 (2099) –Loansadvancedtojointventure 12 (4372) –Loans(advancesto)/repaidbyrelatedparties (143) 520Netcashutilisedininvestingactivities (191792) (199709) Cashflowfromfinancingactivities Issueofshares 6012 –Sharesissuedbysharescheme 4757 18975Increaseinshareschemeloans (6071) (14176)Dividendsandloanrepaymentstooutsideshareholders (10739) (11465)Decreaseininterest-bearingborrowings (187054) (182873)Netcashutilisedinfinancingactivities (193095) (189539)

Netdecreaseincashandcashequivalents (19987) (2925)Cashandcashequivalentsatbeginningofyear 440073 442998Cashandcashequivalentsatendofyear 19 420086 440073 The notes on pages 59 to 93 are an integral part of these financial statements.

54

2010 2009

% R’000 R’000

GROUPADDITIONAlINFORMATION


EBITDARRECONCIlIATION Operatingprofit 576754 691170Propertyandequipmentrental 19213 21196Depreciationandamortisation 205602 185207EBITDAR (10,7) 801569 897573 Weightedaveragenumberofsharesinissue(000) 276487 275291EBITDARpershare(cents) (11,1) 289,9 326,0EBITDARmargin(%) 36,3 40,3

ADJUSTEDEBITDARRECONCIlIATION EBITDAR 801569 897573Transactionsrelatingtocorporateactivity 21684 (13954)AdjustedEBITDAR (6,8) 823253 883619 Weightedaveragenumberofsharesinissue(000) 276487 275291AdjustedEBITDARpershare(cents) (7,2) 297,8 321,0AdjustedEBITDARmargin(%) 37,2 39,6 hEADlINEEARNINGSRECONCIlIATION Attributableprofitfortheyear 280964 360630Profitonsaleoffinancialinstruments – (8)Impairmentofproperty,plantandequipment – 757Lossonsaleofproperty,plantandequipment 137 1831headlineearnings (22,6) 281101 363210 Weightedaveragenumberofsharesinissue(000) 276487 275291headlineearningspershare(cents) (22,9) 101,7 131,9Dilutedheadlineearningspershare(cents) (22,9) 101,7 131,9

ADJUSTEDhEADlINEEARNINGSRECONCIlIATION Headlineearnings 281101 363210Transactionsrelatingtocorporateactivity 19615 (13954)Adjustedheadlineearnings (13,9) 300716 349256 Weightedaveragenumberofsharesinissue(000) 276487 275291Adjustedheadlineearningspershare(cents) (14,3) 108,8 126,9

55

2010 2009

% R’000 R’000

GROUPADDITIONAlINFORMATIONFORTHEYEARENDED31DECEMBER2010

DEPARTMENTAlANAlYSIS Revenue (0,8) 2210872 2229230NetgamingwinperIncomeStatement 2033160 2064648–Netgamingwin 2080977 2102350–Customerloyaltypoints (47817) (37702)ThemePark 74182 72153Hotel 23607 15123–Hotelpriortoadjustments 35309 27029–Inter-departmentalcharges (11702) (11906)Theatre 3543 3517FoodandbeverageperIncomeStatement 38097 35462–Foodandbeveragepriortoadjustments 82767 75798–Inter-departmentalcharges (44670) (40336)Parking 6451 6955Managementfeesandcommissions 1491 1292Rentalincome 27635 26399Other 2706 3681 Operatingcosts (5,0) (1413436) (1346519)Gaming (649326) (652669)–GamingleviesandVAT (408048) (411960)–Gamingexpenses (241278) (240709)–Gamingexpensesincludingemployeecostsandpriortoadjustments (277160) (273521)–Inter-departmentalcharges 35882 32812ThemePark (86647) (69617)Hotel (9030) (9540)–Hotelexpensesincludingemployeecostsandpriortoadjustments (15348) (16230)–Costofsalesoninter-departmentalcharges 6318 6690Theatre (13062) (15682)Foodandbeverage (51754) (49098)–Foodandbeverageexpensesincludingemployeecostsandpriortoadjustments (65926) (61838)–Costofsalesoninter-departmentalcharges 14172 12740Parking (4384) (4782)Managementfeesandcommissions (1000) –Other (598233) (545131)Otherincome 4133 14862EBITDAR (10,7) 801569 897573

56

GROUPSEGMENTAlANAlYSIS


GoldReefCityCasino 925192 960179 (3,6) 330072 362578 (9,0) 35,7 37,8GoldReefCityThemePark 93101 83691 11,2 5800 6653 (12,8) 6,2 7,9SilverstarCasino 545918 543444 0,5 203797 208005 (2,0) 37,3 38,3GoldenHorseCasino 253912 247885 2,4 108325 110865 (2,3) 42,7 44,7MykonosCasino 118189 114192 3,5 46544 47108 (1,2) 39,4 41,3GardenRouteCasino 152884 159907 (4,4) 64169 71463 (10,2) 42,0 44,7GoldfieldsCasino 120298 118732 1,3 50549 51876 (2,6) 42,0 43,7QueensCasino 53041 51340 3,3 12406 11642 6,6 23,4 22,7GoldReefManagement# 67226 70071 (4,1) 3012 14426 (79,1) 4,5 20,6GoldReefResorts – – 206474 229107 (9,9) ConsolidationandotherGroupcompanies> (118889) (120211) (1,1) (207895) (230104) (9,7) 2210872 2229230 (0,8) 823253 883619 (6,8) 37,2 39,6

GoldReefCityCasino 1096882 1082121 128495 138066 1225377 1220187GoldReefCityThemePark 4442 18782 12985 16927 17427 35709SilverstarCasino 994028 1035733 320333 304944 1314361 1340677GoldenHorseCasino 231466 202307 49881 36463 281347 238770MykonosCasino 58051 56529 23803 24412 81854 80941GardenRouteCasino 115130 123719 33661 34189 148791 157908GoldfieldsCasino 117693 120434 20996 21336 138689 141770QueensCasino 95888 103962 7647 10004 103535 113966GoldReefManagement 2024 1137 112969 114833 114993 115970GoldReefResorts 2823661 2818992 168807 186282 2992468 3005274ConsolidationandotherGroupcompanies> (1597391) (1610997) (395157) (383525) (1992548) (1994522) 3941874 3952719 484420 503931 4426294 4456650

#Gold Reef Management’s revenue relates primarily to inter-segmental revenue which eliminates on consolidation.> Included in Consolidation and other Group companies is the elimination of Queens Casino’s results due to it being equity accounted as well as inter-segmental revenue.

ADJUSTED ADJUSTEDEBITDAR REVENUE EBITDAR MARGIN

2010 2009 2010 2009 2010 2009

R’000 R’000 % R’000 R’000 % % %

ASSETS NON-CURRENT CURRENT TOTAlASSETS

2010 2009 2010 2009 2010 2009

R’000 R’000 R’000 R’000 R’000 R’000

57

GROUPSEGMENTAlANAlYSISFORTHEYEARENDED31DECEMBER2010

GoldReefCityCasino 17157 32365 (72617) (130714) (58095) (58095) (113555) (156444)GoldReefCityThemePark 5220 5643 – – – – 5220 5643SilverstarCasino 303197 291186 (1012534) (1115262) (102700) (95700) (812037) (919776)GoldenHorseCasino 20773 28251 (16787) (29385) (12594) (12594) (8608) (13728)MykonosCasino 18427 16684 – – – – 18427 16684GardenRouteCasino 8913 29491 (9748) (17546) (7714) (7714) (8549) 4231GoldfieldsCasino 7129 15782 (19250) (32083) (12834) (12834) (24955) (29135)QueensCasino 4046 6503 (41398) (45403) (3956) (3800) (41308) (42700)GoldReefManagement 15046 12878 – – – – 15046 12878GoldReefResorts 23759 4010 – – – – 23759 4010ConsolidationandotherGroupcompanies> (3581) (2720) 41398 45403 3956 3800 41773 46483 420086 440073 (1130936) (1324990) (193937) (186937) (904787) (1071854)

GoldReefCityCasino – – 58573 37779 58573 37779GoldReefCityThemePark 16270 12643 9101 6792 25371 19435SilverstarCasino – – 12556 13864 12556 13864GoldenHorseCasino 40608 45955 17716 18146 58324 64101MykonosCasino – 3976 11320 6166 11320 10142GardenRouteCasino 1046 50174 11934 2247 12980 52421GoldfieldsCasino – – 9072 7053 9072 7053QueensCasino 3 – 2716 1796 2719 1796GoldReefManagement – – 193 158 193 158GoldReefResorts – – – – – –ConsolidationandotherGroupcompanies> (3) – (2705) (1062) (2708) (1062) 57924 112748 130476 92939 188400 205687

> Included in Consolidation and other Group companies is the elimination of Queens Casino’s results due to it being equity accounted.

DEBT

TOTAlDEBIT CAShONhAND NON-CURRENTDEBT CURRENTDEBT NETOFCASh

2010 2009 2010 2009 2010 2009 2010 2009 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

CAPEX

DEVElOPMENTAl OPERATIONAl TOTAlCAPEX

2010 2009 2010 2009 2010 2009 R’000 R’000 R’000 R’000 R’000 R’000

58

GROUPSEGMENTAlANAlYSIS


GoldReefCityCasino 50 50 1600 1600 198892 253726 (21,6) 698761 679763 2,8SilverstarCasino 24 24 784 784 125115 125509 (0,3) 415136 409008 1,5GoldenHorseCasino 20 20 450 450 54840 51442 6,6 196986 193196 2,0MykonosCasino 9 9 300 300 11521 10079 14,3 106941 103545 3,3GardenRouteCasino 16 16 412 412 14616 15742 (7,2) 138729 143162 (3,1)GoldfieldsCasino 9 9 250 250 13099 13074 0,2 106319 104104 2,1QueensCasino 6 6 180 180 3970 4839 (18,0) 38165 35765 6,7 134 134 3976 3976 422053 474411 (11,0) 1701037 1668543 1,9

GoldReefCityCasino 3978 5075 (21,6) 437 425 2,8SilverstarCasino 5213 5230 (0,3) 530 522 1,5GoldenHorseCasino 2742 2572 6,6 438 429 2,0MykonosCasino 1280 1120 14,3 356 345 3,3GardenRouteCasino 914 984 (7,2) 337 347 (3,1)GoldfieldsCasino 1455 1453 0,2 425 416 2,1QueensCasino 662 807 (18,0) 212 199 6,7 3150 3540 (11,0) 428 420 1,9

NUMBEROFTABlES NUMBEROFSlOTS TABlESWIN SlOTSWIN

2010 2009 2010 2009 2010 2009 2010 2009 R’000 R’000 % R’000 R’000 %

WINPERTABlE WINPERSlOT

2010 2009 2010 2009 R’000 R’000 % R’000 R’000 %

59

2010 2009

R’000 R’000

NOTESTOThEGROUPFINANCIAlSTATEMENTSFORTHEYEARENDED31DECEMBER2010

4.OPERATINGPROFIT Thefollowingitemshavebeencredited/(charged)inarrivingattheoperatingprofit: Revenue NetgamingwinperIncomeStatement 2033160 2064648–Netgamingwin 2080977 2102350–Customerloyaltypoints (47817) (37702)ThemePark 74182 72153Hotelrevenue 23607 15123–Hotelpriortoadjustments 35309 27029–Inter-departmentalcharges (11702) (11906)Theatre 3543 3517FoodandbeverageperIncomeStatement 38097 35462–Foodandbeveragepriortoadjustments 82767 75798–Inter-departmentalcharges (44670) (40336)Parkingrevenue 6451 6955Managementfeesandcommissions 1491 1292Rentalincome 27635 26399Sundryincome 2706 3681 2210872 2229230Otherincome Otherincome 4133 14862 4133 14862 4.1Gaminglevies&VAT Gaminglevies (176406) (178223)VATongrossgamingrevenue (231642) (233737) (408048) (411960) 4.2Promotionalandmarketingcosts Promotionalandmarketingcostspriortoadjustments (180032) (172776)–Inter-departmentalcharges 35882 32812 (144150) (139964) 4.3Depreciationandamortisation DepreciationOwned (197943) (178447)Leased (5265) (4359)Amortisation Trademarks (65) (78)Casinolicenses (184) (180)Bidcosts (2145) (2143)Depreciationandamortisation (205602) (185207)

60

2010 2009

R’000 R’000

NOTESTOThEGROUPFINANCIAlSTATEMENTS


4.OPERATINGPROFIT(CONTINUED) 4.4Otheroperatingexpensesconsistof: Gamingexpenses (12230) (13486)Foodandbeverage (20456) (19106)–Foodandbeverageexpensespriortoadjustments (34628) (31846)–Costofsalesoninter-departmentalcharges 14172 12740Generaladministration,humanresourcesandinformationtechnology (115639) (86105)Securityandsurveillance (38208) (36116)Operatingleasecharges (19213) (21196)–Landandbuildings (9001) (8958)–Property,plantandequipment (10212) (12238)Repairsandmaintenanceandutilities (99183) (85458)Auditors’remuneration (6203) (6080)–Auditfees–currentyear (4847) (4701)–Auditfees–relatedtoprioryear (288) (685)–Otherservices (1068) (694)Fairvalueadjustmentsoninterestratehedge – (660)Ineffectiveportionofinterestratehedgerecognisedthroughprofitandloss (3914) (9229)Otherexpenses (43781) (58712)Total (358827) (336148) lossondisposalofproperty,plantandequipment (190) (1831)ProfitonFEC’s – 8 5.EMPlOYEECOSTS Salariesandwages 484942 445814Share-basedpaymentcharge–equity-settled 5409 6255Share-basedpaymentcharge–cash-settled 5698 3557Providentfundcontributions–definedcontributionplan 25575 24017 521624 479643AveragenumberofemployeesemployedbytheGroupatyear-end Fulltime 2753 2732Parttime 216 250

6.FINANCE(COSTS)/INCOME Financecosts: Interestexpense: (116194) (166369)–Bank (115582) (165671)–Other (612) (698)Financecostspaidoninterestrateswaps (27990) (4542)Totalfinancecosts (144184) (170911) Financeincome: Interestincome: 29622 38553–Bank 5286 6835–Grouptreasury 24336 31718Totalfinanceincome 29622 38553Netfinancecosts (114562) (132358) 7.TAXATIONEXPENSE Currenttaxation 135736 151670–Currentyear 136430 155922–Prioryearoverprovision (694) (4252)STC 20288 17320Deferredtaxation(refertoNote24) 9635 10696–Currentyear 5515 8482–Prioryearunderprovision 2970 2214–DeferredSTC 1150 –Taxationcharge 165659 179686 ThetaxontheGroup’sprofitbeforetaxdiffersfromthetheoreticalamountthatwouldarise usingthebasicrateofSAasfollows:

TaxratereconciliationSouthAfricanstandardtaxrate 28,0 28,0Adjustedfor: Exemptincome (22,4) (21,0)Non-deductibleexpenses 25,8 22,3Prioryearadjustmentscurrenttax (0,2) (0,8)Prioryearadjustmentsdeferredtax 0,6 0,4STC 4,4 3,3DeferredSTCrecognised (0,3) –Other 0,2 0,2 36,1 32,4

61

2010 2009

R’000 R’000

2010 2009

% %


62

2010 2009

R’000 R’000



8.EARNINGSPERShARE BasicEPSBasicEPS is calculatedbydividing theprofit attributable toequityholdersofGoldReefby theweightedaveragenumberofsharesinissueduringtheyear,excludingordinarysharespurchasedbytheCompanyandheldastreasuryshares.

Profitattributabletoshareholders 280964 360630

Totalnumberofsharesinissue(000) 292344 291990Weightedaveragenumberofsharesinissue(000) 276487 275291

BasicEPS(cents) 101,6 131,0 DilutedEPS For diluted EPS the weighted average number of shares in issue is adjusted to assume conversion of allpotentiallydilutiveshares.

Profitattributabletoshareholders 280964 360630–Nopotentiallydilutiveadjustmentstoattributableprofitrequired

Weightedaveragenumberofsharesinissue(000) 276487 275291–Nopotentiallydilutiveadjustmentstoattributableprofitrequired

DilutedEPS(cents) 101,6 131,0

63

FURNITURE, FITTINGS lAND PlANT CAPITAl AND ThEME AND AND WORKIN CASINO COMPUTER OThER PARK BUIlDINGS MAChINERY PROGRESS EQUIPMENT EQUIPMENT EQUIPMENT RIDES TOTAl R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000


9.PROPERTY,PlANTANDEQUIPMENT Fortheyearended31December2010Atbeginningofyear 1874060 197286 – 245363 40502 112139 77849 2547199Additions 10885 27110 – 103088 11486 18103 12 170684Transfersin/(out) 7168 11005 – (4757) 10111 (5414) (18113) –Disposals (5046) (11) – (1285) (55) (1682) (137) (8216)Depreciation (14113) (34791) – (96931) (21587) (27598) (2923) (197943)Atendofyear 1872954 200599 – 245478 40457 95548 56688 2511724 At31December2010 Cost 1967194 391964 – 696790 163124 250459 77541 3547072AccumulatedDepreciation (94240) (191365) – (451312) (122667) (154911) (20853) (1035348)Closingcarryingvalue 1872954 200599 – 245478 40457 95548 56688 2511724 Fortheyearended31December2009 Atbeginningofyear 1890169 175192 19993 267486 43189 73255 75472 2544756Additions 22142 38078 – 68222 14649 26804 15815 185710Transfersin/(out) (29519) 13691 (19993) (4042) 4076 44591 (8804) –Disposals (20) (92) – (1697) (45) (2209) – (4063)Write-offs – – – – – (52) (705) (757)Depreciation (8712) (29583) – (84606) (21367) (30250) (3929) (178447)Atendofyear 1874060 197286 – 245363 40502 112139 77849 2547199 At31December2009 Cost 1954187 353903 – 622488 142253 240629 97421 3410881AccumulatedDepreciation (80127) (156617) – (377125) (101751) (128490) (19572) (863682)Closingcarryingvalue 1874060 197286 – 245363 40502 112139 77849 2547199 At1January2009 Cost 1961584 303444 23165 582454 124082 176923 91115 3262713AccumulatedDepreciation (71415) (128252) (3172) (314968) (80839) (103668) (15643) (717957)Closingcarryingvalue 1890169 175192 19993 267486 43189 73255 75472 2544756 Finance costs capitalised are matched with the net borrowing cost of the loan used to finance a specific area of construction prior to completion.

Net carrying value of property, plant and equipment held under finance leases is R0,4 million (2009: R0,5 million)

A register of land and buildings is available for inspection at Gold Reef ’s offices.

Land and Buildings have been pledged as security as per Note 23.

64

2010 2009

R’000 R’000

TRADE- CASINO BID GOODWILL MARKS LICENSES COSTS TOTAL R’000 R’000 R’000 R’000 R’000



10.lEASEhOlDIMPROVEMENTSAtbeginningofyear 138464 122846Additions 17716 19977Depreciation (5265) (4359)Atendofyear 150915 138464

Cost 184519 166803Accumulateddepreciation (33604) (28339)Closingcarryingvalue 150915 138464

11.INTANGIBlEASSETS Fortheyearended31December2010 Atbeginningofyear 1155087 228 7807 21508 1184630Additions – – – – –Amortisationandimpairment – (65) (184) (2145) (2394)Atendofyear 1155087 163 7623 19363 1182236 At31December2010 Cost 1155087 1518 11124 38488 1206217Accumulatedamortisationandimpairment – (1355) (3501) (19125) (23981)Closingcarryingvalue 1155087 163 7623 19363 1182236 Fortheyearended31December2009 Atbeginningofyear 1155087 166 7987 23651 1186891Additions – 140 – – 140Amortisationandimpairment – (78) (180) (2143) (2401)Atendofyear 1155087 228 7807 21508 1184630

At31December2009 Cost 1155087 1518 11124 38488 1206217Accumulatedamortisationandimpairment – (1290) (3317) (16980) (21587)Closingcarryingvalue 1155087 228 7807 21508 1184630

65

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R’000 R’000


11.INTANGIBlEASSETS(CONTINUED)Goodwill relatesprimarily to thecasino licenses andassociatedbenefits suchasbrandnames, specialisedworkforceskillsandnon-contractualcustomerrelationships.

Casino licenseswhichhavebeenseparatelydisclosedrelate toGardenRouteCasinoandMykonosCasinosincetheseacquisitionswereseparate, stand-alonetransactions.Wherecasino licenseswerepurchasedaspartofaninvestmentinasubsidiary,thesehavebeenincludedingoodwill.

Goodwill is allocated to theGroup’scashgeneratingunits identifiedaccording tooperating segment.Anoperatingsegmentlevelsummaryofthegoodwillallocationispresentedbelow:

OperatingsegmentGoldReefCityCasino 28570 28570GoldReefCityThemePark 1956 1956SilverstarCasino 858283 858283GoldenHorseCasino 8464 8464MykonosCasino 3378 3378GardenRouteCasino 142110 142110GoldfieldsCasino 112326 112326 1155087 1155087

RefertoNote3.1formanagement’sestimatesusedinassessingpossibleimpairmentsofgoodwillandintangibleassets.

12.INVESTMENTINJOINTVENTUREInvestmentinjointventure 2047 –Loanstojointventure 4167 –Netinvestmentinjointventure 6214 –Netshareofresultsinjointventureduringtheyear – –Closingcarryingvalue 6214 –

ReconciliationAtbeginningofyear – –Investmentinjointventure 2047 –Netshareofresultsinjointventure – –Loansadvancedduringtheyear 4167 –Atendofyear 6214 – Closingcarryingvalueisanalysedasfollows:Indol Netinvestmentinjointventure 6471 –Foreignexchangelossontranslation (257) – 6214 –loanstojointventureisanalysedasfollows:Indol*Loansadvancedduringtheyear 4372 –Foreignexchangelossontranslation (205) – 4167 –

* The Company loan to Indol bears interest at the ruling prime interest of Botswana being 13,5%.

Theloantothejointventurehasbeenincludedaspartofthenetinvestmentinjointventureasitisnotconsideredtobeimmediatelyrecoverable.Thecarryingamountoftheloantothejointventureapproximatesitsfairvalue.

ThefollowinginformationrelatestotheGroup’sinterestinitsjointventure:

Indol Botswana Unlisted 50,0 50,0 Gamingand entertainment

Thetradingresultsofthejointventure,whoseresultswereequity-accountedinthefinancialstatementsareasfollows:Totaljointventurecompany’saccumulatedlossfortheyear (28) –

Currentassets 2084 –Non-currentassets 8410 –Currentliabilities 25 –Non-currentliabilities 6466 –

66



2010 2009

R’000 R’000

2010 2009

R’000 R’000

COUNTRYOF lISTED/ PROPORTION ECONOMIC NATUREOFJOINTVENTURE INCORPORATION UNlISED OWNED INTEREST BUSINESS % %

67

2010 2009

R’000 R’000


13.INVESTMENTINASSOCIATEInvestmentinassociate 67 67Impairmentofinvestmentinassociate* (67) (67) – –Loanstoassociate 41563 36759Netshareofresultsinassociateinprioryears (13968) (8793)Netshareofresultsinassociateduringtheyear (3912) (5175)Closingcarryingvalue 23683 22791 ReconciliationAtbeginningofyear 22791 31332Investmentinassociate – –Netshareofresultsinassociate (3912) (5175)Loansadvanced/(repaid)duringtheyear 4804 (3366)Atendofyear 23683 22791 Closingcarryingvaluecomprises:LukhanjiLeisure 23683 22791loanstoassociatecomprises: LukhanjiLeisure** 41496 36692 *For further information on management’s estimates used to assess this impairment, refer to Note 3.1.

**The Company loan to Lukhanji Leisure bears interest at prime +1%. Gold Reef has subordinated its loan to Lukhanji Leisure for the benefit of other creditors, limited to

an amount of R17,5 million.

Theloantoassociatehasbeenincludedaspartofthenetinvestmentinassociateasitisnotconsideredtobeimmediatelyrecoverable.Thecarryingamountoftheloantoassociateapproximatesitsfairvalue.

ThefollowinginformationrelatestotheGroup’sinterestinitsassociate:

LukhanjiLeisure SouthAfrica Unlisted 25,1 25,1 Gamingand entertainment

AstheGrouphassignificantinfluenceinLukhanjiLeisurebutnotcontrol,theresultsofitsoperationsareequityaccounted.ThedirectorsconsidertheGrouptohavesignificantinfluenceinLukhanjiLeisureastheGrouphasappointedtwodirectorstotheBoardofLukhanjiLeisureandaGroupsubsidiaryprovidesconsultingandknowhowtothecompanyholdingthemanagementcontractforLukhanjiLeisure.

COUNTRYOF lISTED/ PROPORTION ECONOMIC NATUREOFASSOCIATE INCORPORATION UNlISED OWNED INTEREST BUSINESS % %

13.INVESTMENTINASSOCIATE(CONTINUED)Thetradingresultsoftheassociatecompany,whoseresultswereequity-accountedinthefinancialstatements,areasfollows:

Revenue 53041 51340Totalassociatecompany’saccumulatedlossfortheyear (15586) (20616)

Theaggregatebalancesheetoftheassociateissummarisedasfollows:Property,plantandequipment 92881 100766Intangibleassets 2318 2652Deferredtaxassets 689 544Cash 4046 6503Othercurrentassets 3601 3501Totalassets 103535 113966Shareholders’loans (123341) (115041)Otherliabilities (52095) (55424)Totalshareholders’funds (71901) (56499)

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69

lOANSAND RECEIVABlES TOTAl R’000 R’000


OThER DERIVATIVESUSED FINANCIAl FORhEDGING lIABIlITIES TOTAl R’000 R’000 R’000

OThER DERIVATIVESUSED FINANCIAl FORhEDGING lIABIlITIES TOTAl R’000 R’000 R’000


14.FINANCIAlINSTRUMENTSBYCATEGORYTheaccountingpoliciesforfinancialinstrumentshavebeenappliedtothelineitemsbelow:31December2010AssetsasperbalancesheetLoanstojointventure 4167 4167Loanstoassociate 41563 41563Tradeandotherreceivables 11151 11151Amountsowingbyrelatedparties 310 310Cashandcashequivalents 420504 420504Total 477695 477695

31December2009AssetsasperbalancesheetLoanstojointventure – –Loanstoassociate 36759 36759Tradeandotherreceivables 8061 8061Amountsowingbyrelatedparties 73 73Cashandcashequivalents 440175 440175Total 485068 485068

31December2010liabilitiesasperbalancesheetInterest-bearingborrowings – 1324650 1324650Financeleaseliabilities – 223 223Derivativefinancialinstruments – – –Tradeandotherpayables 27510 116170 143680Bankoverdraft – 418 418Amountsowingtorelatedparties – 652 652Total 27510 1442113 1469623

31December2009Interest-bearingborrowings – 1511381 1511381Financeleaseliabilities – 546 546Derivativefinancialinstruments 8616 – 8616Tradeandotherpayables 19265 117304 136569Bankoverdraft – 102 102Amountsowingtorelatedparties – 558 558Total 27881 1629891 1657772 Astheamountsincludedinthetablearecontractualundiscountedcashflows,theseamountswillnotnecessarilyreconciletotheamountsdisclosedonthebalancesheetforborrowings,derivativefinancialinstrumentsandtradeandotherpayables.

15.DERIVATIVEFINANCIAlINSTRUMENTS15.1Interestrateswap

TheinterestrateswapagreementshavetheeffectofhedgingtheGroupagainstanyfurtherchangesininterestratesbyfixingtherateonthenotionalamount.TheremaininginterestrateswapforSilverstarCasinowillexpireon31October2011.

Asummaryofthetermsoftheinterestratehedgeoutstandingat31December2010isprovidedbelow:

SilverstarCasino 1004807 5years 8,97 Yes Effective

* This rate excludes credit and liquid margins.

Asummaryofthetermsoftheinterestratehedgeoutstandingat31December2009isprovidedbelow:

SilverstarCasino 1103882 5years 8,97 Yes Effective

* This rate excludes credit and liquid margins.

70



QUAlIFIES PRINCIPAlAMOUNT ORIGINAl SWAP FORhEDGE EFFECTIVE

COMPANY AT31DECEMBER2010 hEDGETERM RATE* ACCOUNTING hEDGE? R’000 %

QUAlIFIES PRINCIPAlAMOUNT ORIGINAl SWAP FORhEDGE EFFECTIVE

COMPANY AT31DECEMBER2009 hEDGETERM RATE* ACCOUNTING hEDGE? R’000 %

15.DERIVATIVEFINANCIAlINSTRUMENTS(CONTINUED)15.1Interestrateswap(continued)SilverstarCasinoenteredintothiscontracttohedgeinitsunamortiseddebtbalance.Managementpredictedthedebtbuildupandresultingamortisationandusedthisasthebasisofenteringintotheinterestratehedge.

Totheextentthatthereisadeviationbetweentheprojectedamortisedbalanceandtheactuallevelofdebt,theineffectiveportionofthehedgeisrecognisedintheincomestatement.

Thefairvaluesofthecash-flowhedgearerepresentedbelow:

2010SilverstarCasino (27510) (27510) – 20334 (27510) (27510) – 20334

2009SilverstarCasino (27881) (19265) (8616) 25110 (27881) (19265) (8616) 25110 TheineffectiveportionrecognisedintheincomestatementfromcashflowhedgesfortheyearamountedtoR3,9million(2009:R9,2million).Thefairvalueadjustmentreleasedfromthehedgereserve(seeNote21)fortheinterestratederivativesduringtheyearamountedtoR4,8million(2009:R14,5million).

Themaximumexposuretoliquidityriskatthebalancesheetdateisthefairvalueofthederivativefinancialliabilitiesonthebalancesheet.

Theinterestratehedgehasbeenclassifiedbetweencurrentandnon-currentassetsandliabiltiesinaccordancewithitsmaturity.InterestrateriskAt31December2010,thefairvalueoftheinterestratehedgeliabilitywouldhavebeenR6,0millionlowerifJIBARhadbeen1%higher,whilethefairvalueadjustmentrecognisedinthehedgingreservewouldhavebeenR6,0millionhigher.

The fair valueof the interest rate hedge liabilitywouldhavebeenR6,0millionhigher if JIBARhadbeen1% lower,while the fair value adjustmentrecognisedinthehedgingreservewouldhavebeenR6,0millionlower.

71


CURRENT NON-CURRENT PORTION PORTIONOF hEDGE DERIVATIVE OFDERIVATIVE DERIVATIVE RESERVEAT lIABIlITY lIABIlITY lIABIlITY 31DECEMBER R’000 R’000 R’000 R’000

72



16.ShARE-BASEDPAYMENTARRANGEMENTS16.1ShareScheme

Amountsduebyparticipants 53196 47125 53196 47125

TheGroupoperatesanequity-settled,share-basedcompensationplanestablishedinSeptember1999.OptionsaregrantedtopermanentemployeesatthediscretionofthedirectorsintermsofwhichsharesinGoldReefmaybeacquiredbasedonpricesprevailingatthedatesofgrantingtheoptions.Deliveryofthesharessoacquirediseffectedinthreeequaltranchesvestingoverfouryears;onethirdaftertwoyears,onethirdafterthreeyearsandonethirdafterfouryears.Sharesacquiredthroughtheshareschemehavetobepaidforbytheemployeesatthesubscriptionpricesasdeterminedintheoptioncontracts.Uponvestingoftheoptionsthesubscriptionvalueiscreditedtosharecapital(nominalvalue)andsharepremiumanddebitedtoanon-currentasset.Thenon-currentassetisconsideredpayablewhentheoptionvestswiththeemployee.Anydividendspaidonthosesharesareutilisedtoreducethebalanceowingbytheemployee.

AcompleteaccountingpolicyfortheschemeisincludedinNote1.15.1totheseannualfinancialstatements.

Movementsinthenumberofunexercisedshareoptionsoutstandingareasfollows:

Awards/optionsatbeginningofyear 3527478 16,24 – –

Granted – – 3637860 16,23–Directors – – 971014 17,00–Staff – – 2666846 16,00

Inter-grouptransfers – – – ––Directors – – – ––Staff – – – –

Lapsed (311041) 16,00 (110382) 16,00–Directors – – – ––Staff (311041) 16,00 (110382) 16,00

Exercisedanddelivered (971014) 17,00 – ––Directors (971014) 17,00 – ––Staff – – – –

Exerciseddeliveredandsold – – – ––Directors – – – ––Staff – – – –

Awards/optionsatendofyear 2245423 16,00 3527478 16,24

2010 2009

R’000 R’000

2010 2009 NUMBER AVERAGE NUMBER AVERAGE OFShARES PRICE OFShARES PRICE R R

16.ShARE-BASEDPAYMENTARRANGEMENTS(CONTINUED)16.1ShareScheme(continued)Shareoptionsthathavebeenexercisedbyemployeesarenotregardedasoutstanding.

Asat31December2010,971014oftheshareoptionsgrantedduringMarch2009hadbeenexercisedbydirectors.

Thefollowingtransactionsarerelevanttosharesexercisedpriorto1January2008:

Novestedshares(2009:101667)weresoldontheopenmarketbyparticipants.Inadditiontothis,theloanbalanceon775000fullyvestedshareswasrepaidandthesharestransferredoutoftheGoldReefShareSchemeTrustAccount.Afurther3257000(2009:4032000)vestedshareswerenotsoldontheopenmarketbyparticipants.

Thefollowingtransactionsarerelevanttosharesexercisedafter1January2008:

Duringtheyear133333vestedshares(2009:229001)weresoldontheopenmarketbyparticipants.Afurther33334sharesweretransferredtotheGoldReefShareSchemeTrustAccountowingtoemployeeresignations.Inadditiontothis3998018(2009:2445337)shareswerenotsoldontheopenmarketbyparticipants,ofwhich971014havenotyetvestedandarenotavailableforsale.

TotalIFRS2costsrelatingtoequity-settledshare-basedpaymentsintermsoftheshareschemeamountedtoR5,4million(2009:R6,3million).ThiscostisincludedinEmployeecostsonthefaceoftheincomestatement.

16.2ExecutiveShareAppreciationSchemeOn3September2008,theRemunerationandNominationsCommitteeapprovedashareappreciationschemetoreplacetheschemeoriginallyapprovedon22November2006,intermsofwhichGoldReefwastoissuefreeGoldReefsharestocertainexecutivedirectors,namelySBJoffe,JSFriedmanandCNeuberger.IntermsoftheExecutiveShareAppreciationScheme,eachexecutivedirectorwouldbeentitledtoacashpaymentlinkedtothenumberof units granted, the share price and the achievement of performance criteria. The performance criteria, which were set by the Remuneration andNominationsCommittee,aremeasuredattheendofthreeandfiveyearsrespectively,withreferencetothepercentageoftheannualperformancebonuswhichtheexecutivedirectorreceivedduringsuchperiod.Scheme1vestedon31December2009andwassettledinfullduringMarch2010.Scheme2vestedon24February2010andtheresultantpaymenthasthereforebeenincludedaspartofthecontractsettlementfollowingtheterminationoftheServiceAgreements(refertopage22intheRemunerationReport).

ThetermsoftheExecutiveShareAppreciationSchemeareasfollows: Scheme1 Scheme2SBJoffe(units) 50000 200000JSFriedman(units) 50000CNeuberger(units) 50000Startdate 1January2007 1January2007Valuationdate 31December2009 31December2010Sharepriceatvaluationdate R19,49 R19,55Contractlife(years) 3 5Vestingperiod(years) 3 5Settlement Cash CashPerformancecriteriaassumption:2007 100% 100%2008 50% 50%2009 60% 60%2010 N/A 70%2011 N/A 100%Totalperformancefactor 70% 76%Fairvalueperunit R18,98 R19,55

73


74



16.ShARE-BASEDPAYMENTARRANGEMENTS(CONTINUED)16.2ExecutiveShareAppreciationScheme(continued)AliabilityofR3,2million(2009:R1,6million)relatingtotheExecutiveShareAppreciationSchemehasbeenrecognised.Thecurrentportionoftheliability,amountingtoR3,2million(2009:R0,8million)hasbeenrecognisedinTradeandotherpayables(refertoNote25).ThecorrespondingIFRS2chargeofR1,6million(2009:R0,3million)hasbeenrecognisedinEmployeecostsintheincomestatement.

Non-currentportionofExecutiveShareAppreciationScheme – 760Cash-settledshare-basedLTIP(refertoNote16.3) 4989 3141Totalnon-currentcash-settledshareincentiveliabilityperthebalancesheet 4989 3901CurrentportionofExecutiveShareAppreciationSchemeincludedinTradeandotherpayables(refertoNote25) 3206 803Currentportionofcash-settledshare-basedLTIPliabilityincludedinTradeandotherpayables(referNote25) 2207 –Totalcash-settledshareincentiveschemeliability 10402 4704

16.3Cash-settledshare-basedlTIPDuringMarch2009,theGoldReefBoardapproved,ontherecommendationoftheRemunerationandNominationsCommittee,theimplementationoftheLTIPtoattract,retain,motivateandrewardexecutivedirectorsandmanagementwhoareabletoinfluencetheperformanceofGoldReefonabasiswhichalignstheirinterestswiththoseoftheCompany’sshareholders.IntermsoftheLTIP,executivedirectorsandmanagementwillreceivecashpaymentsbasedonthesharepriceofGoldReefonexercisedate.TheLTIPconsistsofthreedistinctcomponentsasdetailedbelow:

• Shareappreciationunits,vestinthreeequaltranches,onethirdafterthreeyears,onethirdafterfouryearsandonethirdafterfiveyearsaftergrantdateandareexercisableattheoptionoftherecipientupuntiltheendofsixyearsaftergrantdate.TheamountsettledisthedifferencebetweentheGoldReefsharepriceonexercisedateandthestrikeprice.ThestrikepriceoftheshareappreciationunitsistheGoldReefsharepriceongrantdate;

• Bonusunits,haveamandatoryvestingandexercisedateofthreeyearsaftergrantdateandaresettledatthesharepriceofGoldReefonvestingdate;and

• Performanceunits,haveamandatoryvestingandexercisedateofthreeyearsaftergrantdateandaresettledatthesharepriceofGoldReefonvestingdate,multipliedbyafactorof0–3dependentontheincreaseinHEPSofGoldReefforthethreeyearperiodastabulatedbelow.

5%to7,5% 0–1 7,5%to10% 1–3

2010 2009

R’000 R’000

COMPOUND ANNUAlGROWTh MUlTIPlICATION RATEINhEPS FACTOR

75

ShARE AVERAGE AVERAGE PERFOR- AVERAGE APPRECIATION STRIKE BONUS STRIKE MANCE STRIKE UNITS PRICE UNITS PRICE UNITS PRICE R R R


16.ShARE-BASEDPAYMENTARRANGEMENTS(CONTINUED) 16.3Cash-settledshare-basedlTIP(continued)

31December2010 Cash-settledunitsat1January2010 878702 16,00 244045 – 239974 –Grantedduringtheyear 956905 18,86 196740 – 250658 ––Directors 114130 18,86 97070 – 76803 ––Staff 842775 18,86 99670 – 173855 – Forfeitedduringtheyear (189059) 17,57 (27861) – (32829) ––Directors – – – – – ––Staff (189059) 17,57 (27861) – (32829) – Exercisedduringtheyear – – – – – ––Directors – – – – – ––Staff – – – – – – Expiredduringtheyear – – – – – ––Directors – – – – – ––Staff – – – – – – Cash-settledunitsat31December2010 1646548 17,48 412924 – 457803 – Unitsexercisableat31December2010 – – – Noofemployeesgrantedunits 122 Noofemployeesremainingatyear-end 109 TheLTIP’shavebeenindependentlyvaluedbyactuariesatyear-endutilisingamodifiedbinomialtreemodeltoaccommodateboththeAmericannatureoftheunitspostvestingaswellasincorporatingemployeeexercisebehaviourwhereapplicable.

76

ShARE AVERAGE AVERAGE PERFOR- AVERAGE APPRECIATION STRIKE BONUS STRIKE MANCE STRIKE UNITS PRICE UNITS PRICE UNITS PRICE R R R



16.ShARE-BASEDPAYMENTARRANGEMENTS(CONTINUED) 16.3Cash-settledshare-basedlTIP(continued)

31December2009Cash-settledunitsat1January2009 – – – – – –Grantedduringtheyear 958974 16,00 254529 – 254293 ––Directors 123359 16,00 85782 – 83016 ––Staff 835615 16,00 168747 – 171277 – Forfeitedduringtheyear (58090) 16,00 (5806) – (10770) ––Directors – – – – – ––Staff (58090) 16,00 (5806) – (10770) – Exercisedduringtheyear (22182) 16,00 (4678) – (3549) ––Directors – – – – – ––Staff (22182) 16,00 (4678) – (3549) – Expiredduringtheyear – – – – – ––Directors – – – – – ––Staff – – – – – – Cash-settledunitsat31December2009 878702 16,00 244045 – 239974 – Unitsexercisableat31December2009 – – – Noofemployeesgrantedunits 117 Noofemployeesremainingatyear-end 106

TheLTIP’shavebeenindependentlyvaluedbyactuariesatyear-endutilisingamodifiedbinomialtreemodeltoaccommodateboththeAmericannatureoftheunitspostvestingaswellasincorporatingemployeeexercisebehaviourwhereapplicable.

77

ShARE APPRECIATION BONUS PERFORMANCE UNITS UNITS UNITS


16.ShARE-BASEDPAYMENTARRANGEMENTS(CONTINUED) 16.3Cash-settledshare-basedlTIP(continued)Grantdate 26March2010 26March2010 26March2010Valuationdate 31December2010 31December2010 31December2010Sharepriceatvaluationdate 19,55 19,55 19,55Vestingperiod 3–5years 3years 3yearsSettlement Cash Cash CashVolatilityassumption 33,4% 33,4% 33,4%Interestrateassumption 6% 6% 6%Dividendyieldassumption 4% 4% 4%Performancefactorassumption N/A N/A 1Attritionassumption 11,0% 5,0% 6,5%Fairvalueperunit R5,67 R18,26 R18,26

Grantdate 20March2009 20March2009 20March2009Valuationdate 31December2010 31December2010 31December2010Sharepriceatvaluationdate 19,55 19,55 19,55Vestingperiod 3–5years 3years 3yearsSettlement Cash Cash CashVolatilityassumption 34,7% 34,7% 34,7%Interestrateassumption 6% 6% 6%Dividendyieldassumption 3% 3% 3%Performancefactorassumption N/A N/A 0Attritionassumption 8,3% 6,1% 6,2%Fairvalueperunit R6,87 R18,91 R18,91

AliabilityofR7,2million(2009:R3,1million)relatingtotheLTIPhasbeenrecognisedonthefaceofthebalancesheetandanIFRS2chargeofR4,1million(2009:R3,1million)hasbeenrecognisedinEmployeecostsintheincomestatement.

2010 2009

R’000 R’000

Non-currentportionofExecutiveShareAppreciationScheme – 760Cash-settledshare-basedLTIP 4989 3141Totalnon-currentcash-settledshareincentiveliabilityperthebalancesheet 4989 3901CurrentportionofExecutiveShareAppreciationSchemeincludedinTradeandotherpayables(refertoNote25) 3206 803Currentportionofcash-settledshare-basedLTIPliabilityincludedinTradeandotherpayables(referNote25) 2207 –Totalcash-settledshareincentiveschemeliability 10402 4704

17.INVENTORIESOperatingequipment 3511 541Foodandbeverage 2279 2258Tradinginventory 313 575Stationery 1471 1421Cashlesscards 5279 4125Gaming 5852 6372Uniforms 1073 1343Otherinventory 2529 2615 22307 19250

Noinventorieswerewrittendowntotheirrecoverableamountduringtheyear.18.TRADEANDOThERRECEIVABlESTradereceivables 6693 6913Less:provisionforimpairmentoftradereceivables (2040) (1279)Nettradereceivables 4653 5634Prepayments 25165 22182Sundrydebtors 6498 2427Derivativefinancialinstruments(seeNote15) – –VATreceivable 87 4111Straightliningofleases 500 1487Other 3029 6367 39932 42208Ageanalysisoftradereceivablespasttheirduepaymentdatebutnotimpaired:30–60days 415 54060–90days 97 76Over90days 1327 2020 1839 2636Ageinganalysisoftradereceivablespastdueandimpairedandprovidedfor:30–60days 83 28160–90days 59 72Over90days 1898 1036Impaired (2040) (1279) – 110Movementontheprovisionforimpairmentoftradereceivablesisasfollows: Balanceatbeginningofyear 1279 361Provisionforreceivableimpairment 1345 1269Receivablewrittenoffduringtheyearasuncollectable (191) (74)Unusedamountsreversed (393) (277)Balanceatendofyear 2040 1279Asat31December2010,tradereceivablesofR3,2million(2009:R2,9million)werefullyperforming.

PrepaymentsandotherreceivablesarenotimpairedasthebenefitsassociatedtherewithareexpectedtoflowtotheCompanyintheordinarycourseofbusiness.Nosecurityisheldagainstanyofthereceivablesotherthantenantsdeposits.Thecarryingvalueisareasonableapproximationofthefairvalueoftradeandotherreceivables.

78



2010 2009

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79

2010 2009

R’000 R’000


19.CAShANDCAShEQUIVAlENTS Cashatbank 369385 388676Cashonhand 51119 51499 420504 440175

Bankoverdraft (418) (102) (418) (102)

Cash,cashequivalentsandbankoverdraftsincludethefollowingforthepurposeofthecashflowstatement:Cashandcashequivalents 420504 440175Bankoverdraft (418) (102) 420086 440073

CashandcashequivalentsbalancesareheldwithreputableinstitutionswhohavecreditratingsofbetweenAandBBBat31December2010.

CashandcashequivalentsaredenominatedinSouthAfricanRands.

20.ShARECAPITAl Balanceat1January2009 291990 (17082) 274908 5840 1860132 (70934) 1795038Transferofvestedsharestoemployeesfromthesharescheme – 1676 1676 – – 15059 15059Sharesrepurchasedbythesharescheme – (483) (483) – – (1950) (1950)Balanceat31December2009 291990 (15889) 276101 5840 1860132 (57825) 1808147Issueofshares 354 – 354 7 6005 – 6012Transferofvestedsharestoemployeesfromthesharescheme – 844 844 – – 11249 11249Transferofunvestedsharestotreasuryshares – (354) (354) – – (6012) (6012)Sharesrepurchasedbythesharescheme – (33) (33) – – (480) (480)Profitonsaleofsharesbysharescheme – – – – – (425) (425)Balanceat31December2010 292344 (15432) 276912 5847 1866137 (53493) 1818491

NUMBEROF NUMBEROF NET ORDINARY TREASURY NUMBER ShARE ShARE TREASURY ShARES ShARES OFShARES CAPITAl PREMIUM ShARES TOTAl (000) (000) (000) R’000 R’000 R’000 R’000

80



21.OThERRESERVESBalanceat1January2009 27519 (39624) (548260) (4701) (565066)Profitonsaleofsharesbysharescheme – – – 5866 5866Fairvaluegainoninterestratehedge(refertoNote15) – 14514 – – 14514Fairvaluelossonforeignexchangehedge – (122) – – (122)Balanceat31December2009 27519 (25232) (548260) 1165 (544808)Profitonsaleofsharesbysharescheme – – – 425 425Fairvaluegainoninterestratehedge(refertoNote15) – 4776 – – 4776Fairvaluegainonforeignexchangehedge – 122 – – 122Balanceat31December2010 27519 (20334) (548260) 1590 (539485) *This reserve arose in terms of IFRS3 – Business Combinations as a result of the share exchange and top-up transaction effective 1 July 2007.

TRANS- ACTIONS NON- WIThNON- DISTRI- lAND hEDGE CONTROllING BUTABlE REVAlUATION RESERVE INTERESTS* RESERVES TOTAl R’000 R’000 R’000 R’000 R’000

2010 2009

R’000 R’000

22.NON-CONTROllINGINTERESTNon-controllinginterestconsistsof:

Subsidiaries’prioryearearningsattributabletonon-controllinginterests 44526 42670Profitsattributabletonon-controllinginterestsinthecurrentyear 11657 13321Dividendspaidtonon-controllinginterestsbysubsidiaries (10739) (11465)Balanceatendofyear 45444 44526

At31December2010non-controllinginterestrelatestoa29,6%and15%interestinMykonosCasinoandGardenRouteCasinorespectively.

81

2010 2009

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23.INTEREST-BEARINGBORROWINGSNon-current –Termloans 1130936 1324767–Financeleaseliabilities – 223 1130936 1324990Current –Termloans 193714 186614–Financeleaseliabilities 223 323 193937 186937Totalinterest-bearingborrowings 1324873 1511927

Maturityofborrowingsexcludingfinanceleaseliabilities:Notlaterthan1year 193714 186614Laterthan1yearbutnotlaterthan5years 645376 683535Laterthan5years 485560 641232 1324650 1511381

Financeleaseliabilities:Grossfinanceleaseliability–Minimumleasepayments Notlaterthan1year 235 417Laterthan1yearbutnotlaterthan5years – 208Laterthan5years – – 235 625Futurefinancechargesonfinancelease (12) (79)Presentvalueoffinanceleaseliability 223 546

Thepresentvalueofthefinanceleaseisasfollows:Notlaterthan1year 223 323Laterthan1yearbutnotlaterthan5years – 223Laterthan5years – – 223 546

82

2010 2009

% %



23.INTEREST-BEARINGBORROWINGS(CONTINUED)Weightedaverageeffectiveinterestrates: Termloans* 8,1 10,1AkaniEgoli 7,7 9,8SilverstarCasino 8,1 10,1GoldenHorse 8,0 10,2GardenRoute 8,0 10,1GoldfieldsCasino 8,1 10,4

Financeleaseliabilities 15,8 14,7AkaniEgoli – 12,0SilverstarCasino 15,8 15,8

*These interest-bearing borrowings are at floating rates linked to JIBAR and include liquid and credit margins.

Thedirectorsbelievethatthecarryingvaluesofthecurrentinterest-borrowingsapproximatetheirfairvalues.

Thefairvalueofthecurrentandnon-currentportionsoftheinterest-bearingborrowings,whichamountstoR1,1billionbasedoncashflowsdiscountedusinganinterestrateof8,09%,thereforeapproximatesitscarryingamountandtheimpactofdiscountingisthereforenotsignificantwhenfinancecostsareconsidered.

Thelatestdateatwhichbankborrowingsmatureisduring2018.

IfJIBARweretoincreaseby1%,financecostswouldincreasebyR14,3millionperannum.IfJIBARweretodecreaseby1%,financecostswoulddecreasebyR14,3millionperannum.

83

NATUREOFSECURITY NATUREOF AMOUNT BORROWINGS SECURED R’000


23.INTEREST-BEARINGBORROWINGS(CONTINUED)Bankborrowingsaresecuredasfollows:AkaniEgoli FirstmortgagebondoverfixedpropertyatGoldReefCityCasino Nedbanktermloans 235000SuretyshipbyGoldReefinfavourofNedbank Nedbanktermloans 247307FirstmortgagebondovermoveableassetsatGoldReefCityCasino Nedbanktermloans 25000PraedialbondoverGoldReefCityCasinoservitudelane Nedbanktermloans 2500FirstcoveringmortgagebondstoberegisteredinfavourofNedbankforanynewlandacquired

AkaniMsunduziMortgagebondoverAkaniMsunduzi’srightsunderitspropertylease ABSAtermloanandbankoverdraft 110000Notarialbondovermovableassets ABSAtermloanandbankoverdraft 65000SuretyshipbyGoldReefinfavourofABSA ABSAtermloanandbankoverdraft 50408Cessionofinsurancepolicyonleaseholdimprovementsandmoveableassets AfourpartyagreementexistsbetweenAbsaBankLimited,PietermaritzburgTLC,PietermaritzburgTurfClubandAkaniMsunduziagreeingtothebindingnatureofthetermsoftheheadleaseandsub-leaseandconsentingtotheregistrationoftheabovebondsinfavourofABSABankLimited.

WestCoastleisureMortgagebondoverWestCoastLeisure’ssectioninthecommonpropertyscheme ABSAtermloanandbankoverdraft 35000Generalandspecialnotarialbondsovermovableassets ABSAtermloanandbankoverdraft 25000CessionofinsurancepolicyonfixedpropertyandmoveableassetsWestCoastLeisurehadnodebtinplaceatyear-end.Thesecuritiesaboverefertowhatwouldberequiredifthefacilitywereagainusedbythecompany.

GoldfieldsCasinoNegativepledgeofassets Nedbanktermloanandmulti-optionfacility 88000SecuredbythemanagementfeepayabletoGoldReefManagementtotheextentfinancialcovenantsarenotmet. Nedbanktermloanandmulti-optionfacility 88000

GardenRouteCasinoMortgagebondoverfixedpropertyatGardenRouteCasino Nedbanktermloanandmulti-optionfacility 20000Notarialbondovermovableassets Nedbanktermloanandmulti-optionfacility 30000

SilverstarCasinoFirstcoveringmortgagebondoverfixedpropertyatSilverstarCasino Nedbanktermloan 1400000SuretyshipbyGoldReefinfavourofNedbank Nedbanktermloan 1210416NotarialbondovermovableassetsatSilverstarCasino NedbanktermloanCessionofinsurancepolicyonfixedpropertyandmoveableassetsatSilverstarCasino NedbanktermloanCessionofsharesheldbyGoldReefinSilverstarCasino NedbanktermloanCessionofshareholdersloanaccounts Nedbanktermloan

QueensCasinoLimitedsuretyshipbyGoldReef Investectermloan 18000

84

NATUREOFSECURITY NATUREOF AMOUNT BORROWINGS SECURED R’000



23.INTEREST-BEARINGBORROWINGS(CONTINUED) Bankborrowingsaresecuredasfollows:

GoldReefManagementNegativepledgeofassets Nedbankmulti-optionfacility 50000

Individualborrowingsaresubjectto covenantclauseswherebythe respective companies are required to meet certain keyperformance indicators. The indicators negotiated with eachbankspecifictothatGroupcompany.Thebankiscontractuallyentitledtorequestearlyrepaymentofthe outstandingamountif the covenant is breached and not remedied within a pre-determinedperiodoftime.Nocovenantsareinbreachatyear-end.

Scheduleofcovenantsontermloans

AkaniEgoli CumulativeDebtServiceCoverRatio Minimumof1,25timesSilverstarCasino CumulativeDebtServiceCoverRatio Minimumof1,25timesAkaniMsunduzi DebtServiceCoverRatio Minimumof2,00times GrossInterestPaidCoverRatio Minimumof3,00times DebttoEBITDARatio Maximumof2,00timesGardenRoute CumulativeDebtServiceCoverRatio Minimumof1,25timesGoldfieldsCasino CumulativeDebtServiceCoverRatio Minimumof1,25timesTheborrowingsoftheGroupdonotexceedthatallowedasperthearticlesofassociation.

85

2010 2009

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24.DEFERREDINCOMETAXATION Atbeginningofyear (51970) (48845)Deferredincometaxrecognisedthroughtheincomestatement (9635) (10696)Currentyearmovement(refertoNote7) (5515) (8482)DeferredSTCcreditsrecognised(refertoNote7) (1150) –Prioryearadjustments(refertoNote7) (2970) (2214)Deferredincometaxrecognisedthroughothercomprehensiveincome (604) 7571Deferredincometaxonitemsrecognisedinhedgereserve (604) 7571Atendofyear (62209) (51970)

Brokendownasfollows: Deferredincometaxassets 13906 12510Deferredincometaxliabilities (76115) (64480) (62209) (51970)

Deferredtaxbalancesmaybeanalysedasfollows:DeferredincometaxassetsDeferredincometaxrecognisedthroughtheincomestatement 6939 4939Provisions 5986 2880Assessedlosses 1296 1350DeferredSTCcredits 1150 –Capitalallowances (622) (266)Prepayments – (560)Capitalisedborrowingcosts (2509) –Othertemporarydifferences 1638 1535 Deferredincometaxrecognisedthroughothercomprehensiveincome 6967 7571Deferredincometaxonitemsrecognisedinhedgereserve 6967 7571Totaldeferredincometaxassets 13906 12510

Deferredincometaxliabilities Deferredincometaxrecognisedthroughtheincomestatement (76115) (64480)Provisions 13668 12664Assessedlosses 2739 8361Capitalallowances (78146) (70257)Prepayments (2688) (3251)Capitalisedborrowingcosts (13088) (13362)Othertemporarydifferences 1400 1365 (76115) (64480) Deferredincometaxesarecalculatedinfullontemporarydifferencesundertheliabilitymethodusingaprincipaltaxrateon28%(2009:28%).Deferredtaxassetsareonlyrecognisedtotheextentthatrealisationoftherelatedtaxbenefitthroughfuturetaxableprofitsisprobable.

86

2010 2009

R’000 R’000

PERFORMANCE GAMING INCENTIVE PROVISIONS PROVISIONS OThER TOTAl R’000 R’000 R’000 R’000



25.TRADEANDOThERPAYABlESTradepayables 27936 25218Accruedexpenses 57417 67039ExecutiveShareAppreciationScheme(refertoNote16.2) 3206 830Cash-settledshare-basedLTIP(refertoNote16.3) 2207 –Derivativefinancialinstruments(refertoNote15) 27510 19265VATpayable 17987 15900Otherpayables 30817 25047 167080 153299 Alltradeandotherpayablesariseintheordinarycourseofbusiness.RefertoNote2.1.3fortheageingofTradeandotherpayables.

26.PROVISIONS31December2010Atbeginningofyear 13409 10013 10405 33827Provisionsraised 83213 39325 7865 130403Provisionsutilised (80135) (29554) (6411) (116100)Atendofyear 16487 19784 11859 48130 31December2009 Atbeginningofyear 18555 17653 20333 56541Provisionsraised 24877 35292 7596 67765Provisionsutilised (30023) (42932) (17524) (90479)Atendofyear 13409 10013 10405 33827 Gamingprovisionsincludecasinojackpotprovisionsandloyaltypointprovisions.Casinojackpotprovisionsareutilisedwhenwon.Loyaltypointprovisionsareredeemedbycasinopatronsattheirdiscretion.

Performanceincentiveprovisionsarepaidfollowingfinalisationoftheannualfinancialresults.

AlsoincludedinOtherprovisionsisanamountofR11,8million(2009:R10,1million)recognisedbySilverstarCasinorelatingtoitsobligationtoincurcorporatesocialspendingintermsofitslicenseconditions.

27.RElATEDPARTYTRANSACTIONSThefollowingrelatedpartieshavebeenidentified:

AkaniEgoli SubsidiaryAkaniLeisureInvestments SubsidiaryAkaniMsunduzi SubsidiaryWestCoastLeisure SubsidiaryGoldReefManagement SubsidiaryGoldReefResortsTrainingInstitute SubsidiaryAkaniEgoliManagement SubsidiaryAkaniMsunduziManagement SubsidiaryAldissInvestments SubsidiaryGardenRouteCasino SubsidiaryInkonkaInvestments SubsidiaryGoldfieldsCasino SubsidiaryTangleparkTrading SubsidiarySilverstarCasino SubsidiaryAkaniLeisureMsunduziInvestments SubsidiaryAkaniLeisureGoldfieldsInvestments SubsidiaryAkaniLeisureInvestmentCasinoManagement SubsidiaryRichardMolokoConsortium SubsidiaryRichardMolokoConsortiumHoldings SubsidiaryNewshelf786 SubsidiaryAkaniLeisureSilverstarHoldings SubsidiaryMogaleSilverstarHoldings SubsidiaryIndol JointventureLukhanjiLeisure AssociateGoldReefShareScheme ShareTrustSouthAfricanApartheidMuseum BidCommitmentOlwaziniDiscoveryCentre BidCommitmentClubMykonosResortManagers SectionaltitleholderCASA Memberofassociation

ENBanda* Non-executivedirectorMGDiliza* Non-executivedirectorJCFarrant* Non-executivedirectorMZKrok* Non-executivedirectorZJMatlala* Non-executivedirectorPCMSeptember* Non-executivedirectorPVallet* Non-executivedirectorJSFriedman* ExecutivedirectorSBJoffe* ExecutivedirectorCNeuberger* ExecutivedirectorTMSadiki* Executivedirector

* Resigned subsequent to the financial year end. Refer to page 7.

Therewerenoloanstodirectorsduringthe2010or2009financialyears.

87


PARTY NATUREOFRElATIONShIP

88

2010 2009

R’000 R’000



27.RElATEDPARTYTRANSACTIONS(CONTINUED)TransactionswithrelatedpartiesTransactionswiththefollowingrelatedpartiesduringtheyear:CASA 1161 1095ClubMykonosResortManagers 16 11SouthAfricanApartheidMuseum 4594 4296 5771 5402

Servicesincludemembershipfees,consultancyfees,entrancefeesandlevies.

PaymentstokeymanagementpersonnelaredisclosedinNote31.Keymanagementpersonnelcomprisesexecutiveandnon-executivedirectors.

Balanceswithrelatedparties

Amountsowingbyrelatedparties CASA 310 73 310 73Amountsowingtorelatedparties SouthAfricanApartheidMuseum (579) (497)OlwaziniDiscoveryCentre (73) (61) (652) (558) (342) (485)

Allrelatedpartybalancespayableby/(to)relatedpartiesariseintheordinarycourseofbusiness.

89

2010 2009

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28.CAShFlOWINFORMATION28.1CashflowfromoperatingactivitiesProfitbeforetaxation 458280 55363728.1.1 Adjustedfornoncashitemsandotheradjustments 342761 335008 Depreciationandamortisation(refertoNote4.3) 205602 185207 Lossonthedisposalofproperty,plantandequipment(refertoNote4.4) 190 1831 Financeincome(refertoNote6) (29622) (38553) Financecosts(refertoNote6) 147401 161206 Ineffectiveportionofinterestrateswapsrecognisedthroughtheincomestatement 3914 9229 Write-offoffixedassetsandintangibleassets – 757 Share-basedpaymentcharge(refertoNote5) 5409 6255 Cash-settledshare-basedpaymentcharge(refertoNote5) 5698 3901 Foreignexchangeloss 257 – Shareoflossinassociate 3912 5175 801041 88864528.1.2 Decrease/(increase)innetcurrentassets 12448 (36605) Decrease/(increase)intradeandotherreceivables 2398 (12891) (Increase)/decreaseininventories (3057) 101 Decreaseintradeandotherpayables (1196) (1101) Increase/(decrease)inprovisions 14303 (22714) 813489 85204028.2 Taxationpaid Taxliabilityatbeginningofyear (1764) (899) Currenttaxation(refertoNote7) (136430) (155922) Prioryearoverprovision(refertoNote7) 694 4252 STC (20288) (17320) Taxliabilityatendofyear 4406 1764 (153382) (168125)

28.3 Proceedsondisposalofproperty,plantandequipment Netbookvalue 8216 4063 Lossondisposalofproperty,plantandequipment (190) (1831) 8026 2232

90

lISTED/ PRO- EFFECTIVEhOlDING COUNTRYOF UN- PORTION (ECONOMICINTEREST) NATURE INCOPORATION lISTED OWNED 2010 2009 OFBUSINESS % % %

INVESTMENT NET EFFECTIVEhOlDING INShARES INDEBTEDNESS 2010 2009 2010 2009 2010 2009 % % R’000 R’000 R’000 R’000



29.SUBSIDIARIES,JOINTVENTURES,ASSOCIATESANDOThERINVESTMENTSSubsidiariesAkaniEgoli SouthAfrica Unlisted 100,0 100,0 100,0 GamingandentertainmentAkaniLeisureInvestments** SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingAkaniMsunduzi SouthAfrica Unlisted 100,0 100,0 100,0 GamingandentertainmentWestCoastLeisure SouthAfrica Unlisted 70,4 70,4 70,4 GamingandentertainmentGoldReefManagement# SouthAfrica Unlisted 100,0 100,0 100,0 ManagementofcasinointerestsGoldReefResortsTrainingInstitute SouthAfrica Unlisted 100,0 100,0 100,0 GrouptrainingAkaniEgoliManagement SouthAfrica Unlisted 100,0 100,0 100,0 ManagementofcasinointerestsAkaniMsunduziManagement SouthAfrica Unlisted 100,0 100,0 100,0 ManagementofcasinointerestsAldissInvestments SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingGardenRouteCasino SouthAfrica Unlisted 85,0 85,0 85,0 GamingandentertainmentInkonkaInvestments** SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingGoldfieldsCasino SouthAfrica Unlisted 100,0 100,0 100,0 GamingandentertainmentTangleparkTrading** SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingSilverstarCasino SouthAfrica Unlisted 100,0 100,0 100,0 GamingandentertainmentAkaniLeisureMsunduziInvestments** SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingAkaniLeisureGoldfieldsInvestments** SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingAkaniLeisureInvestmentCasinoManagement> SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingRichardMolokoConsortium SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingRichardMolokoConsortiumHoldings SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingNewshelf786 SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingAkaniLeisureSilverstarHoldings> SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingMogaleSilverstarHoldings SouthAfrica Unlisted 100,0 100,0 100,0 InvestmentholdingGoldReefShareScheme SouthAfrica Trust N/A N/A N/A ShareTrust

JointventuresIndol 50,0 50,0 2047 – 4167 –

Associates LukhanjiLeisure 25,1 25,1 67 67 41496 36692

InvestmentsSekunjaloHealthcareLimited 0,5 0,5 – – – –

#During the 2010 financial year, the investment of R38 990 000 held in Akani Leisure Investment Casino

Management was transferred to the Company’s investment in Gold Reef Management. Akani Leisure Investment Casino Management is currently in the process of being liquidated.

**These companies were liquidated during the 2010 financial year.

>These companies are in the process of being liquidated.

91

2010 2009

R’000 R’000


30.CONTINGENCIES,COMMITMENTSANDGUARANTEESAt31December2010theGrouphadcontingentliabilitiesinrespectofbankandotherguaranteesaswellasothermattersarisingintheordinarycourseofbusinessfromwhichitisanticipatedthatnomaterialliabilitieswillarise. Thedetailsareasfollows:Guarantees^ 88699 89699Litigation 3500 5000Transactioncosts+ 22443 33856Capitalexpenditurecommittedorapproved 3142 43520 117754 172075

GoldReefhasenteredintoanagreementwithNedbankandtheEasternCapeGamblingandBettingBoardwherebythebankhasguaranteedanagreedcapitalamountnotexceedingR3935542(2009:R3935542)forthecompletionoftheconstructionoftheproposalscontainedinQueensCasino’sbidapplication.

AkaniEgolihasenteredintoanagreementwithNedbankandtheGautengGamblingBoardwherebythebankhasguaranteedanagreedcapitalamountnotexceedingR38271389(2009:R38271389)forGamblingBoardtaxesandworkingcapital.AkaniEgolihasprovidedguaranteestovariousfoodandbeveragesuppliersforR150000(2009:R150000).AkaniEgolihasprovidedaguaranteetoNedbankforGoldReefCityThemePark’sbankingfacilityofR2507000(2009:R2507000).

GoldReefCityThemeParkhasprovidedaguaranteetoEskomforR782700(2009:R507000).

AkaniMsunduzihasenteredintoanagreementwithABSAandtheKwaZulu-NatalGamblingBoardwherebythebankhasguaranteedanagreedcapitalamountnotexceedingR5260000(2009:R5260000)forGamblingBoardtaxesandworkingcapital.ABSAhasalsoissuedaguaranteetotheMsunduziMunicipalityforR708000(2009:R708000)onbehalfofAkaniMsunduzi.

GoldfieldsCasinohasenteredintoanagreementwithNedbankandtheFreeStateGamblingandRacingBoardwherebythebankhasguaranteedanagreedcapitalamountnotexceedingR1000000(2009:R1000000)forGamblingBoardtaxesandworkingcapital.

WestCoastLeisurehasenteredintoanagreementwithABSAandtheWesternCapeGamblingandRacingBoardwherebythebankhasguaranteedanagreedcapitalamountnotexceedingR250000(2009:R250000)forGamblingBoardtaxesandworkingcapital.Intermsofthelicenseconditionsforthecasinooperatorlicense,issuedbytheWesternCapeGamblingandRacingBoard,WestCoastLeisurehasplacedondepositanamountofR1500000whichfunding,whenrequired,willbeusedtopartlyfinancetheconstructionofthenewmainroadtoreplacetheexistingMinorRoad44linkbetweenMykonosandMainRoad233oranalternativeprojecttobeagreedwiththeWesternCapeGamblingandRacingBoard.

SilverstarCasinohasenteredintoanagreementwithNedbankandtheGautengGamblingBoardwherebythebankhasguaranteedanagreedcapitalamountnotexceedingR20941670(2009:R20941670)forGamblingBoardtaxesandworkingcapital.SilverstarCasinohasalsoprovidedaguaranteetoMogaleCityMunicipalCouncilforR650000(2009:R650000).

92

2010 2009

R’000 R’000

2010 2009

R’000 R’000



30.CONTINGENCIES,COMMITMENTSANDGUARANTEES(CONTINUED)Garden Route Casino has entered into an agreement with Nedbank and the Western Cape Gamblingand Racing Board whereby the bank has guaranteed an agreed capital amount not exceeding R550 000 (2009:R450000)forGamblingBoardtaxesandworkingcapital.

TheCompanyhasbounditselfassuretyforAkaniEgoli,SilverstarCasino,AkaniMsunduzi,WestCoastLeisureand Queens Casino to their bankers for 100%, 100%, 100%, 70,33% and 35,72% of their exposurerespectively.

Litigationcomprisesapossiblecontingencyforlitigationandrelatedcoststhroughoutallgroupcompanies.Operatingleasecommitments Thefutureminimumleasecommitmentsundernon-cancellableoperatingleasesareasfollows: Notlaterthan1year 4809 5988Laterthan1yearbutnotlaterthan5years 11756 10916Laterthan5years – 2344 16565 1924

^This amount reflects the gross guarantees that can be called upon and not the fair value.+This comprises Gold Reef ’s share of the transaction costs related to the merger and includes fees for corporate advisory services.

31.DIRECTORS’EMOlUMENTS Executivedirectors Basicremuneration 7333 7212Retirementandmedicalcontributions 1277 1170Performanceincentives 6027 6738Gainsonvestedshareoptionsexercised* 1192 2290Otherbenefits – 86 15829 17496Non–executivedirectors Directors’fees 2460 1874Otherservices – 35Otherbenefits – – 2460 1909 18289 19405Totaldirectors’emoluments EmolumentspaidbytheCompany 3581 4088Emolumentspaidbysubsidiaries 14708 15317 18289 19405

*This relates to gains on share options which have been exercised and have vested but remain unsold. Consequently, the directors will only receive the economic benefits once the shares are sold on the open market. Subsequent to year end, on termination of the Service Agreements, these share options vested, the loan balances with the Company were repaid and the pledges over the shares were released.

Adetailedbreakdownofindividualdirectors’emolumentsisshownonpage21oftheannualreport.Share-basedpaymentchargesduringtheyearrelatingtoawardstodirectorswereR5,7million(2009:R3,2million).AlistingofallmembersoftheBoardisshownonpages5to7oftheannualreport.

93


32.SUBSEQUENTEVENTSCorporateactivityThe merger of Gold Reef and Tsogo Sun became effective on 24 February 2011 with the new majorityshareholdersbeingTIHandSABSA.

On24February2011,theCompanyissued888261028ordinarysharesasconsiderationfortheacquisitionoftheentireissuedsharecapitalinTsogoSunfromTIHandSABSA.TIHwasissued453013124ordinarysharesresultinginashareholdinginGoldReefof41,3%(excludingtreasuryshares).SABSAwasissued435247904ordinarysharesresultinginashareholdinginGoldReefof39,7%(excludingtreasuryshares).Onthesamedate,the69205093sharespreviouslyheldbyTsogoSunExpansionbecameGoldReeftreasuryshares. Asoftheeffectivedateofthemerger,theServiceAgreementsenteredintobyGoldReefwereterminated.ThisterminationresultedintotalpaymentstotheexecutivedirectorsofR51,3million.Forfurtherdetailrelatingtotheterminationpayments,refertopage22oftheRemunerationReport. Directors’DealingsOn 23 March 2011, Mr J A Copelyn acquired a direct beneficial interest in the Company following thepurchaseof167775ordinaryGoldReefsharesataVWAPofR14,18.Therequisitepriorwrittenclearancetodealinthesesecuritieswasobtainedforthistransaction.

94

2010 2009

Note R’000 R’000

COMPANYSTATEMENTOFCOMPREhENSIVEINCOME


Otherincome 4 222204 237192Otheroperatingexpenses 4 (15730) (8085)Operatingprofit 206474 229107Financeincome 5 6645 8376Financecosts 5 – –Profitbeforetaxation 213119 237483Taxationexpense 6 (20705) (18335)Profitfortheyear 192414 219148Othercomprehensiveincomefortheyear,netoftax – –Totalcomprehensiveincomefortheyear 192414 219148 The notes on pages 98 to 113 are an integral part of these financial statements.

95

2010 2009

Note R’000 R’000

COMPANYBAlANCEShEETASAT31DECEMBER2010

ASSETS Non-currentassets Property,plantandequipment 7 3658 3658Deferredincometaxassets 17 1150 –Investmentinsubsidiaries 8 2816806 2815331Investmentinjointventure 9 6214 –Investmentinassociate 10 24816 32748Sharescheme 12 60308 58849 2912952 2910586 Currentassets Tradeandotherreceivables 13 – 1000Currenttaxassets 20.2 994 245Cashandcashequivalents 14 23759 35820Amountsowingbyrelatedparties 21 54763 57620 79516 94685Totalassets 2992468 3005271 EQUITYANDlIABIlITIES Capitalandreserves Sharecapital 15 5847 5840Sharepremium 15 1866137 1860132 1871984 1865972Share-basedpaymentreserve 394631 389040Retainedearnings 382104 370335Totalequity 2648719 2625347 Non-currentliabilities Financialguaranteecontracts 16 103106 124702 103106 124702 Currentliabilities Tradeandotherpayables 18 1172 1039Provisions 19 – –Amountsowingtorelatedparties 21 239471 254183 240643 255222Totalequityandliabilities 2992468 3005271


96

ShARE- BASED ShARE ShARE PAYMENT RETAINED TOTAl CAPITAl PREMIUM RESERVE EARNINGS EQUITY R’000 R’000 R’000 R’000 R’000

Balanceat1January2009 5840 1860132 382554 331289 2579815Totalcomprehensiveincomefortheyearended31December2009 – – – 219148 219148Recognitionofshare-basedpayments – – 6486 – 6486Dividendspaid – – – (180102) (180102)Balanceat31December2009 5840 1860132 389040 370335 2625347Totalcomprehensiveincomefortheyearended31December2010 – – – 192414 192414Issueofshares 7 6005 – –Recognitionofshare-basedpayments – – 5591 – 5591Dividendspaid – – – (180645) (180645)Balanceat31December2010 5847 1866137 394631 382104 2648719


COMPANYSTATEMENTOFChANGESINEQUITY


97

2010 2009

Note R’000 R’000

COMPANYCAShFlOWSTATEMENTFORTHEYEARENDED31DECEMBER2010

Cashflowfromoperatingactivities Profitbeforetaxation 213119 237483Non-cashitemsandotheradjustments 20.1 (13151) (22800) 199968 214683Decrease/(increase)innetcurrentassets 20.1 1133 (7296)Cashflowfromoperatingactivities 201101 207387Financeincome 6645 8376Financecosts – –Taxationpaid 20.2 (22604) (15430)Dividendpaid (180645) (180102)Netcashgeneratedfromoperatingactivities 4497 20231 Cashflowfrominvestingactivities Investmentinjointventure 9 (2099) –Loansadvancedtojointventure 9 (4372) –Loans(advancedto)/repaidbyassociate 10 (2785) 1263Amountsadvancedtorelatedparties (11855) (298330)Redemptionofpreferenceshares – 37305Netcashutilisedininvestingactivities (21111) (259762) Cashflowfromfinancingactivities Issueofshares 6012 –(Increase)/decreaseinshareschemeloan (1459) 4606Netcashgeneratedinfinancingactivities 4553 4606 Netdecreaseincashandcashequivalents (12061) (234925)Cashandcashequivalentsatbeginningofyear 35820 270745Cashandcashequivalentsatendofyear 14 23759 35820


98

2010 2009

R’000 R’000

NOTESTOThECOMPANYFINANCIAlSTATEMENTS


4.OPERATINGPROFITThefollowingitemshavebeencredited/(charged)inarrivingatoperatingprofit: Otherincome Dividendsreceived 180351 197799Royaltyfees 15829 16084Amortisationoffinancialguaranteecontracts 21596 18510Other 4428 4799 222204 237192 OtheroperatingexpensesAuditor’sremuneration (1209) (1087)–Auditfees–currentyear (1209) (1087)–Auditfees–prioryear – ––Otherservices – –Impairmentofinvestmentinassociate (10717) (4086)Otherexpenses (3804) (2912) (15730) (8085)

5.FINANCE(COSTS)/INCOME Financecosts: Interestexpense –Bank – –Totalfinancecosts – –

Financeincome: Interestincome–Bank 832 748–Other 5813 7628Totalfinanceincome 6645 8376Netfinanceincome 6645 8376

99

2010 2009

R’000 R’000

NOTESTOThECOMPANYFINANCIAlSTATEMENTSFORTHEYEARENDED31DECEMBER2010

6.TAXATIONEXPENSE Currenttaxation –Currentyear 6376 4585STC 15479 10711 Deferredtaxation –Currentyear (1150) 3039–Ratechange – –Taxationexpense 20705 18335

ThetaxontheCompanyprofitbeforetaxationdiffersfromthetheoreticalamountthatwouldariseusingthebasictaxrateofSAasfollows:

Standardrate 28,0 28,0 Adjustedfor: Exemptincome (26,5) (25,4)Non-deductibleexpenses 1,5 0,2STC 7,3 4,9DeferredSTCrecognised (0,5) – 9,8 7,7

2010 2009

% %

100

lANDAND BUIlDINGS TOTAl R’000 R’000



7.PROPERTY,PlANTANDEQUIPMENT Fortheyearended31December2010 Atbeginningofyear 3658 3658Additions – –Revaluation – –Atendofyear 3658 3658 At31December2010 Cost 3658 3658Accumulateddepreciation – –Closingcarryingvalue 3658 3658 Fortheyearended31December2009 Atbeginningofyear 3658 3658Additions – –Revaluation – –Atendofyear 3658 3658 At31December2009 Cost 3658 3658Accumulateddepreciation – –Closingcarryingvalue 3658 3658 At1January2009 Cost 3658 3658Accumulateddepreciation – –Closingcarryingvalue 3658 3658

101

2010 2009

R’000 R’000


8.INVESTMENTINSUBSIDIARIESSharesatcost Costofinvestmentinordinaryshares(refertoNote22) 2762432 2766548 2762432 2766548Share-basedpaymentstosubsidiaryemployees 54374 48783 2816806 2815331

Aggregateattributableaftertaxprofitsofsubsidiaries 285555 389088

ThefollowinginformationrelatestotheCompany’sinterestinitssubsidiaries:

AkaniEgoli SouthAfrica Unlisted 100,00 GamingandentertainmentAkaniLeisureInvestments** SouthAfrica Unlisted 100,00 InvestmentholdingAkaniMsunduzi SouthAfrica Unlisted 100,00 GamingandentertainmentWestCoastLeisure SouthAfrica Unlisted 70,36 GamingandentertainmentGoldReefManagement# SouthAfrica Unlisted 100,00 ManagementofcasinointerestsGoldReefResortsTrainingInstitute SouthAfrica Unlisted 100,00 GrouptrainingAkaniEgoliManagement SouthAfrica Unlisted 100,00 ManagementofcasinointerestsAkaniMsunduziManagement SouthAfrica Unlisted 100,00 ManagementofcasinointerestsAldissInvestments SouthAfrica Unlisted 100,00 InvestmentholdingGardenRouteCasino SouthAfrica Unlisted 85,00 GamingandentertainmentInkonkaInvestments** SouthAfrica Unlisted 100,00 InvestmentholdingGoldfieldsCasino SouthAfrica Unlisted 100,00 GamingandentertainmentTangleparkTrading** SouthAfrica Unlisted 100,00 InvestmentholdingSilverstarCasino SouthAfrica Unlisted 100,00 GamingandentertainmentAkaniLeisureMsunduziInvestments** SouthAfrica Unlisted 100,00 InvestmentholdingAkaniLeisureGoldfieldsInvestments** SouthAfrica Unlisted 100,00 InvestmentholdingAkaniLeisureInvestmentCasinoManagement> SouthAfrica Unlisted 100,00 InvestmentholdingRichardMolokoConsortium SouthAfrica Unlisted 100,00 InvestmentholdingRichardMolokoConsortiumHoldings SouthAfrica Unlisted 100,00 InvestmentholdingNewshelf786 SouthAfrica Unlisted 100,00 InvestmentholdingAkaniLeisureSilverstarHoldings> SouthAfrica Unlisted 100,00 InvestmentholdingMogaleSilverstarHoldings SouthAfrica Unlisted 100,00 InvestmentholdingGoldReefShareScheme SouthAfrica Trust N/A ShareTrust#During the 2010 financial year, the investment of R38 990 000 held in Akani Leisure Investment Casino

Management was transferred to the Company’s investment in Gold Reef Management. Akani Leisure Investment

Casino Management is currently in the process of being liquidated.



COUNTRYOF lISTED/ PROPORTION NATUREOFSUBSIDIARY INCORPORATION UNlISED OWNED BUSINESS %

Thetradingresultsofthejointventure,whoseresultswereequity-accountedinthefinancialstatementsareasfollows:Totaljointventurecompany’saccumulatedlossfortheyear (28) –

Currentassets 2084 –Non-currentassets 8410 –Currentliabilities 25 –Non-currentliabilities 6466 –

2010 2009

R’000 R’000

102

Indol SouthAfrica Unlisted 50,0 50,0 Gamingand entertainment

2010 2009 R’000 R’000



9.INVESTMENTINJOINTVENTURE Investmentinjointventure 2047 –Impairmentofjointventure – – 2047 –Loantojointventure 4167 –Closingcarryingvalue 6214 – Reconciliation Atbeginningofyear – –Investmentinjointventure 2047 –Impairmentofinvestmentinjointventure – –Loansadvancedduringtheyear 4167 –Impairmentofloanstojointventure – –Atendofyear 6214 –

Closingcarryingvalueisanalysedasfollows: Indol Netinvestmentinjointventure 6471 –Foreignexchangelossontranslation (257) – 6214 –

loanstojointventureisanalysedasfollows:Indol* Loansadvancedduringtheyear 4372 –Foreignexchangelossontranslation (205) – 4167 – *The Company loan to Indol bears interest at the ruling prime interest of Botswana being 13,5%.

Theloantothejointventurehasbeenincludedaspartofthenetinvestmentinjointventureasitisnotconsideredtobeimmediatelyrecoverable.

Thecarryingamountoftheloanstothejointventureapproximateitsfairvalue.

ThefollowinginformationrelatestotheCompany’sinterestinitsjointventure:

COUNTRYOF lISTED/ PROPORTION ECONOMIC NATUREOFJOINTVENTURE INCORPORATION UNlISED OWNED INTEREST BUSINESS % %

103

2010 2009

R’000 R’000


10.INVESTMENTINASSOCIATEInvestmentinassociate 67 67Impairmentofinvestmentinassociate* (67) (67) – –Loanstoassociate 35533 36834Impairmentofloanstoassociate* (10717) (4086)Closingcarryingvalue 24816 32748Reconciliation Atbeginningofyear 32748 38097Impairmentofinvestmentinassociate* – –Loansadvanced/(repaid)duringtheyear 2785 (1263)Impairmentofloanstoassociate* (10717) (4086)Atendofyear 24816 32748

Closingcarryingvaluecomprises: LukhanjiLeisure 24816 32748 loanstoassociatecomprises: LukhanjiLeisure** 24816 32748

* During the year Gold Reef ’s investment in Lukhanji Leisure was impaired. The impairment had no effect on the Group

results since sufficient losses have been equity accounted in terms on IAS 28 – Investments in Associates. Refer to Note 3.1.

** The Company loan to Lukhanji Leisure bears interest at prime +1%. Gold Reef has subordinated its loan to Lukhanji

Leisure for the benefit of other creditors, limited to an amount of R17,5 million.

Theloantoassociatehasbeenincludedaspartofthenetinvestmentinassociateasitisnotconsideredtobeimmediatelyrecoverable.Thecarryingamountoftheloantoassociateapproximatesitsfairvalue.

ThefollowinginformationrelatestotheCompany’sinterestinitsassociate:

LukhanjiLeisure SouthAfrica Unlisted 25,1 25,1 Gamingand entertainment

AstheCompanyhassignificantinfluenceinLukhanjiLeisurebutnotcontrol,theresultsofitsoperationsareequityaccounted.ThedirectorsconsidertheCompanytohavesignificantinfluenceinLukhanjiLeisureastheCompanyhasappointedtwodirectorstotheBoardofLukhanjiLeisureandaGroupsubsidiaryprovidesconsultingandknowhowtothecompanyholdingthemanagementcontractforLukhanjiLeisure.

COUNTRYOF lISTED/ PROPORTION ECONOMIC NATUREOFASSOCIATE INCORPORATION UNlISED OWNED INTEREST BUSINESS % %

104

2010 2009

R’000 R’000



10.INVESTMENTINASSOCIATE(CONTINUED)Thetradingresultsoftheassociatecompany,whoseresultswereequity-accountedinthefinancialstatements,areasfollows:

Revenue 53041 51340Totalassociatecompany’saccumulatedlossfortheyear (15586) (20616)Theaggregatebalancesheetoftheassociateissummarisedasfollows:Property,plantandequipment 92881 100766Intangibleassets 2318 2652Deferredtaxassets 689 544Cash 4046 6503Othercurrentassets 3601 3501Totalassets 103535 113966Shareholders’loans (123341) (115041)Otherliabilities (52095) (55424)Totalshareholders’funds (71901) (56499)

105



OThER FINANCIAl lIABIlITIES TOTAl R’000 R’000

OThER FINANCIAl lIABIlITIES TOTAl R’000 R’000


11.FINANCIAlINSTRUMENTSBYCATEGORY31December2010Assetsperbalancesheet Tradeandotherreceivables – –Cashandcashequivalents 23759 23759Amountsowingbyrelatedparties 54763 54763Total 78522 78522

31December2009AssetsasperbalancesheetTradeandotherreceivables 1000 1000Amountsowingbyrelatedparties 57620 57620Cashandcashequivalents 35820 35820Total 94440 94440

31December2010liabilitiesperbalancesheetFinancialguaranteecontracts 103106 103106Tradeandotherpayables 714 714Amountsowingtorelatedparties 239471 239471Total 343291 343291

31December2009liabilitiesperbalancesheet Financialguaranteecontracts 124702 124702Tradeandotherpayables 651 651Amountsowingtorelatedparties 254183 254183Total 379536 379536

106

2010 2009

R’000 R’000



12.ShARE-BASEDPAYMENTARRANGEMENTS 12.1ShareSchemeLoantosharescheme 60308 58849 60308 58849The Company operates an equity-settled, share-based compensation plan established in September 1999.OptionsaregrantedtopermanentemployeesatthediscretionofthedirectorsintermsofwhichsharesinGoldReefmaybeacquiredbasedonpricesprevailingatthedatesofgrantingtheoptions.Deliveryofthesharessoacquirediseffectedinthreeequaltranchesvestingoverfouryears;onethirdaftertwoyears,onethirdafterthreeyearsandonethirdafterfouryears.Sharesacquiredthroughtheshareschemehavetobepaidforbytheemployeesatthesubscriptionpricesasdeterminedintheoptioncontracts.Uponvestingoftheoptionsthesubscriptionvalueiscreditedtosharecapital(nominalvalue)andsharepremiumanddebitedtoanon-currentasset.Thenon-currentassetisconsideredpayablewhentheoptionvestswiththeemployee.Anydividendspaidonthosesharesareutilisedtoreducethebalanceowingbytheemployee.

AcompleteaccountingpolicyfortheschemeisincludedinNote1.15.1totheseannualfinancialstatements.

13.TRADEANDOThERRECEIVABlES Other – 1000 – 1000Nosecurityisheldagainstanyofthetradeandotherreceivables. 14.CAShANDCAShEQUIVAlENTSCashatbank 23759 35820Cashonhand – – 23759 35820

Bankoverdrafts – – – –

Allbankbalancesandbankoverdraftsareheldundercashmanagement.

Cash,cashequivalentsandbankoverdraftsincludethefollowingforthepurposeofthecashflowstatement: Cashandcashequivalents 23759 35820Bankoverdraft – – 23759 35820

107


15.ShARECAPITAl Balanceat1January2009 291990 5840 1860132 1865972Ordinarysharesissuedin2009 – – – –Balanceat31December2009 291990 5840 1860132 1865972Ordinarysharesissuedin2010 354 7 6005 6012Balanceat31December2010 292344 5847 1866137 1871984 Thetotalauthorisednumberofordinarysharesis1200000000(2009:590000000)withaparvalueof2centspershare(2009:2centspershare).Allissuedshares,otherthanthoserelatingtotheGoldReefShareScheme,arefullypaidup.

NUMBEROF ORDINARY ShARE ShARE ShARES CAPITAl PREMIUM TOTAl (000) R’000 R’000 R’000

2010 2009

R’000 R’000

16.FINANCIAlGUARANTEECONTRACTSAtbeginningofyear 124702 143212Amortisation (21596) (18510)Atendofyear 103106 124702 Thefinancialguaranteecontracts relate to suretyshipsprovidedbyGoldReef tobanks inrespectof loansgranted to subsidiariesandassociates.TheCompanyhasbounditselfassuretyforAkaniEgoli,SilverstarCasinoandQueensCasinototheirbankersfor100%,100%and35,72%oftheirexposurerespectively.

As at 31 December 2010, there was no expectation that Gold Reef would be called upon to fulfill its obligations in terms of the various suretyshipagreements.

108

2010 2009

R’000 R’000



17.DEFERREDINCOMETAXATION Atbeginningofyear – 3039Ratechange – –Currentyearmovement 1150 (3039)Atendofyear 1150 – Brokendownasfollows: Deferredincometaxassets 1150 –Deferredincometaxliabilities – –Netdeferredincometaxasset 1150 – Thedeferredincometaxbalancemaybeanalysedasfollows: Deferredincometaxassets Provisions – –DeferredSTCcredits 1150 – 1150 – Deferredincometaxassets –Deferredincometaxassetstoberecoveredwithin12months 1150 ––Deferredincometaxassetstoberecoveredaftermorethan12months – – 1150 – Deferredtaxationiscalculatedinfullontemporarydifferencesundertheliabilitymethodusingaprincipaltaxrateof28%(2009:28%).

Deferredtaxassetsareonlyrecognisedtotheextentthatrealisationoftherelatedtaxbenefitisprobable.

18.TRADEANDOThERPAYABlESAccruedexpenses 714 651VATpayable 458 388 1172 1039Alltradeandotherpayablesariseintheordinarycourseofbusiness.Forfurtherinformationrelatingtotheageingoftradeandotherpayables,refertoNote2.1.3.

19.PROVISIONS Atbeginningofyear – 7200Provisionsraised – –Provisionsutilised – (7200)Atendofyear – –

109

2010 2009

R’000 R’000


20.CAShFlOWINFORMATION 20.1Cashflowfromoperatingactivities Profitbeforetaxation 213119 237483Adjustedfornon-cashitemsandotheradjustments: (13151) (22800)Financeincome(refertoNote5) (6645) (8376)Financecosts(refertoNote5) – –Amortisationoffinancialguaranteecontracts(refertoNote16) (21596) (18510)Relatedpartyloanreversedagainstinvestmentinsubsidiary 4116 –Foreignexchangeloss 257 –Impairmentofloanstoassociate 10717 4086 199968 214683Decrease/(increase)innetcurrentassets 1133 (7296)Decreaseintradeandotherreceivables 1000 –Increase/(decrease)intradeandotherpayables 133 (96)Decreaseinprovisions – (7200) 201101 207387 20.2Taxationpaid Taxassetatbeginningofyear 245 111Currenttaxation (6376) (4585)STC (15479) (10711)Taxassetatendofyear (994) (245) (22604) (15430)

110

2010 2009

R’000 R’000



21.RElATEDPARTYTRANSACTIONSTransactionsoccurredwiththefollowingrelatedpartiesduringtheyear:RoyaltyfeesreceivedfromGoldReefManagement 15829 16084 Administrationfeesreceivedfrom: AkaniEgoliandsubsidiaries 197 441AkaniMsunduzi 215 302GardenRouteCasino 338 429GoldfieldsCasino 130 172GoldReefManagement 3085 3030WestCoastLeisure 117 197SilverstarCasino 74 128QueensCasino 72 91 Amountsowingbyrelatedpartiesatendofyear: AldissInvestments 43633 43604AkaniEgoli 26 –AkaniMsunduzi 1 –SilverstarCasino 11000 13944GardenRouteCasino 33 35GoldfieldsCasino 12 11MogaleSilverstarHoldings 18 –RichardMolokoConsortiumHoldings 39 26WestCoastLeisure 1 – 54763 57620Amountsowingtorelatedpartiesatendofyear: AkaniEgoli (620) (676)AkaniEgoliManagement (5) –AkaniMsunduzi (359) (9332)WestCoastLeisure –GoldReefManagement (64302) (63811)AkaniEgoliManagement –GardenRouteCasino (18322) (11650)GoldfieldsCasino (239) (6711)SilverstarCasino (470) (659)AkaniLeisureGoldfieldsInvestments – –AkaniLeisureInvestmentCasinoManagement – (4118)RichardMolokoConsortium (86614) (86634)Newshelf786 (68540) (68554)AkaniLeisureSilverstarHoldings – (6)MogaleSilverstarHoldings – –LukhanjiLeisure – (2032) (239471) (254183) (184708) (196563) Theloanstoandfromsubsidiariesbearinterestatvariousratesdeterminedfromtimetotime. Theloansariseduringtheordinarycourseofbusinessandarerepayableondemand.

111

EFFECTIVEhOlDING INVESTMENT (ECONOMICINTEREST) INShARES 2010 2009 2010 2009 % % R’000 R’000


22.SUBSIDIARIES,JOINTVENTURES,ASSOCIATESANDOThERINVESTMENTSSubsidiaries AkaniEgoli 100,00 100,00 984992 984992AkaniLeisureInvestments** 100,00 100,00 – *AkaniMsunduzi 100,00 100,00 135948 135948WestCoastLeisure 70,36 70,36 62715 62715GoldReefManagement# 100,00 100,00 98376 63501GoldReefResortsTrainingInstitute 100,00 100,00 * *AkaniEgoliManagement 100,00 100,00 1 1AkaniMsunduziManagement 100,00 100,00 1 1AldissInvestments 100,00 100,00 * *GardenRouteCasino 85,00 85,00 168837 168837InkonkaInvestments** 100,00 100,00 – 1GoldfieldsCasino 100,00 100,00 165084 165084TangleparkTrading** 100,00 100,00 – *SilverstarCasino 100,00 100,00 972933 972933AkaniLeisureMsunduziInvestments** 100,00 100,00 – *AkaniLeisureGoldfieldsInvestments** 100,00 100,00 – *AkaniLeisureInvestmentCasinoManagement> 100,00 100,00 – 38990RichardMolokoConsortium 100,00 100,00 – *RichardMolokoConsortiumHoldings 100,00 100,00 173545 173545Newshelf786 100,00 100,00 – –AkaniLeisureSilverstarHoldings> 100,00 100,00 – *MogaleSilverstarHoldings 100,00 100,00 – * 2762432 2766548JointVentures Indol 50,00 50,00 6214 –Associates LukhanjiLeisure 25,10 25,10 – –Investments SekunjaloHealthCareLimited 0,50 0,50 – –

#During the 2010 financial year, the investment of R38 990 000 held in Akani

Leisure Investment Casino Management was transferred to the Company’s investment

in Gold Reef Management. Akani Leisure Investment Casino Management is currently

in the process of being liquidated.



112

2010 2009

R’000 R’000



23.CONTINGENCIES,COMMITMENTSANDGUARANTEESAt31December2010 theCompanyhad contingent liabilities in respectof bank andother guarantees aswellasothermattersarisingintheordinarycourseofbusinessfromwhichitisanticipatedthatnomaterialliabilitieswillarise.

Thedetailsareasfollows: Guarantees 3935 3935Transactioncosts 22443 33856Litigation 1000 1000 27378 38791

GoldReefhasenteredintoanagreementwithNedbankandtheEasternCapeGamblingandBettingBoardwherebythebankhasguaranteedanagreedcapitalamountnotexceedingR3935542(2009:R3935542)forthecompletionoftheconstructionoftheproposalscontainedinQueensCasino’sbidapplication.

Litigationcomprisespossiblelitigationandrelatedcosts.

24.DIRECTORS’EMOlUMENTSExecutivedirectorsGainonvestedshareoptionsexercised* 1192 2290Otherbenefits – – 1192 2290

Non-executivedirectorsDirectors’fees 2389 1798Otherbenefits – – 2389 1798 3581 4088Totaldirectors’emoluments EmolumentspaidbytheCompany 3581 4088 3581 4088 * This relates to gains on share options which have been exercised and have vested but remain unsold. Consequently, the

directors will only receive the economic benefits once the shares are sold on the open market. Subsequent to year end, on

termination of the Service Agreements, these share options vested, the loan balances with the Company were repaid and

the pledges over the shares were released.

Adetailedbreakdownofindividualdirectors’emolumentsisshownonpage21oftheannualreport.

AlistingofallmembersoftheBoardisshownonpages5to7oftheannualreport.

113


25.SUBSEQUENTEVENTSCorporateactivityThemergerofGoldReefandTsogoSunbecameeffectiveon24February2011withthenewmajorityshareholdersbeingTIHandSABSA.

On24February2011,theCompanyissued888261028ordinarysharesasconsiderationforthe acquisition of the entire issued share capital in Tsogo Sun from TIH and SABSA. TIHwas issued 453 013 124 ordinary shares resulting in a shareholding in Gold Reef of 41,3%(excluding treasury shares). SABSA was issued 435 247 904 ordinary shares resulting ina shareholding in Gold Reef of 39,7% (excluding treasury shares). On the same date, the 69205093sharespreviouslyheldbyTsogoSunExpansionbecameGoldReeftreasuryshares.

Directors’DealingsOn 23 March 2011, Mr J A Copelyn acquired a direct beneficial interest in the Companyfollowing the purchase of 167 775 ordinary Gold Reef shares at a VWAP of R14,18. Therequisitepriorwrittenclearancetodealinthesesecuritieswasobtainedforthistransaction.

114

NUMBEROF % NUMBEROF %

ShAREhOlDERS ShARES

ANAlYSISOFShAREhOlDERS

ANDJSEPERFORMANCEAT31DECEMBER2010

PORTFOlIOSIZERange 1 – 1000 1178 54,49 318985 0,11 1001 – 5000 435 20,12 1138028 0,39 5001 – 10000 107 4,95 813836 0,28 10001 – 50000 167 7,72 4382440 1,50 50001 – 100000 74 3,42 5702030 1,95100001 – ANDOVER 201 9,30 279988578 95,77 2162 100,00 292343897 100,00 Shareholderspread Public 2149 99,40 144148673 49,31Non-public 13 0,60 148195224 50,69Directorsandmanagement 10 0,45 10743441 3,67Holding10%+ 1 0,05 122990847 42,07Subsidiary 1 0,05 14427602 4,94GoldReefShareScheme 1 0,05 33334 0,01 2162 100,00 292343897 100,00 Majorshareholdersowning1%ormore TsogoSunExpansion 69205093 23,67MaximKrok 15494632 5,30AldissInvestments(Pty)Ltd* 14427602 4,94ShellyKrok 11983531 4,10ElanaPincus 11974176 4,10SimoneKrok 11523732 3,94AllanGrayBalancedFund 9331000 3,19MarkKrok 9214000 3,15DavidKrok 8474536 2,90BlackManagementForumInvestmentCompanyLtd 7587517 2,60Newshelf698(Pty)Ltd 6327740 2,16AllanGrayEquityFund 5036367 1,72AllanGrayGlobalBalancedPortfolio 4393975 1,50PrimePortfolioInvestments“”A””(Pty)Ltd 3533964 1,21StevenJoffe 3389565 1,16AllanGrayStableFund 2977700 1,02 JSEPERFORMANCE Numberofsharestraded 46599451Sharestradedasapercentageoflistedsharesinissueat31December2010(%) 15,94Highestpricetraded(Rands) 21,49Lowestpricetraded(Rands) 15,00Closingmarketpriceat31December2010(Rands) 19,55

*Treasury shares

115

NUMBEROF % NUMBEROF %

ShAREhOlDERS ShARES

ANAlYSISOFShAREhOlDERS

AT28FEBRUARY2011

PORTFOlIOSIZERange 1 – 1000 1275 56,69 326190 0,03 1001 – 5000 434 19,30 1129907 0,10 5001 – 10000 106 4,71 802242 0,07 10001 – 50000 163 7,25 4277693 0,36 50001 – 100000 69 3,07 5357724 0,45100001 – ANDOVER 202 8,98 1168711169 98,99 2249 100,00 1180604925 100,00 Shareholderspread Public 2243 99,74 208677868 17,68Non-public 6 0,26 971927057 82,32Holding10%+ 2 0,09 888261028 75,24Subsidiary 3 0,13 83632695 7,08GoldReefShareScheme 1 0,04 33334 0,00 2249 100,00 1180604925 100,00 Majorshareholdersowning1%ormore TsogoInvestment 453013124 38,37SABSA 435247904 36,87TsogoSunGaming* 42876046 3,63TsogoSunExpansion* 26329047 2,23MaximKrok 15494632 1,31AldissInvestments(Pty)Ltd* 14427602 1,22ShellyKrok 11983531 1,02ElanaPincus 11974176 1,01

*Treasury shares

116

ShAREhOlDERS’DIARY

Nextfinancialyear-end.................................................................31March2012AnnualGeneralMeeting................................................................. 15June2011

REPORTSInterimforsixmonthstoSeptember...............................................November2011Preliminaryannualresults................................................................... May2012Annualfinancialstatements.................................................................. June2012

117

CORPORATEINFORMATION

COMPANYSECRETARYANDREGISTEREDOFFICEWJvanWyngaardtPalazzoTowersEastMontecasinoBoulevardFourways,2055(PrivateBagX200,Bryanston,2021)

SPONSORDeutscheSecurities(SA)(Proprietary)limited(Anon-bankmemberoftheDeutscheBankGroup)(RegistrationNumber:1995/011798/07)3ExchangeSquare,87MaudeStreetSandton,2196(PrivateBagX9933,Sandton,2146)

ATTORNEYSTabacksAttorneys(RegistrationNumber:2000/024541/21)13EtonRoadParktown,2193(POBox3334,Houghton,2041)

NortonsInc.(RegistrationNumber:2009/006902/21)135DaisyStreetSandton,2196(POBox41162,Craighall,2024)

AUDITORSPricewaterhouseCoopersInc.RegisteredAccountantsandAuditors(Registrationnumber:1998/012055/21)2EglinRoadSunninghill,2157(PrivateBagX36,Sunninghill,2157)

TRANSFERSECRETARIESlinkMarketServicesSouthAfrica(Proprietary)limited(Registrationnumber:2000/007239/07)13thFloor,RennieHouse19AmeshoffStreetBraamfontienJohannesburg,2001(POBox4844,Johannesburg,2000)

COMMERCIAlBANKERSNedbanklimited(RegistrationNumber:1966/010630/06)1stFloorCorporateParkNedcorSandton135RivoniaRoadSandown,2196(POBox1144,Johannesburg,2000)

RandMerchantBankAdivisionofFirstRandBankLimited(RegistrationNumber:1929/001225/06)1MerchantPlacecnrFredmanDriveandRivoniaRoadSandton,2196(POBox786273,Sandton,2146)

ABSAGrouplimited(RegistrationNumber:1986/003934/06)3rdFloorAbsaTowersEast170MainStreetJohannesburg,2001(POBox7735,Johannesburg,2000)

INVESTORRElATIONSBrunswickSouthAfricalimited(RegistrationNumber:1995/011507/10)23FrickerRoadIllovoBoulevardIllovo,2196

118

NOTICEOFANNUAlGENERAlMEETING

FORGOLDREEFRESORTSLIMITED

(Incorporated in the Republic of South Africa)Registration number 1989/002108/06Share Code: GDF ISIN ZAE000028338(“Gold Reef” or “the Company”)

NoticeisherebygiventhattheAnnualGeneralMeetingofGoldReefwillbeheldatThePivotConferenceCentre(adjacenttoSouthernSunMontecasinoHotel), Verona Suite, Block B, No. 1 Montecasino Boulevard, Fourways,South Africa on Wednesday, 15 June 2011 at 10h00 for the purpose ofconsidering and, if thought fit, passing with or without amendment thefollowingordinaryandspecialresolutionsandconsideringanyothermattersraisedbyshareholdersattheAnnualGeneralMeeting:

1.ANNUAlFINANCIAlSTATEMENTSOrdinaryresolutionnumber1“ResolvedthattheannualfinancialstatementsoftheCompanyandtheGroupfortheyearended31December2010,togetherwiththeAuditandRiskCommittee’s,independentauditors’anddirectors’reports,bereceivedandadopted.”

2.DIRECTORS2.1Ordinaryresolutionnumber2“Resolved that Mr J A Mabuza, who retires in terms of the Company’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

An abbreviated curriculumvitae in respectofMrMabuza is containedonpage5oftheannualreportofwhichthisnoticeformspart.

2.2Ordinaryresolutionnumber3“ResolvedthatMrMNvonAulock,whoretiresintermsoftheCompany’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

AnabbreviatedcurriculumvitaeinrespectofMrvonAulockiscontainedonpage5oftheannualreportofwhichthisnoticeformspart.

2.3Ordinaryresolutionnumber4“Resolved that Mr R A Collins, who retires in terms of the Company’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

An abbreviated curriculum vitae in respect of Mr Collins is contained onpage5oftheannualreportofwhichthisnoticeformspart.

2.4Ordinaryresolutionnumber5“Resolved that Mr G I Wood, who retires in terms of the Company’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

AnabbreviatedcurriculumvitaeinrespectofMrWoodiscontainedonpage5oftheannualreportofwhichthisnoticeformspart.

2.5Ordinaryresolutionnumber6“Resolved that Mr J A Copelyn, who retires in terms of the Company’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

Anabbreviatedcurriculumvitae inrespectofMrCopelyn iscontainedonpage5oftheannualreportofwhichthisnoticeformspart.

2.6Ordinaryresolutionnumber7“Resolved thatMrMJAGolding,whoretires in termsof theCompany’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

Anabbreviatedcurriculumvitae inrespectofMrGolding iscontainedonpage6oftheannualreportofwhichthisnoticeformspart.

2.7Ordinaryresolutionnumber8“ResolvedthatMrAvanderVeen,whoretires intermsoftheCompany’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

AnabbreviatedcurriculumvitaeinrespectofMrvanderVeeniscontainedonpage6oftheannualreportofwhichthisnoticeformspart.

2.8Ordinaryresolutionnumber9“Resolved that Mr V E Mphande, who retires in terms of the Company’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

AnabbreviatedcurriculumvitaeinrespectofMrMphandeiscontainedonpage6oftheannualreportofwhichthisnoticeformspart.

2.9Ordinaryresolutionnumber10“Resolved that Mr J M Kahn, who retires in terms of the Company’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

AnabbreviatedcurriculumvitaeinrespectofMrKahniscontainedonpage6oftheannualreportofwhichthisnoticeformspart.

2.10Ordinaryresolutionnumber11“Resolved thatMrEAGMackay,who retires in termsof theCompany’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

An abbreviated curriculumvitae in respectofMrMackay is containedonpage6oftheannualreportofwhichthisnoticeformspart.

2.11Ordinaryresolutionnumber12“Resolved that Mr M I Wyman, who retires in terms of the Company’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

119

NOTICEOFANNUAlGENERAlMEETINGFORGOLDREEFRESORTSLIMITED

Anabbreviatedcurriculumvitae in respectofMrWyman is containedonpage6oftheannualreportofwhichthisnoticeformspart.

2.12Ordinaryresolutionnumber13“ResolvedthatMrRGTomlinson,whoretires intermsoftheCompany’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

AnabbreviatedcurriculumvitaeinrespectofMrTomlinsoniscontainedonpage6oftheannualreportofwhichthisnoticeformspart.

2.13Ordinaryresolutionnumber14“Resolved that Mr J G Ngcobo, who retires in terms of the Company’sMemorandum of Incorporation and who, being eligible, offers himself forre-election,isherebyelectedasadirectoroftheCompany.”

Anabbreviated curriculumvitae in respectofMrNgcobo is containedonpage7oftheannualreportofwhichthisnoticeformspart.

2.14Ordinaryresolutionnumber15“ResolvedthatMrYShaikbeelectedasadirectoroftheCompany.”

Mr Yunis Shaik is an attorney of the High Court and presently in privatepractice.HeisaformerDeputyGeneralSecretaryoftheSouthernAfricanClothingandTextileWorkersUnionandadirectorofWorkers’CollegeandhasservedastheSeniorCommissionertotheCCMAinKwaZuluNatal.HewasappointedtotheBoardofHCIasanon-executivedirectorinAugust2005andasleadindependentnon-executivedirectorinAugust2010.

Mr Shaik replaces Mr P J Venison who, in terms of the Company’sMemorandumofIncorporation,retiresatthisAnnualGeneralMeetingandisnotavailableforre-election.

3.AUDITANDRISKCOMMITTEE3.1Ordinaryresolutionnumber16“ResolvedthatMrRGTomlinsonbeappointedasamemberandChairmanoftheGoldReefAuditandRiskCommittee.”

3.2Ordinaryresolutionnumber17“ResolvedthatMrYShaikbeappointedasamemberoftheGoldReefAuditandRiskCommittee.”

Mr Y Shaik replaces Mr P J Venison who, in terms of the Company’sMemorandumofIncorporation,retiresatthisAnnualGeneralMeetingandisnotavailableforre-appointmenttotheGoldReefAuditandRiskCommittee.

3.3Ordinaryresolutionnumber18“ResolvedthatMrJGNgcobobeappointedasamemberoftheGoldReefAuditandRiskCommittee.”

4.AUDITORSANDAUDITORSREMUNERATION4.1Ordinaryresolutionnumber19“Resolved that PricewaterhouseCoopers Inc be appointed as independentauditors of the Company until the conclusion of the next Annual GeneralMeetingoftheCompany.”

4.2Ordinaryresolutionnumber20“Resolved that the directors be authorised to determine the independentauditors’remunerationfortheyearending31December2011.”

4.3Ordinaryresolutionnumber21“Resolvedthattheindependentauditors’remunerationofR5521000fortheyearended31December2010beapproved.”

5.AUThORITY TO ISSUE ShARES FOR ThE PURPOSES OF ThEGOlDREEFShARESChEMEOrdinaryresolutionnumber22“Resolved that up to a maximum of 2,5 million ordinary shares in theauthorisedbutunissued sharecapitalof theCompanybeplacedunder thecontrolofthedirectorswiththeauthoritytoallotandissuesuchsharesforthepurposeof carryingout the termsof theGoldReef Share Scheme, intheirdiscretion,subjecttoallapplicablerequirementsoftheCompaniesAct,71of2008,asamendedandtheListingsRequirementsoftheJSELimited.”

6.DIRECTORS’FEESSpecialresolutionnumber1“Resolvedthatthefeespayabletonon-executivedirectorsfortheirservicesasdirectorsorasmembersoftheBoardsub-committeesinrespectofthefinancialperiodending31March2012,asproposedintheremunerationreportonpage18oftheannualreportofwhichthisnoticeformspart,beapproved.”

Thereasonforandtheeffectofthisspecialresolutionistoensurethattheremunerationofthenon-executivedirectorsremainscompetitiveinordertoenabletheCompanytoattractandretainpersonsofthecalibrerequiredinordertomakemeaningfulcontributionstotheCompany.

7.APPROVAlTOREPURChASEShARESSpecialresolutionnumber2“Resolved that the Company and any of its subsidiaries be and arehereby authorised, by way of a general approval in terms of the ListingsRequirementsoftheJSELimited(“JSE”),toacquireordinarysharesissuedbytheCompany;providedthat:• anysuchacquisitionshallonlybemadeincompliancewiththeprovisions

ofsection48readwithsection46oftheCompaniesAct,71of2008,asamended;

• anysuchacquisitionofordinarysharesshallbeeffectedthroughtheorderbook operated by the JSE trading system and done without any priorunderstandingorarrangementbetweentheCompanyandthecounterparty;

• this general authority shall be valid until the Company’s next AnnualGeneral Meeting, provided that it shall not extend beyond 15 (fifteen)monthsfromthedateofpassingofthisspecialresolution;

• acquisitionsofsharesinaggregateinanyonefinancialyearmaynotexceed10%oftheCompany’sissuedordinarysharecapitalasatthedateofpassingofthisspecialresolution;

• indeterminingthepriceatwhichordinarysharesissuedbytheCompanyareacquiredbyitoranyofitssubsidiariesintermsofthisgeneralauthority,the maximum premium at which such ordinary shares may be acquiredwill be 10% of the weighted average of the market value at which suchordinarysharesaretradedontheJSEforthefivebusinessdaysimmediatelyprecedingthedateofrepurchaseofsuchordinarysharesbytheCompanyoranyofitssubsidiaries;

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NOTICEOFANNUAlGENERAlMEETING


• atanypointintime,theCompanymayonlyappointoneagenttoeffectanyrepurchaseontheCompany’sbehalf;

• theCompany’ssponsormustconfirmtheadequacyoftheCompany’sworkingcapitalforpurposesofundertakingtherepurchaseofsharesinwritingtotheJSEbeforeenteringthemarkettoproceedwiththerepurchase;

• theCompanyand/oritssubsidiariesmaynotrepurchaseanysharesduringaprohibitedperiodasdefinedbytheListingsRequirementsoftheJSEunlesstheyhaveinplacearepurchaseprogrammewherethedatesandquantitiesof ordinary shares to be traded during the relevant period are fixed andfull details of the programme have been disclosed in an announcementoverSENS(theSecuritiesExchangeNewsServiceoftheJSE)priortothecommencementoftheprohibitedperiod;

• theBoardofdirectorsauthorisessuchacquisition;and• the Company passes the solvency and liquidity test as required by the

CompaniesAct,71of2008,asamended.”

Thereasonforandeffectofthisspecialresolution,ifpassedandbecomingeffective, is to grant the Company and the subsidiaries of the Company ageneralauthorityintermsoftheListingsRequirementsoftheJSELimited(“JSE”)fortheacquisitionbytheCompany,orasubsidiaryoftheCompany,oftheCompany’sshares.

ThedirectorsconsiderthatsuchageneralauthorityshouldbeputinplaceinordertoacquiretheCompany’ssharesshouldanopportunitytodosopresentitselfduringtheyearandwhichisinthebestinterestsoftheCompanyanditsshareholders.

Thedirectorshavingconsideredtheeffectsofthisresolution,considerthatforaperiodof12monthsafterthedateofthisnotice:• the Company and the Group will be able, in the ordinary course of

business,topayitsdebts;• theassetsoftheCompanyandtheGroup,measuredinaccordancewith

theaccountingpoliciesusedinthelatestauditedannualGroupfinancialstatements,willexceedtheliabilitiesoftheCompanyandtheGroup;

• the Company and the Group’s ordinary share capital, reserves andworkingcapitalwillbeadequateforordinarybusinesspurposes.

Uponcumulativelyrepurchasing3%oftheinitialnumberofordinarysharesin issue and for each 3% of ordinary shares repurchased thereafter, theCompanywillmakeanannouncementtosucheffectnotlaterthan08:30onthesecondbusinessdayfollowingthedayonwhichtherelevantthresholdisreachedorexceeded.

Thefollowingadditionalinformation,someofwhichappearsintheannualreportofwhichthisnoticeformspart(“annualreport”),isprovidedintermsoftheListingsRequirementsoftheJSEforpurposesofthegeneralauthoritytorepurchaseshares(specialresolutionnumber2):• directorsandmanagement–pages5to7oftheannualreport;• majorbeneficialshareholders–page115oftheannualreport;• theonlydirectorwithaninterestinsecuritiesisMrJACopelyn–refer

topage30oftheannualreport;and• sharecapitaloftheCompany–page79oftheannualreport.

The directors, whose names appear on pages 5 to 7 of the annual reportare not aware of any legal or arbitration proceedings that are pending or

threatened,thatmayhaveorhavehadintherecentpast,beingatleasttheprevious12months,amaterialeffectontheGroup’sfinancialposition.

The directors, whose names appear on pages 5 to 7 of the annual report,collectivelyandindividuallyacceptfullresponsibilityfortheaccuracyoftheinformationpertainingtospecialresolutionnumber2andcertifythat,tothebestoftheirknowledgeandbelief,therearenofactsthathavebeenomittedwhichwouldmakeanystatementfalseormisleading,andthatallreasonableenquiriestoascertainsuchfactshavebeenmadeandthatthisnoticecontainsallinformationrequiredbylawandtheListingsRequirementsoftheJSE.

Other than the facts and developments reported on in the annual report,therehavebeennomaterialchangesintheaffairsorfinancialpositionoftheCompanyanditssubsidiariessincethedateofsignatureoftheannualreportanduptothedateofthisnotice.

8.ChANGEOFNAMEOFThECOMPANYSpecialresolutionnumber3“ResolvedthatthenameoftheCompanybechangedfromGoldReefResortsLimitedtoTsogoSunHoldingsLimited.”

TheeffectofthisspecialresolutionistochangethenameoftheCompanyfromGoldReefResortsLimitedtoTsogoSunHoldingsLimited.ThereasonfortheproposednamechangeoftheCompanyissetoutinAnnexureAtothisnotice.

ShareholdersareadvisedthattheCompanyinformationwillbechangedasfollows:Companyname: TsogoSunHoldingsLimitedJSEsharecode: TSHShortname: TSOGOSUNISIN: ZAE000156238

Importantdatesandtimes: 2011AnnualGeneralMeeting.......................................Wednesday,15JuneLastdaytotradesecuritiesundertheoldname,GoldReefResortsLimited,oldJSEsharecodeandoldISIN................................................................Friday,8JulyListandtradenewsharesundernewname,TsogoSunHoldingsLimited,newJSEsharecodeandnewISIN......... Monday,11JulyRecorddate.............................................................. Friday,15JulyIssueofnewsecuritiesundernewname,newJSEsharecodeandnewISIN............................................ Monday,18JulyCertificatesposted/CSDPsandbrokersaccountsupdatedwithnewname,newJSEsharecodeandnewISIN(seeNote4).......................................... Monday,18July

Notes:1. AnychangestotheabovedatesandtimeswillbereleasedonSENSand

publishedintheSouthAfricanpress.2. AlltimesgiveninthisdocumentarelocaltimesinSouthAfrica.3. This document is available in English only. Additional copies may be

obtainedfromtheCompany’sregisteredofficeandthetransfersecretaries.4. Certificatedshareholderswhosurrendertheirexistingdocumentsoftitle

after12h00on theRecordDatewillhave theirnewsharecertificates,

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NOTICEOFANNUAlGENERAlMEETINGFORGOLDREEFRESORTSLIMITED

reflectingthenewname,posted(withinfivebusinessdaysofreceiptoftheirsurrendereddocuments)bythetransfersecretaries,byregisteredpostinSouthAfrica,attheriskoftheshareholdersconcerned.

9.AUThORITYTOPROVIDEFINANCIAlASSISTANCEGENERAllYTORElATEDORINTER-RElATEDCOMPANIESORCORPORATIONSSpecialresolutionnumber4“ResolvedthattotheextentsuchapprovalmayberequiredintermsoftheCompaniesAct,71of2008,asamended(“CompaniesAct”):1.theprovision,fromtimetotime,ofdirectorindirectfinancialassistance(whetherbywayofloan,guarantee,theprovisionofsecurityorotherwise)bytheCompanytoarelatedorinter-related(asthosetermsaredefinedintheCompaniesAct)companyorcorporationoftheCompany,beandisherebyapproved;and2.thedirectorsoftheCompanybeandareherebyauthorisedandempoweredto authorise the Company to provide such financial assistance, subject tocompliancewiththeapplicableprovisionsoftheCompaniesAct.”

Thereasonfortheabovespecialresolution,giventheuncertaintysurroundingtheambitof thewordingof section45of theCompaniesAct,71of2008,as amended, relating to loans or other financial assistance to directors orprescribed officers of the Company or of related or inter-related partiesof theCompany, is to ensure, to theextentnecessaryorpossible, that thedirectorsareentitledtoauthorisetheCompanytoprovidefinancialassistancetoitsholdingcompany(ifany)and/oritssubsidiarycompaniesfromtimetotimeduring theensuing twoyears if thedirectors consider itnecessaryorexpedient for thepurposesof theconductof thebusinessandaffairsof theCompany,itsholdingcompany(ifany)and/oritssubsidiarycompanies.

VOTINGANDPROXIESThedirectorshavedeterminedthattherecorddateforthepurposesoftheAnnual General Meeting (being the date on which a shareholder must beregisteredintheCompany’sregisterofshareholdersinordertoparticipatein and vote at the Annual General Meeting) shall be the close of businessonthethirdbusinessdaypriortothedateof theAnnualGeneralMeetingi.e.Friday,10June2011(“RecordDate”).Thelastdaytotradeinordertobe registered in the Company register of shareholders would therefore beFriday,3June2011.

A Gold Reef shareholder holding certificated shares and a Gold Reefshareholderwhoholdsdematerialisedshares inhis/herownnameandwhoisregisteredassuchontheRecordDateisentitledtoattend,participateinandvoteattheAnnualGeneralMeetingandmayappointaproxyorproxiestoattend,participateinandspeakandvoteattheAnnualGeneralMeetinginhis/herstead.AproxyneednotbeamemberoftheCompany.Thecompletionand lodging of a form of proxy will not preclude a Gold Reef shareholderfromattending,participatingin,speakingandvotingattheAnnualGeneralMeetingtotheexclusionoftheproxy/iessoappointed.

Theattachedformofproxyshouldbecompletedandreturnedtothetransfersecretariesinaccordancewiththeinstructionscontainedthereinsoastobereceivedbythetransfersecretaries,beingLinkMarketServicesSouthAfrica(Proprietary) Limited, 13th Floor, Rennie House, 19 Ameshoff Street,Braamfontein,2001(POBox4844,Johannesburg,2000)bynolaterthan10:00onTuesday,14June2011.

On a show of hands, every Gold Reef shareholder present in person orrepresentedbyproxyattheAnnualGeneralMeetingshallhaveonlyonevote,irrespectiveofhowmanyGoldReefsharesorshareholdershe/sherepresents.OnapolleveryGoldReefshareholderpresentinpersonorrepresentedbyproxyshallhaveonevoteforeveryGoldReefshareheldbysuchGoldReefshareholder.

GoldReefshareholderswhoholddematerialisedshares,otherthanholdersofdematerialisedsharesintheirownname,mustinformtheirCSDPorbrokerof their intention to attend theAnnualGeneralMeetingand request theirCSDP or broker to issue them with the necessary authorisation/letters ofrepresentation to attend the Annual General Meeting or to provide theirCSDPorbrokerwiththeirvotinginstructionsshouldtheynotwishtoattendtheAnnualGeneralMeeting inperson, failingwhich theCSDPorbrokerwill be obliged to act in terms of the mandate between such Gold ReefshareholdersandtheirCSDPorbroker.

IntermsoftheListingsRequirementsoftheJSE,equitysecuritiesheldbyasharetrustorschemewillnothavetheirvotesattheAnnualGeneralMeetingtakenintoaccountforthepurposesofJSEresolutionsproposedthereat.

IntermsofSection63(1)oftheCompaniesAct,71of2008,asamended,beforeanypersonmayattendorparticipateintheAnnualGeneralMeeting,thatpersonmustpresentreasonablysatisfactoryidentificationandthepersonpresidingattheAnnualGeneralMeetingmustbereasonablysatisfiedthattherightofthepersontoparticipateandvoteattheAnnualGeneralMeeting,eitherasashareholder,orasaproxyforashareholder,hasbeenreasonablyverified.

Copies of the Annual Report of the Company for the year ended31December2010maybeobtainedfromtheregisteredofficeoftheCompanyduringnormalbusinesshoursfrom24May2011to15June2011.

ByorderoftheGoldReefBoard

WJVANWYNGAARDTCompany Secretary

24May2011REGISTEREDOFFICEPalazzo Towers East, Montecasino Boulevard, Fourways, 2055(Private Bag X200, Bryanston, 2021)

TRANSFERSECRETARIESLink Market Services (Pty) Limited 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001(PO Box 4844, Johannesburg, 2000)

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FORMOFPROXY


GoldReefResortslimited(IncorporatedintheRepublicofSouthAfrica)

Registrationnumber1989/002108/06Sharecode:GDF|ISIN:ZAE000028338

(“GoldReef”or“theCompany”)

Gold Reef Shareholders who have dematerialised their shares in the Company and do not have “own-name” registration must inform their Central Securities

Depository Participant (“CSDP”) or broker of their intention to attend the Annual General Meeting and request their CSDP or broker to issue them with the

necessary authorisation/letters of representation to attend or provide their CSDP or broker with their voting instructions should they not wish to attend the

Annual General Meeting in person. Such Gold Reef shareholder must not return this form of proxy to the transfer secretaries.

I/We(fullnamesinBLOCKLETTERSplease)

of(insertaddress)

Beingtheholder(s)of [number]ordinarysharesintheCompany,herebyappoint:

1. orfailinghim/her,

2. orfailinghim/her,

3. theChairpersonoftheAnnualGeneralMeeting,

asmy/ourproxytoattend,speak,participateinandvoteontheresolutionstobeconsideredattheAnnualGeneralMeetingandatanyadjournmentthereofonmy/ourbehalf

andtovoteforand/oragainsttheordinaryandspecialresolutionsand/orabstainfromvotinginrespectoftheordinarysharesintheCompanyregisteredinmy/ourname/s

(seenote4)asfollows:

Please indicate with an “X” the instructions to your proxy in the spaces provided below. In the absence of such indication the proxy will be entitled to vote or abstain from voting in his/her discretion.

Thisformofproxyis forusebyGoldReefshareholdersregisteredassuchwhohold certificated shares in the Company and Gold Reef shareholders who holdownnamedematerialisedsharesintheCompany,toappointaproxyorproxiesfortheAnnualGeneralMeetingoftheCompanytobeheldat10:00onWednesday,15 June 2011 at The Pivot Conference Centre (adjacent to Southern SunMontecasino Hotel), Verona Suite, Block B, No. 1 Montecasino Boulevard,Fourways,SouthAfrica,oranyadjournmentthereof(“AnnualGeneralMeeting”).

NUMBEROF ORDINARYRESOlUTIONS VOTES FOR AGAINST ABSTAIN

1.Adoptionoftheannualfinancialstatements

2.ElectionofJAMabuzaasadirectoroftheCompany

3.ElectionofMNvonAulockasadirectoroftheCompany

4.ElectionofRACollinsasadirectoroftheCompany

5.ElectionofGIWoodasadirectoroftheCompany

6.ElectionofJACopelynasadirectoroftheCompany

7.ElectionofMJAGoldingasadirectoroftheCompany

8.ElectionofAvanderVeenasadirectoroftheCompany

9.ElectionofVEMphandeasadirectoroftheCompany

10. ElectionofJMKahnasadirectoroftheCompany

11. ElectionofEAGMackayasadirectoroftheCompany

12. ElectionofMIWymanasadirectoroftheCompany

13. ElectionofRGTomlinsonasadirectoroftheCompany

14. ElectionofJGNgcoboasadirectoroftheCompany

15. AppointmentofYShaikasadirectoroftheCompany

16. AppointmentofRGTomlinsonasamemberandChairmanoftheGoldReefAudit

andRiskCommittee

17.AppointmentofYShaikasamemberoftheGoldReefAuditandRiskCommittee

NUMBEROF ORDINARYRESOlUTIONS VOTES FOR AGAINST ABSTAIN

NUMBEROF SPECIAlRESOlUTIONS VOTES FOR AGAINST ABSTAIN

18. AppointmentofJGNgcoboasamemberoftheGoldReefAuditandRiskCommittee

19. Appointment of PricewaterhouseCoopers Inc. as independent auditors of the

CompanyuntiltheconclusionofthenextannualgeneralmeetingoftheCompany

20. Toauthorisethedirectorstodeterminetheindependentauditors’remunerationfor

theyearending31December2011

21. Toapprovetheindependentauditors’remunerationfortheyearended31December

2010

22. Placingunissuedsharesunderthecontrolofthedirectorstocarryoutthetermsof

theGoldReefShareScheme,limitedtoamaximumof2,5millionshares

1. Approvalofthefeesproposedfornon-executivedirectorsinrespectofthefinancial

periodending31March2012

2. AuthorityforageneralrepurchaseofordinarysharesoftheCompany

3. ApprovalofthenameoftheCompanytobechangedtoTsogoSunHoldingsLimited

4. Authority to provide financial assistance generally to related or inter-related

companiesorcorporations

AnyGoldReefshareholderentitledtoattend,speakandvoteatandparticipateintheAnnualGeneralMeetingmayappointaproxyorproxiestoattend,speakandvoteinhis/herstead.AproxyneednotbeamemberoftheCompany.ThecompletionandlodgingofaformofproxywillnotprecludeaGoldReefshareholderfromattendingtheAnnualGeneralMeeting,participatingthereinandspeakingandvotingthereattotheexclusionoftheproxy/iessoappointed.

PLEASEREADTHENOTESBELOW.

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FORMOFPROXY(CONT.)FORGOLDREEFRESORTSLIMITED

NOTESTOFORMOFPROXY1. The form of proxy must only be used by shareholders who hold certificated ordinary

shares or shareholder(s) of the Company who hold dematerialised ordinary shares with“own-name”registration.AllotherbeneficialownerswhohavedematerialisedtheirsharesthroughaCSDPorbrokerandwishtoattendtheAnnualGeneralMeetingmustprovidetheCSDPorbrokerwiththeirvotinginstructionsintermsoftherelevantcustodyagreemententeredintobetweenthemandtheCSDPorbrokerconcerned.

2. AshareholderentitledtoattendandvoteattheAnnualGeneralMeetingmayappointandinsert the name of a proxy or the names of two alternative proxies of the shareholder’schoice in the space provided, with or without deleting “the Chairperson of the AnnualGeneralMeeting”.Theproxyorproxiesneednotbeshareholder(s)oftheCompany.Theperson whose name stands first on the form of proxy and who is present at the AnnualGeneralMeetingwillbeentitledtoactasproxytotheexclusionofsuchproxy(ies)whosenamesfollow.

3. Ashareholderisentitledtoonevoteonashowofhandsand,onapoll,onevoteinrespectofeachordinaryshareheldintheCompany.Ashareholder’sinstructionstotheproxymustbe indicatedby inserting the relevantnumberofvotesexercisableby the shareholder inthe appropriatebox(es). If an “X”hasbeen inserted inoneof theblocks to aparticularresolution,itwillindicatethevotingofallthesharesheldbytheshareholderconcerned.

4. Ashareholderortheproxyisnotobligedtouseallthevotesexercisablebytheshareholderorbytheproxy,butthetotalofthevotescastandinrespectofwhichabstentionisrecordedmaynotexceedthetotalofthevotesexercisablebytheshareholderortheproxy.

5. Avotegiven in termsofan instrumentofproxy shallbevalid inrelation to theAnnualGeneralMeetingnotwithstandingthedeath,insanityorotherlegaldisabilityofthepersongrantingit,ortherevocationoftheproxy,orthetransferoftheordinarysharesinrespectofwhich theproxy is given,unlessnotice as to anyof the aforementionedmatters shallhavebeenreceivedbythetransfersecretariesnotlessthantwentyfourhoursbeforethecommencementoftheAnnualGeneralMeeting,oratanyadjournmentthereof.

6. Ifashareholderdoesnotindicateonthisformthathis/herproxyistovoteinfavouroforagainst any resolution or to abstain from voting, or gives contradictory instructions, orshouldanyfurtherresolution(s)oranyamendment(s)whichmayproperlybeputbeforetheAnnualGeneralMeetingbeproposed,suchproxy,ifheisthechairpersonoftheAnnualGeneral Meeting, shall be entitled to vote in favour of the resolutions proposed at theAnnualGeneralmeetinginrespectofalltheshareholders’votesexercisablethereatoriftheproxyisnotthechairpersonoftheAnnualGeneralMeeting,tovoteorabstainfromvotingastheproxythinksfit.

7. TheChairpersonoftheAnnualGeneralMeetingmayrejectoracceptanyformofproxywhichiscompletedand/orreceivedotherthanincompliancewiththesenotes.

8. ThecompletionandlodgingofthisformofproxywillnotprecludetherelevantshareholderfromattendingtheAnnualGeneralMeetingandspeakingandvotinginpersonthereattotheexclusionofanyproxyappointedintermshereof,shouldsuchshareholderwishtodoso.

9. Documentaryevidenceestablishingtheauthorityofapersonsigningtheformofproxyinarepresentativecapacitymustbeattachedtothisformofproxy,unlesspreviouslyrecordedby theCompany or unless this requirement is waived by the Chairperson of the AnnualGeneralMeeting.

10.Aminororanyotherpersonunderlegalincapacitymustbeassistedbyhis/herparentorguardian, as applicable, unless the relevant documents establishing his/her capacity areproducedorhavebeenregisteredwiththeCompany.

11.WheretherearejointholdersofordinarysharesintheCompany:• anyoneholdermaysigntheformofproxy;• thevote(s)oftheseniorshareholder(forthatpurposesenioritywillbedeterminedbythe

orderinwhichthenamesofshareholdersappearintheCompany’sregister)whotendersavote(whetherinpersonorbyproxy)willbeacceptedtotheexclusionofthevote(s)oftheotherjointshareholder(s).

12.Formsofproxymust, inorder tobeeffective,be lodgedwithormailed to the transfersecretaries,LinkMarketServicesSouthAfrica(Proprietary)Limited:

handdeliveriesto: Postaldeliveriesto: LinkMarketServicesSouthAfrica LinkMarketServicesSouthAfrica (Proprietary)Limited (Proprietary)Limited 13thFloor,RennieHouse POBox4844,Johannesburg,2000 19AmeshoffStreet Braamfontein,Johannesburg,2001 tobereceivedbynolaterthan10:00onTuesday,14June2011(or24hoursbeforeany

adjournmentoftheAnnualGeneralMeetingwhichdate,ifnecessary,willbenotifiedonSENSandinthepress).

13.Any alteration or correction made to this form of proxy, other than the deletion ofalternatives,mustbeinitialledbythesignatory(ies).

14.Theappointmentofaproxyorproxies:14.1issuspendedatanytimeandtotheextentthattheshareholderchoosestoactdirectlyand

inpersonintheexerciseofanyrightsasashareholder;14.2isrevocableinwhichcaseashareholdermayrevoketheproxyappointmentby:14.2.1cancellingitinwritingormakingalaterinconsistentappointmentofaproxy;and14.2.2deliveringacopyoftherevocationinstrumenttotheproxyandtotheCompany.15.IftheinstrumentappointingaproxyorproxieshasbeendeliveredtotheCompany,aslong

asthatappointmentremainsineffect,anynoticethatisrequiredbytheCompaniesAct,2008, as amended or theCompany’s Memorandum of Incorporation to be delivered bytheCompanytotheshareholdermustbedeliveredbytheCompanyto:

15.1theshareholder;or15.2theproxyorproxies,iftheshareholderhasdirectedtheCompanytodosoinwritingand

paidanyreasonablefeechargedbytheCompanyfordoingso.16.Theproxyappointmentremainsvalidonlyuntil theendoftheAnnualGeneralMeeting

subjecttoanyrevocationthereof.

124

ANNEXUREA:ChANGEOFCOMPANYNAME

Directors: J A Mabuza* (Chief Executive Officer); M N von Aulock* (Chief Financial Officer); R A Collins*; G I Wood*; J A Copelyn (Chairman); M J A Golding; A van der Veen; V E Mphande; J M Kahn; E A G Mackay; M I Wyman; R G Tomlinson#; P J Venison#; J G Ngcobo#. Company Secretary: W J van Wyngaardt* Executive #Independent non-executive

1.INTRODUCTIONItwasreferredtoinvariousannouncementsreleasedbyGoldReefandthe circular to Gold Reef shareholders dated 3 April 2010, that uponimplementation of the merger of the respective Gold Reef and TsogoSunbusinesses,processeswillbeputinplacetochangethenameoftheCompanytoTsogoSunHoldingsLimited.

2.REASONFORThEPROPOSEDNAMEChANGEThe reason for theproposednamechangeof theCompany is that therespective Gold Reef and Tsogo Sun businesses will be strategicallyrepositionedas a combinedhotel andgamingcompanywithanewsetof majority shareholders, being the majority of shareholders of TsogoSun,collectivelyholdingamajorityofGoldReefordinarysharesintheenlargedissuedsharecapitalofGoldReef.

3.PROCEDUREFORThEIMPlEMENTATIONOFThEChANGEOFNAME3.1TheAnnualGeneralMeetingofGoldReef shareholders convenedin termsof thenoticeofAnnualGeneralMeeting formingpartof theCompany’s Annual Report (and to which this Annexure is annexedas Annexure A), will consider and, if deemed fit, pass the resolutionnecessarytogiveeffecttothechangeofname.IntermsoftheCompaniesActandListingsRequirementsoftheJSE,thechangeofnameissubjectto the approval by special resolution passed by at least 75% of GoldReefshareholderspresentorrepresentedbyproxyattheannualgeneralmeetingandentitledtovote.

3.2Procedureforthesurrenderofdocumentsoftitle• Certificated shareholders must complete the attached form

of surrender (blue) and lodge it with the transfer secretaries.DematerialisedshareholdersdonotneedtodoanythingwithregardtothechangeofnameasthiswillbeautomaticallyupdatedbytheirCSDPorbroker.

• Sharecertificates reflecting thenewnameof theCompanywillbepostedonoraboutMonday,18July2011,byregisteredpostinSouthAfrica, to certificated shareholders, at their own risk, who havesurrendered their documents of title by 12h00 on Friday, 15 July2011(theRecordDate),orwithinfivebusinessdaysofreceiptoftheexistingdocumentsoftitle,whicheveristhelater.

• CertificatedshareholdersshouldbeawarethatsharecertificatesarenolongeracceptedastradeableinstrumentsontheJSE.Certificated

shareholders are therefore urged to dematerialise their sharecertificatesaspertherequirementsofStrateLimited.

• If anyexistingdocumentsof titlehavebeen lostordestroyedandthe certificated shareholder provides evidence to this effect to thesatisfactionof thedirectors, then theCompanymaydispensewiththe surrender of such documents of title against provision of anacceptableindemnity.

• Receiptswillnotbeissuedforthesurrenderofexistingdocumentsoftitle.Lodgingagentswhorequirespecialtransactionreceiptsarerequested to prepare such receipts and submit them for stampingtogetherwiththedocumentsoftitlelodged.

4.NEWDETAIlSOFThECOMPANYTheCompany’newdetailswillbeasfollows: CURRENT NEW

DETAIlS DETAIlS

Name GoldReef TsogoSun ResortsLimited HoldingsLimitedJSEsharecode GDF TSHJSEshortname GOLDREEF TSOGOSUNISIN ZAE000028338 ZAE000156238

5.ACTIONREQUIREDBYGOlDREEFShAREhOlDERSPleasetakecarefulnoteofthefollowingprovisionsregardingtheactionrequiredbyGoldReefshareholders:5.1Ifyouareinanydoubtastowhatactiontotakeinrelationtothis

corporate action, please consult your CSDP, broker, accountant,attorney,bankerorotherprofessionaladviserimmediately.

5.2IfyouhavedisposedofallyoursharesinGoldReef,pleaseforwardthisdocumenttothepurchaserofsuchsharesortotheCSDP,broker,accountant, attorney, banker or other agent through whom thedisposalwaseffected.

5.3Ifyouholdcertificatedsharesa.Holdersofcertificatedsharesarerequestedtocompletetheattached

formofsurrender,andreturnit,togetherwiththeirsharecertificates,or other documents of title, to the transfer secretaries. New sharecertificatesreflectingthechangeofnamewillbeposted,byregisteredpost in South Africa, to those certificated shareholders who havesurrendered their documents of title on or before 12h00 on theRecordDate.

b.Shareholders who surrender their existing documents of title after12h00 on the Record Date, will have their new share certificatesmailed (withinfivebusinessdaysof receipt thereof)by the transfersecretaries, by registered post in South Africa, at the risk of theshareholdersconcerned.

125

ANNEXUREA:ChANGEOFCOMPANYNAME

5.4Ifyouholddematerialisedsharesa.Dematerialisedshareholders’accountswillbeupdatedwiththenew

namebytheCSDPorbrokerandnoactionneedstobetaken.

5.5GoldReefsharecertificatesintheoldnamemaynotbedematerialisedor rematerialised after Friday, 8 July 2011. Dematerialisation andrematerialisation in the new name will commence from Monday,18July2011.

6.EXChANGECONTROlREGUlATIONS Inthecaseofcertificatedshareholderswhoseregisteredaddressesare

outsidethecommonmonetaryareaorwherethesharecertificatesarerestrictivelyendorsedintermsoftheExchangeControlRegulations,thefollowingwillapply:

6.1Non-residentswhoareemigrantsfromthecommonmonetaryarea Sharecertificatesbearingthenewnamewillberestrictivelyendorsed

“non-resident”intermsoftheExchangeControlRegulationsandwillbesenttotheshareholder’sauthoriseddealerinforeignexchangeinSouthAfricacontrollinghisblockedassets.

6.2Allothernon-residents Sharecertificatesbearingthenewnamewillberestrictivelyendorsed

“non-resident”intermsoftheExchangeControlRegulations. With regard to dematerialised shareholders whose registered

addressesareoutsidethecommonmonetaryarea,theirshareswillbeannotatedintheCompany’srelevantsub-registerasnon-residentandstatementswillberestrictivelyendorsedintermsofthoseregulations.

7.IMPORTANTDATESANDTIMES 2011AnnualGeneralMeeting................................. Wednesday,15JuneLastdaytotradesecuritiesundertheoldname,GoldReefResortsLimited,oldJSEsharecodeandoldISIN..........................................................Friday,8JulyListandtradenewsharesundernewname,TsogoSunHoldingsLimited,newJSEsharecodeandnewISIN.................................................... Monday,11JulyRecorddate........................................................ Friday,15JulyIssueofnewsecuritiesundernewname,newJSEsharecodeandnewISIN...................................... Monday,18JulyCertificatesposted/CSDPsandbrokersaccountsupdatedwithnewname,newJSEsharecodeandnewISIN(seeNote4)......................................... Monday,18July

NOTES:1.AnychangestotheabovedatesandtimeswillbereleasedonSENSand

publishedintheSouthAfricanpress.2.AlltimesgiveninthisdocumentarelocaltimesinSouthAfrica.3.This document is available in English only. Additional copies may

be obtained from the Company’s registered office and the transfersecretaries.

4.Certificated shareholders who surrender their existing documentsof title after 12h00 on the Record Date, will have their new sharecertificates,reflectingthenewname,posted(withinfivebusinessdaysofreceiptoftheirsurrendereddocuments)bythetransfersecretaries,by registered post in South Africa, at the risk of the shareholdersconcerned.

126

Numberofsharescoveredbyeachcertificate

Stampandaddressofagentlodgingthisform(ifany)

ANNEXUREA:FORMOFSURRENDER

(FORUSEBYCERTIFICATEDSHAREHOLDERSONLY)

Pleasereadthefollowingnotesandinstructions.Non-compliancewiththeseinstructionsmayresultintherejectionofthisformofsurrender(“Form”).IfyouareinanydoubtastohowtocompletethisForm,pleaseconsultyourbroker,banker,attorney,accountantorotherprofessionaladviser.

Note:AseparateFormisrequiredforeachshareholder.

To: TsogoSunholdingslimited,formerly GoldReefResortslimited c/oLinkMarketServicesSouthAfrica(Proprietary)Limited 13thFloor,RennieHouse 19AmeshoffStreet Braamfontein,Johannesburg,2001 (POBox4844,Johannesburg,2000)

DOCUMENTSOFTITlESURRENDERED

PARTA–TOBECOMPlETEDBYCERTIFICATEDShAREhOlDERSI/WeirrevocablyandinremsuamauthoriseyoutoproducethesignatureofsuchdocumentsthatmaybenecessarytocompletethereplacementofthesharesinthenewnameofTsogoSunHoldingsLimited.

I/Weherebyinstructyoutoforwardthereplacementsharecertificate(s)tome/usbyregisteredpostinSouthAfrica,atmy/ourownrisk,totheaddressbelowandconfirmthat,wherenoaddressisspecified,thesharecertificate(s)willbeforwardedtomy/ouraddressrecordedintheshareregisteroftheCompany.

My/Oursignature(s)onthisFormconstitutesmy/ourexecutionofthisinstruction.

I/Wesurrenderandenclosetheunder-mentionedsharecertificate(s):

Certificatenumber(s)

Total

Title

Surname

Firstname(s)

Postaladdresstowhichnewsharecertificateshouldbesent

(ifdifferentfromtheaddressrecordedintheregister)

Signatureofshareholder

Assistedby(ifapplicable)

(Statefullnameandcapacity)

Date 2011

Telephonenumbers

Home ()

Work ()

Cell ()

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Accountnumber

Postalcode

ANNEXUREA:FORMOFSURRENDER(CONT.)(FORUSEBYCERTIFICATEDSHAREHOLDERSONLY)

PARTB–TOBECOMPlETEDBYEMIGRANTSFROMANDNON-RESIDENTSOFThECOMMONMONETARYAREANominated authorised dealer in the case of a shareholder who is anemigrantfromoranon-residentofthecommonmonetaryarea(seenote2below):

NOTES:1.No receipts will be issued for share certificates lodged, unless

specifically requested. In compliancewith the requirementsof theJSELimited(“JSE”),lodgingagentsarerequestedtopreparespecialtransactionreceipts,ifrequired.SignatoriesmaybecalleduponforevidenceoftheirauthorityorcapacitytosignthisForm.

2.Personswhoseregisteredaddressesintheshareregisterareoutsidethecommonmonetaryarea,orwhosesharesarerestrictivelyendorsed,shouldnominateanauthoriseddealerinPartBofthisForm.

3.AnyalterationtothisFormmustbesignedinfullandnotinitialled.4.IfthisFormissignedunderapowerofattorney,thensuchpowerof

attorney,oranotariallycertifiedcopythereof,mustbesentwiththisFormfornoting(unlessithasalreadybeennotedbytheCompanyoritstransfersecretaries).

5.Where the shareholder is a company or a close corporation, unlessit has already been registered with the Company or its transfersecretariesacertifiedcopyofthedirectors’ormembers’resolutionauthorisingthesigningofthisFormmustbesubmittedifsorequestedbytheCompany.

6.Note4doesnotapplyintheeventofthisFormbearingarecognisedJSEbroker’sstamp.

7.WheretherearejointholdersofanysharesintheCompany,onlythatholderwhosenamestandsfirstintheregisterinrespectofsuchsharesneedsignthisForm.

Nameofauthoriseddealer

Address

AN

NU

AL R

EPO

RT

2010

DESIGNED AND PRODUCED BY THE LOOKING GLASS WWW.THELOOKINGGLASS.CO.ZA

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