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PHM
PHM
PHM - Phumelela- The Group`s Unaudited Condensed Consolidated Interim Financial
Statements
Phumelela Gaming and Leisure Limited (Incorporated in the Republic of South
Africa)
(Registration number 1997/016610/06)
Share code: PHM
ISIN: ZAE000039269
("Phumelela" or "the Company")
* REVENUE FROM INTERNATIONAL OPERATIONS UP 56%
* PBT FROM INTERNATIONAL OPERATIONS UP 30%
* DIVIDEND MAINTAINED AT 25 CENTS PER SHARE
CONDENSED CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Jan 31 Jan 31 Jul
% 2009 2008 2008
change R`000 R`000 R`000
Revenue
local operations 3 1 261 851 1 227 327 2 473 932
international 56 178 275 114 525 256 634
operations
7 1 440 126 1 341 852 2 730 566
Net betting income
local operations 3 273 056 265 104 534 067
international 84 11 899 6 467 13 391
operations
5 284 955 271 571 547 458
Other operating
income
local operations
Ongoing operations 4 71 839 69 142 132 438
Surplus on disposal 27 814 27 815
of Bloemfontein
racecourse
international 29 44 903 34 821 79 501
operations
Net income 401 697 403 348 787 212
Operating expenses
and overheads
stakes 13 80 457 71 082 142 661
local operations 6 224 374 211 279 423 058
international 42 43 057 30 256 68 999
operations
Profit from (41) 53 809 90 731 152 494
operations
Finance costs 42 26 180
Profit before share
of profit of
associated companies (41) 53 767 90 705 152 314
Share of profit of 3 128 1 269 4 108
associated companies
Profit before income (38) 56 895 91 974 156 422
tax
Income tax 19 164 27 006 43 361
Profit for the period (42) 37 731 64 968 113 061
Attributable to:
Equity holders of the (42) 37 731 64 968 113 061
parent
Earnings per share
(cents)
Basic (42) 49,76 85,26 148,13
Diluted (41) 49,72 84,83 147,73
SUPPLEMENTARY INCOME
STATEMENT
INFORMATION
Reconciliation of
headline earnings
Earnings attributable
to equity holders
derived from ongoing (8) 37 731 41 183 88 110
operating activities
surplus on disposal 23 785 24 951
of Bloemfontein
racecourse and
bookmaking concern
after tax
37 731 64 968 113 061
Adjusted for:
Net loss/(surplus) on
disposal of property,
plant
and equipment and 323 (23 520) (23 606)
bookmaking concern
after tax
Headline earnings (8) 38 054 41 448 89 455
Headline earnings per (8) 50,18 54,40 117,20
share (cents)
Diluted headline (7) 50,15 54,12 116,89
earnings per share
(cents)
Net asset value per
share (cents) 6 460,45 434,55 457,57
Interim dividend
Dividend per ordinary 25,00 25,00 25,00
share (cents)
Final dividend
Dividend per ordinary 43,00
share (cents)
Number of shares in 75 565 471 76 653 585 75 859 571
issue
Weighted average 75 831 898 76 197 360 76 325 185
number of shares in
issue for basic and
headline earnings per
share calculation
Weighted average 75 880 878 76 585 455 76 530 533
number of shares in
issue for diluted
earnings per share
calculation
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited Unaudited Audited
31 Jan 31 Jan 31 Jul
2009 2008 2008
R`000 R`000 R`000
ASSETS
Non-current assets 318 357 276 728 307 840
Property, plant and equipment 287 656 253 389 280 367
Deferred taxation 5 175 5 247 5 175
Goodwill 3 312 3 312 3 312
Intangible assets 500 400
Interest in associated 21 165 14 010 18 037
companies
Investments 549 770 549
Current assets 149 055 179 171 202 227
Inventories 5 849 3 598 4 469
Trade and other receivables 63 235 51 206 53 560
Cash and cash equivalents 78 475 124 367 144 198
Income tax receivable 1 496
Total assets 467 412 455 899 510 067
EQUITY AND LIABILITIES
Total equity 347 940 333 096 347 110
Share capital and premium 1 889 6 181 1 897
Retained earnings 346 040 326 721 345 054
Non-distributable reserves 11 194 159
Non-current liabilities 4 100 5 913 4 100
Deferred taxation 2 625 3 645 2 625
Retirement benefit 1 475 2 268 1 475
obligations
Current liabilities 115 372 116 890 158 857
Trade and other payables 115 372 98 995 136 535
Income tax payable 17 895 22 322
Total equity and liabilities 467 412 455 899 510 067
CONDENSED STATEMENT OF CHANGES IN GROUP EQUITY
Non-Dis-
Share Share tributable Retained Total
capital premium reserves earnings equity
R`000 R`000 R`000 R`000 R`000
Balance at 31 July 1 894 1 444 177 292 314 295 829
2007
Issue of share 28 3 655 3 683
capital - options
exercised
Total recognised (18) 113 061 113 043
income and expense
for the year
Profit for the year 113 061 113 061
Foreign currency (18) (18)
translation reserve
Share repurchases (25) (5 099) (10 591) (15 715)
Dividends paid to (49 730) (49 730)
equity holders
Balance at 31 July 1 897 159 345 054 347 110
2008
Issue of share 5 813 818
capital - options
exercised
Total recognised (148) 37 731 37 583
income and expense
for the period
Profit for the 37 731 37 731
period
Foreign currency (148) (148)
translation reserve
Share based payment 1 178 1 178
Share repurchases (13) (813) (5 229) (6 055)
Dividends paid to (32 694) 32 694)
equity holders
Balance at 31 1 889 11 346 040 347 940
January 2009
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
Unaudited Unaudited Audited
6 months 6 months 12 months
31-Jan 31-Jan 31-Jul
2009 2008 2008
R`000 R`000 R`000
Cash generated by operations 61 060 64 944 129 848
(Increase)/decrease in (32 218) (14 356) 20 549
working capital
Cash generated by operating 28 842 50 588 150 397
activities
Investment income 6 136 6 369 12 611
Net finance costs and (43 024) (32 803) (45 867)
taxation paid
Dividends paid (32 694) (30 561) (49 730)
Net cash (outflow)/inflow (40 740) (6 407) 67 411
from operating activities
Net cash outflow from (19 746) (11 185) (50 297)
investing activities
Net cash inflow from 818 2 843 3 683
financing activities before
share repurchases
Share repurchases (6 055) (15 715)
Net (decrease)/increase in (65 723) (14 749) 5 082
cash and cash equivalents
Cash and cash equivalents at 144 198 139 116 139 116
beginning of period
Cash and cash equivalents at 78 475 124 367 144 198
end of period
BASIS OF PRESENTATION
The interim financial results have been prepared and presented in accordance
with International Financial Reporting Standards and the Companies Act 1973. The
presentation and disclosure requirements of IAS 34: Interim Reporting has been
complied with in this announcement.
ACCOUNTING POLICIES
The accounting policies used in preparing the interim financial statements are
consistent with those used in the annual financial statements for the year ended
31 July 2008.
REVIEW OF RESULTS
Local operations
Trading conditions in South Africa were negatively impacted by the downturn in
the economic climate further exacerbated by cancelled race meetings due to
inclement weather conditions. As a consequence revenue growth slowed to R1,3
billion, 3% up on the comparative period. Net betting income, which is a factor
of betting revenue, increased by 3% on the comparative period to R273,1 million.
Operating expenses and overheads were managed down and contained within
inflation increasing by 8% on the comparative period. Excluding stakes, which
are governed by an agreement with the Racing Association and which increased by
13% to R80,4 million, manageable operating expenses and overheads increased by
6% to R224,4 million.
The Group`s share of profit from its associate company, Betting World (Pty)
Limited (a fixed odds bookmaking concern) increased to R2,6 million, 101% up on
the comparative period. Betting World continues to expand and improve on its
local retail footprint and internet betting platform offering a wide range of
betting opportunities on horseracing and sporting events.
Profit before income tax from ongoing local operations excluding the R27,8
million profit on disposal of the Bloemfontein racecourse in the comparative
period, decreased by 20% to R42,6 million.
International operations
Despite the global economic meltdown, international operations continued to grow
superbly with revenue 56% up on the comparative period to R178,3 million.
Operating expenses and overheads increased by 42% to R43,1 million driven mainly
by further costs incurred on improving the quality and feed of satellite
broadcasts of live horse racing around the globe, a further investment in human
capital and increased host track fees incurred on expanding the international
horse racing content.
The Group`s share of profit from its associate company, Automatic Systems
Limited, a company listed on the Mauritius Stock Exchange and one of two
licensed totalisator operators on the island, equates to R0,6 million for the
period (2008: Rnil)
Profit before income tax from international operations increased by 30% on the
comparative period to R14,3 million.
Consolidated results
Total revenue increased by 7% on the comparative period to R1,4 billion (2008:
R1,3 billion) generating a 5% increase in net betting income of R284,9 million
(2008: R271,6 million).
Other operating income that includes, bookmakers levies, stable rentals, local
and international broadcasting levies/fees and a R27,8 million profit on
disposal of the Bloemfontein racecourse in the comparative period decreased by
11% to R116,7 million (2008: R131,8 million). Excluding the profit on sale of
Bloemfontein racecourse, other operating income increased by 12% on the
comparative period.
Total operating expenses and overheads increased by 11% on the comparative
period to R347,9 million (2008: R312,6 million).
Headline earnings and HEPS decreased by 8% on the comparative period to R38
million(2008: R41,4 million) and 50,18 cents per share (2008: 54,40 cents per
share) respectively.
Diluted HEPS decreased by 7% on the comparative period to 50,15 cents per share
(2008: 54,12 cents per share).
FINANCIAL POSITION
The Group has total assets of R467,4 million (2008: R455,9 million) including
cash balances of R78,5 million (2008: R124,4 million) adequately covering total
liabilities of R119,5 million (2008: R122,8 million). The balance sheet remains
strong with no gearing.
Cash and cash equivalents decreased by R65,7 million. Cash generated by
operations of R61,1 million was utilised to fund an increase in working capital
of R32,2 million (attributable mainly to an increase in international operations
trade receivables and a decrease in trade and other payables), pay income tax of
R43 million and dividends of R32,7 million. A further R19,6 million was utilised
for capital expenditure and R6,1 million for share repurchases.
SHARE CAPITAL
During the six month period ended 31 January 2009 the Company purchased a
further 500 000 of its own shares at a total cost of R6,1 million bringing the
total number of shares repurchased to date at 1 507 014. The shares are
currently held as treasury shares and are primarily intended to be used for
issuing shares under the Group`s share option programme.
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
The Group stages and broadcasts horseracing events and offers betting
opportunities on both South African and international product in two geographic
segments, namely South Africa and the rest of the world.
Unaudited Unaudited Unaudited
31-Jan 31-Jan 31-Jul
% 2009 2008 2008
change R`000 R`000 R`000
LOCAL
Revenue 3 1 261 851 1 227 327 2 473 932
Net income 3 344 895 334 246 666 505
Stakes 13 80 457 71 082 142 661
Other net 6 224 374 211 279 423 058
operating expenses
Profit from 40 064 51 885 100 786
ongoing operations
Finance costs 42 26 180
Profit before
share of profit of
associated 40 022 51 859 100 606
companies
Share of profit of 101 2 554 1 269 4 108
associated company
Profit before (20) 42 576 53 128 104 714
income tax from
ongoing operations
Surplus on - 27 814 27 815
disposal of
Bloemfontein
racecourse
Profit before tax (47) 42 576 80 942 132 529
from operations
Assets 427 548 418 840 451 623
Liabilities 109 212 104 823 128 836
INTERNATIONAL
Revenue 56 178 275 114 525 256 634
Net income 38 56 802 41 288 92 892
Net operating 42 43 057 30 256 68 999
expenses
Profit before 25 13 745 11 032 23 893
share of profit of
associated
companies
Share of profit of 574 - -
associated company
Profit before 30 14 319 11 032 23 893
income tax from
ongoing operations
Assets 39 864 37 059 58 444
Liabilities 10 260 17 980 34 121
TOTAL
Revenue 7 1 440 126 1 341 852 2 730 566
Profit from (14) 53 809 62 917 124 679
ongoing operations
Finance costs 42 26 180
Profit before 53 767 62 891 124 499
share of profit of
associated
companies
Share of profit of 146 3 128 1 269 4 108
associated
companies
Profit before (11) 56 895 64 160 128 607
income tax from
ongoing operations
Surplus on - 27 814 27 815
disposal of
Bloemfontein
racecourse
Profit before tax (38) 56 895 91 974 156 422
from operations
Assets 467 412 455 899 510 067
Liabilities 119 472 122 803 162 957
CAPITAL COMMITMENTS
Commitments in respect of capital expenditure approved by directors.
31 Jan 31 Jan
2009 2008
R`000 R`000
Contracted for 27 529* 44 858*
Not contracted for 17 824 115 862
*Includes R24,5 million (2008: R30 million) for the revived project for
illumination of the Turffontein race tracks for night racing.
POST BALANCE SHEET EVENTS
There are no significant post balance sheet events that have a material impact
on the financial statements at 31 January 2009.
Agreements for the sale of the two Bingo licenses held by the Group`s subsidiary
company, Silks Gaming and Leisure (Pty) Limited have been concluded subject to
certain conditions precedent.
SOCIAL RESPONSIBILITY
Phumelela recognises that it has a responsibility to the broader community to
act in a socially responsible manner, for the benefit of all South Africans.
Contributions to selected training, sports and community service related
projects continue. The Group has adopted appropriate BEE and employment equity,
training and procurement policies.
DIRECTORS
Mr SE Abrahams retired from office at the Annual General Meeting of shareholders
held on 5 December 2008. The Board acknowledges his invaluable contribution as
Audit Committee Chairman and non-executive director during his tenure and wishes
him well in his retirement years.
With effect from 14 January 2009, Messrs WA du Plessis and R Cooper were
appointed to the Board as executive director and non-executive director
respectively.
PROSPECTS
Short to medium term trading conditions in South Africa are expected to continue
to be challenging.
The adverse trading conditions have been further exacerbated by inclement
weather conditions that have caused the cancellation of race meetings in South
Africa and the United Kingdom in February and March.
Management remains confident that its international operations, although
impacted by delays in new customers commencing betting, are well positioned to
continue to grow in the second six months and beyond.
Headline earnings for the full year are expected to be below the previous year,
with growth resuming in the 2010 financial year.
DIVIDEND TO SHAREHOLDERS
Notice is hereby given that the Board has declared an interim dividend of 25
cents per share payable to shareholders recorded in the register on Thursday,
30 April 2009. Shareholders are advised that the last date to trade "cum
dividend" will be Tuesday, 21 April 2009. As from commencement of business on
Thursday, 23 April 2009 all trading in Phumelela shares will be "ex dividend".
Payment will be made on Monday, 4 May 2009. Share certificates may not be
dematerialised or rematerialised between Thursday, 23 April 2009 and Thursday,
30 April 2009, both days inclusive.
For and on behalf of the Board
M P MALUNGANI W A DU PLESSIS
Chairman Group Chief Executive
Johannesburg 3 April 2009
Directors: M P Malungani (Chairman), WA du Plessis* (Group Chief Executive), D R
H Attenborough* (CEO South Africa), R Cooper, M J Jooste, B Kantor, S K C
Khampepe, N J Mboweni (Mrs), Dr E Nkosi, M L Ramafalo*, JS Tennant, C J H Van
Niekerk, J B Walters Company Secretary: A F Wintour
(*Executive)
Registered Office: Turffontein Racecourse, 14 Turf Club Street, Turffontein
Transfer Secretaries: Computershare Investor Services (Pty) Ltd
Sponsor: Investec Bank Limited
Web site: www.phumelela.com
Date: 03/04/2009 17:10:01 Produced by the JSE SENS Department.
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