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PHM
PHM
PHM - Phumelela Gaming and Leisure - The Group`s summarised preliminary
consolidated financial statements for the year ended 31 July 2009
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")
Group`s summarised preliminary consolidated financial statements for the year
ended 31 July 2009
- REVENUE FROM INTERNATIONAL OPERATIONS UP 19%
- HEADLINE EARNINGS PER SHARE DOWN 20%
- CASH RESERVES OF R100 MILLION
- DIVIDEND MAINTAINED AT 43 CENTS PER SHARE
CONDENSED CONSOLIDATED INCOME STATEMENTS
Restated
Audited Audited
12 months 12 months
31-Jul 31-Jul
% 2009 2008
change R`000 R`000
Revenue
- Local operations 1 693 615 689 679
- International 19 110 730 92 960
operations
3 804 345 782 639
Net betting income
- Local operations 1 538 719 534 067
- International 76 23 616 13 391
operations
3 562 335 547 458
Other operating income
- Local operations
Ongoing operations 2 134 489 132 438
Surplus on disposal of 27 815
Bloemfontein Racecourse
- International 9 87 000 79 501
operations
Net income 783 824 787 212
Operating expenses and
overheads
- Stakes 10 156 982 142 661
- Local operations 3 436 889 423 058
- International 23 85 093 68 999
operations
Profit from operations (31) 104 860 152 494
Finance costs 77 180
Profit before share of (31) 104 783 152 314
profit of associated
companies
Share of profit of (17) 3 390 4 108
associated companies
Profit before income tax (31) 108 173 156 422
Income tax (13) 37 508 43 361
Profit for the year (37) 70 665 113 061
Attributable to:
- Equity holders of the (37) 70 665 113 061
parent
Earnings per share
(cents)
- Basic (37) 93,35 148,13
- Diluted (37) 93,35 147,73
SUPPLEMENTARY INCOME
STATEMENT INFORMATION
Reconciliation of
headline earnings
Earnings attributable to
equity holders
- Derived from ongoing (20) 70 665 88 110
operating activities
- Surplus on disposal of 24 951
Bloemfontein Racecourse
and bookmaking concern
after tax
70 665 113 061
Adjusted for:
Net loss/(surplus) on 355 (27 725)
disposal of property,
plant and equipment and
bookmaking concern
Tax effect (108) 4 119
Headline earnings (21) 70 912 89 455
Headline earnings per (20) 93,67 117,20
share (cents)
Diluted headline earnings (20) 93,67 116,89
per share (cents)
Net asset value per share 5 481,52 457,57
(cents)
Interim dividend
Dividend per ordinary 25,00 25,00
share (cents)
Final dividend
Dividend per ordinary 43,00 43,00
share (cents)
Number of shares in issue 75 590 371 75 859 571
Weighted average number
of shares in issue for
basic and headline 75 700 146 76 325 185
earnings per share
calculation
Weighted average number 75 700 146 76 530 533
of shares in issue for
diluted earnings per
share calculation
CONDENSED CONSOLIDATED BALANCE SHEETS
Audited Audited
31-Jul 31-Jul
2009 2008
R`000 R`000
ASSETS
Non-current assets 320 806 307 840
Property, plant and equipment 288 505 280 367
Deferred taxation 4 613 5 175
Goodwill 3 312 3 312
Intangible asset 500 400
Interest in associated companies 22 985 18 037
Investments 891 549
Current assets 179 565 202 227
Inventories 5 823 4 469
Trade and other receivables 67 872 53 560
Cash and cash equivalents 100 181 144 198
Income tax receivable 5 689
Total assets 500 371 510 067
EQUITY AND LIABILITIES
Total equity 363 980 347 110
Share capital and premium 1 890 1 897
Retained earnings 362 103 345 054
Non-distributable reserves (13) 159
Non-current liabilities 5 779 4 100
Deferred taxation 4 413 2 625
Retirement benefit obligations 1 366 1 475
Current liabilities 130 612 158 857
Trade and other payables 130 594 136 535
Income tax payable 18 22 322
Total equity and liabilities 500 371 510 067
CONDENSED STATEMENT OF CHANGES IN GROUP EQUITY
Share Share Non- Retained Total
capital premium distri- earnings equity
butable
reserves
R`000 R`000 R`000 R`000 R`000
Balance at 31
July 2007 1 894 1 444 177 292 314 295 829
Issue of share 28 3 655 3 683
capital -
options
exercised
Total (18) 113 061 113 043
recognised
income and
expense for the
year
- Profit for 113 061 113 061
the year
- Foreign (18) (18)
currency
translation
reserve
Share re- (25) (5 099) (10 591) (15 715)
purchases
Dividends paid (49 730) (49 730)
to equity
holders
Balance at 31 1 897 159 345 054 347 110
July 2008
Issue of share 6 963 969
capital -
options
exercised
Total (172) 70 665 70 493
recognised
income and
expense for the
year
- Profit for 70 665 70 665
the year
- Foreign (172) (172)
currency
translation
reserve
Share based 3 048 3 048
payment
Share (13) (963) (5 079) (6 055)
repurchases
Dividends paid (51 585) (51 585)
to equity
holders
Balance at 31 1 890 - (13) 362 103 363 980
July 2009
SUMMARISED CONSOLIDATED CASH FLOW STATEMENTS
Audited Audited
12 months 12 months
31-Jul 31-Jul
2009 2008
R`000 R`000
Cash generated by operations 123 143 129 848
(Increase)/decrease in working (21 607) 20 549
capital
Cash generated by operating 101 536 150 397
activities
Investment income 9 651 12 611
Net finance costs and taxation paid (63 228) (45 867)
Dividends paid (51 585) (49 730)
Net cash (outflow)/inflow from (3 626) 67 411
operating activities
Net cash outflow from investing (35 305) (50 297)
activities
Net cash inflow from financing 969 3 683
activities before share repurchases
Share re-purchases (6 055) (15 715)
Net (decrease)/increase in cash and (44 017) 5 082
cash equivalents
Cash and cash equivalents at 144 198 139 116
beginning of year
Cash and cash equivalents at end of 100 181 144 198
year
REVIEW OF RESULTS
LOCAL OPERATIONS
Totalisator betting income contracted in the second half of the year impacted
by the negative economic climate and concomitant decline in consumer spending
patterns. Despite the tough trading conditions revenue from local operations
ended marginally up on the previous year at R693,6 million (2008: R689,7
million).
Operating expenses and overheads were contained increasing by 7% on the
previous year. Excluding stakes, which are governed by an agreement with the
Racing Association and which increased by 10% to R156,9 million (2008: R142,6
million), manageable operating expenses and overheads increased by 3% to
R436,9 million (2008: R423,1 million).
The Group`s share of profit from its associate company, Betting World (Pty)
Ltd (a fixed odds bookmaking concern) decreased by 43% on the previous year
to R2,4 million (2008: R4,1 million), the profit decline mainly due to
increased marketing and promotions spend, staff costs and leased premises
rentals as Betting World continues to expand and improve on its local retail
footprint and internet betting platform.
Profit before taxation from ongoing local operations, excluding the R27,8
million profit on disposal of the Bloemfontein racecourse in the previous
year, decreased by 22% to R81,6 million (2008: R104,7 million).
INTERNATIONAL OPERATIONS
Revenue from international operations slowed in the second half of the year
impacted by the global economic recession and technological hurdles that
delayed the rollout of further revenue generating opportunities.
Despite this revenue increased by 19% on the previous year to R110,7 million
(2008: R92,9 million) with the Isle of Man totalisator operation showing
strong growth with a 76% increase in net betting income to R23,6 million
(2008: R13,4 million).
Operating expenses and overheads increased by 23% to R85,1 million (2008: R69
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 was a pleasing R1 million for
the year (2008: Rnil).
Profit before taxation increased by 11% to R26,6 million (2008: R23,9
million) and equates to 25% (2008: 19%) of the Group`s profit before
taxation.
GROUP RESULTS
Total revenue increased by 3% to R804,3 million (2008: R782,6 million) with
the increase derived mainly from international operations.
Other operating income that includes, inter alia, bookmakers levies, stable
rentals, local and international broadcasting levies/fees and a R27,8 million
profit on disposal of the Bloemfontein racecourse in the previous year
decreased by 8% to R221,5 million (2008: R239,8 million). Excluding the
profit on sale of Bloemfontein racecourse, other operating income increased
by 5%.
Total operating expenses and overheads increased by 7% to R679 million (2008:
R634,7 million). Excluding stakes operating costs increased by 6%.
Earnings before interest, taxation, depreciation and amortisation excluding
the profit on sale of Bloemfontein racecourse in the previous year decreased
by 8% to R120 million (2008: R130,9 million).
Headline earnings decreased by 21% to R70,9 million (2008: R89,4 million) and
HEPS decreased by 20% to 93,67 cents per share (2008: 117,20 cents per
share).
Diluted HEPS decreased by 20% to 93,67 cents per share (2008: 116,89 cents
per share).
FINANCIAL POSITION
The Group has total assets of R500,4 million (2008: R510,1 million) including
cash balances of R100,2 million (2008: R144,2 million) adequately covering
total liabilities of R136,4 million (2008: R163 million). The balance sheet
remains strong with no gearing.
Cash and cash equivalents decreased by R44 million. Cash generated by
operations of R123,1 million was utilised to fund an increase in working
capital of R21,6 million (attributable mainly to an increase in international
operations trade receivables and a decrease in trade and other payables), pay
income tax of R63,2 million and dividends of R51,6 million. A further R33,5
million was utilised for capital expenditure and R6,1 million for share
repurchases.
BINGO OPERATION
During the year agreements for the transfer of the operating rights inclusive
of an option to purchase the two bingo licenses held by the Group`s
subsidiary company, Silks Gaming and Leisure (Pty) Limited were concluded
subject to certain conditions precedent being met. As a result the bingo
outlet situated at Turffontein racecourse ceased operations during the year.
SHARE CAPITAL
During the year the Group 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.
CAPITAL COMMITMENTS
Commitments in respect of capital expenditure approved by directors.
2009 2008
R`000 R`000
Contracted for 26 326* 1 100
Not contracted for 30 335 63 900
*Mainly for illumination of the Turffontein race tracks for night racing.
SUMMARISED 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.
Restated
Audited Audited
31-Jul 31-Jul
% 2009 2008
change R`000 R`000
LOCAL
Revenue 1 693 615 689 679
Net income 1 673 208 666 505
Stakes 10 (156 982) (142 661)
Other net operating expenses 3 (436 889) (423 058)
Profit from ongoing operations 79 337 100 786
Finance costs (77) (180)
Profit before share of profit 79 260 100 606
of associated company
Share of profit of associated (43) 2 359 4 108
company
Profit before income tax from (22) 81 619 104 714
ongoing operations
Surplus on disposal of 27 815
Bloemfontein Racecourse
Profit before tax from (38) 81 619 132 529
operations
Assets 441 256 451 623
Liabilities 106 493 128 836
INTERNATIONAL
Revenue 19 110 730 92 960
Net income 19 110 616 92 892
Net operating expenses 23 (85 093) (68 999)
Profit before share of profit 7 25 523 23 893
of associated company
Share of profit of associated 1 031
company
Profit before income tax from 11 26 554 23 893
ongoing operations
Assets 59 115 58 444
Liabilities 29 898 34 121
TOTAL
Revenue 3 804 345 782 639
Profit from ongoing operations (16) 104 860 124 679
Finance costs (77) (180)
Profit before share of profit 104 783 124 499
of associated company
Share of profit of associated (17) 3 390 4 108
companies
Profit before income tax from (16) 108 173 128 607
ongoing operations
Surplus on disposal of 27 815
Bloemfontein racecourse
Profit before tax from (31) 108 173 156 422
operations
Assets 500 371 510 067
Liabilities 136 391 162 957
STATEMENT OF COMPLIANCE
The preliminary summarised
consolidated financial statements have
been prepared in accordance with the
recognition and measurement criteria
of IFRS, its interpretations adopted
by the International Accounting
Standards Board (IASB), the
presentation and the disclosure
requirements of IAS34 - Interim
Financial Reporting, the Listing
Requirements of the JSE Limited and
the requirements of the South African
Companies Act.
BASIS OF PRESENTATION
The financial statements are prepared
in thousands of South African Rands on
the historical cost basis, except for
certain derivative financial
instruments that are recognised at
fair value.
The accounting policies are those
presented in the annual financial
statements for the year ended 31 July
2009 and have been applied
consistently to the periods presented
in these summarised consolidated
financial statements and by all Group
entities with the exception of the
disclosure of revenue in the income
statement which has been restated.
Previously revenue included `betting
turnover` representing bets struck on
the totalisator net of VAT and
rebates. In order to be more
consistent with general industry
practice `betting turnover` has been
replaced with `gross betting income`
representing bets struck net of
betting dividends paid to customers
and customer rebates. As a result the
following comparative amounts have
been restated:
As previously
Restated reported
2008 2008
R`000 R`000
Revenue
- Local operations 689 679 2 473 932
- International operations 92 960 256 634
782 639 2 730 566
The restatement had no impact on
income tax and profit after tax.
REPORTS OF THE INDEPENDENT AUDITORS
The unmodified audit reports of KPMG
Inc., the independent auditors, on the
annual financial statements and the
summarised financial statements
contained herein for the year ended 31
July 2009, dated 2 October 2009, are
available for inspection at the
registered office of the Company.
POST BALANCE SHEET EVENTS
There are no significant post balance
sheet events that have a material
impact on the financial statements at
31 July 2009.
SOCIAL RESPONSIBILITY
The Group 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 S E 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.
Mr J S Tennant resigned as a director
on 29 May 2009 for health reasons. The
Board records their appreciation for
his invaluable contribution as the
previous Chief Executive and
subsequently non-executive director
and wish him well and a speedy
recovery to good health.
PROSPECTS
Trading conditions both locally and
internationally are expected to remain
challenging in the short to medium
term. Continued emphasis will be on
cost containment, growing local
revenues through the use of technology
and the introduction of new bet types
and expanding our international
customer base.
DIVIDEND TO SHAREHOLDERS
Notice is hereby given that the Board
has declared a final dividend of 43
cents per share payable to
shareholders recorded in the register
on Friday 23 October 2009.
Shareholders are advised that the last
date to trade "cum dividend" will be
Friday 16 October 2009. As from
commencement of business on Monday, 19
October 2009 all trading in Phumelela
shares will be "ex dividend". Payment
will be made on Monday, 26 October
2009. Share certificates may not be
dematerialised or rematerialised
between Monday, 19 October 2009 and
Friday 23 October 2009, both days
inclusive.
For and on behalf of the Board
M P Malungani
Chairman
W A du Plessis
Group Chief Executive
Johannesburg
02 October 2009
Directors: M P Malungani (Chairman), W
A du Plessis* (Group Chief Executive),
D R H Attenborough* (CEO South
Africa), A W Heide* (Finance
Director), R Cooper, M J Jooste, B
Kantor, S K C Khampepe, N J Mboweni
(Mrs), Dr E Nkosi, M L Ramafalo*, 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
Share code: PHM ISIN: ZAE000039269
Sponsor: Investec Bank Limited Web
site: www.phumelela.com
Date: 02/10/2009 17:40:41 Produced by the JSE SENS Department.
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