| Fri 17 May 2002, 0:00 | | Phumelela Gaming And Leisure Limited - Abridged Pr |
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Phumelela Gaming And Leisure Limited - Abridged Prospectus
PHUMELELA GAMING AND LEISURE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/016610/06)
JSE Share code: PHM
ISIN Code : ZAE000039269
("Phumelela" or "the company")
ABRIDGED PROSPECTUS
relating to:
an offer to the racing public to subscribe for 19 250 000 ordinary shares
of two and a half cents each in the share capital of Phumelela at an issue
price of 50 cents per ordinary share ("the racing public offer").
This announcement contains the salient information in respect of the
racing public offer, which is more fully detailed in the prospectus issued
on 17 May 2002 ("the prospectus). The complete prospectus which is
available on request as detailed in paragraph 10 below should be read in its
entirety. The racing public comprises:
- All members of the Racing Association, a section 21 company with
regisration number 1997/019092/08 ("Racing Association").
- All owners having racing colours registered with The Jockey Club of
Southern Africa ("JCSA") who are resident in the Phumelela region.
- All trainers licensed by the JCSA who are resident in the Phumelela
region.
- All assistant trainers or stable employees licensed by the JCSA who are
resident in the Phumelela region.
- All jockeys licensed by the JCSA.
- All Phumelela Telebet account holders.
- Punters resident in the Phumelela region.
- All grooms residing in the Phumelela region.
- All members of the Thoroughbred Breeders` Association.
- All employees of the Racing Association and the JCSA.
The Phumelela region is Gauteng, Free State, Eastern Cape, Northern Cape,
Mpumalanga, Northern Province and North West.
Approval of an application for the listing of 70 000 285 Phumelela ordinary
shares has been granted by the JSE Securities Exchange South Africa ("the
JSE") in the Development Capital Market of the JSE, under the abbreviated
name "Phumelela", subject to the company obtaining a minimum shareholder
spread as per the JSE Listings Requirement, where the minimum shareholder
spread represents at least 75 public shareholders and a minimum of 10% of
the issued share capital.
The Phumelela ordinary shares ("ordinary shares") offered for subscription
in terms of this abridged prospectus will rank pari passu with the existing
ordinary shares of Phumelela in issue. An English copy of the prospectus was
registered by the Registrar of Companies on Wednesday, 15 May 2002, in terms
of section 155(l) of the Companies Act, 1973 (Act 61 of 1973), as amended.
1. Details of the racing public offer
Offer price per ordinary share (cents) 50
Ordinary shares offered for subscription in terms
of the racing public offer 19 250 000
Total capital to be raised by the racing public
offer before expenses (Rand) 9 625 000
2. Important dates and times
2002
Opening date of the racing public offer (09:00) on Friday, 17 May
Closing date of the racing public offer (16:00) on Friday, 7 June
Share certificates mailed to successful applicants/
credited to Central Security Depository Participant
("CSDP") or broker on Wednesday, 12 June
Refund cheques mailed on Wednesday, 12 June
Proposed listing date on Friday, 14 June
3. Purposes of the racing public offer and the listing
The representatives of the horseracing industry in Gauteng signed a
Memorandum of Understanding on 30 June 1997 ("MOU") with the Gauteng
Provincial Government providing for the corporatisation of the horseracing
industry in Gauteng. The process was subsequently extended to include the
horseracing industry in the Free State, Northern Cape and the Eastern Cape.
One of the obligations under the MOU is that black economic empowerment
shareholders ("BEE shareholders"), members of the racing public and
Phumelela employees be afforded the opportunity to participate directly in
the equity of Phumelela. The other purposes of the racing public offer and
listing are to raise funds to assist in the development of new business
opportunities and to allow Phumelela to carry out appropriate acquisitions
which may arise in the future.
Applications must be for a minimum of 500 ordinary shares and in multiples
of 100 ordinary shares thereafter.
4. Private placing
Prior to the issue of the prospectus, a renounceable letter of
allocation for 50 750 000 shares, credited as fully paid, at a total
subscription price of R25 375 000, was issued to the Racing Association at
50 cents per share. The Racing Association subscribed for 20 ordinary shares
and renounced the right to subscribe for 50 749 980 ordinary shares as
follows:
- 19 250 000 ordinary shares to BEE shareholders;
- 350 000 ordinary shares to M P Malungani;
- 24 499 980 ordinary shares to the Thoroughbred Horseracing Trust
("Racing Trust"); and
- 6 650 000 ordinary shares to a trust established for the purpose
of providing funding to the employees of Phumelela to enable them
to buy shares in Phumelela ("employee trust").
The 6 650 000 ordinary shares subscribed for by the employee trust are in
turn about to be offered to employees of Phumelela at a purchase price of 50
cents per ordinary share. Any ordinary shares not purchased by employees by
the date the racing public offer closes will be sold by the employee trust
to the Racing Association at the same price.
5. Nature of business
Phumelela conducts the business of totalisator betting in all provinces
in South Africa, other than KwaZulu-Natal and Western Cape, and holds
thoroughbred horserace meetings in Gauteng, Free State, Eastern Cape and
Northern Cape. The totalisator is a system of pool betting where the
aggregate amount wagered is divided amongst winning bets on that event after
the deduction of takeout inclusive of taxes ("totalisator"). All South
African horserace meetings are broadcast via Telly Track on channel 34 of
the DSTV bouquet. This is a partnership between Phumelela and Gold Circle
Racing and Gaming Group ("Gold Circle") established to conduct the business
of developing the commercial value of their interests in television
broadcasting and other forms of audio and visual coverage of thoroughbred
horseracing ("Telly Track").
Totalisator betting is conducted through a network of 112 branches and 93
franchised agents as well as through three Telebet centres. Bets are
accepted on all thoroughbred horseracing events taking place in South
Africa, Zimbabwe and selected events from other countries. There are
approximately 506 race meetings consisting of 4 018 races. Of these race
meetings, approximately 264 are conducted at Phumelela`s own racecourses.
Phumelela`s revenue is derived from totalisator bets placed at its
racecourses, totalisator outlets and Telebet centres. Phumelela also
receives a percentage of the provincial taxation levied on bookmakers.
Totalisator betting carries no betting risk for Phumelela, unlike fixed odds
betting.
6. Prospects
The expansion of other forms of gaming in South Africa has had a
negative impact on totalisator turnover. Nevertheless, the directors believe
that there are the following benefits and opportunities that Phumelela can
develop:
Rationalisation
The consolidation of the horseracing industries in each of the provinces
in which Phumelela now operates has enabled management to rationalise
overhead structures and to realise cost and efficiency benefits. Further
rationalisation of racing venues will take place and an additional racetrack
has been built at the Vaal racecourse with a further track under
construction at the Turffontein racecourse. This has enabled the closure of
the Gosforth Park racecourse and will facilitate the further rationalisation
of other racing venues.
National totalisator
Phumelela signed a commingling agreement with Gold Circle on 19 April 2002
("commingling agreement") that will achieve the following:
the totalisator turnover of Gold Circle will be aggregated with that
of Phumelela`s, thereby creating national totalisator betting pools.
Phumelela will receive a fee of 0,5% of Gold Circle`s totalisator
turnover;
each party shall pay to the other party a commission of 3% of their
gross betting turnover generated on races organised by the other
party; and
the creation of a national totalisator will result in much larger
betting pools. This will be more attractive to punters and will also
facilitate the broadcast of South African racing to countries in other
parts of the world. Such broadcasting will also allow the commingling
of overseas betting pools with local betting pools resulting in even
bigger pools that will be more attractive to local and overseas
punters.
A possible partnership with Gold Circle is in the process of being
finalised for the purpose of rationalising the partners` Telebetting
operations, developing new business opportunities anywhere in the world
outside of South Africa and Namibia that is concerned with betting
activities or thoroughbred horseracing, and to conduct the business of the
existing TellyTrack partnership.
Technology
New technology in the pipeline will improve access to information by the
betting public and will facilitate "interactive" betting, enabling bets to
be taken directly into the computerised totalisator betting system through
cellphones, the Internet and TV remote controls. Cellphone users will
simultaneously be able to display live information on their cell phone
screens, including totalisator odds and horses` records. This technology
will enable the excitement of betting on horseracing to be marketed to a
wider audience in a more user-friendly manner.
Intellectual property
All rights to the broadcast of Phumelela`s racing activities and racing
information vest with Phumelela and, as a result, the company is in a strong
position to make full use of these intellectual property rights under its
control. Phumelela`s betting information, coupled with the TellyTrack
television broadcast, enables the sale of a complete racing product on an
international basis.
Gaming machines
Phumelela`s racecourses and betting outlets provide the ideal
infrastructure for the introduction of limited payout slot machines. To
date, legislation has delayed the introduction of limited payout slot
machines.
Provincial totalisator taxation
The rate of totalisator tax in Gauteng has been reduced to 6,5% of gross
revenue from 1 April 2002. Gross revenue is gross totalisator betting
turnover including vat less dividends paid to punters. This equates to a
rate of tax of approximately 1,6% on betting turnover compared to the
previous tax rate of 3,5% and will benefit Phumelela to the value of
approximately R1,6 million per month, based on current turnover and before
the stakes obligation. The tax in the other provinces in which Phumelela
holds licences is higher and Phumelela is making representations to these
other provinces for the tax rate to be reduced.
7. Salient financial information
7.1 Income statements
Audited Reviewed
Actual Actual Actual
16 months 12 months 6 months
ended ended ended
31 July 2000 31 July 2001 31 January 2002
R`000 R`000 R`000
Betting turnover 1 912 985 1 511 516 706 135
Profit before taxation 2 069 1 620 2 337
Taxation - 2 385 -
Profit after taxation 2 069 4 005 2 337
Attributable to outside
shareholders - - (61)
Extraordinary item - 1 666 -
Profit attributable to
ordinary shareholders 2 069 5 671 2 276
Forecast Forecast
6 months 12 months
ending ending
31 July 2002 31 July 2002
R`000 R`000
Betting turnover 740 000 1 446 135
Profit before taxation 9 906 12 243
Taxation - -
Profit after taxation 9 906 12 243
Attributable to outside
shareholders - (61)
Extraordinary item - -
Profit attributable to
ordinary shareholders 9 906 12 182
7.2 Financial statistics
Pro forma
Pro forma forecast
12 months to 12 months to
31 July 2001 31 July 2002
Total ordinary shares in issue (`000) 50 750 70 000
Weighted average number of ordinary
shares in issue (`000) 50 750 53 958
Earnings per ordinary share (cents) 11,2 22,6
Price/earnings multiple on subscription
price (times) 4,5 2,2
Earnings yield on subscription price (%) 22,4 45,2
Net asset value per ordinary share (cents) 180 148
8. Directors
The full names, ages, addresses and occupations of the executive and non-
executive directors of Phumelela are set out below:
Name Address Position
Non-executive directors
Mangalani Peter Malungani (44) 33 Bath Avenue Non-executive chairman
Rosebank, First appointed to the
Johannesburg Phumelela board on
2 October 1997
Samuel Ellis Abrahams (63) 43, 5th Avenue Non-executive director
Illovo, Appointed to the
Johannesburg board Phumelela on
6 February 2001
Khesane Johannes Hlongwane(64) 17th Floor Non-executive director
208 Jeppe Street, Appointed to the
Johannesburg Phumelela board on
29 January 2002
Bernard Kantor (52) 38 African Street Non-executive director
Oaklands, Appointed to the
Johannesburg Phumelela board on
24 February 1999
Siza Khampepe (51) 3 Minelela Road Non-executive director
Bryanston, Appointed to the
Johannesburg Phumelela board on
21 July 2000
Kim Everitt Latilla (64) 33 Wantage Road Non-executive director
Parkwood, Appointed to the
Johannesburg Phumelela board on
23 July 1999
Gibson Joseph Thula (68) 10, 4th Avenue Non-executive director
Houghton, Appointed to the
Johannesburg Phumelela board on
29 January 2002
John Barry Walters (58) 8 Victoria Avenue Non-executive director
Melrose, Appointed to the
Johannesburg Phumelela board on
14 February 1999
Executive directors
Brian Derrick Mehl (59) 6 Madison Square Chief executive
20 Porter Avenue Appointed to the
Melrose, Phumelela board on
Johannesburg 28 September 1999
James Satchwell Tennant (54) 18A Redhill Road Finance director
Morningside, Appointed to the
Johannesburg Phumelela board on
28 September 1999
9. Underwriting
In terms of the underwriting agreement entered into between Phumelela
and the Racing Association dated 11 April 2002, the Racing Association has
fully underwritten the racing public offer of 19 250 000 ordinary shares in
Phumelela. Insofar as the ordinary shares available in terms of the racing
public offer are not fully subscribed and paid for after the closing of the
racing public offer, the Racing Association will subscribe for any such
shares at 50 cents per ordinary share.
10. Prospectus
Copies of the prospectus may be obtained during business hours from
Friday, 17 May 2002 until Friday, 7 June 2002 from:
- Investec Securities Limited, 3rd Floor, 100 Grayston Drive,
Sandown, Sandton, 2196;
- Phumelela Gaming and Leisure Limited, Turffontein Racecourse,
14 Turf Club Street, Turffontein, Johannesburg, 2190;
- Ernst & Young (Chartered Accountants), Wanderers Office Park,
52 Corlett Drive, Illovo, Johannesburg, 2196;
- Tsanwani & Company (Chartered Accountants), Suite 407,
Klamson House, 151 Commissioner Street, Johannesburg, 2001;
- Bowman Gilfillan Inc, 9th Floor, Twin Towers West, Sandton City,
Sandton, 2196;
- Computershare Investor Services Limited, 2nd Floor, Edura House,
41 Fox Street, Johannesburg, 2001;
- the Racing Association, 144 Turf Club Street, Turffontein,
Johannesburg, 2190; and
- a limited number will be made available at selected TAB outlets.
Johannesburg
17 May 2002
Merchant bank
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Attorneys
Bowman Gilfillan Inc.
Registration number 1998/021409/21
Sponsor
Investec Securities Limited
Member of the JSE
(Registration number. 1972/008905/06)
Joint auditors and reporting accountants
Ernst & Young
Chartered Accountants (SA)
(Registered Accountants and Auditors)
Tsanwani & Company
Chartered Accountants (SA)
Registered Accountants and Auditors
Transfer secretaries
Computershare Investor Services Limited
(Registration number 1958/003546/06)
Date: 17/05/2002 07:44:11 AM Produced by the SENS Department
