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PHUMELELA GAMING AND LEISURE LIMITED - UNAUDITED FINANCIAL RESULTS FOR THE SIX
MONTHS ENDED 31 JANUARY 2003
Phumelela Gaming and Leisure Limited
(Registration number 1997/016610/06)
Share code: PHM ISIN: ZAE000039269
Unaudited Financial Results for the SIX months ended 31 JANUARY 2003
* ATTRIBUTABLE EARNINGS UP BY 848%
* MAIDEN DIVIDEND OF 7,5 CENTS PER SHARE
The Group"s unaudited financial results for the six months ended 31 January 2003
are as follows:
Abridged Consolidated Income Statements
Unaudited Reviewed Audited
Six months Six months Twelve months
31 Jan 2003 31 Jan 2002 31 July 2002
R"000 R"000 R"000
Betting turnover 831 059 706 135 1 490 241
Income 226 201 182 243 393 814
Operating expenses 195 661 174 350 362 753
Operating profit before
depreciation, amortisation
of goodwill and interest 30 540 7 893 31 061
Depreciation and goodwill
amortised 5 747 5 206 10 544
Operating profit before
interest 24 793 2 687 20 517
Net interest received/(paid) 901 (350) (1 357)
Profit before taxation 25 694 2 337 19 160
Taxation (4 111) - 386
Profit after taxation before
outside shareholders"
interest 21 583 2 337 19 546
Attributable to outside
shareholders - 61 2 136
Earnings attributable to
ordinary shareholders 21 583 2 276 17 410
Earnings attributable to
ordinary shareholders 21 583 2 276 17 410
Adjusted for:
Surplus on disposal of
property, plant and
equipment (405) - (1 911)
Impairment of
Newmarket Racecourse - - 1 100
Amortisation of goodwill 536 - 89
Headline earnings 21 714 2 276 16 688
Number of shares in
issue 70 000 285 280 70 000 285
Weighted average
number of shares 70 000 285 280 13 655 076
Diluted earnings per
share (cents) 29,78 *16,67 126,39
Headline earnings per
share (cents) 31,02 *16,67 122,21
Earnings per share based
on number of shares in
issue (cents) 30,83 *3,25 24,87
Net asset value per share
based on number of
shares in issue (cents) 136,60 *51,74 105,77
Dividend per share (cents) 7,5 - -
*Based on number of shares as
for 31 July 2002.
Abridged Consolidated Balance Sheets
Unaudited Reviewed Audited
31 Jan 2003 31 Jan 2002 31 July 2002
R"000 R"000 R"000
ASSETS
Non-current assets 163 354 216 011 161 251
Property, plant and
equipment 154 792 205 587 152 153
Goodwill 4 733 8 039 5 269
Deferred taxation 3 829 2 385 3 829
Current assets 40 345 18 355 27 283
Inventories 626 1 771 1 239
Trade and other
receivables 17 115 14 548 19 113
Cash and cash
equivalents 22 604 2 036 6 931
Total assets 203 699 234 366 188 534
EQUITY AND LIABILITIES
Capital and reserves 95 621 36 216 74 038
Share capital and
premium 22 688 - 22 688
Capital reserve - 13 957 -
Accumulated profit 72 933 22 259 51 350
Outside shareholders"
interest - 612 -
Non-current liabilities 50 110 142 736 60 810
Retirement benefit
obligations 9 985 26 486 19 985
Interest bearing
borrowing - 750 700
Racing Association loan 30 125 115 500 30 125
Grant for industry
transformation 10 000 - 10 000
Current liabilities 57 968 54 802 53 686
Trade and other
payables 47 190 46 880 45 780
Provisions 7 258 2 752 7 360
Taxation 3 520 - 546
Bank overdraft - 5 170 -
Total equity and liabilities 203 699 234 366 188 534
Abridged Consolidated Cash Flow Statements
Unaudited Reviewed Audited
Six months Six months Twelve months
31 Jan 2003 31 Jan 2002 31 July 2002
R"000 R"000 R"000
Cash generated by
operations 30 135 8 812 29 148
Movement in working
capital 3 919 (8 309) (2 745)
Cash generated by
operating activities 34 054 503 26 403
Net interest, investment
income and taxation (236) (350) (1 869)
Net cash inflow from
operating activities 33 818 153 24 534
Net cash outflow from
investing activities (7 445) (3 824) (20 453)
Net cash (outflow)/inflow
from financing activities (10 700) (50) 2 263
Net increase/(decrease)
in cash and cash
equivalents 15 673 (3 721) 6 344
Cash and cash equivalents
at beginning of period 6 931 587 587
Cash and cash equivalents
at end of period 22 604 (3 134) 6 931
Abridged Statement of changes in
group equity
Unaudited Reviewed Audited
Six months Six months Twelve months
31 Jan 2003 31 Jan 2002 31 July 2002
R"000 R"000 R"000
Shareholders" interest
at beginning of period 74 038 33 940 33 940
Changes in share capital - - 1 750
Changes in share premium - - 20 938
Net profit for period 21 583 2 276 17 410
Shareholders" interest
at end of period 95 621 36 216 74 038
Comments
REVIEW OF RESULTS AND FINANCIAL POSITION
The Board is satisfied with the Group"s performance in the six months to 31
January 2003 and the resultant R21,6 million attributable earnings. Betting
turnover growth, the benefits from the reduction in gaming taxes in Gauteng and
Limpopo and the yields from ongoing cost reduction initiatives contributed to
the large improvement over the comparative period.
Despite the ongoing high inflation rate and the corresponding punitive
interest rates, the improving economic growth, the national totalizator pools
and the positive mood change in the horse racing industry have favourably
impacted betting turnover, which accordingly grew by 17,7%.
The comparative figures only include the acquisition of TAB North West (Pty)
Ltd from November 2001. Restating the comparative betting turnover number to
include their turnover for the full six months reduces betting turnover growth
to 11,7%.
SA normal taxation has been provided based on the forecast year-end tax rate.
The profits earned for the six months are reflected in the large increase in
the cash holdings. The cash flows have enabled a further R10 million funding of
the Group"s post-retirement medical aid obligation, which is now largely funded.
The balance sheet with cash holdings of R22,6 million continues to be sound.
GOSFORTH PARK PROPERTY
As announced on 5 February 2003, the conditions of the R18,5 million Gosforth
Park Racecourse Disposal Agreement have been fulfilled.
No account of this transaction has been included in these results. R9,25
million will be received in cash on transfer of the property, with the balance,
secured by mortgage bond, payable over five years.
RACECOURSES
The second grass track at Turffontein Racecourse was commissioned in December
2002 and the process of upgrading facilities continues. Various options aimed at
optimising the Newmarket Racecourse property while retaining its use as a racing
venue are under consideration.
GAMING TAXATION
North West Province introduced a gaming tax in an Extraordinary Provincial
Government Gazette dated 25 November 2002. The totalizator tax was backdated to
1 May 2002. Legal advice is that the backdating is ultra vires. Phumelela has
paid and expensed the back taxes of R1,6 million and informed the Provincial
Government and the Gaming Board of its intention to recover the R1,6 million.
SEGMENTAL ANALYSIS
The Group currently operates in one business segment, horse racing
and sports betting, and almost entirely in one geographic segment, South Africa.
ACCOUNTING POLICIES
The financial statements are prepared on the historical cost basis in
accordance with South African Statements of Generally Accepted Accounting
Practice and incorporate accounting policies that are consistent with those
applied in the prior year.
SOCIAL RESPONSIBILITY
Phumelela is an empowerment company supported by appropriate employment equity
and training programmes and due consideration is given to the previously
disadvantaged when awarding contracts.
AUDIT
Ngubane & Co has been appointed joint auditors with Ernst & Young.
PROSPECTS
The improving betting turnover trend experienced during the six months has
been temporarily impacted in February by the large lottery carryovers and the
staging of the World Cup Cricket. Accordingly, the Group will be challenged to
repeat the first six months" profit performance in the second half of the year.
DIVIDEND
Notice is hereby given that the Board has declared a maiden interim dividend
of 7,5 cents per share payable to shareholders recorded in the register on
Friday, 11 April 2003. Shareholders are advised that the last date to trade "cum
dividend" will be Friday, 4 April 2003. As from commencement of business on
Monday, 7 April 2003 all trading of Phumelela shares will be "ex dividend".
Payment will be made on Monday, 14 April 2003. Share certificates may not be
dematerialised or rematerialised between Monday, 7 April 2003 and Friday, 11
April 2003, both days inclusive.
For and on behalf of the Board
M P MALUNGANI B D MEHL
Chairman Chief Executive
Johannesburg
12 March 2003
Directors: M P Malungani (Chairman), B D Mehl* (Chief Executive),
S E Abrahams, K J Hlongwane, B Kantor, S Khampepe, K E Latilla,
J S Tennant* (Finance), G J Thula, J B Walters
(*Executive)
Company Secretary: A F Wintour
Registered Office: Turffontein Racecourse
14 Turf Club Street
Turffontein
Website: www.phumelela.com
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