| Mon 29 Sep 2003, 15:44 | | AUDITED FINANCIAL RESULTS FOR THE YEAR |
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PHUMELELA GAMING AND LEISURE LIMITED -
PHUMELELA GAMING AND LEISURE LIMITED
(Registration number 1997/016610/06)
Share code: PHM ISIN: ZAE000039269
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 JULY 2003
* HEADLINE EARNINGS UP BY 167%
* FINAL DIVIDEND OF 12,5 CENTS PER SHARE
The Group"s audited financial results for the year ended 31 July 2003 are as
follows:
ABRIDGED CONSOLIDATED INCOME STATEMENTS
2003 % 2002
R"000 Change R"000
Betting turnover 1 642 532 10 1 490 241
Income 456 482 16 393 814
Operating expenses 398 476 362 664
Operating profit before depreciation,
amortisation of goodwill and interest 58 006 31 150
Depreciation and goodwill amortised 11 276 10 633
Operating profit before interest 46 730 20 517
Net interest received/(paid) 2 788 (1 357)
Profit before taxation 49 518 19 160
Taxation 5 441 (386)
Profit after taxation before outside
shareholders" interest 44 077 19 546
Attributable to outside shareholders - 2 136
Earnings attributable to ordinary shareholders 44 077 153 17 410
Earnings attributable to ordinary shareholders 44 077 17 410
Adjusted for:
Surplus on disposal of
property, plant and equipment (555) (1 911)
Impairment of Newmarket Racecourse - 1 100
Amortisation of goodwill 1 071 89
Headline earnings 44 593 167 16 688
Number of shares in issue 70 000 285 70 000 285
Basic earnings per share 62,97 *24,87
Diluted earnings per share (cents) 60,63 *23,95
Headline earnings per share (cents) 63,70 *23,84
Net asset value per share based on number
of shares in issue (cents) 162,73 105,77
Dividend per share (cents)- interim 7,5 -
Dividend per share (cents)- final 12,5 -
*Based on 70 000 285 shares in issue
ABRIDGED CONSOLIDATED BALANCE SHEETS
2003 2002
R"000 R"000
ASSETS
Non-current assets 154 658 161 251
Property, plant and equipment 142 626 152 153
Goodwill 4 198 5 269
Deferred taxation 1 214 3 829
Long-term debtor 6 370 -
Investment 250 -
Current assets 42 062 27 283
Inventories 547 1 239
Trade and other receivables 16 931 19 113
Cash and cash equivalents 24 584 6 931
Total assets 196 720 188 534
EQUITY AND LIABILITIES
Capital and reserves 113 915 74 038
Share capital and premium 22 688 22 688
Accumulated profit 91 227 51 350
Non-current liabilities 29 353 60 810
Retirement benefit obligations 9 353 19 985
Interest bearing borrowing - 700
Long-term borrowings 20 000 30 125
Grant for industry transformation - 10 000
Current liabilities 53 452 53 686
Trade and other payables 47 382 45 780
Provisions 4 458 7 360
Taxation 1 612 546
Total equity and liabilities 196 720 188 534
ABRIDGED CONSOLIDATED CASH FLOW STATEMENTS
2003 2002
R"000 R"000
Cash generated by operations 43 915 29 148
Movement in working capital 8 133 (2 745)
Cash generated by operating activities 52 048 26 403
Net interest, investment income,
dividend paid and taxation (4 671) (1 869)
Net cash inflow from operating activities 47 377 24 534
Net cash outflow from investing activities (8 849) (20 453)
Net cash (outflow)/inflow from
financing activities (20 875) 2 263
Net increase in cash and cash equivalents 17 653 6 344
Cash and cash equivalents at beginning of year 6 931 587
Cash and cash equivalents at end of year 24 584 6 931
ABRIDGED STATEMENTS OF CHANGES IN GROUP EQUITY
2003 2002
R"000 R"000
Shareholders" interest at beginning of year 74 038 33 940
Net gain on financial instrument (AC133) 1 050 -
Changes in share capital - 1 750
Changes in share premium - 20 938
Net profit for year 44 077 17 410
Dividend paid (5 250) -
Shareholders" interest at end of year 113 915 74 038
COMMENTS
REVIEW OF RESULTS AND FINANCIAL POSITION
The Board is more than satisfied with the Group"s performance for the year
ended 31 July 2003. Earnings attributable of R44,1 million, 153% up on last
year, was achieved on turnover growth of 10% and the benefits from the lower
gaming taxes in Gauteng and Limpopo announced during the previous year, coupled
with the use of assessed tax losses which are now fully utilised. The February
turnover impact of lottery carryovers and World Cup Cricket, referred to in the
interim report, proved to be temporary with growth returning albeit at a
slightly lower level than achieved in the first half. Interest income and a
lower taxation rate in the second half of the year contributed to the better
performance in the six months to 31 July 2003.
The cash generating nature of the Group"s business resulted in a R17,6
million increase in cash holdings after the R5,3 million interim dividend
payment, R10,1 million repayment of long-term borrowings and R10,0 million
funding of post retirement medical aid liability. The large reduction in non-
current liabilities and the sale of surplus assets further strengthened the
balance sheet, which now has no interest bearing debt, substantial cash and
largely funded retirement benefit obligations. The Group continues with the
programme of investing in technology and refurbishing of facilities.
GAMING TAXATION
The North West Province has repaid the R1,6 million backdated gaming tax that
was paid over and expensed in the first six months.
On 1 August 2003 Mpumalanga Province reduced their gaming tax to 2,5% of
betting turnover.
SEGMENTAL ANALYSIS
The Group currently operates in the business segment of horse racing and
betting, and in one significant geographic segment, South Africa.
ACCOUNTING POLICIES AND AUDIT
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 except for the adoption of AC 133, the impact is noted
in changes in Group equity.
The results have been audited by Ernst & Young and Ngubane & Co and their
unqualified report is available for inspection at the registered office.
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.
RACING ASSOCIATION LOAN and GRANT FOR INDUSTRY TRANSFORMATION
In terms of an agreement between Phumelela and the Racing Association,
Phumelela repaid R10,1 million of their long-term loan and wrote off the stakes
prepayment while the Racing Association assumed the obligations of the
transformation grant. The stakes prepayment resulted from the stakes payments
being in excess of that required by the stakes formula. The advantages of the
agreement will be the earlier indirect settlement of the grant to The
Thoroughbred Horse Racing Trust, which was previously linked to the proceeds
from the sale of Gosforth Park (to be received over 4 years), and the
elimination of the stakes prepayment which would have otherwise limited stakes
increases in future years.
LITIGATION
The Minister of Trade and Industry and the National Lotteries Board have made
application to court for an order to declare that the Soccer 6 is in
contravention of the provisions of the Lotteries Act, 57 of 1997. Prior to the
launch of the bet the company had obtained senior counsel"s opinion, which
confirmed that Phumelela was acting within its rights and will therefore defend
this action.
PROSPECTS
The improving betting turnover trend, a stronger local economy which should
generate more disposable income, and overseas initiatives are confidently
expected to support ongoing real growth in operating profit.
DIVIDEND
Notice is hereby given that the Board has declared a final dividend of 12,5
cents per share payable to shareholders recorded in the register on Friday, 24
October 2003. Shareholders are advised that the last date to trade "cum
dividend" will be Friday, 17 October 2003. As from commencement of business on
Monday, 20 October 2003 all trading of Phumelela shares will be "ex dividend".
Payment will be made on Monday, 27 October 2003. Share certificates may not be
dematerialised or rematerialised between Monday, 20 October 2003 and Friday, 24
October 2003, both days inclusive.
For and on behalf of the Board
M P MALUNGANI B D MEHL
Chairman Chief Executive
Johannesburg
29 September 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
Share code: PHM ISIN: ZAE000039269
Website: www.phumelela.com
