| Wed 17 Mar 2004, 18:12 | | FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 31 JAN 04 |
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PHUMELELA GAMING AND LEISURE LIMITED - THE GROUP"S UNAUDITED FINANCIAL RESULTS
FOR THE 6 MONTHS ENDED 31 JANUARY 2004 PHUMELELA GAMING AND LEISURE LIMITED
(Registration number 1997/016610/06) Share code: PHM
ISIN: ZAE000039269
The Group"s unaudited financial results for the 6 months ended 31 January 2004 *
EARNINGS RESILIENCE DEMONSTRATED DESPITE EQUINE FLU
* DIVIDEND OF 10 CENTS PER SHARE* ATTRIBUTABLE EARNINGS IMPACTED BY FULL
TAXATION CHARGE
The Group"s unaudited financial results for the six months ended 31 January 2004
are as follows:ABRIDGED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
Six Six Twelve
months months months
31 Jan 2004 31 Jan 2003 31 Jul 2003
R"000 R"000 R"000
Betting turnover 802 462 831 059 1 642 532
Net betting income 185 105 188 825 359 720
Other operating income 40 971 38 621 100 053
Net income 226 076 227 446 459 773
Operating expenses 200 348 201 408 409 752
Profit from operations 25 728 26 038 50 021
Finance costs 11 344 503
Profit before taxation 25 717 25 694 49 518
Taxation 8 909 4 111 5 441
Earnings attributable to ordinary 16 808 21 583 44 077
shareholders
Earnings attributable to ordinary 16 808 21 583 44 077
shareholders
Adjusted for:
Surplus on disposal of property, (370) (405) (555)
plant and equipment
Amortisation of goodwill 536 536 1 071
Headline earnings 16 974 21 714 44 593
Number of shares in issue 70 000 285 70 000 285 70 000 285
Weighted average number of shares 70 000 285 70 000 285 70 000 285
Diluted earnings per share (cents) 22,95 29,78 60,63
Headline earnings per share 24,25 31,02 63,70
(cents)
Earnings per share (cents) 24,01 30,83 62,97
Net asset value per share (cents) 174,25 136,60 162,73
Dividend per share (cents) 10,00 7,50 20,00
ABRIDGED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
31 Jan 2004 31 Jan 2003 31 Jul 2003
R"000 R"000 R"000
ASSETS
Non-current assets 154 414 163 354 154 658
Property, plant and equipment 143 602 154 792 142 626
Goodwill 3 662 4 733 4 198
Deferred taxation 1 214 3 829 1 214
Long-term debtor 5 686 - 6 370
Investment 250 - 250
Current assets 42 338 40 345 42 062
Inventories 434 626 547
Trade and other receivables 16 541 17 115 16 931
Cash and cash equivalents 25 363 22 604 24 584
Total assets 196 752 203 699 196 720
EQUITY AND LIABILITIES
Capital and reserves 121 973 95 621 113 915
Share capital and premium 22 688 22 688 22 688
Accumulated profit 99 285 72 933 91 227
Non-current liabilities 27 853 50 110 29 353
Retirement benefit obligations 7 853 9 985 9 353
Racing Association loan 20 000 30 125 20 000
Grant for industry transformation - 10 000 -
Current liabilities 46 926 57 968 53 452
Trade and other payables 36 555 47 190 47 382
Provisions 3 131 7 258 4 458
Taxation 7 240 3 520 1 612
Total equity and liabilities 196 752 203 699 196 720
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited31
31 Jan 2004 31 Jan 2003 Jul 2003
R"000 R"000 R"000
Cash generated by operations 27 028 30 135 43 915
(Increase)/decrease in working (10 324) 3 919 8 133
capital
Cash generated by operating 16 704 34 054 52 048
activities
Net interest, investment income (857) (236) 579
and taxation
Dividend paid (8 750) - (5 250)
Net cash inflow from operating 7 097 33 818 47 377
activities
Net cash outflow from investing (5 502) (7 445) (8 849)
activities
Net cash outflow from financing (816) (10 700) (20 875)
activities
Net increase in cash and cash 779 15 673 17 653
equivalents
Cash and cash equivalents at 24 584 6 931 6 931
beginning of period
Cash and cash equivalents at end 25 363 22 604 24 584
of period
ABRIDGED STATEMENT OF CHANGES IN GROUP EQUITY
Unaudited Unaudited Audited
31 Jan 2004 31 Jan 2003 31 Jul 2003
R"000 R"000 R"000
Shareholders" interest at 113 915 74 038 74 038
beginning of period
Gains on loans and receivables - - 1 050
originated on first time
application of AC 133
Net profit for period 16 808 21 583 44 077
Dividend paid (8 750) D (5 250)
Shareholders" interest at end of 121 973 95 621 113 915
period
COMMENTS
REVIEW OF RESULTS AND FINANCIAL POSITIONThe Board considers the results for the
six months to 31 January 2004 to be reasonable given the impact of the equine
flu from early December 2003. In the period under review the net betting
turnover lost due to the outbreak is estimated to exceed R120,0 million, which
would have yielded additional attributable earnings of approximately R10,0
million. Betting turnover lost would have been higher but for the importation of
additional foreign racing product.
The resultant 3,4% reduction in betting turnover was partially compensated for
by reduced expenses following fewer race meetings and higher interest income,
which enabled the profit before tax to be in line with the comparative. The full
tax charge and STC of R1,1 million on last year"s final dividend caused the
21,8% fall in headline earnings.
Cash generated in the six months was sufficient to fund the increase in working
capital, to cover the payment of the final dividend and STC thereon, plus the
funding of a further R1,5 million post retirement medical aid liability, and
capital expenditure of R5,5 million. The increase in working capital was a
consequence of the equine flu where the lower activity level caused the
reduction in trade and other payables. The programme of investing in technology
and refurbishing facilities has been continued albeit at a slower rate.
EQUINE FLU INSURANCE CLAIM
Phumelela has lodged an insurance claim under the business interruption section
of its insurance policy for the loss of profits caused by the equine flu but the
insurer has not accepted the claim and Phumelela is therefore taking the
necessary steps to pursue the claim.
SEGMENTAL ANALYSISThe Group currently operates in the business segment of horse
racing and betting, and in one significant geographic segment, South Africa.
ACCOUNTING POLICIESThe 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.
LITIGATIONOn 12 February 2004 the Pretoria High Court ruled that bookmakers may
not take bets which are in any way linked to tote dividends as this amounted to
unlawful competition, and further ruled that acceptance of open bets in Gauteng
is in contravention of the local Gambling and Betting Act. Leave to appeal to
the Supreme Court of Appeal has been granted. Should the High Court judgement be
upheld, the implications are that only bookmakers who have been appointed agents
in Phumelela"s region may accept tote bets on behalf of Phumelela and may not
hold such bets themselves. This would be earnings enhancing in the long-term.
Phumelela has requested a hearing date for the Soccer 6 action brought by the
Minister of Trade and Industry and the National Lotteries Board following their
failure to lodge a reply to our affidavit.
PROSPECTSThe racing programme returned to normal from 24 February 2004 in
Gauteng with Eastern Cape and Western Cape having resumed on 23 January and 8
February respectively (as per our trading update of 6 February 2004). The equine
flu impact on the six months to 31 July 2004 will therefore be less than on the
first six months. However, it could take time for turnover levels to normalise.
Progress on overseas initiatives continues and on 18 February 2004 Phumelela
Gold Enterprises, the partnership with Gold Circle, was awarded a tote licence
on the Isle of Man. Although this will not yield any short-term benefit, the
licence has long-term strategic importance. The export of the Tuesday night
racing product to the USA resumed on 2 March 2004. While the commission earned
is currently small, the outlook is encouraging.
DIVIDENDNotice is hereby given that the Board has declared an interim dividend
of 10 cents per share payable to shareholders recorded in the register on Friday
23 April 2004. Shareholders are advised that the last date to trade "cum
dividend" will be Friday 16 April 2004. As from commencement of business on
Monday 19 April 2004 all trading of Phumelela shares will be "ex dividend".
Payment will be made on Monday 26 April 2004. Share certificates may not be
dematerialised or rematerialised between Monday 19 April 2004 and Friday 23
April 2004, both days inclusive.
For and on behalf of the BoardM P MALUNGANI :B D
MEHLChairman :Chief Executive
Johannesburg17 March 2004
Directors: M P Malungani (Chairman), B D Mehl* (Chief Executive),S E Abrahams, K
J Hlongwane, B Kantor, S Khampepe, 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
Date: 17/03/2004 05:17:00 PM Produced by the JSE SENS Department
