| Thu 29 Sep 2005, 17:32 | | Phumelela Gaming And Leisure Limited - Audited Fin |
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Phumelela Gaming And Leisure Limited - Audited Financial Results For The Year
Ended 31 July 2005
PHUMELELA GAMING AND LEISURE LIMITED (Registration number 1997/016610/06) Share
code: PHM
ISIN: ZAE000039269
The Group"s audited financial results for the year ended 31 July 2005
* DISTRIBUTION OUT OF SHARE PREMIUM OF 24 CENTS PER SHARE
* 22% GROWTH IN ATTRIBUTABLE EARNINGS* INTERNATIONAL OPERATIONS POSITIONED FOR
REAL GROWTH
The Group"s audited financial results for the year ended 31 July 2005 are as
follows:ABRIDGED CONSOLIDATED INCOME STATEMENT
% Growth
2005 year on 2004
R"000 year R"000
Revenue 1 946 811 12 1 736 895
Net betting income 415 661 10 376 177
Other operating income 133 412 97 630
Local operations 99 595 86 397
International operations 33 817 11 233
Net income 549 073 16 473 807
Total operating expenses 482 810 417 173
Local operating expenses 327 439 300 551
Stakes 116 022 102 743
International operating expenses 39 349 13 879
Profit from operations 66 263 17 56 634
Finance costs 1 026 35
Profit before associated company"s 65 237 56 599
income
Share of associated company"s income 9 247
Profit before taxation 65 246 15 56 846
Taxation 19 117 18 927
Earnings attributable to ordinary 46 129 22 37 919
shareholders
Adjusted for:
Surplus on disposal of property, (1 655) (452)
plant and equipment
Surplus on disposal of North West (730) -
fixed odds operation
Amortisation of goodwill - 1 072
Headline earnings 43 744 13 38 539
Weighted average number of shares in 71 022 038 70 057 416
issue
Basic earnings per share (cents) 64,95 20 54,13
Diluted earnings per share (cents) 60,33 18 51,29
Headline earnings per share (cents) 61,59 12 55,01
Net asset value per share based on 223,38 16 193,10
number of shares in issue (cents)
Dividend per share (cents) - interim 12,0 20 10,0
Dividend per share (cents) - final - 20,0
Distribution out of share premium 24,0 -
(cents)
Total distribution to shareholders 36,0 20 30,0
for the year (cents)
ABRIDGED CONSOLIDATED BALANCE SHEET
2005 2004
R"000 R"000
ASSETS
Non-current assets 187 796 158 692
Property, plant and equipment 137 104 145 921
Intangible assets 39 720 3 126
Deferred taxation 2 209 100
Long-term debtor 1 681 3 905
Investment in associated company 6 712 5 390
Investments 370 250
Current assets 105 308 70 804
Inventories 126 151
Trade and other receivables 32 057 24 499
Debtor for sale of Newmarket racecourse 22 000 -
Cash and cash equivalents 51 125 46 154
Total assets 293 104 229 496
EQUITY AND LIABILITIES
Capital and reserves 160 411 136 424
Share capital and premium 23 586 23 012
Accumulated profit 136 822 113 412
Non-distributable reserves 3 -
Non-current liabilities 19 384 27 376
Financial liability 16 919 -
Retirement benefit obligations 2 465 5 999
Long-term borrowings - 21 246
Deferred taxation - 131
Current liabilities 113 309 65 696
Trade and other payables 54 335 51 085
Provisions - 1 224
Taxation 16 487 13 387
Short-term financial liability 20 487 -
Short-term borrowings 22 000 -
Total equity and liabilities 293 104 229 496
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
2005 2004
R"000 R"000
Cash generated by operations 67 963 57 948
Movements in working capital (4 361) (3 332)
Cash generated by operating activities 63 602 54 616
Net interest, investment income, dividend (39 945) (19 131)
paid and taxation
Net cash inflow from operating activities 23 657 35 485
Net cash outflow from investing activities (22 316) (17 846)
Net cash inflow from financing activities 3 630 3 931
Net movements in cash and cash equivalents 4 971 21 570
for the year
Cash and cash equivalents at beginning of 46 154 24 584
year
Cash and cash equivalents at end of year 51 125 46 154
ABRIDGED STATEMENT OF CHANGES IN GROUP EQUITY
2005 2004
R"000 R"000
Shareholders" interest at beginning of year 136 424 113 931
Issue of share capital 574 324
Net profit for the year 46 129 37 919
Non-distributable reserves 3 -
Dividends paid (22 719) (15 750)
Shareholders" interest at end of year 160 411 136 424
SEGMENTAL ANALYSIS
Inter-
Local national Total
2005
Revenue (net of VAT) 1 912 994 33 817 1 946 811
Net operating profit 245 954 (5 532) 240 422
Stakes (116 022) - (116 022)
National Horseracing Authority (15 550) - (15 550)
levies
Other net operating expenses (43 613) - (43 613)
Profit before associated 70 769 (5 532) 65 237
company"s income
2004
Revenue (net of VAT) 1 725 662 11 233 1 736 895
Net operating profit 212 462 (2 646) 209 816
Stakes (102 743) - (102 743)
National Horseracing Authority (15 413) - (15 413)
levies
Other net operating expenses (35 061) - (35 061)
Profit before associated 59 245 (2 646) 56 599
company"s income
COMMENTS
REVIEW OF RESULTS
Annual revenue was 12% up on the comparative with most of this growth flowing
through to net betting income. Local operating income experienced good growth
while international income started to reveal its potential. The dispute over
Racing UK broadcast rights was resolved in February 2005 and has negatively
impacted revenues generated.
Local operating expenses were mostly contained within inflation, however
expenses incurred on health and safety and track refurbishments had an adverse
impact. Stakes increased by 13% which included R5,0 million carried over from
the previous year"s equine flu interrupted program.
International operating expenses were R39,3 million which gave rise to a R5,5
million loss from international operations for the year. The second half yielded
a profit of R1,0 million after the R6,5 million interim loss. The costs
associated with the Racing UK deal were in the comparative for 2 and a half
months.
Profit from operations increased by 17%, which after the lower tax charge
yielded a 22% growth in attributable earnings. Headline earnings per share were
12% higher after the adjustment for surplus on asset disposals of R2,4 million
and the dilutionary effect of share options exercised.
FINANCIAL POSITION
Cash generated by operations of R68,0 million funded the increase in working
capital of R4,4 million, the R18,2 million taxation paid, the R22,7 million
dividends paid and the R24,8 million acquisition of property plant and
equipment. Cash and cash equivalents increased by R5,0 million.
RACING UK
As previously reported, PGE, the partnership with Gold Circle, concluded a
royalty agreement with Racing UK in May 2004 in respect of the use of the
exclusive world wide broadcasting rights outside of UK and Ireland to 31 of the
leading UK racecourses. The initial term of the agreement is 3 years renewable
for a further 5 years if certain performance criteria are met. Following the
February 2005 resolution of the data rights and the cessation of pirating by a
previous broadcaster, AC133 on financial instruments became applicable.
Accordingly, the financial liability of the remaining minimum royalty payments
and the corresponding intangible broadcasting rights asset were recognised. At
31 July 2005 these amounted to an intangible asset of R36,6 million after
providing for amortisation, a non-current financial liability of R16,9 million
and a short term liability of R20,5 million.
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.
ACCOUNTING POLICIES AND AUDIT
The financial statements are prepared on the historical cost basis or at
valuation. The group"s accounting policies conform with South African Statements
of Generally Accepted Accounting Practice, and are consistent with those applied
in the previous year except for AC 140: Business Combinations, the revised AC
128: Impairment of Assets and the revised AC 129: Intangible Assets which were
adopted during the year.
The group will be adopting International Financial Reporting Standards ("IFRS")
in the next financial year in line with local requirements.
The results have been audited by Ernst & Young and Sizwe Ntsaluba VSP and their
unqualified audit report is available for inspection at the registered office.
SOCIAL RESPONSIBILITY
Phumelela is an empowered company with appropriate BEE and employment equity,
training programs and procurement policies. Phumelela"s empowerment credentials
were recognized with the overall second place achievement in the annual
Financial Mail Top Empowerment Companies awards and leader in the leisure and
hotels category.
LITIGATION
On 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. This was subsequently overturned by the Supreme Court of Appeal in
May 2005. The company has now made application to the Constitutional Court for
leave to appeal the Supreme Court ruling and a hearing date of 15 November 2005
has been granted.
A trial date has been scheduled for 3 November 2005 against the company"s
insurance underwriters in respect of the loss of profits claim following the
December 2003 outbreak of equine flu.
NEWMARKET RACECOURSE
Newmarket racecourse was sold effective 1 June 2005 to a property development
consortium for R22 million. This sum will be paid to the Racing Association in
settlement of their loan and for cancelling the option and pledge agreements. In
terms of the use agreement concluded between Phumelela and the purchaser,
Phumelela shall be entitled to the use of the Newmarket racing facilities for
the purposes of hosting a maximum of 36 racemeetings per annum, for the seven
years to 31 May 2012 with an option to renew for successive 3-year periods.
CAPITAL COMMITMENTS
Commitments in respect of capital expenditure approved by directors
2005 2004
R"000 R"000
- contracted for 5 809 800
- not contracted for 34 191 26 160
DIRECTORS
Messrs C J H van Niekerk, M J Jooste and Dr E Nkosi have been invited to join
the board once the necessary regulatory requirements have been fulfilled.
PROSPECTS
The concluding of international contracts continues to gather pace and
international operations are expected to make a contribution to profits in the
year ending 31 July 2006.
The strong local economy together with further investment in expanding and
upgrading the retail and telebetting channels, while leveraging technology such
as GPRS betting and providing better access to information with more betting
opportunities should deliver real growth in operating profits.
DISTRIBUTION OUT OF SHARE PREMIUM
Notice is hereby given that the Board has, subject to approval by the
shareholders at the general meeting to be held on 7 October 2005, declared a
cash distribution out of share premium of 24 cents per share, in lieu of a
dividend, payable to shareholders recorded in the register on 21 October 2005.
Shareholders are advised that the last date to trade "cum cash distribution"
will be Friday, 14 October 2005. As from commencement of business on Monday, 17
October 2005 all trading in Phumelela shares will be "ex cash distribution".
Payment will be made on Monday, 24 October 2005. Share certificates may not be
dematerialised between Monday, 17 October 2005 and Friday, 21 October 2005 both
days inclusive.
For and on behalf of the Board
M P MALUNGANI J S TENNANTChairman
Chief Executive
Johannesburg29 September 2005
Directors: M P Malungani (Chairman), S E Abrahams, D R H Attenborough* (Chief
Operating Officer), B Kantor, S Khampepe, Mrs N J Mboweni,B D Mehl* (Deputy
Chairman), M L Ramafalo* (Betting & Compliance),J S Tennant* (Chief Executive),
J B Walters (*Executive)
Company Secretary: A F Wintour
Registered Office: Turffontein Racecourse, 14 Turf Club Street, Turffontein
Web site: www.phumelela.com
Date: 29/09/2005 05:32:37 PM Produced by the JSE SENS Department
