| Thu 23 Mar 2006, 17:01 | | Phumelela - Group unaudited financial results: 6 m |
|
PHM
PHM
Phumelela - Group unaudited financial results: 6 months ended 31 January 2006
PHUMELELA GAMING AND LEISURE LIMITED
(Registration number 1997/016610/06)
Share Code: PHM & ZAE000039269
The Group"s unaudited financial results for the 6 months ended 31 January 2006
HEADLINE EARNINGS UP 41%
HEPS UP 38%
OPERATING CASH FLOWS UP 83%
DISTRIBUTION TO SHAREHOLDERS UP 33%
The Group"s unaudited financial results for the six months ended 31 January 2006
are as follows:
ABRIDGED CONSOLIDATED INCOME STATEMENTS
Restated Restated
Unaudited unaudited audited
6 months 6 months 12 months
31 Jan 31 Jan 31 Jul
% 2006 2005 2005
change R"000 R"000 R"000
Revenue 9 1 043 306 956 601 1 946 811
Net betting income 8 221 522 205 871 415 661
Other operating income
- local operations 5 53 236 50 937 99 595
- international operations 156 22 357 8 734 33 817
Net income 297 115 265 542 549 073
Operating expenses and
overheads
- Stakes 8 60 030 55 515 116 022
- local operations 8 176 446 163 278 324 484
- international operations 19 18 171 15 253 39 349
Profit from operations 35 42 468 31 496 69 218
Finance costs 782 7 1 026
Profit before associated 32 41 686 31 489 68 192
company"s income
Share of associated (113) 151 9
company"s results
Profit before taxation 31 41 573 31 640 68 201
Taxation 12 549 11 179 20 324
Profit for the period 42 29 024 20 461 47 877
Attributable to:
- Ordinary equity holders 28 807 20 461 47 877
of the parent
- Minority interests 217 - -
42 29 024 20 461 47 877
Profit for the period 29 024 20 461 47 877
Adjusted for:
Surplus on disposal of (730)
fixed odds operation
Net (surplus)/loss on (73) 45 (1 655)
disposal of property, plant
and equipment
Headline earnings 41 28 951 20 506 45 492
Number of ordinary shares 72 804 585 71 017 285 71 809 785
in issue
Weighted average number of 72 363 559 70 918 589 71 022 038
ordinary shares in issue
for basic and headline
earnings per share
Weighted average number of 77 044 981 75 083 408 76 462 428
ordinary shares in issue
for diluted earnings per
share
Basic earnings per share 39 40.11 28.85 67.41
(cents)
Diluted earnings per share 38 37.67 27.25 62.62
(cents)
Headline earnings per share 38 40.01 28.91 64.05
(cents)
Net asset value per share 17 273.06 232.46 257.45
(cents)
Dividend per ordinary share 8.00 12.00 12.00
(cents)
Distribution out of share 8.00 24.00
premium (cents)
ABRIDGED STATEMENT OF CHANGES IN GROUP EQUITY
Restated Restated
Unaudited unaudited audited
6 months 6 months 12 months
31 Jan 31 Jan 31 Jul
2006 2005 2005
R"000 R"000 R"000
Total equity at beginning of period 184 877 158 318 158 318
Changes in share capital and 2 132 47 574
premium
Share based payment reserve 246 446 824
Net profit for the period 29 024 20 461 47 877
Foreign currency translation (46) 3
reserve
Dividends paid - (14 188) (22 719)
Capital distribution (17 435) - -
Total equity at end of period 198 798 165 084 184 877
Attributable to:
- Ordinary equity holders of the 198 608 165 084 184 877
parent
- Minority interests 190 - -
198 798 165 084 184 877
ABRIDGED CONSOLIDATED BALANCE SHEETS
Restated Restated
Unaudited unaudited audited
31 Jan 31 Jan 31 Jul
2006 2005 2005
R"000 R"000 R"000
ASSETS
Non-current assets 223 582 194 492 220 624
Property, plant and equipment 183 187 182 763 169 932
Intangible assets 29 507 3 126 39 720
Deferred taxation 2 209 100 2 209
Investment and loan - associated 8 098 5 613 6 712
company
Unlisted investments 370 250 370
Long term debtor 211 2 640 1 681
Current assets 101 405 61 287 105 308
Inventories 217 147 126
Trade and other receivables 22 760 24 140 32 057
Debtor for sale of Newmarket 22 000 - 22 000
Racecourse
Cash and cash equivalents 56 428 37 000 51 125
Total assets 324 987 255 779 325 932
EQUITY AND LIABILITIES
Total equity 198 798 165 084 184 877
Share capital and premium 8 283 23 059 23 586
Retained earnings 190 368 142 025 161 288
Non-distributable reserves (43) - 3
Minority interests 190 - -
Non-current liabilities 17 254 34 011 27 746
Deferred taxation 8 362 7 966 8 362
Long term borrowings - 20 046 -
Financial liability 6 506 - 16 919
Retirement benefit obligations 2 386 5 999 2 465
Current liabilities 108 935 56 684 113 309
Trade and other payables 55 990 47 804 54 335
Taxation 10 458 7 656 16 487
Provisions - 1 224 -
Short-term financial liability 20 487 - 20 487
Short-term borrowings 22 000 - 22 000
Total equity and liabilities 324 987 255 779 325 932
ABRIDGED CONSOLIDATED CASH FLOW STATEMENTS
Restated Restated
Unaudited unaudited audited
6 months 6 months 12 months
31 Jan 31 Jan 31 Jul
2006 2005 2005
R"000 R"000 R"000
Cash generated by operations 45 862 33 857 67 963
Decrease/(increase) in working 10 861 (2 917) (4 361)
capital
Cash generated by operating 56 723 30 940 63 602
activities
Net finance costs, investment (17 676) (14 393) (15 691)
income and taxation paid
Post retirement benefit asset (79) - (1 535)
funding
Dividends paid - (14 188) (22 719)
Net cash inflow from operating 38 968 2 359 23 657
activities
Net cash outflow from investing (19 832) (11 625) (22 316)
activities
Net cash inflow from financing 3 602 112 3 630
activities before capital
distribution
Capital distribution (17 435) - -
Net movement in cash and cash 5 303 (9 154) 4 971
equivalents
Cash and cash equivalents at 51 125 46 154 46 154
beginning of period
Cash and cash equivalents at end of 56 428 37 000 51 125
period
BASIS OF PRESENTATION
The information presented has been prepared in accordance with International
Financial Reporting Standards (IFRS) applicable at 31 January 2006.
IFRS continues to evolve through the issue and development of new standards and
interpretations that may result in IFRS financial information contained herein
differing from that at year-end for the following reasons:
* Further standards and interpretations may be issued that are applicable for
2006 reporting or which are applicable to later accounting periods but with an
option to adopt for earlier periods; or
* Different practice may develop with regard to interpretation and application
of the standards.
The financial impact on transition to IFRS is set out under the heading
Transitional Report.
REVIEW OF RESULTS
Headline earnings increased by 41% on the comparative period with international
operations turning a loss from operations of R6,5 million in the comparative
period to a profit from operations of R4,2 million in the current period. HEPS
improved by 38% to 40.01 cents per share.
Revenue for the six months was up 9% on the comparative period with local
revenue up 8% and international revenue up 156% as the signing of international
contracts gained momentum. Local revenue growth was below expectation after
cancellation/abandonment of many meetings due to inclement weather conditions
experienced since November 2005. The increase in local revenue flowed through to
net betting income that was up 8% on the comparative period.
Local operating expenses, including stakes increased by 8% on the comparative
period with the group continuing to invest in expanding and upgrading the
retail, internet, GPRS betting and telebetting channels.
International expansion expenses increased by 19% on the comparative period
after the growth in international contracts concluded.
FINANCIAL POSITION
Cash and cash equivalents increased by R5,3 million during the six months to
R56,4 million at 31 January 2006. Cash generated by operating activities of
R56,7 million funded taxation payments of R18,5 million, a cash distribution out
of share premium of R17,4 million, capital expenditure of R18,8 million and
investments of R1,5 million. Capital commitments approved by the directors not
contracted for at 31 January 2006 were R21,2 million.
Note: The balance of R22 million due under the debtor for sale of Newmarket
Racecourse was received on 10 March 2006 following registration of transfer of
ownership to the purchaser on 8 March 2006. The proceeds have subsequently been
remitted to the Racing Association (RA) in settlement of the obligation to the
RA disclosed under short-term borrowings.
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.
Restated Restated
Unaudited unaudited audited
31 Jan 31 Jan 31 Jul
2006 2005 2005
R"000 R"000 R"000
LOCAL
Revenue (net of VAT) 1 020 949 947 867 1 912 994
Net income 274 758 256 808 515 256
Stakes 60 030 55 515 116 022
Other net operating expenses 176 446 163 278 324 484
Profit from operations 38 282 38 015 74 750
Assets 282 221 247 974 276 362
Liabilities 89 195 81 997 99 215
INTERNATIONAL
Revenue 22 357 8 734 33 817
Net income 22 357 8 734 33 817
Net operating expenses 18 171 15 253 39 349
Profit/(loss) from operations 4 186 (6 519) (5 532)
Assets 42 766 7 805 49 570
Liabilities 36 994 8 698 41 840
TOTAL
Revenue (net of VAT) 1 043 306 956 601 1 946 811
Profit from operations 42 468 31 496 69 218
Assets 324 987 255 779 325 932
Liabilities 126 189 90 695 141 055
ACCOUNTING POLICIES
In line with the listing requirements of the JSE Limited, the group has adopted
International Financial Reporting Standards (IFRS) for the first time in the
current period and the interim financial statements for the six months ended 31
January 2006 have accordingly been prepared in compliance with IAS 34 - Interim
Financial Reporting and the listing requirements of the JSE Limited.
The transitional adjustments from South African Statements of Generally Accepted
Accounting Practice (SA GAAP) to IFRS are set out in the transitional report
below.
TRANSITIONAL REPORT
The group"s date of transition to IFRS is 1 August 2004. Comparative figures
have been restated to reflect the transition from SA GAAP to IFRS.
The following transitional exemptions from retrospective application under "IFRS
1 - First-time Adoption of International Financial Reporting Standards" were
elected:
Business combinations
The group has elected not to apply "IFRS 3 - Business Combinations"
retrospectively. The carrying amount of goodwill at transition date is its
carrying amount under the previous SA GAAP and has been tested for impairment on
an annual basis since.
Property, plant and equipment
The group has elected to use the fair value as deemed cost for property, plant
and equipment at date of transition.
Share-based payments
The group has elected not to apply "IFRS 2 - Share-based payments" to equity
instruments granted on or before 7 November 2002 or to equity instruments
granted after 7 November 2002 that vested before 1 January 2005.
RECONCILIATION OF PREVIOUS SA GAAP TO IFRS
IFRS 6 months 12 months
transition 31 Jan 31 Jul
1 Aug 2004 2005 2005
R"000 R"000 R"000
Reconciliation of total equity
As previously reported under SA 136 424 141 525 160 411
GAAP
Property, plant and equipment 29 049 31 394 32 828
Deferred tax on PPE adjustment (7 155) (7 835) (8 362)
Total equity restated under IFRS 158 318 165 084 184 877
Reconciliation of non-current
liabilities
As previously reported under SA 27 376 26 176 19 384
GAAP
Deferred tax on PPE adjustment 7 155 7 835 8 362
Non-current liabilities restated 34 531 34 011 27 746
under IFRS
Reconciliation of non-current
assets
As previously reported under SA 158 692 163 098 187 796
GAAP
Property, plant and equipment 29 049 31 394 32 828
Non-current assets restated 187 741 194 492 220 624
under IFRS
Reconciliation of profit
attributable to ordinary holders
As previously reported under SA 19 242 46 129
GAAP
Property, plant and equipment 2 345 3 779
Deferred tax on PPE adjustment (680) (1 207)
Share based payments (446) (824)
Profit attributable to ordinary 20 461 47 877
holders restated under IFRS
EMPOWERMENT
Phumelela is an empowered company with appropriate BEE and employment equity,
training and procurement policies.
LITIGATION
The trial date 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 was postponed at the instance of the company"s insurers
and a new trial date has been set for 12 October 2006.
The company"s application to the Constitutional Court for leave to appeal the
Supreme Court ruling allowing bookmakers to take bets linked to tote dividends
was heard on 15 November 2005. The Court reserved judgement to a date to be
advised.
PROSPECTS
The growth in international operations should continue in the second half of the
year with profits expected to improve on those of the first half.
Local operations should benefit from the buoyant economy and the on-going
investment in the retail footprint and betting technology. Betting turnovers for
February have been negatively impacted by the loss of race meetings due to
inclement weather conditions, however, on the assumption that we can reschedule
lost meetings; local operations are expected to yield real growth in the second
half of the year.
DISTRIBUTION TO SHAREHOLDERS
Notice is hereby given that the Board has declared an interim dividend of 8
cents per share and a cash distribution out of share premium of 8 cents per
share in lieu of a dividend, payable to shareholders recorded in the register on
Friday, 28 April 2006. Shareholders are advised that the last date of trade
"cum" the distributions will be Thursday, 20 April 2006. As from commencement of
business on Friday, 21 April 2006 all trading in Phumelela shares will be "ex"
the distributions. Payment will be made on Tuesday, 2 May 2006. Share
certificates may not be dematerialised or rematerialised between Friday, 21
April 2006 and Friday, 28 April 2006 both days inclusive.
For and on behalf of the Board
M P MALUNGANI J S TENNANT
Chairman Chief Executive
Johannesburg
23 March 2006
Directors: MP Malungani (Chairman) BD Mehl* (Deputy Chairman) JS Tennant* (Chief
Executive) SE Abrahams DRH Attenborough* MJ Jooste B Kantor
KCS Khampepe Mrs. NJ Mboweni Dr E Nkosi ML Ramafalo* CJH van Niekerk
JB Walters
(*Executive)
Company Secretary: AF Wintour
Registered Office: Turffontein Racecourse 14 Turf Club Street Turffontein
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd
Sponsor: Investec Bank Limited
Web site: www.phumelela.com
Date: 23/03/2006 05:01:17 PM Produced by the JSE SENS Department
