Five months ago you voted a new Board into office. We have had to learn a great deal about the Gold Circle business and in terms of our commitment to you; we would like to report on our progress since the last communication dated 06 May 2011.
As you know, we were faced with a number of challenges. We identified that the company had lost a management team with countless years of invaluable collective horseracing and gaming experience. The years of tension between the regions were not conducive to growth. Furthermore, the strained relationship with our partners PGL and certain regulatory authorities was also a hindrance to progress. We decided that the first step in the massive transition phase we were planning was to find an experienced team leader to assist in the development of our strategy.
As a result of the above, and after careful consideration, we decided to employ Michel Nairac on a 6 month contract as a consultant to the Board with operational control. Michel resigned as CEO of Gold Circle in 2009 amid suggestions of misconduct. The Board at the time cleared him of any
mismanagement but unfortunately some rumours still persisted.
As a Board, we believed it was our duty as Directors of the Company to consider the allegations that surrounded the event before appointing Mr Nairac. We discovered that an incomplete Audit investigation and report had been produced withou any consultation with Messrs Nairac and Furness. We therefore instructed the Company’s Attorney to consider the report and the independent opinion obtained on it at the time, conduct interviews and report back to us. An extract from the conclusion of their report is as follows:
1. It would appear that the conclusions drawn in both the report and more particularly the opinion were based on incomplete information and
concomitantly, on the face of it, improperly reached conclusions.
2. Consequently, any Board, relying on the report and the opinion would be at a distinct disadvantage and would be unable to reach a balanced decision, at least, not a correct decision for the right reasons.
3. There are no facts at our disposal at present which would lead us to conclude that Michel Nairac has committed any misconduct which is inherently destructive of the trust relationship between employer and employee
4. In all of these circumstances, it is our opinion that there is no obvious impediment to the re-employment of Michel Nairac”
COMPANY RESTRUCTURE
Unfortunately our Attorneys advise us that the report from the Audit Department draws conclusions from insufficient facts and the application of incorrect principles. Hence the conclusion in point 2 above.
We thank Michel for agreeing to assist Gold Circle going forward during this period of strategic change. He has agreed to a consultancy fee below market value for this period.
PHUMELELA
We engaged representatives of the Phumelela Board on Friday 1 July, namely Messrs Markus Jooste, Bernard Kantor and Rian du Plessis, with the objective of restoring the previously good relationship the companies enjoyed. The meeting was facilitated by Mr. Michael Rattray to whom we
are very grateful. We are glad to report that Management of both companies have agreed to engage each other to address current issues and plot the course for our future relationship for the benefit of the South African Horseracing Industry.
COMPANY RESTRUCTURE
The negotiating teams from both regions led by Robert Bloomberg, Tony Rivalland and Vidrik Thurling are nearing completion of the “Agreement Document” that will regularize the separation.
The transaction is taking longer than originally envisaged due to complicated financial and regulatory requirements. The team is confident that the terms of the agreement will be concluded shortly. Both the transactions and amendments to the Constitutions of the Clubs and the Articles of Association of the Company will be subject to Members’ approval. The date of the Members’ meeting will be announced when the agreement is complete. The relevant notice of meeting and resolutions will be sent timeously to Members in terms of the Constitution.
We welcome Ms Lita Futeran and Mr Peter de Beyer who joined the Board of Gold Circle as Cape representatives as from our meeting of Monday 11 July 2011.
FINANCIAL PERFORMANCE
Turnovers have improved considerably in KZN over the Winter Season with Vodacom Durban July Day showing an above inflationary increase. This bodes well for the annual results and we are hopeful that the Company will not show a loss for the year. Sadly the Western Cape region has not
shown the same improvement and is expected to again show a significant loss. Our current forecast shows KZN making a profit of R17 million (2010: R5 million profit) for the year and the Western Cape a loss of R17 million (2010: R17 million loss). It is hoped that the combination of the All
Stars/Champions Day and Gold Cup day into the Canon Gold Cup Super Saturday at the end of July will improve results further.
VODACOM DURBAN JULY
This year’s Vodacom Durban July was the best ever, attendances and tote turnover exceeded budget and the atmosphere on the day created a unique event of which we are all proud. Gold Circle turnovers for the day grew by 8% and reached a whopping R58 million (2010: R54 million). We have received praise from the many high profile government officials and visitors from England, France, Mauritius, Australia, Singapore and Hong Kong who attended the event. We would like to express our thanks and congratulations to our Management team and staff.
CLAIRWOOD
The Board of Gold Circle has received a substantial offer for the purchase of the Clairwood property. As the Board is working on a new strategy post the separation of the Regions that will ultimately include more efficient utilization of the Company’s assets, a deed of sale was entered into with a
prospective purchaser. There are a number of suspensive conditions that have to be realized before the deal can be concluded, not least the approval of the Members of the Clubs. The Board wishes to reassure Members that the sale of any major assets such as Clairwood cannot be concluded without their approval and all details pertaining thereto will be presented to them for their consideration at a Special General Meeting of Members.
NEW CONSTITUTION
Once the agreement to separate the regions is successfully completed, KZN and the Western Cape will need new Constitutions and Management, and the Company Attorneys in KZN have been requested to start this process. We believe that a new Constitution calls for a new mandate from
Members. Once the new Constitution is approved by the Members and the demerger complete I will, together with Messrs Neil Butcher, Moga Pillay, Tony Rivalland, and Steve Sturlese, step down and call for a full election to ensure a fair and sustainable democratic directive for the future of Gold Circle. In so far as the Western Cape is concerned, their new constitution will be the responsibility of the Western Cape Regional Board.
– Robert Mauvis
