Phumelela Gaming & Leisure Limited is considering capital raising initiatives with B-BBEE equity ownership high on the agenda after enduring its worst year since the business was first incorporated in 1997.
Sounding like a man with few answers and many excuses, CEO John Stuart said the sport of horseracing is ‘at a crossroads – because that is where we are’.
Stakes and junior staff cuts seem to have been the primary pressure points exerted by a management who appear to have no real strategy at hand.
Chairman Bernard Kantor blamed the industry for not working together and said that racing had to change its ‘white elitist sport’ label.
He said that punters having an open bet were ‘stealing money from owners’.
He thought the Executive of the beleagured company had done a ‘helluva job’.
Larry Wainstein – thinks Phumelela have done a great job
RA CEO Larry Wainstein also felt that ‘Phumelela had done a remarkable job in trying times’.
Whilst international operations are continuing to perform at a high level the local operations, both horseracing and betting, had a terrible year. International operations contributed R223,4 million in pre-tax profit but local operations lost a combined R332,4 million, up from R51,9 million.
Subsequent to the year end, the Group’s bankers condoned the breach of their debt covenant as at 31 July 2019 and the facility has not become immediately due and payable.
The condonement is subject to certain terms and conditions that include the provision of a full security package, to the satisfaction of the Lender, and revised debt covenants.
The indulgence provided extends Group facilities for a further year provided the requisite terms and conditions are adhered to.
In addition, a R50 million working capital standby credit facility with a 13-month term has been made available. The Group is keeping its bankers abreast of trading conditions and reports back regularly on cash flow
No dividend was paid.
Salient operational features:
- An unusually high number of local and international sporting results favoured gaming customers, affecting margins at Betting World and Supabets
- Betting operations struggled in a depressed economy
- Horseracing under considerable pressure and facing regulatory uncertainty
- PGI on the Isle of Man once again performed very well
- Demand for live South African horseracing remains buoyant internationally
- Rightsizing of headcount and footprint targeted to realise significant long-term savings
Salient financial features:
- Withdrawal of the Gauteng betting levy is a R75 million annualised loss of income
- Headline loss per share of 98,20 cents compared with headline earnings per share of 154,23 cents
- Attributable loss per share of 92,32 cents compared with attributable profit of 153,78 cents per share
- Equity accounted profits R163,3 million compared with R169,2 million
- A 9% rise in international profits to R223,4 million
- Net asset value per share reduces by 16% to 849,94 cents
- No interim or final dividend per share declared
- Net debt to equity ratio 33% compared with 23%
- Attention is drawn to the emphasis of matter by the Group auditors
The Company remains under cautionary as engagements with the MEC and the Gauteng Gambling Board are still in progress.
