Wrap Text
Unaudited Condensed Consolidated Interim Financial Results and Dividend Declaration
Phumelela Gaming and Leisure Limited
(Incorporated in the Republic of South Africa)
Registration number 1997/016610/06
Share code: PHM
ISIN ZAE 000039269
("Phumelela" or "the Company")
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 JANUARY 2018 AND DIVIDEND DECLARATION
Phumelela is successfully transitioning to a multiple product betting and media rights Group.
OPERATIONAL FEATURES OF THE PERIOD
- A solid result from wholly owned Betting Operations
- Strong performance by Supabets
- Synergies being unlocked with Supabets and Interbet
- Meaningful cost savings flowing from voluntary retrenchment program
FINANCIAL FEATURES OF THE PERIOD
- Headline earnings up 23% to R83,1 million
- Headline earnings per share down 9% to 81,66 cents
- Normalised headline earnings up 52% to R102,5 million
- Normalised headline earnings per share up 12% to 100,82 cents
- Earnings per share down 8% to 83,17 cents
- Net asset value per share up 42% to 989,12 cents
- Interim gross dividend per share increased by 24% to 42,00 cents
- Sound financial position with net debt to equity 22%
RESULTS OVERVIEW
Phumelela is successfully transitioning to a multiple product betting and media rights Group.
Customers can place bets at conveniently located retail betting stores, the internet and on the
telephone. We offer our growing customer base an exciting and engaging betting experience that
caters for all wallets and preferences.
The revised segmental disclosure presented with these results gives shareholders a more accurate
picture of how the Group has transitioned operationally. The segments are Betting Operations,
Media Operations and Administrative & Support Services, with the latter segment providing shared
services to the Group. It is important to note that this segmental disclosure reflects wholly or
majority owned operations on a consolidated basis and equity accounted associates as a single line
item which is not reflective of the combined scale of the Group.
The long-term strategic vision of Phumelela to diversify has resulted in considerable additional
earnings streams over the years and increased our financial scale. The total asset base is now
R1,6 billion and shareholder equity is R1 billion.
During the period under review, we executed on the initiative announced at the full year to
modernise and reposition, which included meaningful cost savings. The voluntary retrenchment program
was completed within budget. The management structure has been changed to reflect the way the Group
is being managed.
The synergistic relationship between our wholly owned fixed odds business Betting World and joint
venture partner Supabets, is gaining significant traction. Supabets, with an entrepreneurial
culture, is expanding its unique retail footprint in partnership with Betting World. We have
established joint ventures equally owned by Betting World and Supabets and are expanding the
Supabets mega store retail footprint using Betting World licenses.
Supabets' sports and numbers offering is being integrated into Betting World retail outlets and a
new Betting World website which will include the wider Supabets sports betting offering, a state of
the art in-play betting offering and a much needed customer loyalty program will be implemented
prior to year-end. Supabets in turn, is re-introducing betting on horseracing into its retail and
online offering, using Betting World's odds management and software. The TAB website is being
converged on to software developed by Interbet, our joint venture online bookmaking business and
betting exchange.
These results demonstrate the significance of corporate activity in the 2017 financial year, with
normalised headline earnings increasing by 52% and shareholder equity by 88%. On a per share basis,
allowing for the 33% increase in shares in issue, the growth in normalised headline EPS is 12% and
growth in net asset value per share 42%. This has been achieved whilst keeping debt to equity at a
relatively low level of 22%.
Phumelela, Kenilworth Racing, and Gold Circle stage race meetings 364 days a year. It is the live
media and data rights to these race meetings that are sold both locally and abroad in our Media
Operations. We have an estimated 6 500 horses in training in South Africa.
The Group has embarked on a strategic initiative by offering Betting World franchises and Tab
agencies to selected previously disadvantaged individuals. Franchisees need no prior bookmaking or
betting experience as the Group provides a turn-key and fully odds managed solution in addition to
the well-known brands of the group. The first franchise agreement was concluded some 18 months ago
in the North West province with Omphe Tshiamo Investments Proprietary Limited ("OTI"). The Group
initially acquired a 5% shareholding and provided R20 million funding for the first 10 of their
retail betting outlets. During the course of January 2018 the Group agreed to increase its
shareholding in OTI to 35% and to provide funding of up to a further R20 million for the roll-out of
additional retail outlets. The new agreement between the Group and OTI has been submitted to the
North West Gambling Board for approval. The Franchise initiative will be deployed in other provinces
where new betting licenses are issued to local previously disadvantaged individuals.
Phumelela will remain the standard bearer for thoroughbred horseracing in South Africa even as we
continue to add complementary revenue sources in other sporting activities and numbers betting.
That diversity and migration among different sports is good for horseracing, good for the betting
industry, and good for the punter who today has a myriad of alternatives not available a quarter of
a century ago.
BETTING OPERATIONS
Phumelela's Betting Operations comprise over-the-counter ("OTC") retail stores and non-OTC. Non-OTC
comprises internet and telephone betting in South Africa and internationally. Equity-accounted income
from the jointly owned Premier Gateway International ("PGI") tote operator on the Isle of Man is
included in the non-OTC segment. Our racing operations are reflected within the new Media segment.
Gross betting income increased by 5%. Betting margin improved somewhat due to changes in product mix
and effective odds management.
Non-OTC betting income comprises 26% of total net betting income. Trends globally in betting point
to strong momentum in non-OTC betting and we are exploiting smartphone technology to drive growth.
Retail stores remain popular with our customers and they are a place to congregate and enjoy a
convivial time with fellow punters. OTC will continue to contribute an important share of betting
income for the foreseeable future. This is underscored by the popularity of the Supabets mega store
concept.
Two Supaworld joint venture mega stores, Kempton Park and Bloed Street, Pretoria, opened in
December 2017 and turnovers are in line with our expectations. Commissioner Street, Johannesburg,
should be trading by April this year. A further 8 stores have been identified and will be opened in
due course.
Supabets' non-OTC betting income comprises 23% of Supabets' total net betting income.
PGI had a slow start to the year in a more competitive betting environment. Equity accounted income
was down by 3%. The relative strength of the rand, which was barely changed on average against
foreign currencies, meant there was no foreign exchange benefit in the result. PGI is well placed to
end the year on a firmer note.
Tight expense control assisted with a 8% increase in EBITDA and the same percentage increase in
pre-tax profit. Equity accounted income from both local and international sources increased by 46%.
Betting pre-tax profit increased by 16%.
MEDIA OPERATIONS
Media Operations comprise the selling of media and data rights of South African horse racing locally
and internationally. Administering horse racing therefore remains a fundamental part of our Media
Operations. We continue to enjoy strong demand from international betting operators for the media
and data rights of South African thoroughbred horse racing. The Group continues to prosecute local
bookmakers who are displaying South African and International horse racing illegally in their
betting shops.
Commingled media and data rights fees from countries outside South Africa were in line with the prior
period. Satisfactory increases were recorded from Cyprus, Denmark, Germany, Hungary, and the USA.
Stand-alone media and data rights fees increased by 10%, boosted by good growth out of Australia,
exceptional growth in Singapore, and a very good first-time contribution from both Hong Kong and
Mali.
GROUP FINANCIAL ANALYSIS
Consolidated net income increased by 4% to R808,7 million of which local income accounted for 80%,
in line with the prior period. Betting Operations are the largest contributor at 68% with Media at
29%.
Operating expenses increased by 5% to R752,2 million, including the R27,1 million voluntary
retrenchment program expense.
Intellectual property rights fees of R101,5 million are appropriately allocated between Betting
Operations and Media.
Operating expenses in Betting Operations increased by a minimal 2%, whilst operating expenses in
Administrative & Support Services reduced by 15% and total operating expenses increased marginally
on the prior period. The right sizing of the cost base that includes the voluntary retrenchment
program accounts for this expense saving.
Depreciation and amortisation increased by 2% to R36,2 million, of which 55% is allocated to Betting
Operations, 35% to Media, and the balance to Administrative & Support Services. The Group continues
to reinvest in its estate with R25,9 million spent during the period.
Operating profit of R20,2 million, a decrease of 19%, includes the effect of the voluntary
retrenchment program.
Finance costs of R17,2 million have doubled due to the higher borrowings that have arisen from
corporate investment activity.
Profits from equity accounted investees increased by 46% and comprises the Group's share of profits
from Supabets, Interbet and PGI.
Attributable income increased by 24% to R84,6 million, assisted by a lower income tax expense. This
includes a small but positive non-cash fair value adjustment relating to the Group's investment
Automatic Systems Limited in Mauritius.
Headline earnings increased by 23% to R83,1 million. Normalised, to take account of the after-tax
costs of the voluntary retrenchments, headline earnings increased by 52% to R102,5 million.
No constant currency earnings numbers are provided as currency effects for the six months were
negligible overall.
The weighted average number of shares in issue increased by 36% to 101,7 million and on a fully
diluted basis there was a 29% increase in weighted average shares, also to 101,7 million.
During the period, the Group bought back 2,6 million shares for R47,4 million at an average price
of R17,93 per share. In terms of the share option scheme, 1,6 million shares were issued at a value
of R19,21 per share. The net effect of these transactions was to reduce the net issued share capital
as at 31 January 2018 to 1% below the net issued share capital as at 31 July 2017.
Earnings per share decreased by 8% to 83,17 cents and headline earnings per share decreased by 9%
to 81,66 cents. Normalised headline earnings per share increased by 12% to 100,82 cents.
A 29% reduction in cash applied to working capital resulted in cash flow from operating activities
improving to R12,8 million. Dividends paid to shareholders amounted to R71,7 million. Net loans
received of R18,7 million compares to a net advance previously. Net dividends received from equity
accounted investees amounted to R57,2 million.
The statement of financial position reflects the material corporate activity in the 2017 financial
year, with a considerable addition of cash generating assets.
Total assets increased by 61% to R1,6 billion, long term assets increased by 92% to R1,3 billion
due to the increase in the value of equity accounted investments to R671,4 million, and equity
attributable to ordinary shareholders increased by 88% to R1,0 billion relative to the position on
31 January 2017. Arlington Racecourse in Port Elizabeth was reclassified at year-end from assets
held for sale to investment property and reflects at R18,7 million. Net asset value per share is
989,12 cents, an increase of 42%.
Gross debt of R318,4 million and cash of R97,6 million, resulting in a net debt position of
R220,8 million compared with R49,8 million in the corresponding period last year and R129,2 million
as at 31 July 2017. The debt to equity ratio of 22% is modest. Included in debt is a contingent
consideration payable in respect of Supabets of R106,3 million that will be paid in due course.
The Group therefore retains a strong financial position and has sufficient cash flow and borrowing
capacity to meet its ongoing operational needs.
Return on average equity has been temporarily affected by the substantially changed capital
structure, decreasing to an annualised 17% but remaining above cost of capital. The strong earnings
performance of Supabets and Interbet suggests these investments will contribute handsomely to future
returns.
SHARE CAPITAL
There has been no change in the authorised share capital of the Company during the period.
Issued share capital increased by 24 696 995 relative to the position as at 31 January 2017 and
decreased by 1 090 422 relative to the position as at 31 July 2017.
Issued share capital increased by 16 602 230 rights offer shares in the 2017 financial year, issued
in part to fund the purchase of Supabets SA Holdings Proprietary Limited, whilst a further
8 796 443 shares were issued to the seller in terms of the Supabets purchase consideration.
During the period, 2 646 330 shares were purchased as treasury shares and 1 555 908 shares were
issued in terms of the share option scheme.
At 31 January 2018, issued share capital amounted to 100 469 347 shares, net of 2 013 311 treasury
shares.
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS
The Group offers betting opportunities on South African and international sports and numbers, and
sells live media and data of South African horseracing content locally and internationally.
Reporting disclosure corresponds to management reporting lines.
Total Betting operations
Jan Jan Jul Jan Jan Jul
% 2018 2017 2017 % 2018 2017 2017
Change R'000 R'000 R'000 Change R'000 R'000 R'000
Net betting income 5 504 415 479 522 948 603 5 504 415 479 522 948 603
Other operating income 2 296 293 291 060 588 498 3 44 832 43 686 89 753
Investment income 5 7 950 7 581 15 846
Total income 4 808 658 778 163 1 552 947 5 549 247 523 209 1 038 356
Intellectual property
rights fees 7 101 527 94 631 187 140 2 60 863 59 381 110 620
Operating expenses 623 579 622 939 1 245 571 2 232 472 227 674 463 565
Voluntary severance
program expense 27 071
Total expenses 5 752 177 717 570 1 432 711 2 293 335 287 055 574 185
Profit/(loss) before
depreciation and amortisation
and finance costs (7) 56 481 60 593 120 236 8 255 911 236 154 464 171
Depreciation and amortisation 2 36 214 35 444 71 207 8 19 949 18 472 38 030
Finance costs 102 17 236 8 530 20 323
Fair value adjustment to
investment (180) (274) 341 (946)
Profit/(loss) before share
of equity accounted income (80) 3 305 16 278 29 652 8 235 962 217 682 426 140
Share of profit of equity
accounted investees 46 82 063 56 189 122 591 46 82 063 56 189 122 591
Profit before income tax
expense 18 85 368 72 467 152 243 16 318 025 273 871 548 731
Local operations (26) (13 726) (18 510) (30 990) 19 287 337 242 176 494 572
International operations 9 99 094 90 977 183 233 (3) 30 688 31 695 54 159
Profit before income
tax expense 18 85 368 72 467 152 243 16 318 025 273 871 548 731
Administrative
Media Support Services
Jan Jan Jul Jan Jan Jul
% 2018 2017 2017 % 2018 2017 2017
Change R'000 R'000 R'000 Change R'000 R'000 R'000
Net betting income
Other operating income 4 236 916 228 889 457 128 (21) 14 545 18 485 41 617
Investment income 5 7 950 7 581 15 846
Total income 4 236 916 228 889 457 128 (14) 22 495 26 066 57 463
Intellectual property
rights fees 15 40 664 35 250 76 520
Operating expenses 2 333 499 327 106 638 118 (15) 57 608 68 159 143 888
Voluntary severance
program expense 27 071
Total expenses 3 374 163 362 356 714 638 24 84 679 68 159 143 888
Profit/(loss) before
depreciation and amortisation
and finance costs 3 (137 247)(133 467) (257 510) 48 (62 184) (42 094) (86 425)
Depreciation and amortisation (1) 12 510 12 634 24 419 (13) 3 755 4 338 8 758
Finance costs 102 17 236 8 530 20 323
Fair value adjustment to
investment (180) (274) 341 (946)
Profit/(loss) before share
of equity accounted income 3 (149 757) (146 101)(281 929) 50 (82 900) (55 303) (114 560)
Share of profit of equity
accounted investees
Profit before income tax
expense 3 (149 757) (146 101) (281 929) 50 (82 900) (55 303) (114 560)
Local operations 6 (217 271) (205 083) (409 411) 51 (83 792) (55 603) (116 152)
International operations 14 67 514 58 982 127 482 197 892 300 1 592
Profit before income
tax expense 3 (149 757) (146 101) (281 929) 50 (82 900) (55 303) (114 560)
CAPITAL COMMITMENTS
Commitments in respect of capital expenditure approved by directors.
2018 2017
Contracted for 7 880 4 364
Not contracted for 90 460 108 222
Capital commitments will be financed out of cash and cash equivalents on hand or borrowing
facilities as and when required.
INVESTMENT
Further to the audited annual financial statements dated 6 October 2017, there has been no further
movement with respect to investments.
MATTERS OF CORPORATE INTEREST AND LITIGATION
In terms of disclosure contained in the annual financial statements for the year ended 31 July 2017
there are no further developments in this regard.
Shareholders are reminded that the outcome of the relevant actions noted under Corporate Interests
and Litigation, as described in the annual financial statements, remains uncertain and may have an
impact on future earnings.
REPORTING ENTITY
Phumelela Gaming and Leisure Limited is a company domiciled in South Africa. The condensed
consolidated interim financial statements as at 31 January 2018 comprises of the company and its
subsidiaries and the Group's interests in equity accounted investees and joint operations.
BASIS OF PRESENTATION
These interim condensed consolidated financial statements have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards ("IFRS") and the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards
Council, and include disclosure as required by IAS 34 Interim Financial Reporting and the Companies
Act of South Africa. They do not include all the information required for a complete set of IFRS
financial statements. In preparing these interim condensed consolidated financial statements,
management make judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income, and expense. Actual results may
differ from these estimates.
The significant judgements made by management in applying the Group's accounting policies and the
key sources of estimation uncertainty were the same as those that applied to the consolidated
financial statements as at and for the year ended 31 July 2017.
Mr B. McLoughlin CA (SA) Chief Financial Officer was responsible for supervising the preparation
of the interim condensed consolidated financial statements and preparing the summarised financial
statements.
SUBSEQUENT EVENTS
There are no significant subsequent events that have an impact on the financial information at
31 January 2018.
RELATED PARTIES
During the period Betting World Proprietary Limited sold two fixed odds licenses to Supaworld
Proprietary Limited, a company jointly owned by Betting World and Supabets.
Other than in the normal course of business, there have been no significant transactions during the
period with equity accounted investees, joint operations, and other related parties.
SOCIAL RESPONSIBILITY
Empowerdex has audited the Group as a level 4 with Empowering Supplier status. The Group continues
to identify areas for improvement.
The Group recognises that it has a responsibility to the broader community to act in a socially
responsible manner, for the benefit of all South Africans. Contributions to selected training,
sports and community service related projects continue. The Group has adopted appropriate BEE and
employment equity, training, and procurement policies.
DIRECTORS
With effect from:
- 25 August 2017, Mr Brian Finch resigned from the Board as a non-executive director;
- 6 December 2017, Mr Markus Jooste resigned from the Board as a non-executive director;
- 12 December 2017, Mr Peter Malungani retired from the Board after twenty years of service;
- 13 December 2017, Mr Bernard Kantor, an independent non-executive director, assumed the role
of Chairman;
- 24 January 2018, Mr Steve Muller was appointed to the Board as a non-executive director; and
- There are no other changes to the composition of the Board.
The board wishes to thank Mr Malungani for his valued contribution and 20 years' loyal service to
the company as chairman. The board also wishes to thank Messrs Finch and Jooste for their
contribution to the company and wishes the three of them all of the best for the future. The board
further welcomes the appointment of Mr Kantor as chairman and Mr Muller to the board.
PROSPECTS
The increase in VAT announced in the budget will have a negative financial impact on the Group with
effect from 1 April 2018. The annualised impact is estimated at R10 million and the impact on the
Group's 2018 financial year is therefore estimated at R3,3 million.
Phumelela will enjoy the benefit of a full year of a 50% share of both Supabets and Interbet earnings.
These businesses are proving to be excellent investments with positive operational learnings for the
Group as a whole.
Despite a difficult macroeconomic backdrop, our Betting Operations locally are performing
satisfactorily in a competitive market place. Our international Betting Operations continue to make
good progress and further initiatives are in the pipeline. Demand for quality South African
horseracing content abroad is positive for the Media business.
Although the local economy and discretionary income is under pressure, recent political developments
in South Africa are positive for business and investor confidence. Arising from this positive turn
of events is a much stronger rand, with the currency appreciating in recent months by approximately
20%. This will be a headwind for international earnings translated to rand; however, we measure our
business in local currencies and strive to record real growth in constant currency terms.
The Group will give consideration to buying further shares, as it is authorised to do.
Any forward-looking statements or forecasts contained in these results have not been reviewed or
reported on by the Group auditors.
CASH DIVIDEND TO SHAREHOLDERS
Notice is hereby given that the Board has declared an interim gross cash dividend from income
reserves of 42,00 cents per share (33,60 cents per share net of dividend withholding tax at a rate
of 20%) payable to shareholders recorded in the register on Thursday, 26 April 2018. The issued
share capital at the declaration date is 102 500 558 ordinary shares. Shareholders are advised that
the last date to trade "cum dividend" will be Monday, 23 April 2018. As from commencement of
business on Tuesday, 24 April 2018 all trading in Phumelela shares will be "ex dividend". Payment
will be made on Monday, 30 April 2018. Share certificates may not be dematerialised or
rematerialised between Tuesday, 24 April 2018 and Thursday, 26 April 2018, both days inclusive.
The Company's tax reference number is 9171/393/84/7.
For and on behalf of the Board
B Kantor WA Du Plessis
Chairman Chief Executive Officer
Turffontein, Johannesburg
28 March 2018
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Unaudited restated Audited
6 months 6 months 12 months
31 Jan 31 Jan 31 Jul
% 2018 2017 2017
Change R'000 R'000 R'000
Income* (2) 797 749 813 639 1 520 515
Gross betting income 5 627 342 595 547 176 913
Net betting income
- Local operations 5 504 415 479 522 948 603
Other operating income
- Local operations 2 136 718 134 686 281 654
- International operations* 2 159 575 156 375 306 844
Investment income
- Local operations 6 7 332 6 940 15 200
- International operations (4) 618 641 646
Net income 4 808 658 778 164 1 552 947
Operating expenses and overheads
- Local operations 2 (613 444) (599 922) (1 218 794)
- Voluntary severance program expense (27 071)
- International operations* (5) (111 662) (117 649) (213 917)
Profit before finance costs, income tax,
depreciation and amortisation (7) 56 481 60 593 120 236
Depreciation and amortisation 2 (36 214) (35 444) (71 207)
Profit from operations (19) 20 267 25 149 49 029
Finance costs - Local operations 102 (17 236) (8 530) (20 323)
Profit before share of profit of equity
accounted investees (82) 3 031 16 619 28 706
Share of profit of equity accounted investees 46 82 063 56 189 122 591
Profit before fair value adjustment 17 85 094 72 808 151 297
Fair value adjustment to investment 274 (341) 946
Profit before income tax expense 18 85 368 72 467 152 243
Income tax expense (89) (509) (4 472) (9 641)
Profit for the period 25 84 859 67 995 142 602
Other comprehensive income net of taxation
Items that may subsequently be reclassified
to profit or loss
- Exchange differences on translating
foreign operations 494 393 (151)
Total comprehensive income for the period 25 85 353 68 388 142 451
Profit attributable to:
Ordinary equity holders of the parent 24 84 585 67 995 146 520
Non-controlling interest 274 (3 918)
Profit for the period 25 84 859 67 995 142 602
Total comprehensive income attributable to:
Ordinary equity holders of the parent 24 85 079 68 388 146 369
Non-controlling interest 274 (3 918)
Total comprehensive income for the period 25 85 353 68 388 142 451
Earnings per ordinary share (cents)
- Basic (8) 83,17 90,78 168,46
- Diluted (3) 83,17 86,16 160,84
* H1 2017 restated to make comparative information more meaningful as follows:
- R14,4 million foreign exchange loss previously included in 'Other operating income' now
included in 'Operating expenses and overheads'.
- R5,4 million inter group charge erroneously included in 'Income' now excluded.
Previously Adjust-
reported ment Restated
6 months 6 months 6 months
31 Jan 31 Jan 31 Jan
2017 2017 2017
R'000 R'000 R'000
Income 819 056 (5 417) 813 639
Other operating income
- International operations 141 992 14 383 156 375
Operating expenses and overheads
- International operations (103 266) (14 383) (117 649)
This reclassification has no effect on the profit of the Group.
SUPPLEMENTARY STATEMENT OF COMPREHENSIVE INCOME INFORMATION
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Jan 31 Jan 31 Jul
% 2018 2017 2017
Change R'000 R'000 R'000
Reconciliation of headline earnings
Earnings attributable to equity holders
of the parent 24 84 585 67 995 146 520
Adjusted for:
Profit on sale of property, plant and
equipment and intangible assets (2 132) (612) (605)
Tax effect 597 171 169
Headline earnings 23 83 050 67 554 146 084
Headline earnings per share (cents) (9) 81,66 90,19 167,96
Diluted headline earnings per share (cents) (5) 81,66 85,61 160,36
Net asset value per share (cents) 42 989,12 698,49 1014,17
Dividend to shareholders
Interim dividend
Dividend per ordinary share (cents) 24 42,00 34,00 34,00
Final dividend
Dividend per ordinary share (cents) 70,00
Number of shares in issue 33 100 469 347 75 772 352 101 559 769
Weighted average number of shares in issue
for basic and headline earnings per share
calculation 36 101 707 053 74 898 327 86 974 276
Weighted average number of shares in issue for
diluted earnings per share calculation 29 101 707 053 78 913 559 91 097 698
The pro forma normalised financial information has been compiled by the directors to illustrate the
impact of the voluntary severance program on the Group's reported financial performance for the
period ended31 January 2018 for illustrative purposes only.
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Jan 31 Jan 31 Jul
% 2018 2017 2017
Change R'000 R'000 R'000
Reconciliation of headline earnings to
normalised headline earnings
Headline earnings 23 83 050 67 554 146 084
Voluntary severance program expense
tax effected 19 491
Normalised headline earnings 52 102 541 67 554 146 084
Normalised headline earnings per share (cents) 12 100,82 90,19 167,96
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Jan 31 Jan 31 Jul
2018 2017 2017
R'000 R'000 R'000
ASSETS
Non-current assets 1 299 102 676 856 1 280 609
Property, plant and equipment 458 151 457 298 468 388
Goodwill 15 206 15 206 15 206
Intangible assets 49 548 52 816 51 939
Interest in equity accounted investees 671 381 68 620 638 074
Investments 11 837 692 11 562
Investment property 18 700 18 700
Long-term loans 47 932 71 044 64 309
Deferred taxation asset 26 347 11 180 12 431
Current assets 306 266 317 282 259 200
Inventories 4 082 2 772 2 466
Trade and other receivables 174 914 173 575 129 855
Defined benefit funds 9 029 8 183 9 029
Income tax receivable 20 608 15 016 19 395
Assets held for sale 28 283
Cash and cash equivalents 97 633 89 453 98 455
Total assets 1 605 368 994 138 1 539 809
EQUITY AND LIABILITIES
Total equity 993 760 529 264 1 029 993
Share capital and premium 473 799 1 894 473 826
Retained earnings 523 704 527 419 560 678
Non-distributable reserves (99) (49) (593)
Equity attributable to ordinary shareholders 997 404 529 264 1 033 911
Non-controlling interest (3 644) (3 918)
Non-current liabilities 202 299 123 187 123 370
Deferred taxation liability 1 905 412 1 393
Borrowings 200 394 122 775 121 977
Current liabilities 409 309 341 687 386 446
Trade and other payables 275 319 305 079 267 146
Short-term borrowings 2 914 2 400 2 400
Contingent consideration liability 106 309 707 101 434
Income tax payable 2 796 5 113 24
Betting dividends payable 13 185 15 030 13 621
Bank overdrafts 8 786 13 358 1 821
Total equity and liabilities 1 605 368 994 138 1 539 809
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Unaudited Unaudited Audited
6 months 6 months 12 months
31 Jan 31 Jan 31 Jul
2018 2017 2017
R'000 R'000 R'000
Net cash outflow from operating activities (77 727) (45 422) (62 201)
Cash generated by operations 43 793 51 625 88 771
Movements in working capital (30 941) (43 748) (43 022)
Cash generated by operating activities 12 852 7 877 45 749
Income tax paid (12 354) (175) (15 082)
Investment income received 5 652 7 581 11 957
Finance costs paid (12 130) (8 530) (17 950)
Dividends to shareholders (71 747) (52 175) (86 875)
Net cash inflow/(outflow) from investing activities 37 983 (15 643) (250 879)
Acquisition of property, plant and equipment and
intangible assets (25 917) (33 282) (82 223)
Proceeds on disposal of property, plant and equipment
and intangible assets 189 864 1 664
Investment in equity accounted investees (11 915) (255 010)
Prepayment and contingent settlements on investments (231) (330)
Net loans received/(advanced) 18 676 (46 254) (24 432)
Dividends received from equity accounted investees 57 181 63 029 109 452
Net cash inflow from financing activities 31 463 59 097 332 195
Finance lease payments (257) (425)
Net borrowings raised 78 931 59 354 58 556
Share capital raised 288 340
Shares repurchased and options issued (47 468) (14 276)
Net (decrease)/increase in cash and cash equivalents (8 281) (1 968) 19 115
Effect of conversion of foreign operations on cash
and cash equivalents 494 393 (151)
Cash and cash equivalents at beginning of period 96 634 77 670 77 670
Cash and cash equivalents at end of period 88 847 76 095 96 634
Make up of balance of cash and cash equivalents
Cash and cash equivalents 97 633 89 453 98 455
Bank overdraft (8 786) (13 358) (1 821)
Cash and cash equivalents at end of period 88 847 76 095 96 634
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Equity
attribu-
Non- table to Non-
distri- ordinary control-
Share butable Retained hare- ling Total
Capital reserve earnings holders interest equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 31 July 2016 1 863 (442) 511 630 513 051 513 051
Total comprehensive income
for the period 393 67 995 68 388 68 388
- Profit for the period 67 995 67 995 67 995
- Foreign currency translation reserve 393 393 393
Transactions with owners recorded
directly in equity
- Shares issued in terms of share
option scheme 31 (31)
- Dividends paid to equity holders (52 175) (52 175) (52 175)
Balance at 31 January 2017 1 894 (49) 527 419 529 264 529 264
Total comprehensive income
for the period (544) 78 525 77 981 (3 918) 74 063
- Profit for the period 78 525 78 525 (3 918) 74 607
- Foreign currency translation reserve (544) (544) (544)
Transactions with owners recorded
directly in equity
- Share issue - Rights offer 288 713 288 713 288 713
- Share issue - Acquisition shares 183 582 183 582 183 582
- Direct listing costs (373) (373) (373)
- Shares repurchased (12) (10 557) (10 569) (10 569)
- Shares issued in terms of share
option scheme 22 (3 729) (3 707) (3 707)
- Share based payment 3 720 3 720 3 720
- Dividends paid to equity holders (34 700) (34 700) (34 700)
Balance at 31 July 2017 473 826 (593) 560 678 1 033 911 (3 918) 1 029 993
Total comprehensive income
for the period 494 84 585 85 079 274 85 353
- Profit for the period 84 585 84 585 274 84 859
- Foreign currency translation
reserve 494 494 494
Transactions with owners recorded
directly in equity
- Shares repurchased (66) (47 442) (47 508) (47 508)
- Share based payment (2 370) (2 370) (2 370)
- Shares issued in terms of share
option scheme 39 39 39
- Dividends paid to equity holders (71 747) (71 747) (71 747)
Balance at 31 January 2018 473 799 (99) 523 704 997 404 (3 644) 993 760
Directors: B Kantor (Chairman), WA du Plessis* (Group Chief Executive),
AW Heide* (Finance Director and COO), P Anastassopoulos, R Cooper,
SKC Khampepe, NJ Mboweni (Mrs), VJ Moodley*, S Müller, Dr E Nkosi,
JA Stuart*, CJH van Niekerk, JB Walters (*Executive)
Company Secretary: F Moloi (Mrs) Sponsor: Investec Bank Limited
Registered Office: Turffontein Racecourse, 14 Turf Club Street, Turffontein
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Share code: PHM
ISIN: ZAE000039269
Sponsor: Investec Bank Limited
Web site: www.phumelela.com
Date: 28/03/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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