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PHUMELELA GAMING & LEISURE LIMITED - Unaudited Interim Financial Results for the six months ended 31 January 2017 & Dividend Declaration

Release Date: 21/04/2017 07:05
Code(s): PHM     PDF:  
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Unaudited Interim Financial Results for the six months ended 31 January 2017 & 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 2017 AND DIVIDEND DECLARATION 

OPERATIONAL FEATURES OF THE PERIOD 
-  A pleasing performance from international operations despite Rand strength    
-  Fixed odds betting performed in line with expectations
-  Tote betting reflective of deteriorating local economic conditions
-  Interbet made a pleasing contribution 
-  Continued investment in horseracing facilities 
-  Diversification of income sources ongoing 


FINANCIAL FEATURES OF THE PERIOD
-  Earnings per share up 4% to 90,78 cents
-  Headline earnings per share up 3% to 90,19 cents
-  Headline earnings per share in constant currency up 26% to 109,80 cents 
-  Interim dividend per share maintained at 34,00 cents
-  Sound financial position


RESULTS OVERVIEW
The Group result is characterised by a pleasing performance from international revenue sources and real 
growth from the fixed odds business and from associate company Interbet. Our tote operations disappointed 
as domestic economic conditions deteriorated. 

International operations contributed combined pre-tax income of R91,3 million, an actual increase of 18% 
at prevailing exchange rates or 38% on a constant currency basis. Phumelela's international operations 
are expected to provide a foreign currency hedge and a good source of diversified income across multiple
geographies.

As detailed in the financial analysis, the strengthening of the South African Rand understated the 
excellence of the offshore performance in foreign currency. For illustrative purposes, earnings are also 
presented with supplementary information in constant currency. 

Initiatives over many years to diversify locally, internationalise and acquire complementary growth 
generators is paying dividends in the form of a better spread of earnings, expanded choice for our many 
customers, and an increased size of the Group from a financial and market value point of view.
Diversification has also resulted in associate income from local and international sources becoming an 
increasingly meaningful contributor to the Group's performance. 

What has not changed is the fact that Phumelela is, and will continue to be, the leading racecourse owner,
betting operator and racing media provider in South Africa. Horseracing is at the heart of what Phumelela 
is and the foundation for our successful and expanding international operations. 

The economy in South Africa is weak and the political situation unsettled. Recent financial results from 
the main banking Groups point to stress in the real economy, with consumer purchasing power under strain.
 
Against this challenging backdrop, it is imperative that Phumelela keeps its betting offerings relevant, 
fresh, and attainable to all. A digital footprint is essential as the Group embraces changing technology 
and customer preferences. Our online betting availability is beneficial for customers with finite 
disposable income but who wish to enjoy a modest wager yet maximise their value for money by eliminating 
the cost of transport to a betting shop. Nevertheless, having a bricks-and-mortar presence will always be 
necessary as a majority of our customers still prefer this as it provides a venue for social interaction.
 
As part of the Group's strategy to minimise the cost base, the tote and fixed odds businesses are 
optimising their operating models wherever feasible to cohabit for mutual benefit as there is 
interdependence between tote and fixed odds betting. 

Product development in tote and fixed odds is ongoing whilst the footprint continues to grow. The Group
now has 80 fixed odds retail shops, up from 75 as at July 2016. The franchise model, in which Phumelela 
provides the expertise and infrastructure for previously disadvantaged individuals to make a successful 
career in the betting business, is a small part of the Group but developing well with 8 franchise outlets 
now operational. 

The acquisition of 50% of Supabets is very much in line with the Group's espoused strategy. Supabets is 
planning to re-introduce horse racing, relying on a managed service supplied by Betting World. In turn, 
Betting World will introduce Supabets' sports and in-play betting products relying on a managed service 
supplied by Supabets. Supabets has large size format betting shops, offering a unique and engaging customer 
experience. Scope for significant synergies between the two businesses have been identified with financial 
benefits anticipated to flow in the medium to long term. As the investment in Supabets only became 
effective on 1 March 2017, Supabets shall therefore contribute for the remaining five months of the Group's 
2017 financial year. 

Phumelela continues to invest to support a quality racing experience for both local and international 
consumers of our product.

GROUP FINANCIAL ANALYSIS 
Income increased at a slower pace in fixed odds but in line with expectation whilst operating profits 
increased by 15%. The local tote and horseracing operations recorded a decline in income and a 48% rise 
in loss from operations. Interbet, in which the Group had a 26% stake for the period, increased profits 
by 23%. 

International operations performed strongly with the combined pre-tax profit from Phumelela International 
and Premier Gateway International ("PGI") increasing by 18% on increased demand for the South African 
thoroughbred horseracing export product and pari-mutuel betting on the Isle of Man. 

Currency effects were pronounced in the period under review. 

For the six months ended 31 January 2017, the rand averaged R17,54 to the pound compared to R21,54 in the 
comparative period, a 19% gain. A net foreign exchange loss of R2,5 million further negatively impacted 
earnings. 

Reported pre-tax profit from Phumelela International and PGI is R91,3 million, up 18% from the 
R77,5 million in the comparative period and representing an increase in Rand of R13,8 million. The currency 
effect from the stronger rand exceeded R15,7 million and therefore an actual increase of 18% translates 
into 38% on a constant currency basis. 

Group income grew by 4% to R819,1 million, of which South African sports betting and media rights income 
declined by 2% to R645,5 million and international income grew by 37% to R173,6 million.

Combined local and international operating expenses, prize monies and levies increased by 2% to 
R703,2 million. Local prize monies increased in line with the formula set out in the stakes agreement with 
the Racing Association. 

The 23% increase in the depreciation charge to R35,4 million for the South African operations reflects 
ongoing investment in modernisation and expansion. Of the R33,3 million in capital expenditure in South 
African operations, R18,1 million was spent on horseracing infrastructure and tote betting and 
R15,2 million in fixed odds. 

The combined South African operations recorded an operating loss of R14,2 million, up from a loss of 
R3,5 million. After finance costs of R8,5 million, but before share of profit from associate Interbet, 
the loss from operations increased to R22,7 million from R6,9 million. 

International pre-tax profit, before share of profits from jointly owned PGI, increased by 7% to 
R39,4 million. 

Equity accounted profits benefited from excellent performances by PGI and Interbet, increasing by 29% to 
R56,2 million. 

Group pre-tax profit, before the fair value adjustment of R0,3 million on held-for-sale ASL investment in 
Mauritius, was flat at R72,8 million. International operations contributed 125% of Group pre-tax profit. 

Net attributable income increased by 5% to R68,0 million, assisted by a lower effective tax rate. 

Headline earnings increased by 4% to R67,6 million. The effect of currency on translation of foreign income 
was R15,7 million or R14,7 million net of tax. For illustrative purposes, constant currency headline 
earnings would therefore have been R82,2 million, which would have represented an increase of 27%. 

There was a minimal increase of 0,5% in the weighted average number of shares in issue and a 0,4% increase 
on a fully diluted basis, reflecting share options exercised. 

Earnings per share grew by 4% to 90,78 cents and headline earnings per share grew by 3% to 90,19 cents. 
Constant currency headline earnings per share grew by 26% to 109,80 cents. 

The Group retained a strong financial position with net debt of R49,1 million, representing a debt to 
equity ratio of only 9%. The Group has sufficient cash flow and borrowing capacity to meet its ongoing 
operational needs. 

Phumelela has a combination of recurring income, in the form of broadcast rights, variable but reasonably 
consistent transactional income, and incremental income from investment in growth and development of 
international and local tote, fixed odds and media business. 

Cash generated from operating activities declined to R7,9 million after an increase in working capital of 
R43,7 million, largely a consequence of seasonal factors and the timing of receipt of income due from 
abroad. 

Dividends received from equity accounted investees increased to R63,0 million from R38,8 million. 

Dividends paid to shareholders amounted to R52,2 million.

Total assets increased to R994,1 million, which includes property, plant and equipment at a carrying value 
of R457,3 million, goodwill and intangibles at R68,0 million, and equity accounted investees valued at 
R68,6 million. 

Attributable equity of R529,3 million represents a net asset value per share of 698,49 cents. 

Annualised return on opening equity remained stable at 27%, substantially exceeding cost of capital. 

SOUTH AFRICAN OPERATIONS
Tote betting decreased by 7% to R1,7 billion, reflective of a tougher consumer environment. Tote betting 
on local horseracing nonetheless maintained a 50% share of the total betting turnover with tote betting on 
international racing also maintained at 18%. Interactive continued to increase its share of bets placed to 
31%, in line with Group strategy and market trends. 

A highlight of horseracing in the period was the first ever Sun Met at Kenilworth, sponsored by Sun 
International as the title sponsor and co-sponsored by G.H. Mumm. This prestigious race day carried record 
prize money with each race running an excellent field of horses. Events such as the Sun Met underscores the 
fact that horseracing holds appeal both as on-course entertainment for the family and for those viewing and
betting locally and, increasingly, overseas. 

Fixed odds betting continued to make good progress, with numbers betting particularly popular. Fixed odds
betting amounted to R964 million in the period. Net fixed odds betting income increased by 8% to 
R139,3 million with both soccer and numbers net betting income growing by 17% each. Consequently, the net 
betting income margin improved to 14,4% with a healthy margin obtained across all three fixed odds 
categories, including horseracing. The acquisition of 51% of Afribet Proprietary Limited (renamed Betting 
World Eastern Cape) has given Phumelela a fixed odds retail presence in 8 betting shops in the Eastern Cape. 

INTERNATIONAL OPERATIONS
International operations contributed combined pre-tax income of R91,3 million, an actual increase of 18% at 
prevailing exchange rates or 38% on a constant currency basis. Phumelela's international operations are 
expected to provide a foreign currency hedge and a good source of diversified income across multiple 
geographies. 

PGI, located on the Isle of Man, made a very pleasing contribution during the period. Demand for the export
of live broadcast of South African horse races was buoyant. The agreement with Arena Racing Company is 
now in place.

SHARE CAPITAL
There has been no change in the authorised share capital of the Company during the period.

Issued share capital increased by 1 236 867 shares, issued from treasury stock to fulfil obligations in 
respect of shares exercisable per the executive option schemes. At 31 January 2017, issued share capital 
amounted to 75 772 352 shares, net of 1 329 533 treasury shares. With effect from 6 February 2017, 
16 602 230 rights offer shares were issued in part to fund the purchase of Supabets SA Holdings Proprietary 
Limited ("Supabets"). A further 8 796 443 shares were issued to the seller in terms of the Supabets 
purchase consideration. As at the date of this financial report, Phumelela had total shares in issue, 
after deducting treasury shares, of 101 171 025 ordinary shares. 

CONDENSED SEGMENTAL ANALYSIS
The Group stages horseracing events in South Africa, offers betting opportunities on South African and 
international sports and numbers, and exports televisual horseracing content internationally. Reporting 
disclosure corresponds to management reporting lines.

                                                                  Unaudited      Unaudited        Audited
                                                                   6 months       6 months      12 months
                                                                     31 Jan         31 Jan         31 Jul
                                                            %          2017           2016           2016
                                                       Change         R'000          R'000          R'000
Local sports betting and media gross income                (2)      645 457        659 746      1 226 382 
International ventures gross income                        37       173 599        126 726        274 415 
Total local and international income                        4       819 056        786 472      1 500 797 
Local tote and fixed odds net betting and other income      1       621 148        617 268      1 222 910 
International other income                                  8       142 633        132 216        274 415 
Total local and international net income                    2       763 781        749 484      1 497 325 
Local expenses, stakes and levies                           2      (635 358)      (620 726)    (1 255 160)
International expenses                                      8      (103 274)       (95 588)      (199 067)
Total expenses                                              3      (738 632)      (716 314)    (1 454 227)
Local operating loss                                      311       (14 210)        (3 458)       (32 250)
Local finance costs                                       150        (8 530)        (3 412)        (9 368)
Local loss from operations                                231       (22 740)        (6 870)       (41 618)
International pre-tax profit                                7        39 359         36 628         75 348 
International and local equity accounted profits           29        56 189         43 413         94 694 
Total Group pre-tax profit before fair value 
adjustment on ASL investment                                         72 808         73 171        128 424 

CAPITAL COMMITMENTS  
Commitments in respect of capital expenditure approved by directors.

                                                                                     2017            2016
                                                                                    R'000           R'000
Contracted for                                                                      4 364           5 062
Not contracted for                                                                108 222          83 140

Capital commitments will be financed out of cash and cash equivalents on hand or borrowing facilities as 
and when required.

INVESTMENTS
50% ownership of Supabets SA Holdings Proprietary Limited was transferred to Phumelela with effect from 
1 March 2017. The purchase consideration of R437 million was settled by way of a rights offer in the 
amount of R284 million, shares issued to the sellers and the rest in cash. 

With effect from 1 March 2017, a further 24% equity interest in Interbet was acquired increasing 
Phumelela's shareholding to 50%.

MATTERS OF CORPORATE INTEREST AND LITIGATION
In terms of disclosure contained in the annual financial statements for the year ended 31 July 2016 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 EQUITY
Phumelela Gaming and Leisure Limited is a company domiciled in South Africa. The condensed consolidated 
interim financial statements as at 31 January 2017 comprises of the company and its subsidiaries and the 
Group's interests in equity accounted investees and joint operations.

BASIS OF PREPARATION
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 2016.

Mr B. McLoughlin C.A. (S.A.) 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 2017.

RELATED PARTIES
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
The amended B-BBEE Codes of Good Practice have set a challenging bar with the new weightings. Empowerdex 
has audited the Group as a level 4 with Empowering Supplier status, and the process has allowed the Group 
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
Mr P. Anastassopoulos was appointed to the Board effective from 8 March 2017. There were no other changes 
to the composition of the Board. 

PROSPECTS
The acquisition of 50% of Supabets opens an exciting new chapter for Phumelela and we have already 
identified opportunities for the extraction of synergistic benefits and growth with our partners. Supabets 
will contribute for the remaining five months of the financial year and is anticipated to be earnings per 
share accretive after allowing for a higher weighted average number of shares in issue. The circular to 
shareholders, dated 19 August 2016, provides granular detail on the pro forma financial effects in this 
regard.

Also with effect from 1 March 2017, the Group increased its shareholding in Interbet from 26% to 50%. The 
increased shareholding was funded by bank debt and is also expected to be earnings per share accretive. 

The local tote operations are under pressure in a difficult economic climate but the fixed odds operation 
is leveraging positively off the Group's investment in facilities and the popularity of the product 
offering. Cost savings and managerial efficiencies are being implemented. 

International operations, comprising the export of live televisual South African horseracing, the import 
of live televisual international horseracing, and pari-mutuel betting through PGI on the Isle of Man, are 
doing well. Real growth in foreign currency income is anticipated for the full year. 

The Group is targeting growth in earnings per share for the year, the extent of which will be dependent 
on foreign exchange movements. 

Any forward looking statements of 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 
34,00 cents per share (27,20 cents per share net of dividend withholding tax at a rate of 20%) payable to 
shareholders recorded in the register on Friday, 26 May 2017. 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 Tuesday, 23 May 2017. As from commencement of business on Wednesday, 24 May 2017 all trading in 
Phumelela shares will be "ex dividend". Payment will be made on Monday, 29 May 2017. Share certificates may 
not be dematerialised or rematerialised between Wednesday, 24 May 2017 and Friday, 26 May 2017, both days 
inclusive. The Company's tax reference number is 9171/393/84/7.

For and on behalf of the Board

MP Malungani                                       WA du Plessis 
Chairman                                           Chief Executive Officer 
Turffontein, Johannesburg 
21 April 2017


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                                  Unaudited      Unaudited        Audited
                                                                   6 months       6 months      12 months
                                                                     31 Jan         31 Jan         31 Jul
                                                            %          2017           2016           2016
                                                       Change         R'000          R'000          R'000
Income                     
- Local operations                                         (2)      645 457        659 746      1 226 382
- International operations                                 37       173 599        126 726        274 415
                                                            4       819 056        786 472      1 500 797
Gross betting income                    
- Local operations                                         (4)      595 547        617 803      1 198 796
Net betting income                    
- Local operations                                         (4)      479 522        497 189        965 551
Other operating income                    
- Local operations                                         13       134 686        119 576        252 603
- International operations                                  7       141 992        132 200        273 840
Investment income                     
- Local operations                                                    6 940            503          4 756
- International operations                                              641             16            575
Net income                                                  2       763 781        749 484      1 497 325
Operating expenses and overheads                    
- Stakes                                                    1       (98 220)       (96 790)      (202 871)
- Local operations                                          1      (501 702)      (495 217)      (991 104)
- International operations                                  8      (103 266)       (95 447)      (198 781)
Profit before finance costs, income tax,
depreciation and amortisation                              (2)       60 593         62 030        104 569                   
Depreciation and amortisation                              23       (35 444)       (28 860)       (61 471)
Profit from operations                                    (24)       25 149         33 170         43 098
Finance costs                    
- Local operations                                        150        (8 530)        (3 412)        (9 368)
Profit before share of profit of
equity accounted investees                                (44)       16 619         29 758         33 730   
Share of profit of equity accounted investees              29        56 189         43 413         94 694
Profit before fair value adjustment                                  72 808         73 171        128 424
Fair value adjustment to investment                                    (341)         2 001          5 578             
Profit before income tax expense                           (4)       72 467         75 172        134 002                          
Income tax expense                                        (56)       (4 472)       (10 199)       (12 912)
Profit for the period                                       5        67 995         64 973        121 090
Other comprehensive income net of taxation                    
Items that may subsequently be reclassified to 
profit or loss                    
- Exchange differences on translating 
  foreign operations                                      274           393            105           (579)
Total comprehensive income for the period                   5        68 388         65 078        120 511
Profit attributable to:                    
Ordinary equity holders of the parent                       5        67 995         64 973        121 944
Non-controlling interest                                                                             (854)
Profit for the period                                       5        67 995         64 973        121 090
Total comprehensive income attributable to:                    
Ordinary equity holders of the parent                       5        68 388         65 078        121 365
Non-controlling interest                                                                             (854)
Total comprehensive income for the period                   5        68 388         65 078        120 511
Earnings per ordinary share (cents)                    
- Basic                                                     4         90,78          87,18         163,62
- Diluted                                                   4         86,16          82,66         155,01


SUPPLEMENTARY STATEMENT OF COMPREHENSIVE INCOME INFORMATION
                                                                  Unaudited      Unaudited        Audited
                                                                   6 months       6 months      12 months
                                                                     31 Jan         31 Jan         31 Jul
                                                            %          2017           2016           2016
                                                       Change         R'000          R'000          R'000
Reconciliation of headline earnings                    
Earnings attributable to equity holders of parent           5        67 995         64 973        121 944
Adjusted for:                    
Net (profit)/loss on disposal of property,                    
plant and equipment                                                    (612)            28            916
Tax effect                                                              171             (8)          (256)
Headline earnings                                           4        67 554         64 993        122 604
Headline earnings per share (cents)                         3         90,19          87,21         164,51
Diluted headline earnings per share (cents)                 4         85,61          82,69         155,85
Net asset value per share (cents)                          10        698,49         636,17         688,33
Reconciliation of headline earnings to adjusted 
headline earnings                    
Headline earnings                                                    67 554         64 993        122 604 
Constant currency adjustment                                         14 682           
Adjusted headline earnings*                                27        82 236         64 993        122 604 
Adjusted headline earnings per share (cents)**             26        109,80          87,21         164,51 
Dividend to shareholders                    
Interim dividend                    
Dividend per ordinary share (cents)                                   34,00          34,00          34,00
Final dividend                    
Dividend per ordinary share (cents)                                                                 70,00
Number of shares in issue                                        75 772 352     74 525 485     74 535 485
Weighted average number of shares in issue 
for basic and headline earnings per share calculation            74 898 327     74 525 485     74 528 006
Weighted average number of shares in issue for 
diluted earnings per share calculation                           78 913 559     78 599 551     78 669 669

* Adjusted headline earnings in constant currencies is the current year local earnings, plus the 
  re-measurement of current year foreign denominated earnings, translated at the prior year average 
  exchange rate for the equivalent period. This has the effect of adjusting current year earnings by 
  eliminating the effect of fluctuations in exchange rates over the period. Comparative figures have not 
  been re-translated for these changes in foreign exchange effects.

** Adjusted headline earnings per share at constant currencies is the adjusted headline earnings in 
   constant currencies as referred to above (see*) divided by the weighted average number of shares in 
   issue for the period. Comparative figures have not been re-translated for these changes in foreign 
   exchange effects.        


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                  Unaudited      Unaudited        Audited
                                                                   6 months       6 months      12 months
                                                                     31 Jan         31 Jan         31 Jul
                                                                       2017           2016           2016
                                                                      R'000          R'000          R'000
ASSETS               
Non-current assets                                                  676 856        588 338        635 466
Property, plant and equipment                                       457 298        452 723        458 914
Goodwill                                                             15 206         12 362         15 206
Intangible assets                                                    52 816         52 127         51 455
Interest in equity accounted investees                               68 620         56 396         75 460
Investments                                                             692            692            692
Long-term secured loans                                              71 044         11 128         24 790
Deferred taxation asset                                              11 180          2 910          8 949
Current assets                                                      317 282        275 573        308 484
Inventories                                                           2 772          1 864          1 920
Trade and other receivables                                         173 575        148 771        137 849
Defined benefit funds                                                 8 183          7 075          8 183
Income tax receivable                                                15 016         10 082         19 233
Assets held for sale                                                 28 283         25 047         28 624
Cash and cash equivalents                                            89 453         82 734        112 675
Total assets                                                        994 138        863 911        943 950
EQUITY AND LIABILITIES               
Total equity                                                        529 264        474 106        513 051
Share capital and premium                                             1 894          1 863          1 863
Retained earnings                                                   527 419        472 001        511 630
Non-distributable reserves                                              (49)           242           (442)
Non-current liabilities                                             123 187         68 226         64 489
Deferred taxation liability                                             412          4 652          1 531
Finance lease liability                                                 179             63
Borrowings                                                          122 775         63 395         62 895
Current liabilities                                                 341 687        321 579        366 410
Trade and other payables                                            305 079        278 236        310 095
Bank overdrafts                                                      13 358         21 831         35 005
Short term borrowings                                                 2 400          2 400          2 926
Contingent consideration liability                                      707            707            707
Income tax payable                                                    5 113          1 683
Betting dividends payable                                            15 030         18 405         15 994
Total equity and liabilities                                        994 138        863 911        943 950


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                                                  Unaudited      Unaudited        Audited
                                                                   6 months       6 months      12 months
                                                                     31 Jan         31 Jan         31 Jul
                                                                       2017           2016           2016
                                                                      R'000          R'000          R'000
Net cash (outflow)/inflow from operating activities                 (45 422)          (431)        38 594
Cash generated by operations                                         51 625         67 537        113 046
Movements in working capital                                        (43 748)        (9 395)        29 949
Cash generated by operating activities                                7 877         58 142        142 995
Income tax paid                                                        (175)       (10 965)       (30 306)
Investment income received                                            7 581            519          5 330
Finance costs paid                                                   (8 530)        (3 412)        (9 368)
Dividends to shareholders                                           (52 175)       (44 715)       (70 057)
Net cash (outflow)/inflow from investing activities                 (15 643)         1 277        (19 549)
Acquisition of property, plant and equipment and                    (33 282)       (37 585)       (76 443) 
intangible assets                               
Proceeds on disposal of property, plant and equipment 
and intangible assets                                                   864            633          2 083
Acquisition of a subsidiary                                                                        (1 710)
Investment in equity accounted investee and contingent 
settlements on investments                                                               3              3
Loans advanced                                                      (46 254)          (525)       (14 448)
Dividends received from equity accounted investees                   63 029         38 751         70 966 
Net cash inflow from financing activities                            59 097         13 491         12 743
Finance lease payments                                                 (257)          (309)          (557)
Net borrowings raised                                                59 354         13 800         13 300
Net (decrease)/increase in cash and cash equivalents                 (1 968)        14 337         31 788
Effect of exchange fluctuations on cash and cash equivalents            393            105           (579)
Cash and cash equivalents at beginning of period                     77 670         46 461         46 461
Cash and cash equivalents at end of period                           76 095         60 903         77 670


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                            Equity            
                                                                          attribu-  
                                                      Non-                table to        Non-
                                                   distri-                ordinary    control-
                                         Share     butable    Retained       hare-        ling      Total
                                       Capital    reserves    earnings     holders    interest     equity
                                         R'000       R'000       R'000       R'000       R'000      R'000
Balance at 31 July 2015                  1 863         137     445 743     447 743                447 743
Total comprehensive income                             105      64 973      65 078                 65 078 
for the period            
- Profit for the period                                         64 973      64 973                 64 973
- Foreign currency translation 
  reserve                                              105                     105                    105
Transactions with owners recorded 
directly in equity                              
-  Share based payment                                           6 000       6 000                  6 000
-  Dividends paid to equity holders                            (44 715)    (44 715)               (44 715)
Balance at 31 January 2016               1 863         242     472 001     474 106                474 106
Total comprehensive income for 
the period                                            (684)     56 971      56 287       (854)     55 433
-  Profit for the period                                        56 971      56 971       (854)     56 117
-  Foreign currency translation 
   reserve                                            (684)                   (684)                  (684)
Transactions with owners recorded 
directly in equity                              
-  Share based payment                                           8 000       8 000                  8 000
-  Purchase of controlling interest 
   in a subsidiary                                                                       854          854
-  Dividends paid to equity holders                            (25 342)    (25 342)               (25 342)
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 the
   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


Directors:                  M P Malungani (Chairman), W A du Plessis* (Group Chief Executive), 
                            A W Heide* (Finance Director and COO), P Anastassopoulos, R Cooper, B P Finch, 
                            M J Jooste, B Kantor, S K C Khampepe, N J Mboweni (Mrs), V J Moodley*,
                            Dr E Nkosi, M L Ramafalo*, J A Stuart*, C J H van Niekerk, J B Walters 
                            (*Executive)
Company Secretary:          F. Moloi (Mrs) 
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
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