Overseas boost for Phumelela
International diversification continued to pay off for Phumelela Gaming and Leisure in the year to July as growth from its international businesses offset a weaker performance from local operations, the company said on Friday.
International diversification continued to pay off for Phumelela Gaming and Leisure in the year to July as growth from its international businesses offset a weaker performance from local operations, the company said on Friday.
Phumelela’s shares added 1.3% to close at R19.40 after it declared a final dividend of 70c a share, bringing its total dividend for the year to 104c, unchanged from 2016. Net asset value is R10.14 a share.
Gross income from local sports betting and media slipped 1%, to R1.21bn compared with 2016, but income from international operations surged 12%, to R307.5m. Income from fixed odds accelerated in the second half of the year but tote betting income declined, CEO Rian du Plessis said.
Headline earnings a share gained 2%, to 167.96c, limited by rand strength against the pound, but in constant currency terms rose 30%, to 214.34c. The number of shares in issue increased due to the Supabets acquisition.
Bottom-line profits from consolidated operations fell 15%, to R28.7m but equity-accounted
NEW TECHNOLOGY WILL REQUIRE DIFFERENT SKILLS FROM STAFF, WHO ARE BEING OFFERED PACKAGES
investments, which reflect Phumelela’s international joint ventures such as Premier Gateway International, Supabets and Interbet, surged 29% to R122.6m. With effect from March 1, Phumelela acquired 50% of Supabets and raised its stake in Interbet to 50%, from 26%.
Du Plessis said the current 50:50 shareholding structures were working well but when Phumelela’s partners wanted to sell more shares, Phumelela would be a logical buyer.
Phumelela’s traditional business of administering horse racing and offering tote betting incurred a loss. The management has taken steps to cut costs and modernise operations. It has streamlined management functions, brought in a national retail manager to bring new thinking on technology and store design and has merged the tote and fixed-odds management teams.
The introduction of new technology will require different skills from staff, who are being offered voluntary retrenchment or early retirement packages. Du Plessis said a fixed number of job cuts was not planned but there were cost targets. Phumelela has provided about R30m for the restructure.
Du Plessis said conditions in South African betting remained difficult. Phumelela plans to form joint ventures with Supabets at eight underperforming fixed-odds outlets and has applied for regulatory approval. The first three are expected to begin trading in October.
Phumelela is also putting the best of Supabets software into its trading outlets, while Supabets will reintroduce race betting, supported by Phumelela’s fixed-odds business.