Phumelela Reports on First Half Earnings

April 23 - The South African gaming group Phumelela Gaming and Leisure rolled out its financial report for the six months from August 1st, 2011 until January, 2012.

The leading horse racing and tote betting company reported diluted headline earnings of 44.49 per share, from 42.77 in the previous period.

Highlights of Phumelela's financial report include:

• Total income for Phumelela increased to R452 million - up 2%.

• If one excludes the group's Isle of Man totaliser operation, total income actually increased 5%.

• Net betting income decreased to R323 million - a drop of 3%.  The main reason for this drop in betting income was the fact that the Isle of Man operation was equity accounted in the six month period.

• Local operations saw their net betting income climb 1%.

• Operations profit for Phumelela dropped to R43 million  - 21%.

• Profit before income tax grew 100% from Phulemela's international operations.  This was mainly due to income derived from the export of South African racing media rights and the growth in the number of international punters wagering on South African races.

• A weakening Rand also saw an increase in international operations.

• Profit before income from local South African operations dropped a whopping 49%, mainly to an increase in operating costs.

• Income from fixed odds betting, limited payout machines, bingo and tote betting on soccer and rugby offset the big losses felt from the group's local horse racing operations.

Phumelela Betting Group Looks Ahead

Despite some worrying numbers highlighted in the six month Phumelela first half earnings report, the group said that it was looking ahead and expected its international operations to continue to be in good demand.

Phumelela also expected its local turnovers on South African sports (excluding horse racing) to continue to do well.

Management has promised to give its full attention to the poor revenues in local Tote betting operations.

The statement indicated that the group has sanctioned the South African government on a number of opportunities to address the problem of the lack of a level playing field between the contributions made by Tote and bookmaker betting in the South African gambling industry.

Should the government adopt recommendations made by a sub-committee that changes are made to South African gambling legislation, this could positively impact Phumelela's financial earnings, although these changes would not be felt before year's end.

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