Johannesburg - Africa’s biggest horse-racing and tote betting business, Phumelela, has reported a drop in profits due to several hurdles that slowed it down.
The group burnt its fingers in Nigeria and impaired its 26 percent stake in Betting World Nigeria by R9 million.
It took a R13m mark-to-market loss on Automatic Systems in Mauritius.
The company also spent R11m in legal and consulting fees on fighting abuse of intellectual property and other related legal matters. This all resulted in the group’s headline earnings per share dropping by 11 percent to 117.06c and headline earnings declining by 12 percent to R88m.
Phumelela’s share price on the JSE declined by 6.25 percent to close on Friday at R18.
Adjusted headline earnings rose by 7 percent to R106m, or 141.48c, per share.
“The growth (in headline earnings) was achieved notwithstanding a more challenging international trading environment, particularly in the first half, that negatively affected overseas derived income,” the firm said.
However, the group said it expected to improve its results in the current year as investments proved fruitful.
Meanwhile, total net betting income from local operations grew 13 percent to R841m.
Net betting up
Phumelela maintained a final gross dividend of 60c per share. Net betting income from local tote operations increased an 7 percent to R679m.
Net tote betting income from sports other than horse racing grew 17 percent to R221m and net tote betting income on horseracing increased 3 percent to R457m.
Phumelela said in its results for the year that it was a respondent in three consolidated complaints lodged by the Gauteng Off-Course Bookmakers’ Association, the KwaZulu-Natal Bookmakers’ Society (the KZNBS), the Western Cape Bookmakers’ Association and various individual bookmakers with the Competition Commission during 2014 and 2015, regarding alleged excessive pricing and abuse of its dominant position.
The complaints are being investigated by the Competition Commission and Phumelela said it had submitted extensive information and documents to the Competition Commission to assist it with its investigation.
In March, the KZNBS lodged a complaint with the Independent Communications Authority of South Africa (Icasa). The complaint consists of two parts, the first against the joint parties of Tellytrack, Phumelela, Gold Circle and Kenilworth Racing and the second against Telemedia, for alleged contraventions of the Electronic Communications Act pertaining to the provision of commercial broadcast services without the correct licences.
The complaints are being investigated by Icasa and the parties are assisting with its investigation. The applicants seek an order interdicting Phumelela from offering totalisator betting on sports other than horseracing.
Phumelela has filed its answering affidavit and the applicants are required to file their replying affidavit.
“The outcome of the relevant actions noted above, and under corporate interests, remains uncertain and may have an impact on future earnings,” the group said.
* Additional reporting by ANA
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