Whilst the euphoria of the past Champions Season brings back fond memories, the reality of the underlying financial status of the company continued to negatively impact on profitability. A general increase in non-feature race stakes will still be implemented.
So writes Gold Circle Chairman Phumla Mnganga in a recent letter to Members
Members were enlightened on the reasons for the concerning declines in turnover as early as December 2016 and thereafter as reported at an informal meeting of members. Regrettably the trend has continued and consequent remedial actions have and will be taken.
At the informal information meeting held on 6th April 2017 Members were updated on the broad detail relating to the company restructure which would involve a down-sizing of the Gold Circle business including a major retrenchment programme. Details of the restructure were notified to personnel and consultations commenced immediately. The total cost of the retrenchment programme was extensive, the majority of which has been brought to account in the 2017 financial year.
The composition of the Gold Circle Executive Management was reviewed and now only comprises five persons as follows:
Michel Nairac – Chief Executive Officer
Stuart Gardner – Acting Chief Financial Officer
Patrick Loker – Commercial Executive
Raf Sheik – Racing Executive
Veronica Jack – Corporate Services Executive
Operational models and practices have been reconsidered and changes have been made in several areas of the business to become more cost effective and efficient. Whilst there is still a long road ahead, the remedial actions taken to date will have a positive impact in the year ahead.
Stakes and Nominations
As part of the restructure an in-depth review has been undertaken into the racing fixtures and programmes offered in KZN having particular regard to the number of dual nominations being received for raceday programmes. With a view to bringing more efficiency it has been agreed that nomination fees will be reintroduced into the administrative process for implementation in November 2017. This will have a positive controlling influence on the number of horses actually intending to participate in any particular race.
The return on investment to owners in horse racing has always been a top priority for Gold Circle as this forms the core of its business income generation. Over the past two years, given the general economic condition in the country and the racing industry, Owners have not been afforded meaningful stakes increases to offset their increasing costs. The business’ restructure and the consequent cost savings have allowed the company to review the funding available for Stakes in the year ahead.
Gold Circle is pleased to announce that it will implement, effective from 1st November 2017, a general increase in stakes values for all non-feature race categories. Priority has been given to races in the lower divisions such as Progress, Graduation and Maiden categories.
This increase should greatly assist owners when racing in KwaZulu-Natal.
The Annual Financial Statements for the year ended 31 July 2017 have been audited and are passing through the internal approval processes prior to being circulated to Club members. As was expected, the company sustained a consolidated loss on trading amounting to R12 million compared to a profit of R6 million in the prior year. This loss has been tempered by a surge in investment returns in July 2017 as well as certain other IFRS accounting requirements.
The current 2017 / 2018 trading is reflecting mixed results. Totalisator turnover income generation continues its concerning negative trend when compared with the prior year. Whilst the downturn trend was taken into account in the preparation of the 2018 budget projections the aggregates to the end of September 2017 were still marginally negative.
Several sectors within the company are achieving better than expected operating results and the Management accounts at the end of August 2017 reported a trading profit of R1.4 million however, this was only the first month of the new financial year. Management are cautiously optimistic that improved returns will be achieved in the year ahead.
The turf racing surface at Greyville has undergone its annual scheduled maintenance programme and should be ready for the first racing programme scheduled for 22nd October 2017. Scottsville is presently under maintenance and racing returns to Pietermaritzburg in December 2017.
The night racing programme at Greyville on Friday nights has commenced and will run through to April 2018. The continuity of this programme has significant benefits to the company in both the local and international betting markets.
Members will no doubt be aware of the major storm the best the coastal region on Tuesday 10th October 2017. Over 100mm of rain was recorded at Greyville within a very short period and facilities were tested particularly from wind damage. Whilst there was infrastructural damage caused by the storm most of the repair work has been effected. It was impressive to note the rapidity of water egress from the polytrack surface following the storm.
The KwaZulu-Natal Gaming and Betting Act 2010 is still under review and whilst Gold Circle has proposed certain amendments which would facilitate statutory and operational efficiencies for the company, it is not expected that promulgation the amendments will take place in the near future.
The Board of Gold Circle has had several positive interactions with the Office of the Premier as well as the KwaZulu-Natal Gaming and Betting Board. It is important that these relationships be maintained as they ensure that there is a greater understanding of the racing industry from a regulatory perspective.
The several matters previously reported to Members in respect of various actions by the bookmaking fraternity against the Racecourse Operators mainly with reference to Tellytrack have not as yet been resolved. Any outcome on these will be communicated to Members in due course.
Members are reminded that the Gold Circle Racing Club AGM has been scheduled for 5 December 2017 at 17:30.