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Dark December For Gaming Industry

Poor Economy and Vat increase impact negatively

South Africa’s largest horseracing operator Phumelela Gaming and Leisure Limited have published a trading update and voluntary trading statement for the six months ended 31 January 2019.

The Sens statement indicates that Phumelela Gaming and Leisure Limited’s annual results narrative for the twelve months ended 31 July 2018, reflected on the South African economic environment that continued to deteriorate, and several negative factors were cited that made trading conditions very difficult.

Turffontein

As a consumer-facing business with a large retail footprint, pressure on discretionary spending in the economy directly affects us. In addition, we must absorb the full financial cost of the VAT increase effected last year.

Trading conditions remained challenging during the period ended 31 January 2019, for our local tote and fixed odds operations.

December was a particularly poor month for the gaming industry, both in South Africa and abroad. Consequently, Betting World and Supabets profits were negatively impacted.

Whilst cost control remains tight, betting turnovers are not keeping up with inflation on the expenses line and in fact declined in nominal terms.

Banaadeer wins at Turffontein 1 March 2014

Our international media rights operations and PGI on the Isle of Man returned excellent results for the period. Supaworld, a Joint Venture between Supabets and Betting World, is making progress. Interbet has performed well and in line with management expectations.

We furthermore continue to invest in reshaping the quality of the betting experience for our customers as we upgrade branches, grow the digital/on-line offering, and customer base.

The Phumelela management team are resolute and excited in right sizing the Group for the changing commercial realities. With this will come improved operating leverage.

ChekilliPhumelela bears an onerous burden in administering the sport of thoroughbred horseracing and continues to face challenges on several fronts. But the Group is convinced that it is best positioned to manage racing and defend the interests of all who make their living from this industry.

For the industry to survive, we all need to cooperate and contribute proportionately on a level playing field.

Furthermore, it is high time that we had regulatory and licensing predictability and consistency in the industry.

Given the trading pressures the Group faced for the period in South Africa, the initiative to cut costs, and a decline in profitability, the Board will give consideration to revising the dividend policy. The Group remains well capitalised.

  • Excerpt from JSE Sens statement issued on 7 March 2019

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14 comments on “Dark December For Gaming Industry

  1. Peter Wrensch says:

    Hardly surprising given what I experienced now. Lunch time, and with a cup of tea and donut in hand, security denies me entry to Betting World in Milnerton.
    No problem, Hollywood is 500m away. And has a pub lunch downstairs.
    Great way to encourage customers.

  2. The Dark Duke says:

    Onerous burden? You having a laugh? Where do those lovely profits come from international media rights?

  3. WILLIAM MILKOVITCH says:

    Those are the type of things/incidents that happens on and off to many people, over many years, Peter.

    Eventually racing people say ‘Stuff it, with or without racing is a rush’ and all the other sweet talk.

    Go well Peter

  4. fricks says:

    horse racing is one entity in south africa,
    merge the entities under one umbrella & set new race time tables in all provinces, and issue a national pool for race days which will attract the larger public on the betting pools.

    this would make intersting racing & gaming.

    this is public interest and not ownership of a sport & gaming leisure.

    why follow the world , when the pools are in the country.

    restructure properly.

    fricks

  5. Ian Jayes says:

    Before Phumelela all the proceeds of betting etc were applied to stakes and infrastructure now the lion’s share goes to shareholders. You can’t have your cake and eat it.

  6. Brian says:

    I really must commend them. Perfect comedy, perfect. Onerous Burden? Well, you know what happens when the kitchen gets hot, or do you?

  7. Pops says:

    ;You have to feel for Phumelela. Who stuck them with the burdensome, heavy, inconvenient, troublesome, awkward, crushing, back-breaking, oppressive; task of administering the sport of thoroughbred horseracing?And all for what?
    Come on,own up.

  8. Sean says:

    Well said Peter. You just have to look at how the local B/World is run in Blouberg to see why you are losing customers hand over fist. Stop allowing staff to play on their cellphones. Not only are you losing t/over but customers as well. No planning at exotic times with clients standing and complaining as there is only one person at her till. More t/over lost! You have to plead for them to put the tv. sound on. The tote dividend board is never up to date. You have to ask to refresh the entire time. Sometimes it still on race 1 at 3.30pm! On Met day people were taking multiple bets and I went to take a bet at one of the staff members who had nobody at her station. She proceeded to play on her cellphone and said I must go stand in the other que as she was dealing with soccer bets. There was nobody at her station. Carry on this way and losses will continue. Don’t expect rentals to drop because your t/over has, resulting in your cost of occupancy becoming too expensive. The problem lies with idle management! With pressure on discretionary spending you would think that client service and retention etc would be of paramount importance!! I haven’t seen anything addressed at this outlet in question and at others! As some Clients (friends) have said …they are passed gatvol!

  9. Art says:

    The writing has been on the wall.Phumelela and in particular Betting World with its ‘elite’clubs opening up allowing only their mates to bet with free food and free drink whilst the rest of the long serving patrons struggle along
    Come to Cspe Town and in particular the sea point branch which was renovated at an enormous cost, the downstairs section has a capacity for at least l50 punters but on average attracts a few soccer watchers who frequent the tote to watch tv whilst the upstairs section hosts on average 10 people a day (open section ) and an average of 5 per day in the ‘elite section’.
    Today one punter walked in to take advantage of the warmth and to get out of the rain.he slept for most of the afternoon and did not have a bet AND was not asked to leave.
    Cafe de ville at Blouberg is no better with a tote area for two operators and seating for about 10 punters max.The rest of the area is a public bar .
    Customer service is non existent .Changes are / have been made without consulting the punter who is the lifeblood of the industry.Despite bringing this problem to the attention of the people concerned they remain a faceless bunch of autocrats who are bent on taking the lions share of the profits for the shareholder instead of ploughing profits back into the business for long term success.
    It is time for a total revamp of the horse racing industry which has never looked more bleak..Restructiring of Phumela will hopefully start at the top .

  10. Leon Smuts says:

    I had the privilege to visit a betting shop in Singapore run by the Singapore Turf Club back in 2014 and what an eye opener this was. Packed with people, huge screens all around, up to date betting information and each counter, and there were many, staffed for every minute of the race program. True professionalism and dedication to serve their customers. If only……….

  11. Rian says:

    Its been going on for to many years , even under Moodley the Rocket man, dont know how Peter would even want to visit TAB branch in Milnerton, its a disgrace..
    Now he running the show with his extremely gifted Team
    SHAME ON YOU

  12. Ralph Fell says:

    As a long serving, or suffering employee of BW it is easy to concur with the above sentiments. For the ill-equipped, read clueless clerks and branch ‘management’, BW works like a Chinese laundry – in by 9 out by 5. All the lowly paid staff are thoroughly expendable. New robots are a dime a dozen. Yet I witnessed sucb profligacy amongst the suits that the word ‘whisteblower’ became a refrain to me. With the advent of numbers (racket?) all attention to dyed-in-the-wool racegoers became a burden. One of the suits said to me that reading the bottom line for numbers was the most fun he could have with his clothes on. The staff feeding the numbers coupons into the terminal would not know which end of a horse kicks. I have a recurring nightmare that virtual horseracing is a heartbeat away.

  13. Andre Hauptfleisch says:

    In light of these results it would be a fantastic time for Phumelela executives to give themselves a huge pat on the back and start thinking about their next huge bonuses they so rightfully deserve.

  14. Rian says:

    Not only Bonuses Andre What about Housing Loans and Motor cars, medical aids and lists go on and on, certainly not for the bulk of the workforce.
    Thank god i wont be alive to see Virtual Horseracing Ralph,

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