From fin24.com
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Cape Town - Tote operator Phumelela Gaming & Leisure said on Wednesday there were massive opportunities for offshore expansion - hinting that expansion into the lucrative Far East market was on the cards.
CEO Jim Tennant told Fin24 that although there were sometimes big lead times before a deal could be landed, the potential for Phumelela's to expand offshore was "beyond anything you can imagine."
Tenant was speaking at the release of Phumelela's half year to end-January 2008 results, which showed a 22% increase in bottom line earnings from continuing operations to R41.5m (earnings per share was up 22% to 85c/share) from a 17% hike in turnover to R1.3bn.
Phumelela's offshore operations are still fairly small measured against the mainstay local tote operations.
International net income - mainly derived from Australia - more than doubled to R114.5m with net income coming in 24% higher at R41m. The "margin sacrifice" in the fledgling international business is perhaps understandable as Phumelela builds up its market share.
Tennant said margins should improve in the year ahead - especially when Phumelela opened up its websites.
Tennant said Phumelela had not set a target of what proportion of its revenue should be derived from offshore markets.
But he noted that the international tote market was worth an estimated $100bn with 60% of the global market situated in the Far East.
Asked if Phumelela was looking at more offshore markets, Tennant said Phumelela was currently investigating a market in the Far East.
But he would not give additional details. "I can't be specific. I don't want to give away too much at this point."
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