Who are the real Phumelela shareholders ?

Are they the shareholders who have invested in the company and are getting a dividend or the owners of racehorses who will see no increase in stakes over the next year.

In my opinion these buffoons should be feeding the pockets of those that are feeding the horse. As owners the letters from our trainers announcing an increase in fees keep coming but we receive nothing from the bigwigs who went to the UK to promote our product but cannot offer anything beneficial to those wanting to own a horse.

Why spend R40 million on the lights at Turffontein ? Rather wait for the economy to improve and put the money into stakes. I don't care if my horse runs under the sun as long as I receive more for my investment.

I don't need my name in lights, I just need my bank balance to be out of the red and into the green.

The 'all up' bet was offered by Gold Circle in the late 1980's and it was a waste of time. It's nothing new and won't solve our problems.

Follow the example of the rulers of the land, if you want any action.
all racehorse owners should scratch their horses for a period of 3 months.
nor nominate the horse to run.
let the trainers race them during the day to keep them fit.

Phumelela cannot hold out for 3 months..
the board and senior management will be fired.

very simple solution.

no races, no tote pools
no tote pools, no income
income is down as it is, cannot afford 3 months of no income..

The Racing trust is the main shareholder I think they wanted pretty lights.

On the upside when the lights are all on the Druggies and Hookers will be elsewhere so to drive to Big T will be a lot safer.

On the downside. The lights will be stolen within a few minutes of going up and sold for scrap metal at 5 rand a Ton.

Either way 40 million well spent.

Uncle Ormie thinks the lights will upset his horsies but as per the experts on the board no such problem the horses in Randjies cant see so far.

ALEC HOGG: On Friday evening late, we had financial results out from Phumelela - almost the same as the financial results that came out late from Altron today. We are expecting to see Robbie Venter in the studio tomorrow evening. Maybe he needs a little more time to get his defences ready because those were really bad results out of Altron - and Phumelela - not great either. Rian du Plessis, the chief executive is in the studio with us. Rian the first thing that jumps out at me is when you look at your cash flow statement - you’ve actually dipped into reserves to pay a dividend. Is that wise in this kind of economic climate?

RIAN DU PLESSIS: Yes, our balance sheet is totally ungeared. We’re sitting on R100million of cash and the principle of “use it or lose it” applies. We haven’t made any acquisitions over the past year - we will be looking at that for the next financial year, but the board and I believe in our financial model going forward and although we didn’t have a year to be proud of, we cannot live outside of our industry - we did gain marginal market share here in South Africa against our partners, Gold Circle - ever so slightly but still…

ALEC HOGG: You don’t count the casinos perhaps as competitors for the gaming …

RIAN DU PLESSIS: We do compete for the punters’ rand or dollar, but ours is an informed bet whereas theirs is a game of chance and we like to believe that the lifetime ownership of our customers is far better and far longer than those of the casinos. We encourage our punters to bet responsibly and we also encourage them to bet smaller quantities, more regularly.

ALEC HOGG: What is interesting is the whole international development of Phumelela has been the one that people were hoping would bail you out in difficult times. But in this past financial year it didn’t really come to the party - the international income, net, went from 14% to 16.5% of the total - which is still very small in the overall pot.

RIAN DU PLESSIS: International is now 25% of our bottom line so I’m not sure where you get your numbers from - we’re up from 19% to 25% of our total bottom line. Yes, we would have expected and hoped to do even better so if you compare the first six months growth in international turnover to the second six months, we grew slower in the second six months…

ALEC HOGG: I was working on the turnovers, not on the bottom line. But the bottom line, even so, 25% I suppose it is growing. Are you going to get to a lot higher percentage in the future?

RIAN DU PLESSIS: Well that’s what we’re working towards and our three-year plan is to have 50% of our profits from international operations - admittedly not at the expense of local profits. We would like to grow our local profits, but just grow our international business even faster. It should be borne in mind, and nobody makes any excuses, but we had some severe technological challenges in getting the big international websites, not only up and trading, but trading at the levels at which they should be trading. You may have seen our announcement in May when we did a strategic transaction partnership with 888, which has some 13 million online punters. They encountered the technical difficulties on their side and although we had hoped they’d be up and trading during the course of our financial year, they’ve been delayed and we now expect them to only start trading on 1 January 2010.

ALEC HOGG: That’s also horseracing betting?

RIAN DU PLESSIS: Yes absolutely.

ALEC HOGG: Having a look at the way going forward - you are a new chief executive so it’s interesting to hear you say ‘use it or lose it’ with your cash pile - down from R144million to R100million. If you have another tough year like the one that you had now, would you have no problems in again funding your dividend out of your reserves - or where is a good level for your cash reserves - that’s really what I’m getting at?

RIAN DU PLESSIS: Well we took a long hard look at that and again in the midst of economic turmoil you go more conservative than you otherwise would. This business is highly cash generative so modest gearing would under normal circumstances be appropriate. We took the overly conservative route during the past financial year where we didn’t spend any of our cash other than on capex so we didn’t make any acquisitions, and sat on our cash for the best part of the year. We’ve seen what could be the elements of a turnaround, and I guess you’re better positioned than I am, to say if there is any substance in that. We think it’s premature but we are in the new financial year, looking at making a few acquisitions. One or more may be here but the vast majority of the focus will be abroad.

ALEC HOGG: Having a look at the Betting World operator - you talk about acquisitions - that could be quite exciting. It’s a local business that hasn’t really performed yet - your fixed odds bookmaking business - but you have been expanding it.

RIAN DU PLESSIS: Yes, we hold Betting World in high regard and it’s very much a part of our strategic focus going forward. The past financial year was a year of investment for Betting World, so their profits were down 40% but that was on an almost doubling of their retail footprint as well as spending a considerable amount of money on marketing the brand. We are positioning Betting World as the leading brand for the soccer World Cup that happens next year. You see Betting World is able to offer the array of 17 tote bets, plus whatever else you want to bet on, whether it’s sport or whether - whatever else you can think of on a fixed odds basis - whereas our tote outlets are limited to tote bets. We think that when you do look at the upmarket side of our business, as well as the tourists, we need to offer them the full suite to compete for their dollars or euros that they’ll bring.

ALEC HOGG: Shareholders always look at the prospects and from your perspective you look at cost containment, which you managed to do pretty well in this past financial year. Also new bets that you’re bringing out and international expansion - those new bets - is this what you’re referring to now …

RIAN DU PLESSIS: Firstly we’re about to introduce the All-Up Bet which is very successful in Mauritius and commands as much as 15% - just the one bet type commands as much as 15% of their bets and we think that it will go down well in South Africa.

ALEC HOGG: What is that, exactly?

RIAN DU PLESSIS: You bet on three winners but could be on any race so it’s not like a jackpot which is consecutive races or pick-6s etcetera…

ALEC HOGG: It’s going to be very popular given the popularity of - at the moment you can’t do that kind of thing - you’ve got to go…

RIAN DU PLESSIS: Well you’ve got to go to the counter and place your bets individually - the exotics and win bets, particularly for the international punters - win and place is still an important part of the component and this moves it from a win bet to an exotic bet.

ALEC HOGG: That could give you a turnover boost, but as far as the capex is concerned, you do have the lights at Turffontein that you’re investing in, I see from your numbers that R26million has already been spent in the 2009 financial year - how much is it going to be - in total?

RIAN DU PLESSIS: Approximately R40million give or take …

ALEC HOGG: It’s not a big hit then in this financial year …

RIAN DU PLESSIS: I don’t think it will be less than R40million but around that - you know how construction projects are. But we think night racing is an important part of the thoroughbred horseracing industry. It’s important to get corporates back into the sport. It’s one of things that we are going to focus on very heavily going forward. We just don’t believe that horseracing remotely gets an appropriate share of the corporate marketing spend… and we’re the fourth most popular sport in South Africa and globally, probably either second or third most popular sport in the world after football. Yet in South Africa we get less than R50million out of the corporate wallet every year.

ALEC HOGG: You’ve made some progress with Sansui who are coming in there…

RIAN DU PLESSIS: We’ve made some progress, and watch this space.

ALEC HOGG: As far as my constituency or one of my constituencies concerned, racehorse owners - last year’s stakes were up 10%. On these financial results what does the future hold for stakes increases?

RIAN DU PLESSIS: For this year, in terms of the formula we would expect stakes to be flat - so despite the fact that our profits are down stakes will be flat. Which given what’s happening elsewhere in the world, I tell you is not a bad position to be in…