Phumela Gaming & Leisure on Monday reported a 12% increase in headline earnings per share from ongoing operations from 104.62 cents to 117.2 cents for the year ended July.

Revenue increased by 15% year on year to R2.7 billion from R2.4 billion in 2007 with revenue from local operations up 9% to R2.5 billion and revenue from international operations up 118% to R256.6 million from R117.5 million.

Earnings attributable to equity holders increased marginally year on year mainly due to the post tax effect on earnings of the R24.5 million surplus on disposal of Bloemfontein Racecourse in the current year set off against the R31 million compensation received on termination of the Newmarket use agreement in the previous year.

Excluding the favourable impact of these transactions, earnings attributable from ongoing operations increased by 13% to R88.1 million from R78 million.

The group said that earnings growth in the second half of the year slowed as a result of the economic downturn experienced in both local and global markets.

Despite this, year on year profit before interest and tax from ongoing operations for international operations increased by 12% to R23.9 million (2007: R21.3 million) and local operations by 13% to R100.8 million (2007: R89,1 million).

Local operating costs increased by 10% year on year with the group continuing to invest in its local retail operations and betting technology.

Operating costs were generally contained within inflation other than costs incurred on social responsibility projects, promotions and marketing, racing information publications, information technology and the Bingo operation at Turffontein racecourse.

International operating costs increased by 37% year on year due to increased costs incurred in investing and promoting the broadcasting rights held under the RUK agreement, the Isle of Man Totalisator operation with further costs incurred on acquiring additional human capital.

Looking ahead, Phumela said that short to medium-term trading conditions in South Africa are expected to be negatively impacted by the current economic climate compounded by inflationary pressures and higher interest rates curbing consumer spend.

"Management remains confident that its international operations are well positioned to unlock further growth and are therefore targeting growth in earnings for the 2009 financial year," the group said.

The group declared a final dividend of 43 cents per share (2007: 40 cents per share) for the year ended 31 July 2008.

Source: I-Net Bridge