Highlights

• Headline earnings from ongoing operations up 14% to R89.5 million (2007: R78.4 million).

• Diluted HEPS from ongoing operations up 13% to 116,89c (2007: 103,19c)

• Profit from international operations 16% of total.

• Revenue from local operations was up 9% to R2.5 billion and revenue from international operations up 118% to R256.6 million (2007: R117.5 million).

• Earnings attributable from ongoing operations increased by 13% to R88.1 million (2007: R78 million).

• Ranked fifth in the 2007 Business Times “Top 100 companies” over the last five years.

• Jim Tennant (60) retires as Group CEO after nine years with the Group, but remains until January 2009 to ensure seamless transition.

• Rian du Plessis (47) appointed Group CEO of Phumelela and CEO of Phumelela Gold Enterprises (PGE) as of 1 August, 2008.

• David Attenborough (45), formerly Phumelela’s Chief Operating Officer, appointed CEO of Phumelela’s South African-based operations on 1 August, 2008.

“Our stated vision is to expand the international arm of the business to 50% of total profits in the next three years. As part of this strategy, PGE, a partnership between Phumelela and Gold Circle, acquired an indirect shareholding of 20% of the issued capital in Automatic Systems Limited (ASL), a company listed on the Mauritius Stock Exchange, for R5.7 million in December 2007. ASL is one of two companies licensed to operate a totalisator on the island.

“In May 2008, Phumelela also acquired an additional 2.5% equity interest in its associate company, Betting World (Pty) Limited, for R1.4 million, increasing Phumelela’s equity holding to 42.5%.”

Phumelela, which listed on the JSE’s Travel and Leisure sector in 2002, has seen growth in headline earnings per share (HEPS) from ongoing operations for the financial year 2008, up 12% to 117,20 cents per share, from 104,62 cents per share in FY 2007.

Phumelela operates tote betting in seven of South Africa’s nine provinces and conducts horseracing in four. Currently about 16% of the Group’s profits come from international operations.

Through PGE, the Group:

• Owns a totalisator license in the Isle of Man and provides betting opportunities via its online totalisator operation to a worldwide customer base.

• Owns the exclusive worldwide (UK and Ireland excluded) broadcasting rights to 30 UK racecourses. The agreement securing the rights from Racing UK (RUK) continues to 28 February 2010 and is renewable under the same terms and conditions, provided certain criteria are met.

• Operates a television studio that broadcasts live horseracing audio, visual and data from South Africa, the UK and other international racecourses to betting shops and private subscribers worldwide.

Outgoing CEO Jim Tennant has agreed to continue in a full-time capacity until at least the end of the year to ensure a seamless transition and to focus on certain key projects.

“We are looking at various ways of maximising the value and returns from our properties, without disposing of racing assets,” Tennant says.

Phumelela Chief Financial Officer, Andreas Heide, says the Group has invested more than R70 million in the past year in its South African retail footprint, racecourses, stabling and new technology.

The dividend for the full year increased by 13% to 68 cents a share.

“We have invested heavily in improving the business,” Heide says. “We also spent R15.7 million on a share buyback.”

On current operating conditions Group CEO Rian du Plessis said: “In the short-term there has been some weakness in tote betting turnovers in South Africa, but we are working hard to compensate for that with Soccer 6 and the introduction of new bet types, such as the Pick 3 which we launched today, and the Soccer 4, which we are planning to launch towards the end of the year.

“We will also be applying for an online gaming license when these licenses become available and believe that there will be excellent growth in online gaming, with huge potential for poker, casino, bingo and slots online.

“Our biggest opportunity, however, is internationally. I believe that we can organically grow our international business substantially in excess of inflation,” du Plessis says. “We are also looking to augment our organic growth through strategic acquisitions.

“We are determined to continue improving our results, despite the challenging economic climate in South Africa and the rest of the world.”

The South African horseracing tote market is worth about R4.7 billion, while the global market is worth US$100 billion (about R750 billion).

“Let’s add some jet-fuel to that,” concluded Du Plessis.