Phumelela share price drops

The Phumelela share price dropped today by 9,5% or R 1 per share to R 9,50 per share. That's 12,5% in the last 30 days, and 16,3% over the last 12 months. 21 000 shares offered but only 500 bid for at the closing price.

Was it coincidence that this happened on the day they announced everything was hunky dory on the tote abberations. ?

do you think something bigger is going down? maybe there'll be another public statement soon..

I don't think it is necessarily anything sinister but rather the expiry of the broadcasting arrangement that they had with UK racecourses and which has to be a blow:

PHUMELELA GOLD ENTERPRISES: INTERNATIONAL DISTRIBUTION RIGHTS HELD UNDER
AGREEMENT WITH RACECOURSE MEDIA GROUP
Phumelela announces that Racecourse Media Group (RMG*) and At The Races (ATR*)
are moving forward with a new joint venture company which will exploit the
international distribution rights for all UK and Irish racecourses into bricks
and mortar betting outlets worldwide. The international distribution rights
currently held by Phumelela Gold Enterprises (PGE) under agreement with RMG will
accordingly terminate on 28 February 2010. Despite this latest development the
relationship between RMG and PGE remains strong and both parties continue to
explore business opportunities between them.
Shareholders are advised that the pro-forma financial effect of this latest
development on the Company's results for the year ended 31 July 2009, on the
assumption that the rights held under the distribution agreement had been
terminated on 31 July 2008, is set out below. The pro-forma financial effect is
for illustrative purposes only, has not been reviewed or reported on by the
Company's auditors and is the responsibility of the company's directors.
Pro-forma Pro-forma
Audited effect restated
12 months 12 months 12 months
31 July 31 July 31 July
2009 2009 2009 %
R'000 R'000 R'000 Change
Profit for the year 70 665 (9 882) 60 783 (14)
cents cents cents
Basic earnings per share 93,35 (13,06) 80,29 (14)
Headline earnings per share 93,67 (13,06) 80,61 (14)
Net asset value per share 481,52 (13,08) 468,44 (3)
(*) RMG, Racecourse Media Group is the umbrella organisation for the 30 UK
racecourses which own and operate Racing UK (RUK).
(*) ATR, At The Races owns various media rights to 30 UK racecourses and 26
Irish racecourses.
Johannesburg
11 January 2010

Then add to the above the resignation of David Attenborough and is it any wonder that the share price has contracted?

Spot on Andrewest

Wow,I'm shocked,this is such a cutting edge company and their share price is going down.I wonder why,maybe because they are too stupid to listen to their customers?

Garrick, we broke the news that they had lost the rights here on ABC over a month ago,wondered at the time how it will effect the current showing of South African racing in the betting shops in the uk(you can`t watch from home),UK punters are not interested in SAF racing,its a bit like how you guys feel about swedish and french racing.

So when the deal runs out will PGE get a good deal for SAF pictures? and how much will they have to pay to show UK racing in SA?

And if paying to get UK racing becomes too expensive will a search party be sent out to try to find the lost local racing public? Believe me they won't be found in the Piggs Peak Resort but a trip to the local Pick 'n Pay might yield results!!!

agreed Garrick, also with reference to your other post about the low prize monies, this is all the more reason why SAF racing bodies Phumelela and GC alike should spend more effort on growing a local market. Even though the overseas contracts and deals are lucrative in terms of bottom line profits etc etc it is dangerous to put all the eggs in that basket, at the cost of the local market...there will be nothing to fall back onto if deals go awry.

Hi Garrick

The JSE is a reasonably efficient market and I would not expect them to take 30 days to digest the loss of coverage rights bad news before the effect is reflected in the share price. Nor was there a significant ripple after the announcement of DA's resignation. The share price movement has held at R 9,50 today and suggests there is either more bad news on the way or far more sellers than buyers based on forward perceptions. Note that the negative movement after the loss of the coverage rights was only 3% and the other 9,5% happened yesterday long after this news had been digested. This is part of a long term downward trend in a market which has significantly recovered in the last 12 months.

Gajima - You may well be correct but consider the following ;

How often have you heard dramatic/catastrophic news on the radio regarding a listed company followed by the statement - 'The share closed Rx HIGHER on the JSE....'.Incredible but its true and happens regularly.

I, however, tend to agree with you in your contention that there may well be more negative news to follow.

With all the negative news out there concerning Phumelela I'm actually surprised that the share price is still relatively healthy. The time to get in was at the time of listing when they offered public shares at 50c per share!

It was the same with the smaller listed Gaming companies. Their growth was terrific in the first 3 to 5 years of listing and then once they hit their straps there was only one way to go....down. You cannot sustain a gaming market in SAf with everything else going on globally. The only exception may be Sun International (KERSAF I believe) but thats because of their size and diverse interests.

Remember that Mr. Attenborough has his share options coming as well. This could be interesting to keep an eye on, unless he keeps his shares??

Nowhere to go but down in my opinion.

go short...bumpy road ahead for Phumelela