Phumelela is essentially a retail business, and is directly affected by the health (or otherwise) of the local economy. And the economic headwinds of financial 2018 have intensified in 2019.

At the interim stage, betting income fell 7% year on year but expenses continued to go up. Downward pressure on the income line and rising expenses cannot be maintained indefinitely, so cash generated was negative and the debt equity ratio deteriorated over the six months. Gearing is 30%. In short, the group has no balance sheet flexibility. It is now in breach of its debt covenants.

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