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SAIL Group Limited - Unaudited Group results for the 6 months ended 30 June 2002
SAIL Group Limited
Unaudited Group results for the 6 months ended 30 June 2002
SAIL GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1941/014601/06),
Share Code: SIR, ISIN Code: ZAE000039962 ("SAIL")
- Revenue up by 123%
- Profit from operations up by 113%
- Profit before taxation, abnormal items and amortisation
of intangibles up by 25%
- Headline earnings before abnormal items up by 13%
>> INCOME STATEMENT
for the six months ended 30 June 2002
Unaudited Unaudited Audited
6 months 6 months 12 months
30 June 2002 30 June 2001 31 December 2001
Notes R`000 R`000 R`000
Revenue 88 957 39 974 108 882
Other income 6 649 5 583 10 518
Operating expenses (82 952) (39 607) (99 013)
Profit from
operations 12 654 5 950 20 387
Finance costs (10 342) (7 416) (13 384)
Income from
associates
and joint
ventures 2 8 872 10 434 11 136
Profit before
taxation, abnormal
items and
amortisation
of intangibles 11 184 8 968 18 139
Amortisation of
intangibles (3 418) (1 896) (3 976)
Abnormal items 3 (2 410) (761) (4 420)
Profit before
taxation 5 356 6 311 9 743
Taxation (917) 612 2 724
Profit after taxation 4 439 6 923 12 467
Minority interest 342 551 (210)
Net profit for the period 4 781 7 474 12 257
>> RECONCILIATION OF HEADLINE EARNINGS
for the six months ended 30 June 2002
Unaudited Unaudited Audited
6 months 6 months 12 months
30 June 2002 30 June 2001 31 December 2001
Notes R`000 R`000 R`000
Attributable
earnings 4 781 7 474 12 257
Goodwill
amortisation net
of minorities`
interest 3 415 1 188 3 938
Loss on write
down/sale of
assets net of
minorities`
interest 3 1 059 732 4 368
Headline earnings
after abnormal
items 9 255 9 394 20 563
Abnormal items 3 1 331 - -
Headline earnings
before abnormal
items 10 586 9 394 20 563
Headline earnings
per share before
abnormal items (cents) 3.86 3.83 8.07
Headline earnings
per share after
abnormal items (cents) 3.38 3.83 8.07
Earnings per share (cents) 1.75 3.05 4.81
Weighted average shares
in issue (000) 273 945 245 168 254 776
>> BALANCE SHEET
at 30 June 2002
Unaudited Unaudited Audited
6 months 6 months 12 months
30 June 2002 30 June 2001 31 December 2001
Notes R`000 R`000 R`000
ASSETS
Non-current assets
Deferred taxation 11 830 5 182 9 121
Intangible assets 1 178 400 95 526 94 572
Investments and loans 12 231 6 876 12 267
Investments in
associates and
joint ventures 1 78 969 72 395 163 869
Property, plant and
equipment 55 364 47 026 53 810
336 794 227 005 333 639
Current assets
Other current assets 69 189 33 934 47 529
Short-term investments
and loans 2 721 8 542 5 651
Cash and cash equivalents 39 912 61 577 38 923
111 822 104 053 92 103
Total assets 448 616 331 058 425 742
EQUITY AND LIABILITIES
Capital and
reserves 1 243 423 191 777 238 945
Minority interest 4 611 3 969 4 988
Non-current liabilities
Interest bearing
borrowings 109 551 70 533 108 589
Non-interest bearing
borrowings 4 386 3 209 4 500
Income received in advance 4 168 7 694 4 324
118 105 81 436 117 413
Current liabilities
Bank overdraft 7 635 2 526 5 935
Other current liabilities 65 491 32 022 44 899
Income received in advance 9 351 19 328 13 562
82 477 53 876 64 396
Total equity and
liabilities 448 616 331 058 425 742
Net asset value (cents) 90.56 79.84 89.03
Shares in issue (`000) 273 898 245 168 273 992
>> STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2002
Non-
Distri- distri-
Stated butable butable
capital reserves reserves Total
R`000 R`000 R`000 R`000
Balance at 30 June 2001 154 034 34 002 3 741 191 777
Issue of stated capital 42 335 - - 42 335
Net profit for the period - 4 785 - 4 785
Foreign currency translation
reserve - - 48 48
Transfer to non-distributable
reserve - (2 245) 2 245 -
Balance at
31 December 2001 196 369 36 542 6 034 238 945
Net profit for the period - 4 781 - 4 781
Share issue expenses
written off (267) - - (267)
Share buyback (134) - - (134)
Foreign currency
translation reserve - - 98 98
Balance at 30 June 2002 195 968 41 323 6 132 243 423
>> CASH FLOW STATEMENT
for the six months ended 30 June 2002
Unaudited Unaudited Audited
6 months 6 months 12 months
30 June 2002 30 June 2001 31 December 2001
R`000 R`000 R`000
Profit from operations 12 654 5 950 20 387
Other income (6 649) (5 583) (10 518)
Non cash flow adjustments 3 856 2 162 280
Cash generated by operating
activities before working
capital adjustments 9 861 2 529 10 149
Abnormal items (1 331) - -
(Increase)/decrease in
working capital (3 961) 4 562 5 547
Cash generated by operating
activities 4 569 7 091 15 696
Other income 6 649 5 583 10 518
Finance costs (8 759) (7 416) (13 384)
Taxation paid (35) (1 224) (1 897)
Cash inflow from operating
activities 2 424 4 034 10 933
Cash outflow from investing
activities (1 165) (17 734) (42 124)
Cash outflow from financing
activities (1 970) (758) (9 330)
Net decrease in cash and
cash equivalents (711) (14 458) (40 521)
Cash and cash equivalents
at beginning of period 32 988 73 509 73 509
Cash and cash equivalents
at end of period 32 277 59 051 32 988
Notes
1. Effective 1 September 2001 SAIL acquired a 100% stake in SAIL Sport and
Entertainment, which provides complete sponsorship and event management services
to corporates. The acquisition was carried as an associate until 20 February
2002, when Competition Commission approval was granted - thereafter it is
carried as a subsidiary. The acquisition of the business was funded by the issue
of 28 823 529 SAIL shares at R1,50 and borrowings of R45 million.
2. Included in "income from associates and joint ventures" is an amount of R3
million relating to a grant received by Border Bears (Pty) Ltd. The grant is for
upgrading of the stadium prior to the Cricket World Cup 2003. The grant is
recognised as the stadium is upgraded, on a percentage of completion basis. The
leasehold improvements will be amortised on a straight-line basis over its
estimated useful life. The Cricket World Cup 2003 is expected to yield
substantial profits in the 2003 financial year.
3. Abnormal items relate to the write-down of loans and non-performing assets,
and costs associated with international expansion. The abnormal items disclosed
are made up as follows:
R Million
Write-down of loans and non-performing assets 1,08
Costs associated with international expansion 1,33
4. The interim results comply with South African Statements of Generally
Accepted Accounting Practice and are consistent with accounting policies applied
for the year ended 31 December 2001 except for the adoption of AC135. Investment
properties held for rental are carried at fair value. No adjustments have been
made as an independent valuation performed at 31 December 2001 indicates that
the fair value approximates the cost at which the properties are carried.
5. SAIL is currently in negotiations with a financial institution regarding a
tax-structured liability that was inherited by SAIL on acquisition of its stake
in the Blue Bulls company. As the outcome is uncertain no provision has been
made for the potential liability, which is capped at R3,6 million after
taxation. SAIL is confident of a positive outcome.
6. The Board is currently considering the estimated write-off period in respect
of Goodwill relating to non-sport brand acquisitions. This may result in an
accelerated write-off of Goodwill in future financial periods.
Review of results
SAIL is pleased to report that its core business is performing satisfactorily
under present economic circumstances. Revenue is up by 123%, and profit from
operations increased by 113%. Profit before taxation, abnormal items and
amortisation of intangibles, is up by 25%. SAIL`s Headline Earnings before
abnormal items, is up by 13% from R9,4 million to R10,6 million. Headline
Earnings per share, before abnormal items, is up by 1% from 3.83 cents to 3.86
cents.
Cash generated by operating activities, before working capital adjustments, is
up by R7,3 million (289%), whilst working capital increased by R8,5 million, due
mainly to a decrease in income received in advance in the current period. This
decrease was caused by a lack of high profile test matches and poor suite and
season ticket sales at the Blue Bulls. The timing impact of major events on
interim period cash flows is a characteristic of SAIL`s business.
The growth in Headline Earnings and Headline Earnings per share before abnormal
items, is pleasing considering the lack of high profile tests at some of SAIL`s
investments and a global recessionary environment, which has impacted on
consumer and advertising spend.
Continued pressure on revenue streams will have to be countered by structural
changes.
The above factors have been largely offset by the positive effect of SAIL`s
latest acquisition, SAIL Sport and Entertainment.
SAIL`s Headline Earnings and Headline Earnings per share after abnormal items,
are down by 1% and 12% respectively and Earnings per share after abnormal items,
is down by 43% which is attributable to the abovementioned factors, impairment
write-offs on non-performing and non-core assets, and international expansion
costs.
Prospects
Over the past two years, SAIL has strengthened its management capacity
significantly, and its independent business units now have the capacity to
operate on a decentralised basis. This is set to deliver increased earnings and
cash flow through cost savings and employing SAIL`s intellectual capital.
SAIL has identified non-core and non-performing assets, and is in the process of
either restructuring or disposing of these. This is expected to substantially
increase both earnings and cash generated from operations in the 2003 financial
year, but may lead to further impairment write-offs in the current year.
The sport and media industries are currently facing a contracting market cycle
which has an impact on the rights, sponsorship and advertising segments of
SAIL`s revenue streams. SAIL is cautiously pursuing its international
objectives. Progress is being made with international expansion, although slow
in certain areas, and prospects of earning a major portion of SAIL`s revenues in
hard currency is becoming a reality. SAIL`s unique sports business models and
the ability of SAIL to add value through its intellectual capital are finding
acceptance internationally.
SAIL believes that the restructuring process that rugby in South Africa is going
through will have a positive effect on the financial viability of the sport.
SAIL Sport and Entertainment has increased its client base, which should see
even better results from this business unit over the next six to twelve months.
Mobile telephony applications for the delivery of video sport content to
consumers may be a reality before the end of the year and SAIL will participate
in this together with identified partners.
For and on the behalf of the Board
BC Esterhuyzen KSE Troskie
Chairperson Company Secretary
Cape Town
10 September 2002
Registered Office
28th Floor
No 1 Thibault Square
Long Street, Cape Town, 8001
PO Box 4755, Cape Town, 8000
Tel: (021) 425 2288
Date: 10/09/2002 08:00:00 AM Produced by the JSE SENS Department
