| Tue 16 Sep 2003, 17:09 | | Results For The Year To 30 June 2003 |
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Sasani Limited - Results For The Year To 30 June 2003
SASANI LIMITED
Company Registration number: 1955/000259/06
Share Code: SSA
ISIN Code: ZAE000017851
SUMMARISED RESULTS FOR THE YEAR TO 30 JUNE 2003
GROUP INCOME STATEMENT
ACTUAL AUDITED ACTUAL AUDITED
30 JUNE 2003 30 JUNE 2002
R"000 R"000
Revenue 196,067 237,058
Contribution 131,598 133,674
Overheads (88,202) (90,435)
Operating profit before depreciation 43,396 43,239
(EBITDA)
Depreciation (26,998) (27,463)
Amortisation of trademarks (6,430) (7,832)
Share of profit of associate company 1,285 936
Operating profit before exceptional 11,253 8,880
items
Exceptional items (1,790) (4,809)
Exceptional items attributable to - (1,695)
associate
Operating profit 9,463 2,376
Net interest 1,120 (1,720)
Profit before taxation 10,583 656
Taxation - this year (3,308) (91)
Taxation attributable to associate (856) (430)
Profit after taxation 6,419 135
Outside shareholders" interest - (613)
Earnings attributable to ordinary 6,419 (478)
shareholders
Headline earnings reconciliation
Earnings attributable to ordinary 6,419 (478)
shareholders
Exceptional items (net of 166 1,786
taxation and minorities):
Headline earnings 6,585 1,308
Earnings per ordinary share (cents)
Headline earnings 10.6 2.0
Earnings attributable to ordinary (0.7)
shareholders 10.4
GROUP BALANCE SHEET
ACTUAL AUDITED ACTUAL AUDITED
30 JUNE 2003 30 JUNE 2002
R"000 R"000
ASSETS
Non-current assets 117,898 132,418
Property, plant and equipment 73,794 81,798
Trademarks and copyrights 44,283 50,713
Other assets (179) (93)
Current assets 74,922 72,050
Inventories 4,418 5,430
Trade and other receivables 27,490 36,000
Cash and cash equivalents 43,014 30,620
Total assets 192,820 204,468
EQUITY AND LIABILITIES
Capital and reserves
Issued capital and reserves 155,862 153,039
Deferred taxation 4,615 5,002
Non-current liabilities 1,325 12,833
Interest bearing borrowings 1,325 12,833
Current liabilities 31,018 33,594
Trade and other payables 20,187 25,099
Taxation payable 2,184 661
Interest bearing borrowings 8,647 7,834
Total equity and liabilities 192,820 204,468
Gearing percentage 6.4 13.5
Net asset value per share (cents)
Including intangible assets 251.8 232.7
Excluding intangible assets 180.3 155.6
Net cash / debt 33,042 9,953
Cash and cash equivalents 43,014 30,620
Interest bearing borrowings (short (9,972) (20,667)
& long term)
GROUP CASH FLOW STATEMENT
ACTUAL AUDITED ACTUAL AUDITED
30 JUNE 2003 30 JUNE 2002
R"000 R"000
Cash generated by operations 41,419 41,137
Net interest received / (paid) 1,120 (1,720)
Increase in working capital 4,610 (177)
Taxation paid (1,250) (4,178)
Cash available from operations 45,899 35,062
Net receipts for businesses - 5,101
Net fixed assets acquired (19,443) (17,864)
Other investing activities 229 1,569
Financing activities (14,291) (15,272)
Net movement in cash and cash 12,394 8,596
equivalents
Cash and cash equivalents at 30,620 25,530
beginning of the period
Cash and cash equivalents of (3,506)
businesses sold
Cash and cash equivalents at end of 43,014 30,620
the period
GROUP STATEMENT OF CHANGES IN EQUITY
ACTUAL AUDITED ACTUAL AUDITED
30 JUNE 2003 30 JUNE 2002
R"000 R"000
Share Capital & Premium
Balance at beginning of year 111,818 111,818
Movement due to share buyback (3,596)
Balance at the end of the year 108,222 111,818
Non Distributable Reserves
Balance at the beginning and end of 225 225
the year
Retained earnings
Balance at beginning of year 40,996 41,474
Net Profit / (Loss) for the year 6,419 (478)
Balance at the end of the year 47,415 40,996
Total ordinary shareholders interest 155,862 153,039
Basis of preparation
The consolidated financial statements are prepared in accordance with and comply
with South African Statements of Generally Accepted Accounting Practice. The
financial statements are prepared on the historical cost basis. The accounting
policies used by the group are consistent with those of the previous year,
except for the application of AC 133, being the statement on the treatment of
financial instruments and circular 7/2002 clarifying the treatment of headline
earnings. The adoption of AC 133 did not have a material effect on the results
of the group.
The group and company annual financial statements of Sasani Limited have been
audited by PriceWaterhouseCoopers Inc and their unqualified audit opinion is
available for inspection at the registered offices of the company.
CEO"s REPORT
Overview
The year to end June 2003 was used to re-focus Sasani into its core business and
to position it to be able to achieve a better return on assets in the future.
Returns were significantly improved, but by no means good. The group continued
to be cash generative and is now effectively debt free.
New opportunities and an anticipated increase in the degree of government
support offer encouraging
prospects in an industry otherwise characterised by an oversupply of assets and
reducing barriers to entry.
Two new directors have been appointed with effect from 12 September 2003. Ronnie
van Wijk joins the board in a largely non-executive role, and we welcome his
broad-based experience in the industry. Peter Theron, who has been part of the
executive management team leading Sasani"s Cape Town operations for the past 5
years, has been recognised for his contribution and asked to take on the further
responsibilities associated with a Board appointment, as an executive director.
Nature of the Business
Over the past year Sasani has been positioned as the main provider of
infrastructural facilities into the broader film production sector. Through its
significant influence on every feature film, commercial and television series
shot on film in South Africa, Sasani underpins the film industry in this
country. In addition, it services significant parts of the video production
sector and broadcasts into Africa on secondary broadcasters.
Results
Almost all areas of the business achieved satisfactory growth in revenue and
profits. The exceptions were the Movie Camera Company partially due to the
circumstances and sentiment surrounding legal proceedings in Cape Town (which
are now over) and Sasani Film Services, where the strength of the Rand reduced
Dollar based revenues.
This resulted in an overall decline in revenue of continuing operations of 3%
from R 202 million, for the year to 30 June 2002, to R 196 million for the year
to 30 June 2003. The difference between the 30 June 2002 published revenue and
that of the continuing operations related to Sasani Communications, Blue Moon
and Lava Multimedia, which were disposed of in the prior year.
Costs incurred in the production of the group"s income for the year to 30 June
2003 were reduced by 7% on the prior year from R 164m to R 153m.
Operating profits achieved on the continuing operations before exceptional items
and trademark amortisation amounted to R 17,7 million against the prior year"s R
12,1 million.
Attributable income improved from a loss of (R 0.4m) to R 6,4 million. This
yields an earnings per share (EPS) position of 10,4 cents against the loss in
the prior year of (0.7) cents.
We have restated headline earnings and headline earnings per share (HEPS) to
comply with circular 7/2002 which resulted in the adding back of the trademark
amortisation being disallowed. The HEPS under the new treatment amounting to
10.6 cents compares with the prior year restated HEPS of 2 cents. Under the
previous treatment this would have resulted in HEPS of 21 cents for the current
year against the prior years HEPS of 13.9 cents.
Cash generated by operations was healthy at R 41 million, with working capital
management improvements yielding an additional R4,6 million. This resulted in
R46m as the total cash available from operations, compared to an equivalent
figure of R 41 million in the prior year. The net cash position strengthened
significantly from R10 million to R33 million.
Net capital expenditure amounted to R19,4 million, which is 7% up on the net
capital expenditure invested in the prior year of R17,8 million.
Other investing activities in the year included receipt of a payment associated
with the prior year sale of Blue Moon of R 2,5 million and an outflow of R 1,7m
to Condor Cape.
Financing activities of R 14 million resulted from debt settlement of R 10
million and a share buy-back of 8,6% of the issued share capital amounting to R
3,6 million. This constituted 41% of the total volume traded of the 16,1 million
shares during the year. The average price paid was R0,53c per share and all
share re-purchase activities were under the direct control of non-executive
members of the Board.
Trading review
Film footage processed in South Africa grew 18% year on year in the period under
review. This growth was evenly spread between the two main production centres -
Johannesburg and Cape Town, and was as a result of an increase both in foreign
commercials and long format productions.
On a global basis, commercial production was down during the period. It was,
therefore, encouraging to see that the appeal of South Africa outweighed the
reduced competitiveness of the local production industry resulting from the
stronger Rand. In fact, growth would have been higher still, had the Iraqi war
not contributed to a premature ending of the Cape Town season.
Internally, the year was essentially a period of consolidation with new
management having taken over in July 2002. Reporting lines were shortened and
operations decentralised, providing a greater degree of autonomy into the
operating companies.
The emphasis shifted onto people, both internally and externally and various
past associations were renewed and new ones formed to supplement the management
team.
In an effort to extend government"s support of the broader film industry,
significant time and resource continues to be focused into this area.
From a corporate governance point of view, Sasani welcomes accountability to all
our stakeholders. We have adopted the principles of the Code of Corporate
Practices and Conduct as set out in the King Committee report on Corporate
Governance (King II). Non-executive directors, chair and participate in, all of
our board committees.
Factors influencing the film industry in South Africa
There are several key factors that will dictate the future success and
sustainability of a film industry in South Africa. Broadly speaking, they are as
follows:-
The relative value of the Rand
As a runaway destination, cost of production is a huge factor when commercial
and long-format producers decide on production destinations. At Rand values of
less than 8:1 against the dollar, the industry loses much of its competitive
advantage.
Crime
This is still the biggest deterrent and potential risk to attracting foreign
producers, particularly Americans, to South Africa.
Government subsidisation and support
Almost all the countries against whom we are competing offer significant
financial incentives and tax rebates to the film industry. In addition, while co
production treaties remain the subject of much discussion, there has been little
progress and no new treaties over the last year.
Prospects
The traditional facilities business of Sasani is becoming increasingly
competitive and commoditised. Soft markets overseas have seen the deployment of
new assets in South Africa and both prices and market share are under pressure.
In an effort to have a greater degree of control over our future, Sasani has
refocused significant resources into new business development. While optimising
our service to facilitation and production companies in South Africa, Sasani is
reacting to new opportunities in business television, education into Africa and
long format development and financing. In conjunction with Kagiso Educational
TV, we have received a R100m order to supply educational content into Ethiopia.
This requires the production of seven hours of finished content per day and will
be completed in May 2004.
In the area of post production, we have partnered with an accredited
international company called Condor to provide a new top-end commercial
finishing company called Condor Cape.
And in business television we are considering opportunities to increase our
exposure to the sales of business communication and learning solutions.
Initiatives in long format financing activities are currently in the planning
stage and will be contingent on government announcing the anticipated and much
hoped-for incentive package.
As a result of these various initiatives, management, while remaining cognisant
of the threats to our current business, is cautiously optimistic about the
future.
For and on behalf of the board
Johannesburg
12 September 2003
N.J. Frangos J.R.H Whitehouse
NON-EXECUTIVE CHAIRMAN CHIEF EXECUTIVE OFFICER
REGISTERED OFFICE: 2 Johannesburg Road, Highlands North Ext 6, 2192; P.O. Box
89271, Lyndhurst, 2106
Telephone: (011) 719-4000; Fax : (011) 719-4092; e-mail
sasanilimited@sasani.co.za ; www.sasani.co.za
DIRECTORS:
Non-executive - N.J. Frangos(Chairman); G.D. Doyer; E.Ellerine;
W.T.Msomi(independent): R. van Wijk
Executive - J.R.H. Whitehouse (CEO); P.J. Theron
Company Secretary - J.M. Caddy A.C.I.S.
Transfer Secretaries: Computershare Limited, 70 Marshall Street, Johannesburg,
2001, P.O. Box 1053, Johannesburg 2000
Date: 16/09/2003 05:05:10 PM Produced by the JSE SENS Department
