| Thu 9 Sep 2004, 15:51 | | Results For The Year To 30 June 2004 |
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Sasani Limited - Summarised Results For The Year To 30 June 2004
SASANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1955/000259/06)
Share code: SSA ISIN: ZAE000044384
(`Sasani` or `the Group`)
* Turnover up 47%
* Attributable earnings per share up 97%
* Net cash up to R40 million
* Net Asset Value increased to 286 cents per share
* Dividend of 5 cents per share.
SUMMARISED RESULTS FOR THE YEAR TO 30 JUNE 2004
GROUP INCOME STATEMENT
Reviewed Audited
30 June 30 June
2004 2003
R`000 R`000
Revenue 287 021 196 067
Contribution 182 366 131 598
Overheads (123 083) (88 202)
Operating profit before depreciation 59 283 43 396
Depreciation (38 781) (26 998)
Amortisation of trademarks and goodwill (5 149) (6 430)
Share of profit of associate company 603 1 285
Operating profit before exceptional items 15 956 11 253
Exceptional items - (1 790)
Operating profit 15 956 9 463
Net interest 482 1 120
Profit before taxation 16 438 10 583
Taxation - this year (5 656) (3 308)
Taxation - attributable to associates (181) (856)
Taxation - previous year 1 576 -
Profit after taxation 12 177 6 419
Outside shareholders` interest (179) -
Earnings attributable to ordinary shareholders 11 998 6 419
Headline earnings reconciliation
Earnings attributable to ordinary shareholders 11 998 6 419
Amortisation of negative goodwill (1 289) -
Investment written-off - 166
Impairment of property 413 -
Profit on sale of property, plant and equipment (177) -
Headline earnings 10 945 6 585
Number of shares (000`s)
Issued 58 491 58 767
Weighted average 58 599 61 615
Earnings per ordinary share (cents)
Headline earnings 18,7 10,6
Earnings attributable to ordinary shareholders 20,5 10,4
Diluted earnings 20,0 -
GROUP BALANCE SHEET
Reviewed Audited
30 June 30 June
2004 2003
R`000 R`000
ASSETS
Non-current assets 120 538 116 631
Property, plant and equipment 82 870 73 794
Intangible assets 33 476 44 283
Other assets 4 192 (1 446)
Current assets 99 274 76 049
Inventories 7 937 4 418
Trade and other receivables 45 311 28 617
Cash and cash equivalents 46 026 43 014
Trade and other receivables 45 311 28 617
Cash and cash equivalents 46 026 43 014
Total assets 219 812 192 680
EQUITY AND LIABILITIES
Capital and reserves
Issued capital and reserves (167 497) (155 721)
Minority interests (388) -
Deferred taxation (2 405) (4 615)
Non-current liabilities (8 977) (1 325)
Non-interest bearing borrowings (3 836) -
Interest bearing borrowings (5 141) (1 325)
Current liabilities (40 545) (31 019)
Trade and other payables (34 370) (20 188)
Taxation payable (3 180) (2 184)
Interest bearing borrowings (1 295) (8 647)
Non-interest bearing borrowings (1 700) -
Total equity and liabilities (219 812) (192 680)
Gearing percentage 3,8 6,4
Net asset value per share (cents)
Including intangible assets 285,8 252,7
Excluding intangible assets 228,7 180,9
Net cash/debt 39 591 33 042
Cash and cash equivalents 46 026 43 014
Interest bearing borrowings (short and long term) 6 435 9 972
GROUP CASH FLOW STATEMENT
Reviewed Audited
30 June 30 June
2004 2003
R`000 R`000
Cash generated by operations 59 637 41 419
Net interest received 482 1 120
Decrease in working capital 1 307 4 610
Taxation paid (8 130) (1 250)
Dividends paid - -
Cash available from operations 53 296 45 899
Net payment for business acquired (5 500) -
Proceeds on disposal of fixed assets 259 279
Net fixed assets acquired (44 860) (19 722)
Other investing activities 8 344 230
Financing activities (16 145) (14 291)
Net movement in cash and cash equivalents (4 606) 12 394
Cash and cash equivalents at beginning of year 43 014 30 620
Cash and cash equivalents of business
acquired/sold 7 618 -
Cash and cash equivalents at end of year 46 026 43 014
GROUP STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
30 June 30 June
2004 2003
R`000 R`000
Share capital and share premium
Balance at the beginning of year 107 793 111 818
Repurchase (222) (3 596)
Shares held by Share Trust - (429)
Balance at the end of year 107 571 107 793
Non-distributable reserves
Balance at the beginning and end of year 225 225
Retained earnings
Balance at the beginning of year 47 703 41 284
As previously stated 47 703 40 996
Change in accounting policy - 288
Net profit for year 11 998 6 419
Balance at the end of year 59 701 47 703
Basis of preparation
These consolidated results for the year ended 30 June 2004 have been prepared
in accordance with and comply with South African Statements of Generally
Accepted Accounting Practice, based on accounting policies that has been
consistently applied with those used in the previous year, except for the
consolidation of the Share Trust in terms of the JSE Securities Exchange
rulings. The results have been reviewed in terms of Rule 3.22 of the Listings
Requirements of the JSE Securities Exchange South Africa by the group`s
auditors PricewaterhouseCoopers Inc and their unqualified review opinion is
available for inspection at the registered office of the company.
COMMENTARY
Overview
Over the past year Sasani achieved excellent results in a difficult market.
Turnover was up 47% and headline earnings per share rose 76% over the previous
year. The net cash position increased to just under R40 million after
settlement of purchase considerations in two new businesses. Net Asset Value
per share continued to advance to 285,8 cents per share.
Much of the improved performance can be ascribed to increased feature film
production and the new digital educational initiatives in Ethiopia. This more
than offset the negative effect of reduced international commercial production
and the increased competition in the Cape region.
Over the coming year, we expect a further decline in local production of
foreign commercials as a result of the ongoing strength of the rand. Feature
production will continue to benefit from the recently announced government film
incentives. The contribution from digital education is uncertain, with Ethiopia
undecided around their second phase and other initiatives still in relatively
early stages of development.
Significantly more time has been focused on the identification and development
of new business opportunities outside Sasani`s traditional film production ser
vices. This is expected to lead to an increasing percentage of income from new
activities in the future.
Nature of Sasani`s Business
Sasani is the largest ser vice provider of facilities to South Africa`s
commercial and film production sector.
During the past year, through its 50% stake in a joint venture with Kagiso
Educational Television, the group has now also established a position as the
biggest producer of video based digital education in Africa.
This new expertise in creating and digitally packaging educational content is
being expanded into skills development and training areas.
Satellite-based digital corporate communications will become a bigger
contributor with the acquisition of an increased stake in Global Access.
Results
Turnover was up 47% on the prior year to R287 million. The growth was largely
from new initiatives with education, contributing R51 million, and R27 million
from the increased stake in Global Access.
Johannesburg based operations, buoyed by increased feature footage and healthy
local commercial production also showed turnover growth at levels slightly
higher than inflation.
Overheads were tightly managed across all group companies with the total as a
percentage of sales being reduced from 45% to 42,9%.
Operating profit after trademark amortization rose 69% to R16 million and
taxation came in at a lower than expected 26% due to the write-back of a prior
period deferred tax liability. This left attributable earnings per share up 97%
at 20,5 cents. Headline earnings were R10,9 million or 18,7 cent per share with
the major difference being made up of a write-back of R1,29 million of negative
goodwill.
Cashflow from operating activities remained healthy at R59,6 million with
working capital improvements yielding an additional R1,3 million. This resulted
in R60,9 million of total cash available from operations before interest and
tax paid compared to R46 million in the prior period.
Capital expenditure increased significantly to R44,8 million, the increase
being attributable to the assets needed to ser vice educational initiatives and
to the proportional consolidation of our new Cape based yielding an additional
R1,3 million. This resulted in R60,9 million of total cash available from
operations before interest and tax paid compared to R46 million in the prior
period.
Capital expenditure increased significantly to R44,8 million, the increase
being attributable to the assets needed to ser vice educational initiatives and
to the proportional consolidation of our new Cape based postproduction joint
venture, (R12,3 million). After settlement of the purchase consideration of an
additional 55% in Global Access and the funding of Condor, net cash on hand
increased to R39,6 million.
The weighted average shares in issue decreased from 61,9 million to 58,6
million as a result of share buybacks in the latter part of last year and the
early part of this trading period. This resulted in a NAV per share of 286
cents and a tangible NAV per share of 229 cents.
Prospects
The transitional nature of our strategy makes future forecasts difficult. It is
our intention to continue to grow over time at a pace which at least matches
the growth of the economy in real terms. There may be periods of consolidation
as this growth rolls out.
The traditional facilities business of Sasani continues to be overtraded with
rapidly evolving technology and reducing barriers to entry. In the short term,
this has created pricing pressure and increased competition.
This will be offset to some extent by growth in feature production, driven
largely by the recent introduction of government incentives. Commercial
production for the local market is also expected to remain healthy in the short
term.
Our traditional business in the production of foreign commercials is at risk
because this market is strongly influenced by the strength of the rand. Should
the rand continue to trade at levels below R7 to the US dollar the sector is
likely to decline further.
There are limited opportunities in the traditional facilities model. It is
therefore important for Sasani to pursue new business opportunities Significant
progress has already been made in a variety of areas including the digital
packaging of educational and broader training content in video formats. We are
also continuing to investigate various financial ser vices and other elements
of funding in the film industry, as well as other opportunities.
Corporate Governance
Sasani is committed to upholding good corporate governance, both statutory and
non-statutory, in all of its business dealings. The board of directors conduct
the business of Sasani with professionalism, integrity and in accordance with
generally accepted corporate practices.
Key principles of statutory requirements as well as The Code of Corporate
Practice as set out in the second report of the King Committee, are reviewed
from time to time by the Corporate Governance Committee.
The system of financial control is the direct responsibility of the directors
and the executive committee. The board has approved a policy that the auditors
will not be awarded any corporate finance ser vices, in order to preserve
their independence and oversight function.
Much of the improved performance is ascribed to the changing culture and
values in the group with the ongoing implementation of a decentralized,
empowered management approach. Our three values focus on the client, an
innovative approach and our people and these have been rigorously unpacked and
applied in every part of the group.
We are pleased to announce that the Board has approved a dividend of 5 cents
per share to shareholders at this time. We expect to maintain a dividend policy
of four times cover in the future.
We would like to take this opportunity to thank our fellow directors for the
time and effort that they have put in to support the efforts of management and
to provide sound oversight on behalf of the shareholders.
The non-executive directors have expressed their satisfaction with the
standards of integrity and value systems introduced by management.
Finally, our thanks go to ever y one of the nearly 400 permanent staff in
Sasani for their commitment and passion and for their part in achieving the
successes of the last year.
Dividend announcement
The board has declared a final dividend of 5 cents per share to all
shareholders recorded in the books of Sasani Limited. The last day to trade cum
dividend will be Friday, 12 November 2004, and the shares of Sasani will
commence trading ex dividend from the commencement of business on Monday, 15
November 2004.
The record date will be Friday, 19 November 2004. The dividend will be paid on
Monday, 22 November 2004.
Share certificates may not be dematerialised or rematerialised between Monday,
15 November 2004 and Friday, 19 November 2004, both days inclusive.
By order of the board
N J Frangos J R H Whitehouse
CHAIRMAN CHIEF EXECUTIVE OFFICER
DIRECTORS: N J Frangos (Chairman)*, J R H Whitehouse (CEO), G J Doyer*,
E Ellerine*, W Msomi*#, P J Theron, R van Wijk
(*Non-excutive and #independent)
COMPANY SECRETARY: J M Caddy A.C.I.S. F.C.I.B.M.
SPONSOR: LPC Manhattan Sponsors (Proprietary) Limited
TRANSFER SECRETARIES: Computershare Investor Services 2004 (Pty) Ltd,
70 Marshall Street, Johannesburg 2001, PO Box 61051,
Marshalltown, 2107
SASANI LIMITED
Registered office: 2 Johannesburg Road,
Highlands North Ext 6,
Johannesburg, 2192
Date: 09/09/2004 03:40:08 PM
Produced by the JSE SENS Department
