e.tv |
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| e.tv is a free-to-air television broadcaster in South Africa. |
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SAIL
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SAIL provides professional services to the sporting and entertainment
industry. SAIL also has investments in Sports Brands.
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31.5% interest |
MIDI TV (PROPRIETARY) LIMITED (TRADING AS e.tv) www.etv.co.za |
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| e.tv is the only independent free-to-air television broadcaster
in South Africa. |
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OVERVIEW OF THE YEAR TO 31 MARCH 2005 |
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| Media and television benefited from South Africa’s
general economic growth and the subsequent increase in advertising
spending. |
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| The industry became very competitive, with players
trying to use every available measure to gain an advantage. Such
competitive activities resulted in the splitting of audiences, where
e.tv lost audience share to its competitors, but managed to maintain
a higher level of revenue share. |
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| Revenue growth of 13.5% and the curtailment of expenses
resulted in a satisfying increase of 311% in net profit before taxation.
Cash flow for the year was strong and e.tv repaid a significant portion
of shareholders’ loans subsequent to year-end. |
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BEE |
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| e.tv is a fully black empowered company in both ownership
and employment. Over 75% of the staff are historically disadvantaged
individuals. Substantial emphasis has been placed on the training
and development of the station’s staff. |
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THE FUTURE |
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| e.tv’s key challenges will be to continue enhancing
its current programme schedule and to develop new properties and
franchises to counteract the current negative market share trend.
Modest profit growth is expected, as the next fiscal year will be
used to re-invest in the business to ensure a solid platform for
future growth. |
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| Icasa’s rulings in terms of the closure of M-Net’s
open time, and the amendments to the SABC’s licence conditions
are expected to level the playing fields somewhat and to benefit
e.tv during 2007. |
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| e.tv is pursuing expansion opportunities in Sub-Saharan
Africa and is busy positioning itself to benefit from opportunities
that will arise from the implementation of the promulgated convergence
bill and resultant digital terrestrial television environment. |
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| Management believes that there are enough new initiatives
and opportunities to sustain positive growth in the foreseeable future.
The company remains confident of the future prospects in the industry. |
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36.5% interest |
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| SAIL Group Limited (SAIL) provides professional services
to the sporting and entertainment industry. It operates as two business
units: SAIL Sport and Entertainment (SSE) and Sports Rights and Brands
Commercialisation. |
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| SSE creates, manages and executes sponsorships and
events on behalf of corporates. It also houses SAIL Retail, which
manages the procurement and distribution of all merchandising and
promotional items on behalf of clients. Sports Rights and Brands
Commercialisation focuses on adding value by commercialising and
effectively managing sports franchises and events and, in some cases,
invests in them. Investments include Blue Bulls Rugby (Proprietary)
Limited (Blue Bulls) (50.0%) and Western Province Rugby (Proprietary)
Limited (24.9%). |
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| SAIL benefited from extended opportunities among its
existing client base. The event, exhibition and hospitality management
for the September 2005 World Petroleum Conference, with its more
than 3 000 delegates, was awarded to SAIL in an open tender. Telkom
appointed SAIL Retail to supply its merchandising and promotional
items, and SSE was appointed as the SABC’s preferred supplier
for events. |
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| SAIL continues to support rugby in South Africa actively.
While the Blue Bulls’ exceptional performance on the field translated
into new sponsorships and ticket sales, management was involved with
industry stakeholders to support the progressive restructuring of
rugby. |
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OVERVIEW OF THE PERIOD TO 30 JUNE 2005 |
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| SAIL’s operating results for the period ended
30 June 2005 were in line with its expectations. Thanks to the performance
of SAIL’s biggest contributors, SSE and its investment in the
Blue Bulls, the group delivered good revenue growth. This was not
affected by the sale of ProRange, which became effective on 1 April
2004. Operating margins were maintained with the increased revenue.
The group continued to gain from the efficiencies introduced during
2003. Benefits from economies of scale were evident as SAIL pursued
new client engagements actively, while the associated costs did not
impact on its bottom line. |
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DELISTING FROM THE JSE LIMITED |
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| On 1 September 2004, VenFin, as a member of a consortium
consisting of SACTWU Investment Group (Proprietary) Limited and members
of SAIL’s management, made an offer for the shares held by the
other shareholders of SAIL. |
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| On 31 December 2004, the transaction was executed when
VenFin, on behalf of the consortium, acquired 172.9 million SAIL
shares for R71 million. Subsequently, 28.1 million SAIL shares were
repurchased by SAIL, while the remaining 144.8 million shares were
converted into SAIL preference shares, which were subscribed for
by VenFin on 30 June 2005. Following this transaction, VenFin’s
effective interest in SAIL is 36.5% |
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BEE |
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| In the period under review, SAIL increased its black
economic empowerment (BEE) credentials. SACTWU owns 46.5% of SAIL.
Employment equity for historically disadvantaged individuals is currently
53%. In addition, social responsibility and skills development programmes
contribute to SAIL’s broad-based BEE credentials. These strong
empowerment credentials increased SAIL’s opportunities with
existing clients and numerous public sector entities, and SAIL is
now well positioned to pitch for new opportunities, in both the public
and private sectors. |
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THE FUTURE |
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| SAIL has a good platform for growth and the group has
reached a level where internal economies of scale enable it to pursue
new opportunities. The team is currently evaluating and identifying
viable new opportunities in the sports industry value chain. SAIL
will continue to focus on its core business of sponsorship and event
management. Services in related segments, which could add value to
the business, will be assessed continually to ensure the sustainability
of the business model. |
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