1st quarter financial performance

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1st Quarter Financial Performance. Revenue lower than budget by R11m (1%) and growing by 1.5% year-on-year. Expenses lower than budget by R4m (.3%) and increasing by 16.5% year-on-year. Depreciation R7m (9%) lower than budget, growing 4.5% year-on-year. - PowerPoint PPT Presentation

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Page 1: 1st Quarter Financial Performance

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Page 2: 1st Quarter Financial Performance

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1st Quarter Financial Performance

•Revenue lower than budget by R11m (1%) and growing by 1.5% year-on-year.

•Expenses lower than budget by R4m (.3%) and increasing by 16.5% year-on-year.

•Depreciation R7m (9%) lower than budget, growing 4.5% year-on-year.

•Net Interest (Finance costs) R11m (47%) higher than budget, 76% higher year-on-

year.

Page 3: 1st Quarter Financial Performance

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1st Quarter Financial performance

•TV advertising revenue under pressure (see box). R12m (1.7%) lower than budget,y-o-y decline was 1%•Radio advertising performing better than budget by R27m (10%),y-o-y growth was 14%•TV Licence revenue higher than budget by R13m (6%),y-o-y growth was 6% •Other revenue (content sales & trade exchanges) = R38m (41%) lower than budget,y-o-y growth was 7%

TV advertising revenue

• Decline in audience

• Schedule changes

• European companies cutting

marketing budgets in RSA

Page 4: 1st Quarter Financial Performance

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1st Quarter Financial performance

•Programme, Film, Sport and Broadcast costs were higher than budget but Sport rights and Production costs incurred were not capitalised to Programme Stock (Balance sheet). Costs overstated by R82m.•Signal distribution lower in view of lower need for ad hoc News feeds and slow roll-out of Low Power Transmitters.•Employee Costs lower than budget but 6% annual salary increase for Management was not paid/accrued yet. •Productivity Gains - see box.•Marketing costs lower than budget in view of delay in awarding tender to marketing agencies.•Direct TV Licence collection costs lower in view of lower sms-, paypoint- & debt collection costs.•Professional costs lower in view of a year-end accrual for management fees that was credited to the new year but not paid yet. Costs are understated by R16m. •Other Operational expenses - Leases, Maintenance and Travel were lower than budget.•Other Personnel expenses – Membership fees, Recruitment costs, Transport, Courses were lower than budget.

Productivity Gains•Request to change Government Guarantee (GG)

targets was not approved in June’12.•Budget allocated to units (Feb’12) had to be

reduced to balance back to GG targets.•Units have to find “gains”/savings from other

expense line items during FY12/13.•Actual & projected savings are recorded against

these expense line items.

Page 5: 1st Quarter Financial Performance

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1st Quarter Financial performance

•Balance of R1.1bln (before bank reconciliations and including bank guarantees)

•Cash in cheque and savings accounts increased by R47m in quarter.

•Monthly payments to Nedbank made as per loan agreement

Page 6: 1st Quarter Financial Performance

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1st Quarter Working Capital Management

Debtors

• Average total debtor days:61 days – 10 days slower (seasonal fluctuations)

• Average Advertising debtor days:67 days – 8 days slower

• Local & Foreign stock days:234 days vs. 285 days last year

• Sport rights stock days:142 days vs. 196 days last year

• Average total creditor days:144 days vs. 123 days(increase in accruals & provisions)

Programme Inventory

Creditors

Slower debt collection Lower stock levels Longer payment cycle= Improved cash management

and balance

Impact on Cash

Page 7: 1st Quarter Financial Performance

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1st Quarter Capex

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

1 000 000

FY08/09 FY09/10 FY10/11 FY11/12 FY12/13

Budget Actual Projection

•Used R31m of a budget of R527m in first quarter.

•Project managers are being employed to increase capacity to implement

Capex projects.

•Projecting to use R220m by year-end = 100% higher than previous year.

Page 8: 1st Quarter Financial Performance

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1st Quarter Projected performance

Please note: Projections this early in the year is not very realistic in view of limited (3 months) data and the over/under statement of expenses.

• At end of first quarter business units projected a loss of R16.6m by end of the year.• TV advertising revenue remained under pressure during the second quarter.• More realistic projection will be available at the end of the second quarter.

Page 9: 1st Quarter Financial Performance

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1st Quarter Government Guarantee

• Lower than budget revenue from TV

advertising continued during the

second quarter.

• Reducing variable costs over short

term to balance back is unlikely.

• The high surplus target of R536m will

not be achieved if revenues do not

improve.