VENTURES: Sekunjalo Hitting The Right Notes
Recent Western Cape Business News
CRITICAL mutterings around empowerment company Sekunjalo Invest-ment’s involvement as an equity partner in the company behind the Cape Town Jazz Festival may soon be muted.
In late 2006 Sekunjalo acquired a 50% stake in ESP Afrika from Rocklands Holdings for an unspecified sum (largely believed to be a fairly nominal amount as Sekunjalo’s annual report values ESP Afrika at cost at R4.5 million).
While no-one could fault Sekunjalo’s desire to pin its empowerment colours to the mast of one of the most popular international events hosted in Cape Town, the critical issue was whether the company could afford this diversion.
After all, Sekunjalo was still struggling to eke decent returns from its mainstay fishing, technology and healthcare interests. ESP Afrika, it seemed, was not exactly profiting from the Jazz Festival – and could end up being an additional burden on Sekunjalo’s prolonged turnaround efforts.
Reports have even suggested that in 2005 the Jazz Festival almost went under after former Dutch partner, Mojo, obtained a provisional liquidation order against ESP Afrika. Apparently ESP Afrika owed Mojo R6.5 million. It was Rockland – who later sold out to Sekunjalo - that loaned ESP Afrika the monies to stave off the liquidation attempt.
With the Jazz Festival seemingly not making profits, there was understandably some concern that Sekunjalo would be carrying the can in terms of not inconsiderable costs.
The Cape Town Jazz Festival is estimated to have had a budget of R25 million last year – but does fund a goodly portion of this budget with sponsorships.
To date no real evidence exists that ESP Afrika is proving a drag on Sekunjalo. The group’s last annual report – covering the period to end August 2008 – shows that Sekunjalo’s Enterprise Development division – comprising ESP Afrika and Tripos Travel – managed turnover of R133 million and net profits of almost R5 million.
This performance may well lend credence to comments in Sekunjalo’s annual report that the 2008 Jazz Festival – which attracted 32 000 visitors - had been the ‘most successful festival of all’.
It would seem the recent 2009 festival also went off rather well – at least judging by comments on Sekunjalo’s recently released interim results.
Chairman Iqbal Surve noted ESP Afrika held its own during the current period. But he pointed out that due to the seasonality of the Cape Town International Jazz Festival occurring after the interim period (which ended February 28), the business’s true profits would only show in the full year’s results to end August 2009.
Surve confirms the Jazz Festival was a success and a ‘sold out show’ for the fourth consecutive year.
He provided a hint that ESP Afrika is picking up the necessary momentum when revealing that the company will explore new projects and festivals both locally and internationally to ‘diversify and expand its ability to generate new revenue streams’.
While no financial detail was provided on ESP Afrika in the interim results, Sekunjalo disclosed that Tripos Travel delivered a breakeven performance despite a drop-off in travel due to prevailing economic conditions.
However, Surve stresses that Tripos usually performs better in the second six months of the year as its relationship with the Jazz Festival provides additional growth. He says this growth will be reflected in the full year’s performance.
While the details of ESP Afrika’s performance will no doubt be keenly awaited, CBN suspects that Sekunjalo’s growing stature as an influential empowerment corporation can well be a major factor in the Jazz Festival securing the necessary flow of sponsorships.
Is that the sound of ‘green notes’ we hear?
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