| Thu 19 Jun 2008, 7:06 | | AVU - AVUSA Limited - Voluntary Shareholder Update |
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AVU
AVU
AVU - AVUSA Limited - Voluntary Shareholder Update
AVUSA
Voluntary Shareholder Update
www.avusa.co.za
AVUSA Limited (formerly Avusa OpCo Holdings Limited)
Incorporated in the Republic of South Africa
Registration number: 2008/002461/06 Share code: AVU
ISIN: ZAE000115895 ("Avusa")
Further to ElementOne Limited`s ("ElementOne") announcement released earlier
today in respect of its audited financial results for the year ended 31 March
2008, Avusa is pleased to provide an update to shareholders in the interest of
continuity of information.
Avusa acquired ElementOne`s operating media and entertainment assets at the end
of March 2008, and was listed on 31 March 2008 on the JSE Limited.
As the Avusa group did not form a separate legal group until the end of March
2008, the segmental information and operational review which follow, have been
extracted from the ElementOne announcement. As such, it does not constitute
financial statements or a results announcement of Avusa, the Avusa group, or any
entity in the Avusa group.
Segmental
for the year ended 31 March 31 March
2008 2007
Rm Rm
Revenue from external customers
Media 2 099 1 884
Retail 1 045 735
Entertainment 1 040 932
Books and Maps 487 426
4 671 3 977
Profit from operations before exceptional items
Media 283 300
Retail 33 (14)
Entertainment 60 62
Books and Maps 73 78
449 426
Corporate costs (28) (42)
421 384
OPERATIONAL REVIEW
The review of operations is in respect of operations that formed part of
ElementOne during the year under review, but that are now part of Avusa and will
in future be reported on by Avusa.
Changes were made to the segmental structure. These changes are detailed at the
beginning of the review of each segment. Comparatives have been restated
accordingly.
The traditional businesses continued to grow, and digital initiatives comprise
15% of the operating profit generated by the media and entertainment assets.
Media
The media business unit included the group`s interests in newspapers, magazines,
Career Junction and I-Net Bridge.
Revenue grew 11% with the development of new revenue streams, while operating
profit increased by 8%, excluding the development costs of The Times and The
Weekender.
Since its launch in June 2007, the new daily product, The Times, attracted 38
000 new subscribers for the Sunday Times. The Times delivered an operating loss
of R39 million net of advertising revenue.
The Sowetan maintained steady circulation growth but, along with the Eastern
Cape dailies, The Herald and Daily Dispatch, lagged the record profit levels
achieved in the previous financial year.
The Sunday World achieved exceptional circulation growth, passing the 200 000
level for the first time, to end the year at 203 400 copies per week. It also
enjoyed robust advertising revenue growth, entrenching its growing position in
the Sunday newspaper market.
The Financial Mail continued to increase both readership and profitability
following its recent redesign. The Home Channel was re-launched as a 24/7
offering, with its audience subsequently almost doubling. Operating loss
contribution from The Weekender totalled R6 million, with circulation reaching a
pleasing 12 600.
The magazine division was also impacted by the advertising downturn but
nevertheless produced solid results. Elle Decor was voted Consumer Magazine and
also Decor magazine of the year at the industry`s annual PICA awards.
Career Junction, 100% held since 1 November 2007, had another remarkable
business year, growing both revenue and profits strongly. New business ventures
included online talent management services for South Africa`s growing film and
commercials business and an expansion into Dubai.
I-Net Bridge continued to produce solid results and enlarge its footprint in the
local financial and corporate communities. Innovative and enhanced products
continue to be developed and launched in tandem with changing market
requirements.
During the year majority stakes in Amorphous New Media and Amorphous Corporate
were acquired. The businesses service the demand for digital marketing and
communications solutions, with both businesses having performed well in their
respective markets.
A 60% stake in Airport Media, a specialist airport advertising business with a
strong reputation for innovation in the competitive outdoor market, was acquired
at the end of March 2008 as part of a strategy to enter the expanding out-of-
home market.
Retail
Retail comprised Exclusive Books, Van Schaik Bookstore (acquired 1 October 2007)
and the Africa business.
Exclusive Books opened six new stores during the year, while two shops were
moved within their respective shopping centres and fully refurbished. Revenue
grew by 15%, with same-store revenue up by 13%.
Van Schaik Bookstore delivered above the expectation benchmarked for the
investment proposal.
In Nigeria, operating losses were incurred by the media stores, cinemas, and
compact disc plant, while the Business Day Nigeria newspaper operated
profitably. The political turmoil in Kenya subsequent to the December 2007
elections materially affected the business. Tremendous credit must go to the
team in Kenya who worked tirelessly to keep the business running throughout the
unrest. Revenues from the Africa business grew by 35% to R159 million from R118
million last year, while the loss from operations narrowed to R54 million from
R70 million in the prior year.
Entertainment
The Nu Metro businesses (Film Distribution, Home Entertainment, Interactive,
Cinemas and Popcorn Cinema Advertising), combined with Music and Compact Disc
Technologies ("CDT"), formed the entertainment business unit. Nu Metro`s brand
look and feel was revitalised to support the fresh vision of a dynamic African
entertainment company.
Nu Metro Film Distribution retained its leading share in the local film
distribution market.
Home Entertainment delivered excellent results. Growth came from continued
initiatives in the emerging market, new supermarket distribution channels and
excellent product management. The division delivered growth for its studios and
again won Licensee of the Year from Walt Disney Pictures for excellence in
innovation, marketing, sales and reporting. Home Entertainment continued to work
closely with SAFACT to fight piracy and protect intellectual property rights in
Southern Africa.
Nu Metro Interactive, which distributed interactive games into the South African
market, continued to expand its operations, and represented Eidos, Sega, Square
Enix, and various independent publishers.
Nu Metro Cinemas experienced a tough trading year, with significant pressure
from poor content and flat attendances exacerbated by the ongoing pressure of
deflated pricing in the South African cinema industry. 3D was introduced at the
Montecasino site in February 2007, with excellent results and a very positive
consumer reaction.
Popcorn Cinema Advertising delivered solid results with growth in advertising
sales.
The rights management business, which was closed during the year, incurred
losses of R6 million.
The music business struggled in line with the world-wide trends of diminishing
physical sales and small revenues generated by digital format.
CDT performed strongly.
Books and Maps
Books and Maps incorporated Struik, Struik Christian Books, New Holland, Map
Studio, MapIT, Booksite Afrika and Entertainment Logistics Services ("ELS").
The Books and Maps results include a foreign exchange gain of R1 million
compared to R6 million in the prior year, as well as R5 million in mobile
development costs.
The South African operations again formed the backbone of the business unit`s
performance of a very high base, with Booksite Afrika posting excellent results.
The poor economic environment offshore resulted in weak results from the
overseas businesses.
MapIT had an exceptional year, growing revenues and earnings in excess of 100%.
Growth was powered by increased sales of satellite navigation devices. The
business invested to ensure that it remained the proprietor of the "richest"
mapping data in the country.
ELS results were flat year-on-year.
OUTLOOK FOR AVUSA
The seventh consecutive year-on-year upward trend for both revenue and profit
from operations for the media and entertainment businesses has been achieved.
Avusa is currently operating in a tougher environment with a focus on retaining
the upward trend. Its first set of interim results will be published in November
2008.
DIVIDEND
Avusa was incorporated in February 2008, and its first year-end will be March
2009. The declaration of a dividend will be considered at the time of the
release of the company`s 2009 year-end results in line with previous practice at
ElementOne.
Johannesburg
19 June 2008
Sponsor
Nedbank Capital
Date: 19/06/2008 07:06:01 Produced by the JSE SENS Department.
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