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AVU
AVU
AVU - Avusa Limited - Reviewed Condensed Group Financial Results For The Six
Months Ended 30 September 2008
AVUSA LIMITED
(formerly Avusa Opco Holdings Limited)
Incorporated in the Republic of South Africa
Registration number: 2008/002461/06
Share code: AVU
ISIN code: ZAE000115895
Reviewed condensed group financial results for the six months ended
30 September 2008
Highlights
- Revenue from continuing operations +12%
- Profit after taxation from continuing operations +12%
- Headline earnings per share +6%
Commentary
Overview
Avusa was incorporated in South Africa on 1 February 2008 as a wholly owned
subsidiary of ElementOne Limited (ElementOne). On 31 March 2008, Avusa acquired
all of ElementOne`s directly held operating media and entertainment assets, and
was listed on the JSE Limited. In the first week of April 2008, Avusa was
unbundled to ElementOne`s shareholders. As detailed in the basis of preparation
note which appears later in this announcement, the comparative financial
information is as set out in Avusa`s pre-listing statement, re-presented for the
discontinued Nigerian and Kenyan operations in accordance with IFRS 5.
Operational review
Media
The media business unit, which includes the group`s interests in newspapers,
magazines, Career Junction and I-Net Bridge, produced a commendable set of
results in very tough trading conditions.
Our newspapers managed to grow revenue and earnings despite a downturn in the
advertising market. A combination of printing cost initiatives and cover-price
increases helped counter the decline in advertising spend. All titles enjoyed
strong readership growth. The Times, which celebrated its first anniversary in
June, enjoyed growing support from advertisers attracted by its almost 400 000
high-income readers, and delivered an operating loss of R15 million net of
advertising revenue.
The magazine division, equally affected by the tough trading conditions, managed
a marginal increase in revenue while earnings were steady at last year`s levels.
The BDFM business, with its strong brands, remained profitable. Summit TV
successfully managed strong challenges from new competition, while The Home
Channel performed above expectations.
Our digital businesses, including Career Junction and I-Net Bridge, continued to
enjoy double-digit growth.
Airport Media, which we acquired on 31 March 2008, recorded strong trading. A
further 20% of this company was acquired on 1 August 2008, increasing Avusa`s
interest to 80%.
Effective 1 September 2008, our stake in Ochre Media, which houses our new
Indian lifestyle channel, Saffron TV, was increased from 80% to 100%.
Entertainment
The Nu Metro businesses (Film Distribution, Home Entertainment, Interactive,
Cinemas and Popcorn Cinema Advertising), combined with Music and Compact Disc
Technologies (CDT), form the entertainment business unit.
Nu Metro experienced soft trading resulting from weak content and the current
economic slow-down. The line-up for the second half of the year includes
stronger content. Nu Metro Cinemas launched its new website, activated its cell-
phone ticket-reservation facility, and introduced 3D at additional sites. Nu
Metro Interactive acquired representation for three more publishers.
The music business continued to struggle, in line with the international music
industry. Trading was further hurt by the lack of hit material. The second half
of the financial year is expected to feature improved product.
CDT`s relocation of its packing plant to expanded premises in Bedfordview will
further improve operational efficiencies.
Retail
Retail comprises Exclusive Books and Van Schaik Bookstore (acquired 1 October
2007).
Revenue at Exclusive Books was flat compared to the previous half-year, and 2%
below the prior year on a same-store comparison. Several Exclusive Books stores
were renovated during the period and the six stores opened last year are
included in the current reporting period with accompanying new store costs.
Van Schaik Bookstore continued to deliver above expectations.
Books and Maps
Books and Maps incorporates Random House Struik, Struik Christian Books, Map
Studio, MapIT, Booksite Afrika and Entertainment Logistics Services (ELS).
In August 2008, Struik Publishing merged with Random House South Africa to form
Random House Struik, a significant new player in the African book publishing
industry. The combined entity is 50,1% held by the Books and Maps business, with
the balance owned by Random House Group in London.
The half-year to September 2008 was a tough trading period across all
businesses, with map publishing, local and international book publishing, and
the industry warehouse business impacted by softer economies. Slower sales of
paper-based maps were more than off-set by the exceptional contribution from the
digital mapping business.
Discontinued operations
As advised on SENS on 15 October 2008, Avusa, with effect from the end of
September 2008, concluded the sale of its Nigerian interests to Capital Alliance
Private Equity, and of its Kenyan interests to Silverbird Africa Holdings
Limited, for a total of USD3,8 million. These interests have been accounted for
as discontinued operations in accordance with IFRS 5.
Financial results and position
Revenue from continuing operations increased 12% from R2,089 billion to R2,332
billion. Challenging market conditions resulted in the gross profit percentage
decreasing from 39,1% to 37,1%. Operating costs were well-controlled. The
balance sheet is ungeared and strong. Net cash amounts to R178 million.
BEE update
While the board remains desirous of the introduction of a broad-based BEE
transaction, the requisite 75% shareholder approval to effect such a transaction
is currently not available.
Board changes
Mr Mashudu Ramano stepped down as chairman of the board on 30 September 2008,
remaining an independent non-executive director. Advocate Dumisa Ntsebeza was
appointed independent non-executive chairman on 30 September. The board extends
its thanks to Mr Ramano for his valued contribution to the company during his
tenure as chairman, and welcomes Advocate Ntsebeza.
Outlook
In line with economic forecasts predicting a decelerating advertising spend and
reduced private consumer spend, Avusa`s results for the second half are expected
to deliver softer revenues, offset by cost containment measures.
Dividend
As advised in Avusa`s voluntary shareholder update in June 2008, with Avusa`s
first year-end being March 2009, the declaration of a dividend by the board will
be considered at the time of the release of the 2009 year-end results.
Adv. Dumisa Buhle Ntsebeza SC
Chairman
Prakash C Desai
Group Chief Executive Officer
Howard Benatar
Chief Financial Officer
For and on behalf of the board
Rosebank
19 November 2008
Income statement
for the period ended % Reviewed Reviewed
change 6 months 6 months
ended ended
30 Sept 30 Sept
2008 2007
Rm Rm
Continuing operations
Revenue 12 2 332 2 089
Cost of sales (1 467) (1 273)
Gross profit 6 865 816
Operating expenses (686) (631)
Operating costs 9 (641) (590)
Depreciation and amortisation (50) (41)
Share-based payments 5 -
Profit from operations before (3) 179 185
exceptional items
Exceptional items (5) -
Profit from operations (6) 174 185
Net finance income 14 6
Finance income 42 17
Finance costs (28) (11)
Share of profits of associates - 2
Profit before taxation (3) 188 193
Taxation (60) (79)
Profit after taxation 12 128 114
Discontinued operations
Profit (loss) from discontinued 39 (17)
operations
Profit for the period 72 167 97
Attributable to:
Shareholders of Avusa 73 157 91
Minority interest 10 6
167 97
Attributable earnings per ordinary
share (cents)
Basic 72 151 88
Diluted 151 88
Attributable earnings per ordinary
share from continuing operations
(cents)
Basic 10 114 104
Diluted 114 104
Attributable earnings per ordinary
share from discontinued operations
(cents)
Basic 37 (16)
Diluted 37 (16)
Number of ordinary shares in issue
(`000)
At beginning and end of period 103 821 103 821
Weighted average for period (diluted) 103 839 103 821
Balance sheet
as at Reviewed Reviewed
30 Sept 30 Sept
2008 2007
Rm Rm
ASSETS
Non-current assets 796 693
Tangible and intangible assets 636 544
Investments and loans 36 46
Deferred taxation assets 124 103
Current assets 2 084 1 865
Inventories, receivables and other current 1 665 1 508
assets
Bank balances, deposits and cash 419 357
Total assets 2 880 2 558
EQUITY AND LIABILITIES
Capital and reserves
Interest of Avusa shareholders 1 302 934
Minority interest 70 40
Total equity 1 372 974
Non-current liabilities 295 308
Long-term borrowings 29 44
Post-retirement benefits liabilities 173 164
Operating leases equalisation liabilities 80 90
Deferred taxation liabilities 13 10
Current liabilities 1 213 1 276
Payables and other current liabilities 966 1 057
Short-term borrowings 6 61
Bank overdrafts 241 158
Total equity and liabilities 2 880 2 558
Net asset value per ordinary share (cents) 1 254 900
Statement of changes in equity
Share Accum- Share-
capital Other ulated holder Minority Total
and reserves profits interest interest equity
share Rm Rm Rm Rm Rm
premium
Rm
Balance at 707 41 - 748 39 787
31 March 2007
Total income and (3) 91 88 6 94
expense recognised
Income and expense (3) - (3) - (3)
recognised
directly in equity
Attributable - 91 91 6 97
earnings
Effect of - - - (5) (5)
acquisitions and
disposals
Cash received from 98 - - 98 - 98
holding company
Balance at 30 805 38 91 934 40 974
September 2007
Balance at 31 1 150 - - 1 150 40 1 190
March 2008
Total income and (14) 157 143 10 153
expense recognised
Income and expense (15) - (15) - (15)
recognised
directly in equity
Equity-settled 1 - 1 - 1
share-based
payments
Attributable - 157 157 10 167
earnings
Effect of 9 - 9 20 29
acquisitions and
disposals
Balance at 30 1 150 (5) 157 1 302 70 1 372
September 2008
Cash flow statement
Reviewed Reviewed
6 months 6 months
for the period ended ended ended
30 Sept 30 Sept
2008 2007
Rm Rm
Cash (utilised) generated by operations (25) 46
Taxation paid (44) (60)
Net interest received 14 1
Net cash used in operating activities (55) (13)
Net cash used in investing activities (35) (140)
Net cash (used in) from financing activities (11) 106
Net decrease in cash and cash equivalents (101) (47)
Cash and cash equivalents at beginning of 275 246
period
Foreign operations translation adjustment 4 -
Cash and cash equivalents at end of period 178 199
Segmental
for the period ended % Reviewed Reviewed
change 6 months 6 months
ended ended
30 Sept 30 Sept
2008 2007
Rm Rm
Revenue from external customers
Continuing operations
Media 11 1 154 1 036
Entertainment (4) 485 504
Retail 43 458 320
Books and Maps 3 235 229
12 2 332 2 089
Discontinued operations
Africa 80 76
2 412 2 165
Profit (loss) from operations
before exceptional items
Continuing operations
Media 4 144 139
Entertainment (48) 12 23
Retail (38) 10 16
Books and Maps (16) 21 25
(8) 187 203
Corporate costs 28 (13) (18)
(6) 174 185
Share-based payments 5 -
(3) 179 185
Discontinued operations
Africa (15) (12)
164 173
Notes
1. Basis of preparation and accounting policies
The condensed group interim financial statements for the six months ended 30
September 2008, have been prepared using accounting policies compliant with
International Financial Reporting Standards (IFRS), and are in compliance
with IAS 34 Interim Financial Reporting, the JSE Limited`s Listings
Requirements and the South African Companies Act. The accounting policies and
basis of preparation are consistent, in all material respects, with those
detailed in Avusa`s pre-listing statement. The comparative financial
information is as set out in Avusa`s pre-listing statement, re-presented for
the discontinued Nigerian and Kenyan operations in accordance with IFRS 5.
for the period ended Reviewed Reviewed
6 months 6 months
ended ended
30 Sept 30 Sept
2008 2007
Rm Rm
2. Exceptional items
Continuing operations
Fair value adjustment of investment (5) -
3. Reconciliation between attributable and
headline earnings
Attributable earnings 157 91
Profit on sale of discontinued (60) -
operations
Total tax effect of adjustment - -
Total minority interest of adjustment - -
Headline earnings 97 91
Headline earnings per ordinary share
(cents)
Basic 93 88
Diluted 93 88
4. Earnings per ordinary share
The calculation of basic attributable and headline earnings per
ordinary share is based on attributable earnings of R157
million (2007: R91 million) and headline earnings of R97
million (2007: R91 million) respectively, and 103 821 159
(2007: 103 821 159) ordinary shares in issue.
The calculation of diluted attributable and headline earnings
per ordinary share is based on attributable earnings of
R157 million (2007: R91 million) and headline earnings of R97
million (2007: R91 million) respectively, and 103 839 457
(2007: 103 821 159) diluted ordinary shares in issue.
As Avusa was only incorporated on 1 February 2008, and as the
Avusa group did not constitute a separate legal group until 31
March 2008, the number of ordinary shares listed on the JSE
Limited on 31 March 2008 has been applied in the calculation of
earnings per ordinary share in respect of the comparative
information.
as at Reviewed Reviewed
30 Sept 2008 30 Sept 2007
Rm Rm
5. Contingent liabilities and
commitments
Contingent liabilities 13 10
Operating lease commitments 568 695
- due within one year 109 134
- due after one year 459 561
6. Capital expenditure commitments
Contracted but not provided for 8 7
Approved but not yet contracted for 2 61
10 68
Reviewed Reviewed
6 months 6 months
ended ended
30 Sept 2008 30 Sept 2007
Rm Rm
7. Discontinued operations
Revenue 80 76
Loss from operations (15) (12)
Net finance costs (5) (5)
Loss before taxation (20) (17)
Taxation - -
Loss after taxation (20) (17)
Outside shareholders` interest (1) -
(21) (17)
Sale of Nigerian and Kenyan
interests
Profit on sale 60 -
Profit (loss) from discontinued 39 (17)
operations per income statement
Cash generated (utilised) by 10 (8)
operations
Net interest paid (5) (5)
Net cash from (used in) operating 5 (13)
activities
Net cash used in investing (1) (14)
activities
Net cash (used in) from financing (7) 7
activities
Foreign operations translation 1 1
adjustment
Net cash used in discontinued (2) (19)
operations
Disposals of assets and
liabilities on sale
Non-current assets 85 73
Current assets 9 68
Non-current liabilities 10 14
Current liabilities 150 119
8. Reviewed results
These condensed group interim financial statements have been
reviewed by our auditors, Deloitte & Touche. A copy of their
unmodified review report is available for inspection at the
company`s registered office.
Company secretary: JR Matisonn E-mail: matisonnj@avusa.co.za
Directors: DB Ntsebeza (Chairman), PC Desai* (Group Chief Executive Officer),
H Benatar* (Chief Financial Officer), MD Brand, YZ Cuba,
LM Machaba-Abiodun, S Matiwaza+, Z Mtshotshisa+, TRA Oliphant,
ME Ramano, MJ Willcox, TA Wixley, MSM Xayiya *Executive +Alternate
Address: 4 Biermann Avenue, Rosebank, 2196, Johannesburg
PO Box 1746, Saxonwold, 2132
These results may be viewed on the internet at http://www.avusa.co.za
Date: 20/11/2008 09:07:16 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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