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AVU
AVU
AVU - Avusa - Audited Condensed Group Financial Results For The Year Ended
31 March 2009
AVUSA LIMITED
Incorporated in the Republic of South Africa
Registration number: 2008/002461/06
Share code: AVU
ISIN code: ZAE000115895
www.avusa.co.za
AUDITED CONDENSED GROUP FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2009
- Revenue from continuing operations +8%
- Profit after taxation from continuing operations +7%
- Headline earnings per share +29%
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 ElementOne`s directly-held operating media and entertainment assets, and was
listed on the JSE Limited. In the first week of April 2008, ElementOne unbundled
its entire shareholding in Avusa.
The comparative information presented represents the 31 March 2008 balance sheet
of ElementOne`s operating media and entertainment businesses which were disposed
of on that date by ElementOne to Avusa Limited, and the income statement and
cash flow statement of the results and cash flows for the 12 months ended 31
March 2008 of the media and entertainment businesses of ElementOne, which
include ElementOne`s corporate costs and share-based payments charges and cash
flows, but exclude the effects of the part-period results and November 2007
disposal of MNet/Supersport and ElementOne`s passive investment in Caxton.
Financial results and position
Revenue from continuing operations increased 8% from R4,512 billion to R4,875
billion, while profit for the year of R329 million exceeded that of last year by
58%. The company`s increased profitability resulted from cost-savings
initiatives implemented group-wide, the sale of the group`s Nigerian and Kenyan
interests which stemmed related operational losses and realised a R62 million
profit on sale, a 22% reduction in corporate costs, and from reduced share-based
payments. Operating costs include restructuring charges, primarily retrenchment
costs, of R25 million, and R6 million of developmental losses in respect of the
group`s new digital and multi-media projects.
The balance sheet remains ungeared, with strong cash generation yielding a net
cash balance of R416 million at the balance sheet date.
Operational review
The single change made to the segmental structure as reported at the half-year
is that Compact Disc Technologies (CDT) has been moved from the Entertainment
business unit to the Books and Maps business unit. Comparatives have been
restated accordingly.
Media
The media business unit, which includes the group`s interests in newspapers,
magazines, I-Net Bridge and Career Junction, posted a revenue gain of 6%,
despite the impact of the sharp downturn in the economy in the second half of
the financial year.
As a result of cost-containment initiatives, particularly with regard to
printing, together with cover-price increases, we reduced the impact of the
economy-related advertising downturn, and restricted the decline in the profit
contribution from our newspapers.
The Times, having established itself in the market, enjoyed 132% growth in
revenue over the prior year, on the back of advertising support from major
retailers. The title`s losses narrowed to R25 million from R39 million reported
last year.
BDFM, our 50% joint venture with Pearson, and publisher of Business Day and
Financial Mail, incurred a loss before interest and tax of R9 million against
last year`s R7 million profit, mainly as a result of development costs.
The magazine division, despite being more deeply affected by the economic
downturn, increased its revenues and maintained profitability.
The digital businesses recorded revenue growth of 20%. I-Net Bridge introduced
several enhancements to its local data services, and also made significant
headway towards its goal of becoming the premier provider of financial data from
the African continent. Career Junction`s online talent management business, The
Whole Bang Shoot, benefited from a marketing tie-up with the Sunday Times.
Despite the operations of our out-of-home business, Airport Media, being impeded
by construction work at OR Tambo International Airport, the company achieved
creditable returns.
Retail
Retail comprises Exclusive Books and Van Schaik Bookstore (acquired on
1 October 2007).
Exclusive Books revenue grew 1% over the prior year, with same-store revenue
remaining flat year-on-year. Three new stores were opened during the year, two
of which traded for only a short portion of the year.
Van Schaik Bookstore enjoyed a record year driven by an increase in the sales
mix of higher-margin stationery and general books, growth in student enrolments
at tertiary education institutions, and by improved administration of bursary
funds by the relevant financial institutions. In addition to opening two new
stores, Van Schaik extended its footprint with its online offering.
Entertainment
The Nu Metro businesses (Film Distribution, Home Entertainment, Interactive,
Cinemas and Popcorn Cinema Advertising), combined with Music, form the
entertainment business unit.
Nu Metro Film Distribution developed a new label, Nu Metro Inspires, to provide
faith-based and inspirational movie content.
The Home Entertainment business performed well despite soft trading in the
retail environment. DVD unit sales improved 7% year-on-year.
Nu Metro Interactive continued to build its licence representation and to invest
in retail development and content expertise.
Nu Metro Cinemas restructured its operational workforce and placed a significant
emphasis on expense reduction. 3D projection was extended to a further three
sites, resulting in increased occupancy levels. Three new cinemas were opened,
while the non-performing Killarney site was closed.
Popcorn Cinema Advertising successfully diversified its operations into events
management hosted at cinema sites that the business represents.
The Music business struggled during the year in tandem with the worldwide
industry. Restructuring initiatives undertaken to right-size the business
included reducing headcount and moving offices to benefit from lower rentals.
Books and Maps
Books and Maps incorporates Random House Struik, Struik Christian Books, Map
Studio, MapIT, Booksite Afrika, Entertainment Logistics Services (ELS) and CDT.
In August 2008, Struik Publishing merged with Random House South Africa to form
Random House Struik. The combined entity is 50,1% held by the Books and Maps
business, with the balance owned by Random House Group in London.
The tough trading conditions experienced locally in the first half of the year
intensified during the second half, placing all the South African businesses,
except MapIT`s digital mapping business, under pressure. MapIT continued to
benefit from the ongoing surge in the use of satellite navigation devices, with
its revenues now exceeding those of the paper-based maps business. Despite the
challenges posed by the economic downturn, CDT used the year to position itself
for the future by establishing a dedicated packing and finishing facility and by
installing a power supply back-up to guarantee continuity to its customers.
The offshore business was loss-making, with the UK book publishing operation
particularly negatively affected by an early and deep recession.
Discontinued operations
Avusa, with effect from the end of September 2008, concluded the sale of its
Nigerian and Kenyan interests for a total of R28 million. These interests have
been accounted for as discontinued operations in accordance with IFRS 5.
Outlook
High earnings growth has been delivered over a number of years. However, during
the current reporting period conditions were challenging and uncertain, and
remain so.
Avusa continues to pursue long-term strategies for profitability and growth.
With the current focus on cash flows, operational efficiencies, cost reductions
and consolidation, we remain cautiously confident of delivering a satisfactory
level of profitability.
Dividend
Notice is hereby given that a maiden dividend of 60 cents per ordinary share has
been declared by the directors for the year ended 31 March 2009, and is payable
to shareholders recorded in the register of members of the company at the close
of business on Friday, 24 July 2009.
In compliance with the requirements of Strate, the electronic settlement and
custody system used by the JSE Limited, the following salient dates are
applicable for the payment of the dividend:
Last day to trade cum dividend Friday, 17 July 2009
Shares commence trading ex dividend Monday, 20 July 2009
Record date Friday, 24 July 2009
Payment date Monday, 27 July 2009
Share certificates may not be dematerialised or rematerialised between Monday,
20 July 2009 and Friday, 24 July 2009, both days inclusive.
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
23 June 2009
Income statement
for the year ended % 31 March 31 March
change 2009 2008
Rm Rm
Continuing operations
Revenue 8 4 875 4 512
Cost of sales (3 039) (2 753)
Gross profit 4 1 836 1 759
Operating expenses (1 439) (1 373)
Operating costs (1 342) (1 208)
Depreciation and amortisation (100) (85)
Goodwill impairment (4) -
Share-based payments 7 (80)
Profit from operations before 3 397 386
exceptional items
Exceptional items (3) 12
Profit from operations 394 398
Net finance income 26 5
Finance income 74 45
Finance costs (48) (40)
Share of profits of associates - 6
Profit before taxation 3 420 409
Taxation (130) (137)
Profit after taxation 7 290 272
Discontinued operations
Profit (loss) from discontinued 39 (64)
operations
Profit for the year 58 329 208
Attributable to:
Shareholders of Avusa 57 305 194
Minority interest 24 14
329 208
Attributable earnings per ordinary share
(cents)
Basic 58 296 187
Diluted 58 296 187
Attributable earnings per ordinary share
from continuing operations (cents)
Basic 4 258 249
Diluted 4 258 249
Attributable earnings (loss) per ordinary
share from discontinued operations
(cents)
Basic 38 (62)
Diluted 38 (62)
Segmental
for the year ended % 31 March 31 March
change 2009 2008
Rm Rm
Revenue from external customers
Continuing operations
Media 6 2 228 2 099
Retail 22 1 082 886
Entertainment 7 955 894
Books and Maps (4) 610 633
8 4 875 4 512
Discontinued operations
Africa 80 159
Profit (loss) from operations before
exceptional items
Continuing operations
Media (11) 252 283
Retail (9) 79 87
Entertainment (79) 5 24
Books and Maps (24) 83 109
(17) 419 503
Corporate costs 22 (29) (37)
(16) 390 466
Share-based payments 7 (80)
3 397 386
Discontinued operations
Africa (18) (54)
Balance sheet
as at 31 March 31 March
2009 2008
Rm Rm
ASSETS
Non-current assets 876 860
Tangible and intangible assets 704 685
Investments and loans 38 44
Deferred taxation assets 134 131
Current assets 2 236 2 034
Inventories, receivables and other current assets 1 679 1 624
Bank balances, deposits and cash 557 410
Total assets 3 112 2 894
EQUITY AND LIABILITIES
Capital and reserves
Interest of Avusa shareholders 1 415 1 138
Minority interest 97 40
Total equity 1 512 1 178
Non-current liabilities 263 299
Long-term borrowings 3 34
Post-retirement benefits liabilities 167 162
Operating leases equalisation liabilities 70 89
Deferred taxation liabilities 23 14
Current liabilities 1 337 1 417
Payables and other current liabilities 1 187 1 197
Short-term borrowings 9 85
Bank overdrafts 141 135
Total equity and liabilities 3 112 2 894
Net asset value per ordinary share (cents) 1 363 1 096
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 9 194 203 14 217
expense recognised
Income and expense 9 - 9 - 9
recognised directly
in equity
Attributable earnings - 194 194 14 208
Effect of 345 (62) (194) 89 (5) 84
acquisitions,
disposals and
unbundling
Minority share of - - - (8) (8)
subsidiaries`
dividends
Cash received from 98 - - 98 - 98
holding company
Balance at 1 150 (12) - 1 138 40 1 178
31 March 2008
Total income and (28) 305 277 24 301
expense recognised
Income and expense (8) - (8) - (8)
recognised directly
in equity
Equity-settled share- 3 - 3 - 3
based payments
Call options over (23) - (23) - (23)
Avusa shares
Attributable earnings - 305 305 24 329
Effect of - - - 43 43
acquisitions and
disposals
Minority share of - - - (10) (10)
subsidiaries`
dividends
Balance at 31 March 1 150 (40) 305 1 415 97 1 512
2009
Cash flow statement
31 March 31 March
for the year ended 2009 2008
Rm Rm
Cash generated by operations 445 141
Taxation paid (134) (98)
Net interest received (paid) 22 (5)
Net cash generated by operating activities 333 38
Net cash used in investing activities (148) (348)
Net cash (used in) from financing activities (47) 344
Net increase in cash and cash equivalents 138 34
Cash and cash equivalents at beginning of year 275 246
Foreign operations translation adjustment 3 (5)
Cash and cash equivalents at end of year 416 275
Notes
1. Accounting policies and basis of preparation
The condensed group annual financial statements for the year ended
31 March 2009, have been prepared using accounting policies compliant
with International Financial Reporting Standards (IFRS), IAS 34
Interim Financial Reporting, the JSE Limited`s Listings Requirements
and the South African Companies Act. The accounting policies are
consistent, in all material respects, with those detailed in Avusa`s
pre-listing statement.
The comparative financial information has been prepared on the same
basis as the historical information which was presented in Avusa`s pre-
listing statement, other than that these comparatives include share-
based payments, whereas share-based payments were excluded in the pre-
listing statement.
The new and amended statements and interpretations which are not yet
effective for the group will be adopted as they become effective. The
adoption of the new and amended statements and interpretations is not
expected to have a material impact on the group`s financial results in
the periods of initial application, but will impact presentation and
disclosure in the group`s financial statements.
The statement and interpretation which will have the most effect are
IAS 1 Presentation of Financial Statements and IFRIC 13 Customer
Loyalty Programmes.
IAS 1 Presentation of Financial Statements
The amendments require information in financial statements to be
aggregated on the basis of shared characteristics and introduce a
statement of comprehensive income. This will enable users to analyse
changes in equity resulting from transactions with owners in their
capacity as owners (such as dividends) separately from "non-owner"
changes (such as transactions with third parties).
The revisions include changes in the titles of some of the financial
statements to reflect their function more clearly, for example, the
balance sheet is renamed a statement of financial position. The new
titles will be used in accounting standards, but are not mandatory for
use in financial statements.
The adoption by Avusa of this amended standard will not have an impact
on Avusa`s results or financial position, but will result in different
presentation and disclosure in the group`s financial statements.
IFRIC 13 Customer Loyalty Programmes
IFRIC 13 impacts entities that issue points to customers entitling
them to a discount on future purchases. The interpretation requires
loyalty award credits to be accounted for as a separate component of
the sale transaction in which they were granted by allocating the sale
proceeds between the loyalty award and the other components of the
sale. The amount allocated to the loyalty award is determined by
reference to its fair value and is deferred until the loyalty reward
is redeemed.
Exclusive Books operates its Fanatics customer loyalty programme. The
effect of IFRIC 13 will be that Exclusive Books will deduct the fair
value of customer loyalty points from revenue rather than including it
in marketing expenses, as is the current accounting treatment. Had
IFRIC 13 been applied to the current annual financial statements,
revenue for the year would have been reduced by R8 million (2008: R9
million). There would have been no effect on profit from operations.
for the year ended % 31 March 31 March
change 2009 2008
Rm Rm
2. Exceptional items
Fair value adjustment of investments (5) -
Pension fund surplus apportionment 1 8
Other 1 4
(3) 12
3. Reconciliation between attributable
and headline earnings
Attributable earnings 57 305 194
Profit on sale of discontinued (62) -
operations
Impairment of property, plant and 3 -
equipment
Loss on disposal of tangible and - 1
intangible assets
Other - (4)
Total tax effect of adjustment - 1
Total minority interest of adjustment - -
Headline earnings 28 246 192
Headline earnings per ordinary share
(cents)
Basic 29 239 185
Diluted 29 239 185
4. Shares in issue
At 31 March 2009, Avusa held 1 379 978 call options over Avusa shares
as hedges against share incentives granted. 382 734 call options were
acquired by Avusa as part of the assets purchased from ElementOne, and
997 244 were bought in October 2008 as hedges against the 2008 share
incentives grant. The call options over Avusa shares have zero strike
prices, and are treated for accounting purposes as treasury shares.
31 March 2009 31 March 2008
Shares in issue at beginning of the 103 821 159 103 821 159
year
Less: Call options over Avusa shares (1 379 978)
Adjusted shares in issue at end of the 102 441 181 103 821 159
year
Weighted average for the year 102 939 803 103 821 159
Diluted average for the year 102 958 271 103 821 159
The dilution arises as a result of unexercised equity-settled share
incentives.
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.
5. Earnings per ordinary share
The calculation of basic attributable and headline earnings per
ordinary share is based on attributable earnings
of R305 million (2008: R194 million) and headline earnings of R246
million (2008: R192 million) respectively, and
on a weighted average of 102 939 803 (2008: 103 821 159) ordinary
shares in issue.
The calculation of diluted attributable and headline earnings per
ordinary share is based on attributable earnings
of R305 million (2008: R194 million) and headline earnings of R246
million (2008: R192 million) respectively, and
on a weighted average of 102 958 271 (2008: 103 821 159) diluted
ordinary shares in issue.
as at 31 March 31 March
2009 2008
Rm Rm
6. Contingent liabilities and operating lease
commitments
Contingent liabilities 10 17
Operating lease commitments 611 631
- due within one year 176 139
- due after one year 435 492
7. Capital expenditure commitments
Contracted but not provided for 10 13
Approved but not yet contracted for 23 8
33 21
8. Discontinued operations - Nigerian and Kenyan
interests
Revenue 80 159
Loss from operations (18) (54)
Net finance costs (4) (10)
Share of losses of associates - (1)
Loss before taxation (22) (65)
Taxation - (1)
Loss after taxation (22) (66)
Minority interest (1) 2
(23) (64)
Sale of Nigerian and Kenyan interests
Profit on sale 62 -
Profit (loss) from discontinued operations 39 (64)
Cash generated by operations 7 4
Net interest paid (4) (10)
Net cash generated by (used in) operating 3 (6)
activities
Net cash used in investing activities (1) (24)
Net cash (used in) from financing activities (7) 12
Foreign operations translation adjustment 1 (2)
Net cash used in discontinued operations (4) (20)
Disposals of assets and liabilities on sale
Non-current assets 85 95
Current assets 9 48
Non-current liabilities 10 12
Current liabilities 150 155
9. Audited results
The auditors, Deloitte & Touche, have issued an unmodified audit
opinion on the group`s annual financial statements for the year ended
31 March 2009. A copy of their audit report is available for
inspection at the company`s registered office. These condensed group
annual financial statements have been derived from the group annual
financial statements and are consistent in all material respects with
the group annual financial statements.
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, Johannesburg?2196
PO Box 1746, Saxonwold 2132
These results may be viewed on the internet at http://www.avusa.co.za
Date: 25/06/2009 07:05:01 Produced by the JSE SENS Department.
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