| Fri 30 Mar 2001, 0:00 | | Primedia Limited Interim Unaudited Results |
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Primedia Limited
Interim Unaudited Results for Six Months Ended 31 December 2001
1. Introduction
In the past six months, Primedia has focused on improving efficiency in all its
businesses while clearly defining its long-term strategy.
It has evaluated the performance of each of the acquisitions made over the last
seven years and, in the light of operating experience, has established which of
these fit into the group's future plans and which need to be disposed of.
The revised reporting format of this interim report should enable unitholders
to gain a better appreciation of group performance and the contribution to
group profits. The group's media businesses have been classified as follows:
The advertising businesses which generate advertising revenue through radio,
billboards, cinema, etc. All these businesses are situated in South Africa.
The one-to-one marketing services businesses in the UK(Primecom) which generate
income from advertisers who focus on direct marketing channels.
The filmed entertainment businesses, whose principal activities are the
exhibition and distribution of filmed entertainment, through cinema and video
in South Africa, the UK, Ireland, Europe and the Middle East.
The group's allocation and management of capital is a key focus area going
forward. Businesses not generating an acceptable return on capital in
prescribed timeframes will be disposed of. Currently the group's filmed
entertainment businesses are generating very low returns on invested capital.
Considerable attention is focused on correcting this issue.
The group's strategy, as further described below, in respect of each of the
three categories remains consistent. The priority in the future direction of
Primedia is to allocate capital from underperforming businesses to those areas
in which the group has proven expertise and a good track record, such as
advertising businesses, thereby enhancing shareholder value.
2. Overview and highlights
2.1 Trading Results and Cash Flow
The results for the six months underscore the success and continued growth of
Primedia's advertising and one-to-one marketing services businesses and
highlight the heavy costs and associated losses incurred in the start-up of new
cinema outlets in Europe and the Middle East, as well as the impact of
depressed cinema attendance figures in South Africa.
Group turnover increased by 12% to R892,7 million. The advertising and
one-to-one marketing services businesses posted respectable results,
collectively increasing turnover by 22% to R612,5 million and operating profit
before depreciation (EBITDA) by 13% to R120,2 million.
Group EBITDA declined by 2% to R137,7 million while headline earnings per
combined unit (HEPU) declined by 43%. This was in the main due to the decline
in cinema attendances in South Africa, the interest cost arising from the
investment of an additional R157,6 million in Ster Century Europe and the share
of losses emanating from the start-up of new cinema multiplexes in Europe and
the Middle East.
The group's share of losses from Metropolis* declined from
R10 million to R3,9 million mainly due to the closure of the B2B unit of
Metropolis*. The group is considering the de-listing of Metropolis* and an
announcement will be made in this regard in due course.
The group's operating cash flows remain healthy, bolstered by the significantly
reduced capital expenditure programme following a critical analysis of returns.
2.2 Return on Capital
The group's businesses generated the following EBITDA returns (excluding
associated companies) relative to original investment cost (including
intangible assets that were previously written off):
Six Months 12 Months to
Annualised June 2000
Advertising businesses 21% 19%
One-to-one marketing
services businesses 42% 38%
Filmed entertainment businesses 4% 6%
2.3 Disposals
The group realised R146 million from the disposal of non-core and/or
under-performing assets. Excluding property-based financing of R54,6 million,
Primedia's net operating debt is at a comfortable R145 million, which
represents 18% of unitholders funds and 53% of six months annualised group
EBITDA. The group continues to focus on realising non-core assets and a further
R44 million has been received in March 2001 relating to the sale of Virtutel, a
subsidiary of Primecom.
The group has started the process of buying out minorities in its subsidiaries
in order to simplify the group structure and increase its direct access to
operating cash flows.
2.4 Management
The group continues to strengthen its operating capacity and has recently
appointed Ferdi Gazendam as Group Chief Operating Officer in South Africa.
3. Divisional Review
3.1 Advertising businesses
3.1.1 Six month review
Although the combined turnover did not grow materially, healthy EBITDA margins
of 28% were maintained. Excellent results were reported by the following
businesses:
Primedia Broadcasting's results included a 30% increase in EBITDA by 94.7
Highveld Stereo. This station remains South Africa's most successful commercial
radio station.
Primedia Outdoor recorded a 22% increase in turnover and 37% increase in EBITDA
on the back of improved occupancies across all media types and tight cost
control.
Cinemark, which has established cinema as a truly effective advertising medium,
posted impressive results with turnover and EBITDA up 22% and 39% respectively.
These results were achieved despite significantly reduced spend by tobacco
advertisers.
The direct marketing division posted a 17% increase in EBITDA.
Primedia Sport, Product Marketing Services and CartAd In-Store Media depressed
the results of the Specialist Marketing division as FMCG advertisers came under
pressure as a result of the increasing squeeze on disposable income in the
local market.
3.1.2 Prospects
The full year results of Primedia Sport, Product Marketing Services and CartAd
In-Store Media are expected to remain well behind those of the previous year
despite an improved second half.
All other companies are expected to continue to perform at similar levels to
those achieved during the first half.
3.2 One-to-one marketing services businesses
3.2.1 Six month review
Primecom's excellent results included Foresight as a subsidiary for the first
time. Foresight was recently merged with pres.co to form Wheel thereby becoming
the largest digital communications company in the UK. Excluding Foresight,
Primecom would have improved turnover and EBITDA by 27% and 25% respectively.
Tight trading conditions experienced by Wheel in the last quarter were more
than offset by excellent performances by the IC3 division and in particular,
Spark (fulfillment) and c3 (contact centre consultancy).
Primecom sold its 30% stake in dunnhumby and 95% of AlphaMail for R144 million
in November 2000.
3.2.2 Prospects
Wheel, which is Primecom's largest business, is expected to experience tight
trading conditions in the second six months. This follows the worldwide
contraction in technology and e-services spend. Although Wheel has embarked on
a significant cost reduction program to meet these conditions, margins are
expected to remain under pressure in the short term.
Primecom's results will be materially influenced by Wheel and, based on current
trading conditions, EBITDA from Primecom is expected to be materially lower in
the second half. Primecom's results for the full year will also be impacted by
recent disposals.
In order to achieve economies of scale and to improve the competitiveness of
Primecom's businesses, Primecom is exploring various opportunities including
selling or merging some of its businesses with other trade players. This
initiative will be constantly evaluated against the shareholder value creation
imperative and a backdrop of volatile equity markets.
As Primedia has now honed its focus on traditional media, and in particular
advertising media, Primecom's businesses are not considered a core long-term
holding for Primedia.
3.3 Filmed entertainment businesses
3.3.1 Ster-Kinekor Theatres and Ster-Kinekor Pictures
Six month review
In line with the local cinema industry, Ster-Kinekor Theatres experienced a 10%
decline in attendances that resulted in a decline in turnover and
profitability.
This was only partially offset by marked operational improvements, including
increased average ticket prices, concession takings and margins, and a 15%
reduction in labour expenses at cinema level. EBITDA declined by 34% to R20
million, and PBIT declined by R12 million (a decline of 60%) to R8,1 million as
a result of an 18% increase in the depreciation charge.
Ster-Kinekor Pictures, the leading distributor of filmed entertainment in South
Africa, improved EBITDA by over 100% to R3,2 million mainly as a result of
commissions received from the sale of product to television broadcasters.
Prospects
Ster-Kinekor Theatres' attendances have declined from 19,5 million in 1998,
when the business was acquired by the group, to 16,3 million in 2000.
Attendance levels are the most important value driver in Ster-Kinekor Theatres
with every 100 000 attendances contributing approximately R1,2 million to
Ster-Kinekor Theatres' EBITDA. Since acquisition therefore, Ster-Kinekor
Theatres profit has been eroded by approximately R40 million by the decline in
attendances. Increased entertainment choices, a squeeze on consumer disposable
income, the emigration of high frequency cinema patrons, the slow take-up of
cinema by black consumers and the over-screening in the South African market
have all contributed to attendance and attendances per screen declining to the
lowest level yet.
After a complete review of its circuit, Ster-Kinekor Theatres has concluded
that a further downsizing is required to better match the demand for cinema
with the supply of screens. Accordingly, 15 sites (90 screens out of 360
screens) will be either closed, or the number of screens reduced with a related
reduction in rental, or franchised. This will also result in further central
and regional cost reductions. It is anticipated that a reasonable proportion of
attendees from sites closed will patronise other Ster-Kinekor cinemas.
In order to meet the costs of this rationalisation, the group will incur a
once-off headline earnings restructuring charge of between R45 million and R55
million in the second half (including a R16 million provision that was raised
in the prior year). The charge includes estimated cash restructuring costs of
R35 million which will be financed out of cash flows. The payback period on the
cash restructuring costs is expected to be three years.
Post restructuring, Ster-Kinekor Theatres will be less susceptible to declines
in cinema attendances and will be better positioned for future expansion into
new markets. The industry is expected to remain depressed in the short term due
to the reasons mentioned earlier. Attendances also remain directly correlated
to the quality of content.
Due to the size of Ster-Kinekor Theatres relative to Primedia's other
businesses, Primedia's HEPU for the full year will be influenced by the overall
level of Ster-Kinekor Theatres' attendances and the impact of restructuring
costs.
Ster-Kinekor Theatres does not intend committing any further expansionary
capex, other than what has been committed to date, until there is clear
evidence that the market is expanding.
3.3.2 Ster Century Europe and Ster Century Middle East
Six month review
Primedia's share of development losses from Ster Century Europe (SCE) and Ster
Century Middle East (SCME) increased to R16,5 million(1999: R3,4 million) of
which R12,9 million relates to SCE.
SCE increased turnover by 120% to $17,8 million for the comparable six months
as six new sites were opened in Poland, Greece, The Czech Republic and
Slovakia. The turnover increase was also impacted by openings in the prior year
which traded for a full year for the first time. SCE has 154 screens in
operation. EBITDA losses increased to $2,6 million (1999: losses of $2,0
million) as a result of slower than expected build in attendances from new site
openings, a dearth of local product in Poland (a major driver of local
attendances) and increased infrastructure costs associated with the greater
number of territories.
SCME will open its first site in April 2001 and losses to date relate to
infrastructure costs.
Prospects
Primedia's share of SCE's losses for the second half of the year will be higher
than those recorded in the first half as increasing depreciation due to site
openings offsets improving EBITDA. SCE should reach positive monthly operating
cash flows by September 2001. It is not anticipated that Primedia will invest
any further cash into SCE.
Notwithstanding the improved outlook, Primedia has decided to redeploy capital
from SCE. As referred to in the recent cautionary announcements, Primedia and
Royale Resorts Limited are currently in negotiations to dispose of their
interests in SCE. It is anticipated that an announcement on the outcome of the
negotiations will be made by 30 June 2001.
3.3.3 Ster-Kinekor Home Entertainment
Six month review
Home Entertainment posted a decline in EBITDA of 23% in line with budget. The
decline was due to the delayed launch of Sony Playstation II in South Africa as
there is a worldwide shortage of consoles. The benefit of this new product
launch will be felt in the second six months. Ster-Kinekor Home Entertainment
did experience good growth in video rental and video retail due to the release
of good product from the studios it now represents (Columbia Tristar,
Dreamworks and Universal). DVD sales were also pleasing.
Prospects
Continued growth in rental and video distribution and the release of Sony
Playstation II should result in Ster-Kinekor Home Entertainment posting an
increase in EBITDA for the full year.
4. Other Income Statement Items
R8,6 million of losses relating to Primedia Music is included in the reported
EBITDA. The group has now exited this business. Adequate provision for closure
costs has been made. The group is no longer involved in the development of
proprietary entertainment content.
Net interest paid increased due to the debt incurred to finance SCE. The
disposal of non-core assets towards the end of the period under review will
result in a significant reduction in net interest paid for the second six
months.
The net exceptional gain relates mainly to the profit realised on the sale of
dunnhumby and AlphaMail, offset by the write-off of Primedia's investment in
Metropolis*.
The increased losses from associates are mainly due to the losses of SCE and
SCME, which accounted for R16,5 million, and R3,9 million is attributable to
Metropolis*. The attributable loss of CapeTalk declined by 33% to R1 million.
5. Balance Sheet
The group remains in a healthy financial position with gearing at 25%.
Following the disposal of Virtutel for R44 million, gearing has subsequently
reduced to 20%.
The increased investment in associated companies relates mainly to the
additional R157,6 million invested into SCE.
6. Cash Flow
The cash flow from operations, excluding interest on borrowings, was consistent
with that of the prior year and remains healthy.
Excluding the R21,6 million cost of the new Primedia Broadcasting premises,
operational capex for the period amounted to R46 million which represents a 15%
reduction on the prior year.
Acquisitions net of minority financing includes the R157,6 million invested
into SCE, offset by the proceeds from the disposal of dunnhumby, AlphaMail and
Intelligence Publishing of R146 million. The balance relates mainly to the
payment of amounts due to vendors.
Cash flow for the full year will be enhanced by the 63% take-up of the
re-investment option in respect of the half-year debenture interest payment
resulting in a cash conservation of R22 million.
7. Changes in accounting policy
The interim results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. There have been no
changes effected to any accounting policies during the six-month period other
than as stated below:
Intangible Assets
In accordance with the South African Statements of Generally Accepted
Accounting Practice AC 129 (Intangible Assets) and AC 131 (Business
Combinations) the group has changed its accounting policy for goodwill,
development cost and other intangible assets.
Accordingly, with effect from 1 July 2000, any goodwill arising on the
acquisition of investments in subsidiaries, businesses, joint venture or
associates is stated at cost less accumulated amortisation.
Goodwill is amortised through the income statement over its estimated useful
life or a maximum period of 20 years.
Development costs were previously capitalized and amortised over the expected
future lives. With effect from 1 July 2000, all development costs are written
off in the period in which they are incurred.
Where necessary, comparative figures have been restated to conform with the
change in the accounting policies.
8. Dilutive number of shares in issue
The weighted number of combined units outstanding has been increased by the
weighted average number of share options granted, but not yet exercised. The
assumed proceeds from these options are based on the issue of the options at
fair value. The differences between the number of combined units issued and the
number of combined units that would have been issued at fair value to raise the
assumed proceeds are treated as an issue of combined units for no consideration
9. Conclusions
The group is focused on the need to unlock shareholder value and also to grow
shareholder value in the long-term. Core areas of business activity have been
identified for growth. Non-core assets have been earmarked for disposal and
under-performing assets will be addressed.
The group intends to improve the returns from its filmed entertainment
businesses, the restructuring of Ster-Kinekor Theatres and the sale of SCE.
Proceeds from the sale of SCE and any other non-core asset will be used to
bolster the group's main focus, reduce debt or return capital to shareholders.
The group has a good balance of management skills to manage the strategic and
operational challenges of the future.
The prospects for the group's operating businesses are set out above. HEPU for
the full year will be substantially below that of the prior year, mainly due to
the negative impact of the filmed entertainment businesses on the group's
results.
10. STRATE
Primedia has been notified by the JSE Securities Exchange that it has been
selected to transfer the company's share capital to the electronic STRATE
(Share Transactions Totally Electronic) environment as from 2 July 2001. This
is the date from which investors' shares can be converted into an electronic
record in order to become eligible to settle in the STRATE environment. Trading
for electronic settlement begins on 23 July 2001 and from this date there is a
legal requirement for investors to deposit their shares with Central Securities
Depository Participant (CSDP) or a qualifying stockbroker prior to selling them
in order for the trade to settle in STRATE.
This means that with effect from 23 July 2001 investors will not be able to
sell their Primedia shares unless they exist in electronic form in the STRATE
environment. Electronic settlement of trades in Primedia shares will take place
for the first time on 30 July 2001.
On behalf of the board
Issie Kirsh Paul Nkuna* William Kirsh Ferdi Gazendam
Chairman Deputy Chairman Chief Executive Chief Operating Officer
30 March 2001
Other directors: M H Brodie, M J Lamberti*, P Maw, M M Mbebe*, R A Nicholson, K
Pillay, P S Ratlou* (Alt. C O Elk*), C S Seabrooke*, B J T Shongwe, A Watson (*
non-executive director)
Consolidated Income Statement
Unaudited six months Year ended
ended 31 December % 30 June
R'000 2000 1999 Change 2000
Restated Restated
Turnover 892,718 798,048 12% 1,714,383
Operating profit
before depreciation
(EBITDA) 137,765 140,974 -1% 275,586
Depreciation (41,173) (34,831) 18% (78,170)
Amortisation of
goodwill (1,128) - -
Operating profit
(PBIT) 95,464 106,143 -9% 197,416
Net interest
(paid) / received (17,187) 36 NM (3,078)
Net income before
debenture interest,
exceptional items
and taxation 78,277 106,179 -25% 194,338
Debenture interest (35,443) (35,243) (70,309)
Exceptional
profit / (loss) 13,271 - (53,779)
Profit before
associates' results 56,105 70,936 70,250
Loss from associates (20,733) (11,781) (35,376)
Profit before taxation 35,372 59,155 34,874
Taxation (13,746) (24,683) (39,091)
Profit / (loss)
after taxation 21,626 34,472 (4,217)
Attributable to
outside shareholders (6,642) (7,506) (11,246)
Attributable
income / (loss) 14,984 26,966 (15,463)
Basic headline
earnings per
combined unit -
cents (1) 17 30 -43% 48
Diluted headline
earnings per
combined unit -
cents (1) 17 31 -45% 47
Basic earnings per
combined unit - cents 26 30 -13% 27
Diluted earnings per
combined units - cents 25 31 -19% 27
Basic earnings /(loss)
per share - cents 7 13 -46% (8)
Diluted earnings /(loss)
per share - cents 7 13 -46% (7)
(1) Determination of
headline earnings:
Attributable income /
(loss) 14,984 26,966 (15,463)
Debenture interest
distribution 35,443 35,243 70,309
Amortisation of
oodwill 1,128 - -
51,555 62,209 54,846
Net exceptional
(profit) / loss (16,371) - 42,702
Gross exceptional
profit / (loss) (13,271) - 53,779
Non headline earnings
adjustment (2,852) - (2,390)
Taxation and outside
shareholders' effects (248) - (8,687)
Headline earnings 35,184 62,209 97,548
Number of units in
issue ('000) 201,691 204,153 -1% 201,693
Weighted number of
units in issue ('000) 201,691 204,485 -1% 203,881
Diluted weighted
number of
units ('000) 204,291 202,618 1% 206,311
Consolidated Balance Sheet
Unaudited 31 December 30 June
R'000 2000 1999 2000
Restated Restated
Assets
Property, plant
and equipment 398,690 366,694 378,981
Associated companies 415,009 280,886 293,997
Other investments 53,200 77,531 54,675
Deferred tax asset 318,480 306,169 324,740
Goodwill 4,140 - -
Current assets 539,491 486,615 476,362
Inventory 27,743 32,871 24,149
Accounts receivable 471,870 402,844 411,568
Cash resources 39,878 50,900 40,645
Total assets 1,729,010 1,517,895 1,528,755
Equity and
liabilities
Share capital and
reserves 416,380 376,056 305,587
Debentures 374,639 379,214 374,645
Total unitholders'
funds 791,019 755,270 680,232
Outside shareholders'
interest 173,145 186,258 185,774
Long term borrowings 58,726 47,231 44,845
Current liabilities 706,120 529,136 617,904
Debenture interest
Payable 35,443 35,243 35,165
Amounts due to
Vendors 31,264 53,719 49,617
Bank borrowings 171,412 4,508 58,312
Other current
Liabilities 468,001 435,666 474,810
Total equity and
liabilities 1,729,010 1,517,895 1,528,755
Net asset value
per combined
unit - cents 392 370 337
Consolidated Cash Flow Statement
Unaudited six months Year ended
ended 31 December 30 June
R'000 2000 1999 2000
Restated Restated
Operating profit
before depreciation 137,765 140,974 275,586
Net interest (paid)
/ received (17,187) 36 (3,078)
Total increase in
working capital (54,649) (54,440) (29,148)
Cash flow from
Operations 65,929 86,570 243,360
Interest attributable
to outside
shareholders (2,454) (4,599) (7,797)
Debenture interest
paid (35,165) (38,353) (73,497)
Taxation paid (18,208) (18,999) (20,525)
Cash flow from
operating activities 10,102 24,619 141,541
Net capital
expenditure (67,591) (54,861) (99,070)
- to expand
operations (31,218) (35,696) (72,868)
- to maintain
operations (36,373) (19,165) (26,202)
Acquisitions net of
shareholders'
interest and vendor
financing (62,801) (63,719) (144,011)
Other investments (8,663) 1,638 (31,433)
Net funds utilised (128,953) (92,323) (132,973)
Issue of units (5) 63 80,037
Repurchase of units - - (98,271)
Net increase /
(decrease) in
borrowings 128,191 (37,980) 10,610
Net cash outflow (767) (130,240) (140,597)
Statement of Changes in Equity
Non Total share-
Subscribed distri- Distri holders'
butable butable
R'000 capital reserves reserves equity
Balance at 30 June
1999 380,757 354,560 33,370 768,687
Changes in accounting
policies:
Write off of
development costs (23,914) (23,914)
Restated balance
at 30 June 1999 380,757 354,560 9,456 744,773
Units held in
The Primedia Trust (709) (1,692) (2,401)
Units issued 63 63
Write off of
intangibles (16,052) (16,052)
Attributable earnings 26,966 26,966
Tax relief on
intangible assets 1,531 1,531
Translation reserve
movement 390 390
Balance at 31
December 1999 380,111 354,789 20,370 755,270
Balance at 30
June 2000 377,670 369,937 (41,425) 706,182
Changes in accounting
policies:
Write off of
development costs (25,950) (25,950)
Restated balance at
30 June 2000 377,670 369,937 (67,375) 680,232
Units held in
The Primedia Trust (5) (56) (61)
Write back of
intangibles disposed 122,678 122,678
Taxation relief on
intangible assets (9,983) (9,983)
Attributable earnings 14,984 14,984
Translation reserve
movement 9,519 9,519
Devaluation of
fixed assets (1,831) (1,831)
Translation reserve
Released (25,142) (25,142)
Other 623 623
Balance at 31
December 2000 377,665 343,067 70,287 791,019
Notes
Unaudited 31 December 30 June
R'000 2000 1999 2000
Restated Restated
1. Net interest
(paid) / received
Interest paid (21,272) (10,359) (20,720)
Interest received 4,085 10,395 17,642
(17,187) 36 (3,078)
2. Taxation
Current taxation (16,743) (12,718) (27,535)
Secondary taxation
on companies - - (1,899)
Associated companies - - (1,677)
Deferred taxation 2,997 (11,965) (7,980)
(13,746) (24,683) (39,091)
3. Exceptional
profit / (loss)
Net profit /
(loss) on disposal
and write down of
businesses
and investments 15,147 - (4,968)
Restraint of
trade payments (1,876) - (1,882)
Provision for
closure of cinema
complexes - - (27,258)
Discontinued
operations - - (19,671)
13,271 - (53,779)
4. Associated
companies
Listed company 21,591 60,589 28,918
Unlisted
companies 393,418 220,297 265,079
415,009 280,886 293,997
Market value
of listed company
at 31 December 15,114 102,580
Market value of
listed company
at 15 Septem-
ber 2000 31,308
5. Future lease
payments
The minimum lease
payments under
non-cancellable
operating leases
are as follows:
Within one year 54,645 65,930 56,595
Thereafter 320,444 418,953 346,890
375,089 484,883 403,485
6. Capital commitments
Capex 82,076 171,659 111,457
Contracted for 39,258 126,853 15,718
Authorised, but
not contracted
for 42,818 44,806 95,739
Other capital
commitments 16,640 142,654 166,853
98,716 314,313 278,310
The commitments will be financed by cash flows from operations and the
utilisation of cash and borrowings within the accepted gearing profile of the
group.
7. Lease guarantee commitments Primedia and Royale Resorts have issued joint
and several guarantees in respect of future lease commitments of Ster Century
Europe. Primedia and Royale have indemnified each other so as to limit each
party's exposure to its pro rata portion of the guarantees based on
shareholding. Primedia's 50% (1999: 30%) share of the guarantees issued in
respect of future lease commitments amounts to US$3m per annum (1999: US$2m per
annum) and US$26m (1999:US$16m) in total. Primedia and Royale will be released
from their guarantee commitments based on Ster Century Europe achieving certain
financial milestones, being principally the extent of the paid-up capital of
Ster Century Europe. Based on the paid-up capital which has been invested by
Primedia and Royale in terms of the Ster Century Europe business plan, the
anticipated commitments in respect of Primedia's guarantee exposure are as
follows:
31 December 30 June
US$ '000 2000 1999 2000
Expected release
within one year 4,661 - 3,357
Expected release
thereafter 21,628 16,215 14,642
Total guarantees 26,289 16,215 17,999
Ratios
Six months ended 31 December 30 June
2000 1999 2000
Restated Restated
Operating profit
before depreciation
margin 15% 18% 16%
Operating profit
margin 11% 13% 12%
Tax rate before
exceptional items and
associated loss 32% 35% 37%
Debenture interest
cover 2.2 3.0 2.8
Segmental Reporting
Six months ended 31 December Year ended
30 June
R'000 2000 1999 2000
Restated Change Restated
Turnover
Advertising 295,801 285,745 4% 571,366
Broadcasting 77,891 69,513 12% 133,807
Outdoor 56,704 46,407 22% 98,937
Cinema 31,725 25,961 22% 47,338
Direct Marketing 48,447 41,675 16% 85,402
Specialist
Marketing 59,165 65,155 -9% 132,873
Publishing 21,869 37,034 -41% 73,009
One-to-one
marketing 316,762 216,367 46% 609,272
Wheel 122,701 47,564 158% 224,769
Customer Insight 22,604 24,492 -8% 52,666
IC 3 171,457 144,159 19% 331,837
Central - 152 -100% -
Filmed
entertainment 272,106 280,917 -3% 506,533
Ster -Kinekor
Theatres 159,797 173,701 -8% 333,038
Ster-Kinekor
Pictures 9,161 12,034 -24% 15,964
Ster-Kinekor Home
Entertainment 103,148 95,182 8% 157,531
Central 117 126 -7% 251
Music* 7,932 14,893 -47% 26,961
Total Turnover 892,718 798,048 12% 1,714,383
EBITDA
Advertising 83,161 80,576 3% 153,672
Broadcasting 40,952 35,015 17% 63,985
Outdoor 18,404 13,469 37% 25,966
Cinema 7,590 5,458 39% 10,549
Direct Marketing 7,832 6,704 17% 14,315
Specialist
Marketing 8,141 18,936 -57% 40,854
Publishing 242 994 -76% (1,997)
One-to-one
Marketing 37,064 25,566 45% 64,268
Wheel 20,150 17,058 18% 39,853
Customer Insight 2,409 3,450 -30% 9,663
IC 3 16,562 9,871 68% 22,436
Central (2,057) (4,813) -57% (7,684)
Filmed
entertainment 30,272 40,817 -26% 79,401
Ster-Kinekor
Theatres 20,031 30,192 -34% 62,958
Ster-Kinekor
Pictures 3,200 1,493 NM 3,938
Ster-Kinekor Home
Entertainment 7,041 9,132 -23% 12,505
Central (4,133) (3,813) 8% (18,372)
Music* (8,599) (2,172) NM (3,383)
Total EBITDA 137,765 140,974 -2% 275,586
EBITDA Margin
Advertising 28% 28% 27%
One-to-one marketing 12% 12% 11%
Filmed entertainment 11% 15% 16%
Central NM NM NM
Music* NM -15% -13%
15% 18% 16%
Music* - Discontinued
from 1 January 2001
NM - Not meaningful
Contribution
Turnover
Advertising 33% 36% 33%
One-to-one marketing 35% 27% 36%
Filmed entertainment 30% 35% 30%
Central 0% 0% 0%
Music 1% 2% 2%
31% 37% 31%
EBITDA
Advertising 60% 58% 56%
One-to-one marketing 27% 18% 23%
Filmed entertainment 22% 29% 29%
Central -3% -3% -7%
Music -6% -2% -1%
100% 100% 100%
Capital invested
Advertising 788,664 768,763 768,763
One-to-one
marketing 178,450 168,234 168,234
Filmed
entertainment 1,403,376 1,403,376 1,403,376
2,370,490 2,340,373 2,340,373
