| Mon 3 Mar 2003, 9:04 | | Primedia - Interim Unaudited Results For The Six M |
|
Primedia - Interim unaudited results For the six months
ended 31 December 2002
Incorporated in the Republic of South Africa
Registration number 1993/003355/06
Share code: PMA ISIN: ZAE000035119
Share code: PMN ISIN: ZAE000035127
("Primedia")
Highlights
- Turnover up 9,2% to R929,3 million
- PBIT from South African operations up 23,8% to R112,3 million
- Interim distribution of 13,0 cents per share
- Strengthened balance sheet
1. Overview
Primedia`s results for the six months bear testimony to the achievement of
its key strategic objectives, namely optimally balancing the group`s media
portfolio and the continued disposal of non-core international businesses.
Domestically, the group made further progress with its previously announced
innovations, with secured revenues now exceeding the R75 million previously
reported. The ongoing orderly disposal of the group`s international interests is
the group`s near-term strategic priority and the following progress has been
made:
- The formal sale process for the remaining Ster Century Europe
territories commenced in February 2003 and the outcome is expected to be
announced by the end of the current fiscal. Onerous lease terms were
renegotiated prior to commencing the sale process.
- Ster Century Middle East has been successfully restructured through
the achievement of significant rent concessions from all landlords other than in
respect of one site, which has been closed. The business is now cash flow
positive and alternatives for maximising shareholder value are being explored.
- Corrective action has resulted in significantly reduced losses from
the UK-based one to one businesses over the last six months.
These accomplishments bring the group closer towards its stated objective
of becoming a world class South African media group, encompassing a balanced
portfolio of market leading media businesses with strong cash flow
characteristics.
2. Operating Highlights
Advertising
Improved market conditions, the impact of the group`s innovations, as well
as positive contributions from previous underperforming businesses, resulted in
turnover increasing by 15,8% to R318,7 million. PBIT increased by 23,5% to R77,2
million and PBIT margins improved from 22,7% to 24,2%.
Cash flow generation was again excellent and approximated operating
profits.
Filmed Entertainment
The South African filmed entertainment businesses, incorporating Ster-
Kinekor Theatres, Ster-Kinekor Pictures and Ster-Kinekor Home Entertainment all
performed well, supported by good content and ongoing operational excellence.
Turnover grew by 15,3% to R424,4 million and PBIT increased by 26,9% to R36,0
million. PBIT margins increased from 7,7% to 8,5%.
Cash flow generation was seasonally impacted by working capital
requirements relating to Sony PlayStation, as retailers stocked up for
Christmas. These have since reversed in January and February.
One to One Marketing
Although the results were worse than the prior year, relative to the six
months ended 30 June 2002 the operating loss and loss per share for the current
period from the UK-based one to one businesses were reduced to R7,8 million and
2,9 cents respectively, from R18,7 million and 11,9 cents. Ongoing efforts are
being made to mitigate surplus property related costs, which in the period
amounted to R3,9 million.
The one to one businesses remain self-funding due to capital expenditure
being lower than depreciation and good working capital management.
3. Financial Highlights
- Group turnover was up 9,2% to R929,3 million with turnover from the
South African businesses up 14,8% to R752,6 million.
- Group EBITDA was up 15,0% to R137,0 million with EBITDA from the South
African operations up 21,4% to R143,7 million.
- Depreciation increased by 12,3% to R41,8 million due mainly to the
amortisation, over five years, of the R22 million infrastructural costs relating
to Rank TV.
- Group PBIT was up 16,2% to R95,2 million with PBIT from the South
African operations up 23,8% to R112,3 million.
- Net interest paid was 32,1% lower than in the prior year.
- The net foreign exchange losses reflect mainly the impact of the
strengthening rand on the group`s investments in Ster Century Europe and Ster
Century Middle East (SCME). Compliance with the provisions of the Accounting
Standard on financial instruments (AC 133) also resulted in a foreign exchange
loss of R2,9 million relating primarily to the purchases of Sony PlayStation
stock.
- Losses from associates, being principally Ster Century Europe and Ster
Century Middle East, reduced by 32,8% to R24,7 million due the previously
announced sales of loss-making territories, improved trading and corrective
action.
- Minorities` share of profits increased to R13,4 million (6,1 cents per
share) due mainly to the pay down of the 94.7 Highveld Stereo empowerment
funding structure.
- EPS excluding unrealised foreign exchange gains or losses increased to
11,8 cents from a loss of 25,2 cents.
- The group reflected an improvement in its liquidity position, with net
short term debt declining to R73,4 million (2001: R157,6 million).
4. Distribution to Shareholders
Notice is hereby given that a distribution out of share premium of 13,0
cents per share in lieu of a dividend, has been awarded to shareholders recorded
in the register of Primedia at the close of business on Friday, 28 March 2003.
The total value awarded to shareholders amounts to R29,3 million. Shareholders
are advised that the last day to trade "CUM" the distribution will be Thursday,
20 March 2003. The shares will trade "EX" the distribution as from Monday, 24
March 2003 and the record date will be Friday, 28 March 2003. Share certificates
may not be dematerialised or rematerialised during the period Monday, 24 March
2003 and Friday, 28 March 2003, both days inclusive. Payment will be made on
Monday, 31 March 2003.
The distribution has been based on 50% of the group`s core South African
earnings per share of 29,6 cents, adjusted for central costs. This metric is
considered to be most representative of the group`s sustainable earnings and
cash flow.
In terms of the requirements of the Companies Act, the directors confirm
that after the payment of the distribution, Primedia will be able to pay its
debts as they become due in the ordinary course of business, and its
consolidated assets, fairly valued, will exceed its consolidated liabilities.
5. Prospects
The group`s core South African businesses are anticipated to continue to
produce good results, which should enable the repayment of most of the group`s
short-term debt by June 2003. Continued efforts will be made to realise the
group`s international businesses.
6. Capital Structure
Consideration has been given to alternatives, which would enable the
group`s "N" share structure to be dismantled without negatively affecting
Primedia`s empowerment profile.
The Board has concluded that there are no alternatives presently available
that could persuade sufficient shareholders, including Mineworkers Investment
Company, to vote to pass a resolution to dismantle the "N" share structure.
Accordingly, the "N" share structure will remain in place for the time
being. The Board remains open to consider alternative proposals at any time.
For and behalf of the board
AP NKUNA W KIRSH
Chairman Chief Executive
Johannesburg 3 March 2003
Directorate: AP Nkuna (Chairman), W Kirsh (CE), MJ Bosman, BP Dibate,
FA Gazendam*, O Ighodaro*, HM Khoza, I Kirsh, HM Madima, P Maw, K Pillay*,
CS Seabrooke, BJT Shongwe, SV Zilwa.
Company secretary: O Ighodaro
(*Executive directors)
Registered office Transfer secretaries
6th Floor, Primedia Place, Computershare Investor Services Limited
5 Gwen Lane, Sandown 2196 70 Marshall Street, Johannesburg 2001
CONSOLIDATED INCOME STATEMENT
6 months 6 months 12 months
ended ended ended
31 Dec 02 31 Dec 01 30 Jun 02
Unaudited Unaudited % Audited
R`000 R`000 Change R`000
Revenue 929 256 850 681 9% 1 684 310
Operating expenses (792 238) (731 527) (1 458 359)
Operating profit before
depreciation ("EBITDA") 137 018 119,154 15% 225 951
Depreciation (41 833) (37 250) (75 839)
Operating
profits ("PBIT") 95 185 81 904 16% 150 112
Goodwill amortisation (1 996) (3 795) (5 316)
Debenture interest - (36 665) (35 730)
Other net finance costs (7 826) (11 526) (21 237)
Unrealised foreign exchange
(losses)/profits (11 614) 32 640 (22)
Share of associated
companies` losses (24 650) (36 686) (83 412)
Profit before taxation and
exceptional items 49 099 25 872 4 395
Exceptional items (1 771) (311 830) (343 567)
Profit before taxation 47 328 (285 958) (339 172)
Taxation (19 062) (18 420) (26 034)
Profit after taxation 28 266 (304 378) (365 206)
Minority interests (13 403) 117 2 153
Attributable
profits/(losses) 14 863 (304 261) (363 053)
Less: Headline adjusting
items 2 797 346 733 361 359
Attributable headline
profits/(losses) 17 660 42 472 (58%) (1 694)
Add: Unrealised foreign
exchange losses/(profits)
net of tax 8 130 (22 848) 15
Attributable headline
profits/(losses)
excluding foreign
exchange
losses/(profits) 25 790 19 624 31% (1 679)
Attributable headline
profits/(losses)
as detailed above 17 660 42 472 (1 694)
Add: Provision for cinema
closure costs - 1 730 4 029
Less: Impairment of
non-equity
accounted investments
in associates - (73 364) (64 773)
Cinema closure costs and
onerous lease charges - - (4 935)
Headline profits/(losses)
per share -
Circular 7/2002 17 660 (29 162) (67 373)
Number of shares in
issue (`000)
- At period end 218 021 211 599 220 763
- Weighted average 218 475 206 504 212 446
- Diluted weighted
Average 218 898 206 756 212 710
Earnings per share (cents)
- Headline excluding
foreign exchange
(losses)/profits 11,8 (25,2) (31,7)
- Headline 8,1 (14,1) (31,7)
- Diluted headline 8,1 (14,1) (31,7)
- Basic 6,8 (147,3) (170,9)
- Diluted basic 6,8 (147,2) (170,7)
CONTRIBUTION TO HEADLINE
EARNINGS PER SHARE
Cents Cents Cents
South Africa 29,6 26,5 12% 55,2
- advertising 19,6 19,3 37,4
- filmed entertainment 10,3 7,3 17,8
- one to one marketing (0,3) (0,1) 0,0
International (14,1) (50,6) 72% (78,3)
- filmed entertainment (11,2) (49,7) (65,5)
- one to one marketing (2,9) (0,9) (12,8)
Corporate center *(3,7) (6,3) 41% (13,3)
Headline earnings per
share before
adjusting items 11,8 (30,4) (36,4)
Discontinued operations - (0,1) (0,3)
Unrealised foreign exchange
(losses)/profits (3,7) 11,1 0,0
Debenture interest
tax shield - 5,3 5,0
Headline earnings
per share 8,1 (14,1) (31,7)
* The decrease is
attributable
to savings in
interest paid and
additional taxation
refunds received.
CONSOLIDATED BALANCE SHEET
31 Dec 02 31 Dec 01 30 Jun 02
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets 755 531 882 446 835 401
Property, plant and equipment 282 612 303 170 298 056
Goodwill and intangible assets 12 386 24 995 20 745
Investment in associates 93 867 183 905 149 527
Other investments 2 804 10 300 3 231
Deferred tax assets 363 862 360 076 363 842
Current assets 600 028 566 761 473 731
Inventories 69 634 53 151 31 703
Trade and other receivables 443 359 448 060 353 523
Bank balances and cash 87 035 65 550 88 505
Total assets 1 355 559 1 449 207 1 309 132
EQUITY AND LIABILITIES
Share capital and reserves 427 283 424 967 420 801
Minority interest 143 061 129 833 127 637
Total shareholders` funds 570 344 554 800 548 438
Non-current liabilities 157 352 170 305 167 095
Long-term borrowings 49 587 43 308 47 356
Provisions for liabilities and charges 107 765 126 997 119 739
Current liabilities 627 863 724 102 593 599
Bank borrowings and overdraft 148 704 213 586 184 292
Interest bearing short-term borrowings 11 748 9 520 19 343
Other current liabilities 467 411 500 996 389 964
Net asset value per share (cents) 196 201 191
CONSOLIDATED CASH FLOW STATEMENT
6 months 6 months 12 months
ended ended ended
31 Dec 02 31 Dec 01 30 Jun 02
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash generated from operations 77 919 112 841 244 432
Net non-debenture interest paid (9 036) (8 801) (21 237)
Income taxes received/(paid) 12 791 (14 793) (17 847)
81 674 89 247 205 348
Cash flow relating to
exceptional items (2 810) (3 812) (17 895)
Debenture interest paid - (34 884) (71 474)
Net cash inflow from
operating activities 78 864 50 551 115 979
Cash invested
Loans advanced to associated
companies (9 930) (93 897) (90 945)
Net property, plant and
equipment acquired (30 515) **(14 336) **(53 992)
Other investing activities (11 199) (29 761) (29 871)
Net cash outflow from investing
activities (51 644) (137 994) (174 808)
Cash from financing
Net proceeds of shares/combined
units issued 7 619 20 267 50 372
Share buy-back (7 345) - (9 129)
Other financing activities 3 201 (7 954) (1 726)
Net cash inflow from financing
activities 3 475 12 313 39 517
Net movement in cash and
cash equivalents 30 695 (75 130) (19 312)
Cash and cash equivalents
at beginning of period (95 787) (71 280) (71 280)
Effect of foreign exchange
rate changes 3 423 (1 626) (5 195)
Cash and cash equivalents
at end of period (61 669) (148 036) (95 787)
** The prior periods` acquisitions
are both net of R20 million capital
expenditure funded by landlord.
STATEMENT OF CHANGES IN EQUITY
Non-
distributable Accumulated
Share capital reserves loss Total
GROUP R`000 R`000 R`000 R`000
Balance as at
1 July 2002 449 427 487 742 (516 368) 420 801
Change in accounting
policy - AC133 (2 040) (2 040)
Restated balance as
at 1 July 2002 449 427 487 742 (518 408) 418 761
Shares issued 7 619 7 619
Tax relief on intangible
assets 11 484 11 484
Attributable profits 14 863 14 863
Foreign exchange
translation difference (18 504) (18 504)
Share buy-back (7 345) (7 345)
Other 405 405
Balance as
at 31 December 2002 449 701 481 127 (503 545) 427 283
SEGMENTAL ANALYSIS
6 months 6 months 12 months
ended ended ended
31 Dec 02 31 Dec 01 30 Jun 02
Unaudited Unaudited % Audited
GROUP R`000 R`000 Change R`000
Revenue
Continuing operations 929 256 831 294 12% 1 656 510
- advertising 318 770 275 385 16% 549 794
- filmed entertainment 424 415 368 183 15% 717 893
- one to one marketing 186 071 187 726 (1%) 388 823
Disposed entities - 19 387 - 27 800
929 256 850 681 9% 1 684 310
EBITDA
Continuing operations 137 018 119 181 15% 226 434
- advertising 93 911 78 026 20% 154 002
- filmed entertainment 50 064 39 864 26% 88 451
- one to one marketing 1 669 6 735 (75%) 825
- corporate centre (8 626) (5 444) (58%) (16 844)
Disposed entities - (27) - (483)
137 018 119 154 15% 225 951
PBIT
Continuing operations 95 185 82 011 16% 150 729
- advertising 77 169 62 463 24% 126 923
- filmed entertainment 36 042 28 409 27% 63 312
- one to one marketing (8 798) (2 634) (234%) (21 101)
- corporate centre (9 228) (6 227) (48%) (18 405)
Disposed entities - (107) - (617)
95 185 81 904 16% 150 112
NOTES
1. Basis of accounting
The financial information has been prepared on the historical cost basis in
accordance with South African Statements of Generally Accepted Accounting
Practice. The accounting policies used in preparing the financial information
are consistent with those used in the annual financial statements for the year
ended 30 June 2002, except that AC133 in respect of financial instruments
recognition and measurement has been adopted. Certain comparative figures have
been reclassified so as to provide more meaningful information.
The effect of the change in accounting policy in respect of AC133 is as
follows:
Gross Tax effect Minorities Net effect
R`000 R`000 R`000 R`000
Restatement of opening
accumulated loss (3 239) 972 227 (2 040)
Effect on current
period attributable
profits (2 957) 887 207 (1 863)
(6 196) 1 859 434 (3 903)
6 months 6 months 12 months
ended ended ended
31 Dec 02 31 Dec 01 30 June 02
R`000 R`000 R`000
2. Unrealised foreign exchange
(losses)/profits
Translation (losses)/profits (8 657) 32 640 (22)
Mark to market of financial
instruments (2 957) - -
(11 614) 32 640 (22)
3. Exceptional items
Net profit/(loss) on
disposal and
write down of assets 7 194 (127 981) (103 773)
Retrenchment and restructuring
costs (971) (3 827) (17 895)
Assets and goodwill impaired (7 994) (180 022) (216 964)
Provision for onerous leases - - (4 935)
(1 771) (311 830) (343 567)
Taxation 291 1 085 5 231
Minority interest - - 1 880
Net effect of exceptional
items (1 480) (310 745) (336 456)
4. Headline adjusting items
Debenture interest - 36 665 35 730
Goodwill amortisation 1 996 3 795 5 316
Capital items 801 306 273 320 313
2 797 346 733 361 359
5. Provisions for liabilities and
charges
Post retirement medical
Benefits 22 173 28 997 22 173
SCME guarantee exposure 55 892 78 000 67 764
Landlord inducement 19 942 20 000 19 703
Other 9 758 - 10 099
Per balance sheet 107 765 126 997 119 739
6. Capital expenditure and
commitments
Net capital expenditure for
the period 30 515 14 336 53 992
Future capital commitments 61 279 62 426 26 689
Financial commitments 17 711 26 146 50 094
Operating lease commitments 573 876 431 126 565 690
Due within one year 77 756 73 863 74 712
Thereafter 496 120 357 263 490 978
Guarantees and suretyships 167 475 375 964 177 970
Date: 03/03/2003 08:00:00 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
