Avusa recovery on track

Avusa has reported on Friday (16 November) an 18% rise in profit from operations, to R86 million, for the six months ended September 2012.

Times Media Group took over operational and management control of Avusa and its underlying operations from the beginning of October 2012.

Avusa’s operations include a number of print titles including Sunday Times, Business Day, Financial Mail, and Elle, while online brands include I-Net Bridge, Junction.co.za, and BDlive. It also owns Exclusive Books, and cinema chain NuMetro.

Revenue improved marginally to R2.898 billion, from R2.85 billion in 2011, while Avusa’s media division reported operating revenue of R57 million, from R47 million before.

Media

“Despite trading conditions remaining difficult and volatile, the media division reported significantly improved profits due to a modest recovery in advertising revenues. Newspapers recorded the strongest growth, with the Sunday Times and dailies showing significant improvements,” Times Media said.

The group said that despite market conditions remaining extremely tough, circulation and readership of its titles remained steady. “The steep rise in fuel prices offset some of the gains made in addressing our cost of sales, but we remain vigilant and continue to seek innovations to keep costs under control,” the group said.

“The mining strikes have directly affected our recruitment advertising revenues, and we expect this to continue in the short term,” Times Media said.

It said that the contribution from the digital businesses was boosted by a greatly improved performance of the ‘Live websites’ which were on the verge of achieving break-even as a result of strict cost controls and aggressive growth in advertising and content revenues.

Books

The Books division, which consists of book retail (Van Schaik Bookstore and Exclusive Books), book and map publishing (Random House Struik, Struik Christian Media, New Holland Publishers and Map Studio), digital mapping (MapIT) and book logistics (Booksite Afrika and Mega Digital), revealed a turnaround, with profit at R1 million, from as prior loss of R12 million.

However, Times Media said that the turnover at Exclusive Books, was marginally lower than the prior year mainly due to the growing shift to e-books in the fiction category. Exclusive Books increased its gross margin and improved its operating efficiencies to reduce overheads.

Entertainment

The entertainment division comprising Nu Metro and Gallo Music, among others, reported an operating loss of R25 million, from a loss of R30 million in 2011.

“The business environment remains volatile, making predictions and forecasting difficult. The transition effects of format changes, digitisation and consumer expectations continue to drive the remodelling and rejuvenation of the business.

Times Media said that the film distribution business performed well on the back of strong content, increasing video-on-demand revenues and robust cost controls.

“Nu Metro Cinemas enjoyed good content and solid growth in ticket prices and confectionary sales, offsetting reduced attendances. Significant efforts continue to be made to reduce expenses and improve operational efficiencies,” the group said.

The Music business has adopted a turnaround strategy to attract new artists, drive frontline content and deliver efficiencies, Times Media added.

Outlook

Looking ahead, the group said that, although the broader operating environment is anticipated to remain challenging over the next 12 months, management has instituted a number of structural changes.

“Management believe the turnaround will take time given the number of smaller companies and the complexities involved in these various businesses.

“A key area of focus of management will be the company’s revenue and operating margins and the reduction of debt,” Times Media said.

“The board of directors of Times Media Group believes the business is appropriately capitalised and efficiently leveraged with sufficient flexibility to support the company’s turnaround strategy.  With a diverse portfolio of assets, and a strong management team, the board is confident the business is now well positioned to deliver on its turnaround strategy,” it said.

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