Page 9 - Integrated Annual Report

(-18%) given the various lockdowns and especially in response to the bans on the sale of alcohol.
Our advertising revenue was notably less reduced (-7%). Essentially the reason for this is that our market share has grown over the last few years and especially this last year. At our lowest point in about 2015 we had shrunk to an audience share of around 13,5%.
While traditionally eMedia has had around half the audience share of the SABC this has changed considerably over the last few years. In April this year for the first time the combined eMedia group all adult 24-hour audience share reached 32,44%, a nose ahead of the combined SABC channels (30,94%) and DSTV (30,42%). This is partly the consequence of our decision to invest in Open View these last several years but equally it has been the result of more popular programming on eTV. Our share of LSM 8-9 audience at 25,6% is now a good stretch ahead of the SABC’s 19%, though still a fair margin away from DSTV’s 37,5%. Likewise, our eExtra channel now attracts a prime-time audience almost double that of SABC 3. The group turned around its R15m loss for the first half of the year to close with PAT of some R134m for the full year, a truly remarkable achievement.
Hosken Passenger Logistics and Rail:
The company is slowly regaining the number of passengers it carried pre-COVID-19. By year end this had increased to around 70% of previous passenger levels. The company has made great efforts to trim its costs and retain as much of its profitability as possible despite its reduced turnover. It succeeded in achieving PAT of about R203m, some 78% of the previous year which by any standards is an exceptional achievement. It was in addition a significant contributor to our cash flow, releasing dividends to us of some R114m through the year.
The dispute over the unions’ attempt to cling on to percentage across the board wage increases for workers earning significant premiums to the agreed minima persists for yet another year but unquestionably we are making progress in compelling an understanding that this is a fundamental issue for the company on which we cannot afford to compromise.
That resolve on our side is only strengthened by a decision in the Competition Tribunal which seeks to suggest the subsidizing of the bus sector but not the taxi industry is unfair. It seems utterly indifferent to the cost of labour in a formally regulated sector relative to that applicable in one which pays no overtime, standing time, bonuses, paid leave, pension benefits, sick pay, and the like (not to mention taxes on profits).
We are currently in negotiations with the unions aimed at agreeing a way out of this impasse but to date we have not yet found each other. Likewise, we continue to make
representations to the Department of Transport and Treasury about the differences between formal industries and informal ones including the enormity of the escalation in the cost of transport to the passengers and/or the state if the current framework is allowed to disintegrate.
Bottom line of these pressures however is that we cannot survive in the long term with a cost structure based on the accumulated historic premium to our competitors of close to 40% and, come what may, the difficulties this represents must be resolved.
On the developmental side, the company is currently doing a trial with two electric buses to see whether we can effectively use same in our regular services and thereby substantially reduce our level of carbon emissions. If this is practicable it is our intention to slowly replace diesel powered buses with electric vehicles.
Manufacturing and Distribution:
Deneb has demonstrated good resilience through the pandemic. The benefits of its efforts over several years to contain its debt and to release assets and cash from businesses that were struggling, proved central to its success last year. Likewise, its discipline in carving out profitable areas of business to pursue and shedding those businesses that were marginal or loss making prior to COVID-19 pressures could hardly have been completed moretimeously.
Its property portfolio has been very stable through the pandemic. It is an industrial portfolio of long established but well-maintained premises leased out at prices well below those obtainable from new builds. It suffered little pressure for rent relief and vacancies remained at a low level throughout the last year.
As a result, its ability to service its debt has not been under any unusual pressure. On the contrary it succeeded in reducing same by some R200m for the second consecutive year.
Its loss-making businesses have largely been sold off now and the two that remain have every prospect of turning around this coming year.
The business was very tightly managed through the pandemic. Unavoidably, turnover was reduced. Nevertheless, several of its businesses managed to improve their bottom line despite this. Toys turned a loss of R9m last year into an R18m profit on turnover reduced by some 35%. Brits Non-Woven, Integrated Polypropylene (“IPP”) and Premier likewise had greatly improved results.
Formex was badly affected by the reduction in car sales all over the world and the consequent reduction in car manufacture by motor assemblers. It has however picked up a strong flow of orders which will significantly increase its production over the next five to seven years and we remain very buoyant on its future.
HOSKEN CONSOLIDATED INVESTMENTS LIMITED
INTEGRATED ANNUAL REPORT 2021 7