Wrap Text
Reviewed Consolidated Condensed Annual Results for the year ended 31 March 2016
eMEDIA HOLDINGS LIMITED
(formerly Seardel Investment Corporation Limited)
Registration number: 1968/011249/06 (Incorporated in the Republic of South Africa)
JSE share code: EMH IZIN: ZAE000208898
JSE share code: EMN IZIN: ZAE000209524
("eMedia Holdings" or "the Group")
REVIEWED CONSOLIDATED CONDENSED ANNUAL RESULTS
FOR THE YEAR ENDED 31 MARCH 2016
The company's shares are listed under the Media sector of the JSE
Limited.
REVIEWED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31 March 31 March
2016 2015
R000's R000's
ASSETS
Non-current assets 7 777 611 7 624 838
Property, plant and equipment 1 013 908 886 974
Plant and equipment 356 621 238 285
Owner occupied property 657 287 648 689
Intangible assets 2 676 785 2 750 263
Goodwill 3 774 453 3 737 528
Equity-accounted investees 230 912 206 985
Long-term receivables 19 206 2 935
Deferred tax assets 62 347 40 153
Current assets 1 140 719 1 166 181
Inventories 17 945 18 090
Programming rights 490 973 431 169
Trade and other receivables 493 570 591 536
Tax assets 17 377 12 409
Cash and cash equivalents 120 854 112 977
Assets of disposal groups 118 492 249 405
Total assets 9 036 822 9 040 424
EQUITY AND LIABILITIES
Total equity 7 091 342 7 131 929
Stated capital/Share capital and share premium 6 762 797 6 665 383
Reserves (659 675) (595 481)
Equity attributable to owners of the Company 6 103 123 6 069 902
Non-controlling interest 988 220 1 062 027
Non-current liabilities 990 175 1 068 963
Deferred tax liabilities 549 530 465 531
Borrowings 440 644 501 001
Share based liabilities - 102 431
Current liabilities 938 790 814 653
Tax liabilities 10 509 12 398
Current portion of borrowings 385 352 339 082
Trade and other payables 542 133 461 918
Bank overdraft 796 1 255
Liabilities of disposal groups 16 515 24 879
Total liabilities 1 945 480 1 908 495
Total equity and liabilities 9 036 822 9 040 424
Net asset value 6 103 123 6 069 902
Net asset value per ordinary share
after treasury shares (cents) 1 369 1 406
REVIEWED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
Reviewed Audited*
31 March 31 March
2016 2015
R000's R000's % change
Continuing operations
Revenue 2 431 315 2 390 282 1,7%
Cost of sales (1 090 540) (983 171) 10,9%
Gross profit 1 340 775 1 407 111 -4,7%
Other income 108 207 56 721 90,8%
Administrative and other expenses (927 583) (868 685) 6,8%
Earnings before interest, taxation,
depreciation and amortisation 521 399 595 147 -12,4%
Depreciation, amortisation and
impairments (260 927) (187 365) 39,3%
Operating profit 260 472 407 782 -36,1%
Finance income 8 346 14 456 -42,3%
Finance expenses (50 936) (55 305) -7,9%
Share of profit/(loss) of equity-
accounted investees, net of taxation 7 828 (756) 1135,4%
Profit before taxation 225 710 366 177 -38,4%
Taxation (169 709) (147 428)
Profit for the year from
continuing operations 56 001 218 749 -74,4%
Discontinued operations
Loss for the year from discontinued
operations, net of taxation (144 815) (66 579)
(Loss)/profit for the year (88 814) 152 170 -158,4%
Other comprehensive income,
net of related taxation
Items that are or may be reclassified
to profit or loss
Foreign operations - foreign currency
translation differences 43 051 22 728
Reclassification of foreign currency
differences on disposal (11 600) -
Other comprehensive income,
net of taxation 31 451 22 728
Total comprehensive (loss)/income
for the year (57 363) 174 898
(Loss)/profit attributable to:
Owners of the Company (63 592) 124 813
Non-controlling interest (25 222) 27 357
(88 814) 152 170
Total comprehensive (loss)/income
attributable to:
Owners of the Company (43 655) 139 733
Non-controlling interest (13 708) 35 165
(57 363) 174 898
* Restated for discontinued operations
REVIEWED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Treasury Other Retained
Capital Shares Reserves Income
R'000 R'000 R'000 R'000
Balance 31 March 2014 1 692 429 (17 794) 213 202 726 226
Profit - - - 124 813
Other comprehensive income
- FCTR - - 14 920 -
Share incentive scheme - - - 4 174
Dividends - - - -
Share options 11 503 - - (11 194)
Rights issue 4 961 451 - - -
Treasury shares - 17 794 - (17 794)
Dividend through demerger - - (212 058) (1 467 924)
Effect of change in ownership
- minority interests - - - 37 152
Change in ownership
- minority interest acquired - - - (6 998)
Acquisition of subsidiaries
with NCI's - - - -
Balance 31 March 2015 6 665 383 - 16 064 (611 545)
Loss - - - (63 592)
Other comprehensive income
- FCTR - - 19 937 -
Share transaction with
minority shareholders 97 414 - 2 029 (20 394)
Disposal of share interest - - - -
Change in ownership
- minority interest acquired - - - (2 173)
Balance 31 March 2016 6 762 797 - 38 030 (697 705)
Non-
Equity controlling Total
Owners Interest Equity
R'000 R'000 R'000
Balance 31 March 2014 2 614 063 1 230 078 3 844 141
Profit 124 813 27 357 152 170
Other comprehensive income
- FCTR 14 920 7 808 22 728
Share incentive scheme 4 174 - 4 174
Dividends - (70 192) (70 192)
Share options 309 - 309
Rights issue 4 961 451 - 4 961 451
Treasury shares - - -
Dividend through demerger (1 679 982) 179 (1 679 803)
Effect of change in ownership
- minority interests 37 152 (135 828) (98 676)
Change in ownership
- minority interest acquired (6 998) (1 002) (8 000)
Acquisition of subsidiaries
with NCI's - 3 627 3 627
Balance 31 March 2015 6 069 902 1 062 027 7 131 929
Loss (63 592) (25 222) (88 814)
Other comprehensive income ñ FCTR 19 937 11 514 31 451
Share transaction with
minority shareholders 79 049 (65 042) 14 007
Disposal of share interest - 2 770 2 770
Change in ownership - minority
interest acquired (2 173) 2 173 -
Balance 31 March 2016 6 103 123 988 220 7 091 343
REVIEWED CONSOLIDATED STATEMENT OF CASH FLOW
Reviewed Audited
31 March 31 March
2016 2015
R000's R000's
Net cash flow from operating activities 336 152 (418 639)
Net cash used in investing activities (262 089) (125 647)
Net cash used in financing activities (44 660) 1 051 383
Net change in cash and cash equivalents 29 403 507 097
Cash and cash equivalents at the
beginning of the year 130 125 (376 972)
Cash and cash equivalents at the end of the year 159 528 130 125
Cash and cash equivalents 120 854 112 977
Bank overdraft (796) (1 255)
Cash of disposal groups held for sale 39 470 18 403
Cash and cash equivalents at the end of the year 159 528 130 125
HEADLINE EARNINGS
Reviewed Audited*
31 March 31 March
2016 2015
R000's R000's
(Loss)/earnings attributable to equity
owners of the parent (63 592) 124 813
IAS 16 gains on disposal of plant and equipment (4 120) (1 735)
IAS 16 impairment of plant and equipment 6 640 9 587
IAS 21 foreign currency translation reserve
reclassified to profit or loss (7 851) -
IAS 28 gain on disposal of associates (2 729) (11 500)
IAS 36 impairment of other assets 1 458 -
IAS 38 impairment of intangible assets 100 563 -
IAS 40 fair value adjustment to investment property - (46 792)
IFRS 3 gain on bargain purchase - (1 077)
IFRS 3 impairment of goodwill 5 238 86 862
IFRS 10 loss on the loss of control of a subsidiary 1 162 -
Total tax effect of adjustments (4 568) 9 220
Headline earnings 32 199 169 378
* Restated for discontinued operations
STATISTICS PER SHARE
Reviewed Audited*
31 March 31 March
2016 2015
Basic earnings (R'000)
(Loss)/earnings (63 592) 124 813
Continuing operations 34 429 136 054
Discontinued operations (98 022) (11 241)
Headline earnings 32 199 169 378
Continuing operations 35 057 162 912
Discontinued operations (2 857) 6 466
Basic earnings per ordinary share (cents)
(Loss)/earnings (14,47) 30,27
Continuing operations 7,84 32,99
Discontinued operations (22,31) (2,73)
Headline earnings 7,33 41,07
Continuing operations 7,98 39,50
Discontinued operations (0,65) 1,57
Weighted average number of ordinary shares
in issue ("000) 439 408 412 400
Actual number of ordinary shares in issue
at end of the period ("000) 445 738 431 821
Diluted earnings per ordinary share (cents)
(Loss)/earnings (14,47) 30,27
Continuing operations 7,84 32,99
Discontinued operations (22,31) (2,73)
Headline earnings 7,33 41,07
Continuing operations 7,98 39,50
Discontinued operations (0,65) 1,57
Diluted weighted average number of ordinary shares
in issue ("000) 439 408 412 400
* Restated for discontinued operations
During the year the Company consolidated its authorized and issued stated
capital on the basis of 10 to 1 ("Share Consolidation") by:
- the consolidation of every 10 Ordinary Shares of no par value into 1
Ordinary Share of no par value, and
- the consolidation of every 10 N-Shares of no par value into 1 N-Share
of no par value.
NOTES TO THE REVIEWED CONSOLIDATED CONDENSED RESULTS FOR THE YEAR ENDED
31 MARCH 2016
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The results for the year ended 31 March 2016 have been prepared in
accordance with International Financial Reporting Standards ("IFRS"), the
disclosure requirements of IAS 34, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee, the requirements of the
South African Companies Act, 2008, and the Listing Requirements of the
JSE Limited. Except for the new standards adopted, the accounting
policies applied by the group in the preparation of these reviewed
condensed consolidated financial statements are consistent with those
applied by the group in its consolidated financial statements as at, and
for, the year ended 31 March 2015.
There was no material impact on the financial results identified based on
management's assessment of the new standards adopted. As required by the
JSE Limited Listings Requirements, the group reports headline earnings in
accordance with Circular 2/2015: Headline Earnings as issued by the South
African Institute of Chartered Accountants.
These financial statements were prepared under the supervision of the
financial director, AS Lee (CA)SA.
BUSINESS COMBINATIONS
During the year the Group acquired and consolidated 100% of Moonlighting
Films Proprietary Limited and its subsidiary ("Moonlighting"), effective
15 December 2015. The total purchase consideration of the shareholding
was R15.3 million cash-settled (R11.475 million paid at year end and
R3.825 million paid during April 2016) for 51% plus a further contingent
consideration fairly valued at R32.053 million for the remaining 49%
shareholding payable by June 2018 and June 2021.
For the four months ended 31 March 2016, Moonlighting contributed revenue
of R16.040 million and profit of R9.388 million to the Group's results.
If the acquisition had occurred on 1 April 2015, contributed revenue and
profit to the Group would have been R23.465 million and R12.103 million
respectively.
The following table summarises the consideration paid for Moonlighting
and the amount of the assets acquired and liabilities assumed recognised
at acquisition date.
2016
Reviewed
R'000
Cash 11 475
Contingent consideration 32 053
Deferred payment 3 825
Total consideration 47 353
Recognised amounts of identifiable assets acquired
and liabilities assumed:
Property, plant and equipment 72
Trade and other receivables 5 225
Cash and cash equivalents 12 178
Trade and other payables (15 967)
Taxation payable (1 033)
Total identifiable net (liabilities) / assets 475
Less: Non-controlling interest (212)
Goodwill 47 090
Total consideration 47 353
Cash flow from investing activity
Cash consideration transferred (11 475)
Cash and cash equivalents in the business acquired 12 178
Net cash inflow from investing operations 703
DISCONTINUED OPERATIONS
Following a decision to exit the business of Shibula Lodge and Spa
Proprietary Limited and Mindset TV Proprietary Limited, the results of
these operations were reclassified to discontinued operations in the
statement of comprehensive income and its assets and liabilities
reclassified to disposal groups held for sale in the statement of
financial position.
A decision was also taken to dispose of a commercial building at 9 Summit
Road, Dunkeld West, Johannesburg owned by Sabido Properties Proprietary
Limited. The value of the building at the lower of its carrying value and
fair value less costs to sell has been included in disposal groups held
for sale in the statement of financial position.
Certain subsidiaries of the Longkloof Limited Group, e.Botswana
Proprietary Limited and e.tv Botswana Proprietary Limited remain
classified in discontinued operations in the statement of comprehensive
income and its assets and liabilities remain classified to disposal
groups held for sale in the statement of financial position as at, and
for, the year ended 31 March 2016 since exit and sale strategies are
being finalised.
Discontinued operations as disclosed in the statement of comprehensive
income consist of the following:
Longkloof
Subsidiaries Afrikaans
e.tv and Learnthings Satelliet
R'000 e.Botswana Botswana associates Africa TV
March 2016
Revenue 4 790 - 26 735 5 608 250
Profit/(loss)
after tax (553) - (131 187) 1 296 (4 779)
March 2015
Revenue 4 344 - 27 273 2 231 -
Profit/(loss)
after tax (2 042) - (156 909) (803) -
Shibula Non-media
Lodge Mindset assets
R'000 and Spa TV (Deneb) Total
March 2016
Revenue 4 207 - - 41 590
Profit/(loss) after tax (8 368) (1 224) - (144 815)
March 2015
Revenue 3 872 - 1 927 457 1 965 177
Profit/(loss) after tax (1 345) - 94 520 (66 579)
Longkloof
e.tv subsidiaries
R'000 e.Botswana Botswana and associates
March 2016
Assets of disposal group
Property, plant and equipment 884 2 132 -
Intangible assets - - 11 629
Other assets 3 164 21 60 873
Total assets 4 048 2 153 72 502
Liabilities of disposal group
Other liabilities (305) 2 (15 782)
Total liabilities (305) 2 (15 782)
March 2015
Assets of disposal group
Property, plant and equipment 1 212 2 233 521
Intangible assets - - 155 973
Investment in associates - - 37 091
Other assets 2 597 17 49 761
Total assets 3 809 2 250 243 346
Liabilities of disposal group
Deferred taxation liability - (40) (5 592)
Other liabilities (282) 2 (18 967)
Total liabilities (282) (38) (24 559)
Sabido
Properties
(Building - Shibula Lodge
R'000 9 Summit Road) and Spa Total
March 2016
Assets of disposal group
Property, plant and equipment 33 860 5 532 42 408
Intangible assets - - 11 629
Other assets - 397 64 455
Total assets 33 860 5 929 118 492
Liabilities of disposal group
Other liabilities - (430) (16 515)
Total liabilities - (430) (16 515)
March 2015
Assets of disposal group
Property, plant and equipment - - 3 966
Intangible assets - - 155 973
Investment in associates - - 37 091
Other assets - - 52 375
Total assets - - 249 405
Liabilities of disposal group
Deferred taxation liability - - (5 632)
Other liabilities - - (19 247)
Total liabilities - - (24 879)
CHANGE IN COMPARATIVES
The results of discontinued operations have been separately disclosed
on the face of the statement of comprehensive income.
RELATED PARTY TRANSACTIONS
During the year, in the ordinary course of business, certain companies
within the group entered into transactions with one another. These intra-
group transactions have been eliminated on consolidation.
Transactions with Hosken Consolidated Investments Limited ("HCI")
(ultimate holding company), entities in which HCI has an interest, Remgro
Limited ("Remgro") (shareholder in eMedia Investments Proprietary
Limited), and Venfin Media Investments Proprietary Limited ("Venfin") (a
wholly-owned subsidiary of Remgro) are included in the following table:
2016 2015
Reviewed Audited
R'000 R'000
Income / (expense) transaction values with
related parties
Media assets
HCI - management fees paid (14 915) (14 205)
HCI - internal audit service fee (340) -
Venfin - management fees paid (1 689) (1 608)
Longkloof Limited - management fees received - 1 331
Interest income - interest bearing loans to employees 139 117
Interest income - unwinding of employee loans
at 0% interest 1 028 958
SACTWU - loan relating to the
acquisition of Sabido - (5 987)
HCI - preference shares relating to the
acquisition of Sabido - (13 972)
Unbundled assets
SACTWU - disposal of apparel
manufacturing operation - 5 312
HCI - fees for managerial and secretarial paid - (2 800)
HCI - working capital loan advanced - (1 943)
HCI - loan at prime, repayable on demand - 3 245
Formex Industries (subsidiary of HCI)
- management fees received - 864
HCI - fees for risk management received - 261
2016 2015
Reviewed Audited
R'000 R'000
Balances owing (to) by related parties
Media assets
HCI - working capital loan (8 602) (8 602)
Venfin - loan relating to the acquisition
of Longkloof Limited (156 605) (156 605)
Cape Town Film Studios - associate loan 95 442 71 786
Dreamworld Management Company - associate loan 11 182 10 624
Global Media Alliance Broadcasting Limited
- associate loan - 73 772
Employees of the Group - loans relating to
company shares held by employees 19 205 10 251
AUDITOR'S REVIEW
These condensed consolidated financial statements for the year ended 31
March 2016 have been reviewed by Grant Thornton Johannesburg Partnership,
who expressed an unmodified review conclusion. The auditor's report does
not necessarily report all of the information contained in this
announcement of the financial results. Shareholders are therefore advised
that in order to obtain a full understanding of the engagement they
should obtain a copy of the auditor's report together with the
accompanying financial information from the issuer's registered office. A
copy of the auditor's review report is available for inspection at the
company's registered office together with the financial statements
identified in the auditor's report.
CHANGE OF NAME
The company changed its name from Seardel Investment Corporation Limited
to eMedia Holdings Limited with effect from 29 October 2015.
DIVIDEND TO SHAREHOLDERS
The directors have resolved not to declare a dividend for the year ended
31 March 2016 (2015: Nil).
COMMENTARY
GROUP
The Group's only asset is eMedia Investments, an investment holding
company with various investments in the media industry. eMedia
Investments houses e.tv (Pty) Ltd ("e.tv"), eSat.tv (Pty) Ltd ("eNCA"),
Yired (Pty) Ltd ("Yfm") and Sasani Africa (Pty) Ltd ("Sasani Studios"),
amongst others.
During the year, the company increased its holding in eMedia Investments
from 63.9% to 67.7% by purchasing the shares of all minority shareholders
other than Venfin Media Bellegings. This was settled by the issue of
eMedia Holdings "N" shares to the minorities of eMedia Investments.
The group ended the year with a loss attributable to the equity owners of
the company of R63.6 million compared to a profit in the previous year of
R124.8 million. The loss takes into account a loss of R144.8 million for
discontinued operations. The Group has continued disinvesting from non-
core assets. Also included in the net loss is the amortisation of
intangibles resulting from the acquisition of eMedia Investments and a
deferred tax charge which relates to the change in the inclusion rate of
capital gains tax on the PPA raised on the acquisition of eMedia
Investments. This amounted to R80.3 million and R75.6 million
respectively for the year under review. The Group ended on an EBITDA of
R521.4 million compared to R595.1 million in the prior year. Headline
earnings for the Group ended on R32.2 million compared to R169.4 million
the prior year.
e.tv
The financial year has been a difficult one for the Group with revenue in
its core asset, e.tv, coming under continual pressure. Despite this,
revenue for the Group ended the year on R2.43bn compared to the prior
year R2.39bn, a 1.7% increase. As mentioned, the core asset, e.tv, saw
advertising revenue under pressure as a result of a sharp drop in market
share in the previous financial year. This necessitated that management
review the schedule of e.tv and implement changes to correct the falling
market share. These changes were implemented in the latter half of the
2015 financial year and the first part of this financial year. It has
seen the market share of e.tv recover, once again becoming the most
watched English channel in South Africa. The recovery, however, came at
considerable investment in local programming, which resulted in cost of
sales ending the year on R1.09bn compared to R983 million the previous
year, an increase of 10.9%. This investment was necessary and with the
market share of e.tv now stable for the latter part of the financial
year, advertising revenue should once again be more reflective of market
share.
Multi-channel, OpenView HD and Digital Terrestrial Television
Added to the pressure on revenue has been the continued investment into
the multi-channel business. With Digital Terrestrial Televisions ("DTT")
continuing its slow rollout, e.tv struggles as a lone channel in an ever
increasing multi-channel environment. The Group continues to invest in
its multi-channel platform, OpenView HD ("OVHD") and producing channels
for the multi-channel environment. Further investment of R261.9 million
(2015: R245.1 million) is included in the financials for this year with
very little revenue recorded. On a more positive note, OVHD has seen the
number of activations increase from 112 715 to 388 812 at the end of the
financial year, an increase of 245%. Management believes that the
investment in quality channels and a multi-channel platform will stand
the Group in good stead when the DTT rollout ramps up.
The litigation matter between e.tv and The Minister of Communications and
Others regarding the Broadcasting Digital Migration policy and whether
government-funded set top boxes should be encrypted or not was heard in
the Supreme Court of Appeal on 9 May 2016. We expect a judgment before
the end of the first quarter of the financial year.
eSat.tv
eSat.tv continues to perform well and the eNCA channel remains the most
watched news channel on DStv with a share of over 50% of the viewership
of all news channels. The long term contract with DStv is terminable in
May 2016, but all indications are that DStv would like to enter into a
new agreement to keep the news channel on its platform. It should however
be noted that a new deal with DStv will not see the current performance
of eSat.tv be sustainable going forward.
Other assets, core and non-core
The financial year has seen strong performances from subsidiaries,
Sasani Studios, Silverline 360 and Yfm.
The financial year also saw management take a strategic look at the
future of the Group. With this in mind, management decided to exit any
non-core and non-profitable investments. This resulted in R144.8 million
being reflected as a loss from discontinued operations. The Group has all
but exited from its offshore investments and will for the near future
concentrate on its core South African assets with ever-increasing
competition from non-linear broadcasting platforms. Also included in the
results is the impairment of a loan receivable of R48.2 million for the
sale of The Africa Channel (UK) as the purchaser has failed to deliver on
payment.
These "once-off" factors, together with the struggles in revenue, have
had a negative impact on the results of the Group. Management however
believes that with the stabilisation of the e.tv market share, the
continued investment in the multi-channel business and the continued need
for content, the Group is poised to achieve better results going forward.
Signed for and on behalf of the board on 25 May 2016.
T G Govender
Acting Chief Executive Officer
A S Lee
Financial Director
CORPORATE INFORMATION
Registration number: 1968/011249/06 (Incorporated in the Republic of
South Africa)
JSE share code: EMH IZIN: ZAE000208898
JSE share code: EMN IZIN: ZAE000209524
Registered office: 5 Summit Road, Dunkeld West, Johannesburg, 2194
Directors: J A Copelyn* (Chairman), T G Govender (Acting Chief Executive
Officer), A S Lee (Financial Director), E Mphande*^, L Govender*^, R D
Watson*^ (* Non-executive^ Independent)
Company secretary: Junadi Van Der Merwe
Transfer secretaries: Computershare Investor Services Proprietary
Limited, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown. 2107
Auditors: Grant Thornton Johannesburg Partnership
Sponsors: Investec Bank Limited
Date: 25/05/2016 04:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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