Wrap Text
Reviewed consolidated condensed annual results for the year ended 31 March 2017
eMEDIA HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
('EMEDIA HOLDINGS' OR 'THE GROUP')
THE COMPANY'S SHARES ARE LISTED UNDER THE MEDIA SECTOR OF THE JSE LIMITED.
REGISTRATION NUMBER: 1968/011249/06
JSE SHARE CODE: EMH IZIN: ZAE000208898
JSE SHARE CODE: EMN IZIN: ZAE000209524
REVIEWED CONSOLIDATED CONDENSED ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2017
REVIEWED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31 March 31 March
2017 2016
R000's R000's
ASSETS
Non-current assets 7 622 858 7 777 611
Property, plant and equipment 941 584 1 013 908
Plant and equipment 323 028 356 621
Owner-occupied property 618 556 657 287
Intangible assets 2 596 701 2 676 785
Goodwill 3 778 264 3 774 453
Equity-accounted investees 203 038 230 912
Long-term receivables 16 457 19 206
Deferred tax assets 86 814 62 347
Current assets 1 529 469 1 140 719
Inventories 20 946 17 945
Programming rights 866 244 490 973
Trade and other receivables 439 962 493 570
Current tax assets 16 113 17 377
Cash and cash equivalents 186 204 120 854
Assets of disposal groups 53 618 118 492
Total assets 9 205 945 9 036 822
EQUITY AND LIABILITIES
Total equity 7 181 685 7 091 343
Stated capital/Share capital and share premium 6 762 797 6 762 797
Treasury shares (7 221) -
Reserves (600 432) (659 674)
Equity attributable to owners of the Company 6 155 144 6 103 123
Non-controlling interest 1 026 541 988 220
Non-current liabilities 877 871 990 174
Deferred tax liabilities 540 747 549 530
Borrowings 332 627 440 644
Operating lease liability 4 497 -
Current liabilities 1 144 768 938 790
Current tax liabilities 6 664 10 509
Current portion of borrowings 342 537 385 352
Trade and other payables 793 757 542 133
Bank overdraft 1 810 796
Liabilities of disposal groups 1 621 16 515
Total liabilities 2 024 260 1 945 480
Total equity and liabilities 9 205 945 9 036 822
Net asset value 6 155 144 6 103 123
Net asset value per share after treasury shares (cents) 1 384 1 369
REVIEWED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
31 March 31 March
2017 2016*
R000's R000's % Change
Continuing operations
Revenue 2 582 733 2 416 156 6,9
Cost of sales (1 176 867) (1 083 336) 8,6
Gross profit 1 405 866 1 332 820 5,5
Other income 54 945 108 206 (49,2)
Administrative and other expenses (972 546) (920 018) 5,7
Earnings before interest, taxation, depreciation
and amortisation 488 265 521 008 (6,3)
Depreciation, amortisation and impairments (216 817) (260 401) (16,7)
Operating profit 271 448 260 607 4,2
Finance income 10 916 8 340 30,9
Finance expenses (64 548) (50 936) 26,7
Share of (loss)/profit of equity-accounted
investees, net of taxation (2 241) 7 829 (128,6)
Profit before taxation 215 575 225 840 (4,5)
Taxation (87 522) (168 635)
Profit for the year from continuing operations 128 053 57 205 123,8
Discontinued operations
Profit/(loss) for the year from discontinued
operations, net of taxation 32 561 (146 021)
Profit/(loss) for the year 160 614 (88 814) (280,8)
Other comprehensive income, net of related taxation
Items that are or may be reclassified to profit or loss
Foreign operations - foreign currency
translation differences (2 198) 43 051
Reclassification of foreign currency differences on
disposal (65 049) (11 600)
Other comprehensive (loss)/income, net of taxation (67 247) 31 451
Total comprehensive income/(loss) for the year 93 367 (57 363)
Profit/(loss) attributable to:
Owners of the Company 104 760 (63 592)
Non-controlling interest 55 854 (25 222)
160 614 (88 814)
Total comprehensive income/(loss) attributable to:
Owners of the Company 59 242 (43 655)
Non-controlling interest 34 125 (13 708)
93 367 (57 363)
* Prior year restated for discontinued operation.
REVIEWED CONSOLIDATED STATEMENT OF CASH FLOW
Reviewed Audited
31 March 31 March
2017 2016
R000's R000's
Net cash from operating activities 269 096 329 586
Cash flows from operating activities 444 428 482 864
Net finance costs (49 004) (42 590)
Taxes paid (126 327) (110 688)
Net cash used in investing activities (50 858) (262 089)
Acquisition of property, plant and equipment (78 103) (308 596)
Acquisition of plant and equipment (69 922) (251 359)
Acquisition of owner-occupied properties (8 181) (57 237)
Proceeds from sale of property, plant and equipment 7 393 18 133
Book value of assets disposed 4 472 11 973
Surplus/(loss) on disposal 2 921 6 160
Movement in financial assets 2 271 20 939
Acquisition of subsidiary, net of cash acquired (3 749) (703)
Net cash flows of discontinued operations 36 928 42 930
Additions to intangible assets (10 073) (29 726)
Loans advanced to equity-accounting investees (6 900) (6 070)
Investment income 1 375 1 004
Net cash (used in) from financing activities (180 471) (44 660)
Repayment of borrowings (170 875) (43 266)
Borrowings raised 2 877 7
Share buyback (7 221) -
Change in non-controlling interest - (1 401)
Dividends paid to non-controlling interest (5 252) -
Net change in cash and cash equivalents 37 768 22 837
Cash and cash equivalents at beginning of the year 159 528 130 125
Effect of movements in exchange rates on cash held (4 785) 6 566
Cash and cash equivalents at end of the year 192 510 159 528
Cash and cash equivalents comprise the following:
Cash and cash equivalents 194 320 160 324
Bank balances 186 204 120 854
Cash in disposal group assets held for sale 8 116 39 470
Bank overdrafts (1 810) (796)
192 510 159 528
REVIEWED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Treasury Other Retained
Capital Shares Reserves Income
R000's R000's R000's R000'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 (697 704)
Profit - - - 104 760
Other comprehensive income - FCTR - - (45 518) -
Share buyback - (7 221) - -
Disposal of share interest - - - -
Dividends paid - - - -
Balance 31 March 2017 6 762 797 (7 221) (7 488) (592 944)
Non-
Equity controlling Total
Owners Interest Equity
R000's R000's R000's
Balance 31 March 2015 6 069 902 1 062 027 7 131 929
Loss (63 592) (25 222) (88 814)
Other comprehensive income - 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
Profit 104 760 55 854 160 614
Other comprehensive income - FCTR (45 518) (21 729) (67 247)
Share buyback (7 221) - (7 221)
Disposal of share interest - 9 449 9 449
Dividends paid - (5 252) (5 252)
Balance 31 March 2017 6 155 144 1 026 542 7 181 685
HEADLINE EARNINGS
Reviewed Reviewed
Gross Net
R000's R000's
For the year ended 31 March 2017
Earnings attributable to equity owners of the parent 104 760
IAS 16 gains on disposal of plant and equipment (2 995) (2 156)
IAS 21 foreign currency translation reserve reclassified
to profit or loss (44 030) (44 030)
IAS 36 impairment of other assets 15 674 15 674
IAS 38 impairment of intangible assets 5 002 3 602
IFRS 10 loss on sale of subsidiary 20 189 20 189
Headline earnings 98 039
For the year ended 31 March 2016
Loss attributable to equity owners of the parent (63 592)
IAS 16 gains on disposal of plant and equipment (4 120) (5 274)
IAS 16 impairment of plant and equipment 6 640 5 152
IAS 21 foreign currency translation reserve reclassified to profit
or loss (7 851) (10 050)
IAS 28 gain on disposal of associates (2 730) (2 730)
IAS 36 impairment of other assets 1 458 1 730
IAS 38 impairment of intangible assets 100 563 100 563
IFRS 3 impairment of goodwill 5 238 5 238
IFRS 10 loss on sale of subsidiary 1 162 1 162
Headline earnings 32 199
Prior year restated for discontinued operations
STATISTICS PER SHARE
Reviewed Audited
31 March 31 March
2017 2016
R000's R000's
Basic earnings
Earnings/(loss) 104 760 (63 592)
Continuing operations 72 969 35 245
Discontinued operations 31 791 (98 837)
Headline earnings 98 039 32 199
Continuing operations 90 089 37 759
Discontinued operations 7 950 (5 560)
Basic earnings per share (cents)
Earnings/(loss) 23,52 (14,47)
Continuing operations 16,38 8,02
Discontinued operations 7,14 (22,49)
Headline earnings 22,01 7,33
Continuing operations 20,23 8,59
Discontinued operations 1,78 (1,26)
Weighted average number of shares in issue - 31 March ('000) 445 359 439 408
Issued shares as at 1 April ('000) 445 738 431 821
Effect of shares issued ('000) - 7 587
Effect of own shares held ('000) (379) -
Net number of shares in issue - 31 March ('000) 444 597 445 738
Number of shares in issue - 31 March ('000) 445 738 445 738
Number of treasury shares in issue - 31 March ('000) (1 140) -
Prior year restated for discontinued operations.
NOTES TO THE REVIEWED CONSOLIDATED CONDENSED RESULTS
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The results for the year ended 31 March 2017 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. 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 2017. 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 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 Waterfront Film Studios
Proprietary Limited, effective 1 July 2016. All risks and rewards have been transferred
to the Group as 100% of the issued shares was acquired. The purchase consideration
of the shareholding was R7.5 million of which R3.751 million is deferred at year end.
IMPACT OF ACQUISITION ON THE RESULTS
Revenue and losses included in the results since the date of acquisition amounted to
R16.280 million and R1.701 million respectively. Revenue and losses which would have been
included in the results, had the acquisition date been on the first day of the financial
year, amounts to R21.080 million and R6.369 million respectively.
IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED
The following table summarises the amount of the assets acquired and liabilities
assumed recognized as the acquisition date:
Reviewed
31 March
2017
R000's
Cash 3 749
Liability - deferred payment (fair value) 3 751
Total consideration 7 500
Recognised amounts of identifiable assets acquired and liabilities assumed:
Property, plant and equipment 9 614
Deferred lease liability (1 496)
Financial liabilities (current) (1 920)
Deferred lease liability (current) (2 510)
Total identifiable net assets 3 688
Goodwill 3 812
Total consideration 7 500
Cash flow from investing activity
Cash consideration transferred (3 749)
Cash and cash equivalents in the business acquired -
Net cash used in investing activities (3 749)
DISCONTINUED OPERATIONS
Following a decision at 31 March 2017 to sell the business of Lalela Music SA Proprietary
Limited ('Lalela Music SA') and Lalela Music LLC ('Lalela Music LLC'), the results of
these operations were reclassified to discontinued operations in the statement of
comprehensive income and in assets and liabilities to disposal groups held for sale
in the statement of financial position. A decision was also taken to dispose of a
commercial building at 73 Richefond Circle, Ridgeside, Umhlanga, Kwazulu-Natal owned
by Sabido Properties Proprietary Limited.
The sale of the business of Shibula Lodge, TVPC Media and Power (a subsidiary of
Longkloof Limited) was effected on 13 July 2016 for Shibula Lodge and the latter
two businesses on 1 July 2016.
The proceeds on the sale of Power amounted to $600 000, Shibula Lodge amounted to
R5.4 million and TVPC Media amounted to R1. The Group sold a commercial building at
9 Summit Road, Dunkeld West, Johannesburg owned by Sabido Properties Proprietary
Limited for R35 million.
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 2017 since the sales are being finalised.
Discontinued operations as disclosed in the statement of comprehensive income consist
of the following:
Reviewed Audited
31 March 31 March
2017 2016*
R000's R000's
Revenue
Longkloof Limited Group subsidiaries and associates 3 304 26 735
e.Botswana and e.tv Botswana 4 409 4 790
TVPC Media, Shibula Lodge and Afrikaans Satelliet TV 1 112 14 564
Lalela Music SA and Lalela Music LLC 13 082 10 660
Total revenue 21 907 56 749
Profit/(loss) from discontinued operations
Longkloof Limited Group subsidiaries and associates 33 652 (131 187)
e.Botswana and e.tv Botswana (12) (554)
TVPC Media, Shibula Lodge and Afrikaans Satelliet TV (4 076) (16 280)
Lalela Music SA and Lalela Music LLC 2 997 2 000
Total profit/(loss) 32 561 (146 021)
*Prior year restated for entities reclassified as discontinued in the current year.
Discontinued operations as disclosed in the statement of financial position
consist of the following:
Property, plant Intangible Other Total
and equipment assets assets assets
R000's R000's R000's R000's
Assets
31 March 2017
Longkloof Limited Group subsidiaries
and associates - - 5 590 5 590
e.Botswana and e.tv Botswana 2 801 - 2 813 5 614
Lalela Music SA and Lalela Music LLC 295 12 001 7 133 19 429
Sabido Properties - building to be sold 22 985 - - 22 985
Total assets 26 081 12 001 15 536 53 618
31 March 2016
Longkloof Limited Group subsidiaries and
associates - 11 629 60 873 72 502
e.Botswana and e.tv Botswana 3 017 - 3 184 6 201
Shibula Lodge 5 532 - 397 5 929
Sabido Properties - building to be sold 33 860 - - 33 860
Total assets 42 409 11 629 64 454 118 492
Reviewed Audited
31 March 31 March
2017 2016
R000's R000's
Liabilities
Longkloof Limited Group subsidiaries and associates - (15 782)
e.Botswana and e.tv Botswana (174) (303)
Shibula Lodge - (430)
Lalela Music SA and Lalela Music LLC (1 447) -
Total liabilities (1 621) (16 515)
CHANGES 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:
Reviewed Audited
31 March 31 March
2017 2016
R000's R000's
Income/(expense) transaction values with related parties
HCI - management fees paid (15 810) (14 915)
HCI - internal audit service fee (136) (340)
Venfin - management fees paid (1 781) (1 689)
Interest income - interest-bearing loans to employees 128 139
Interest income - unwinding of employee loans at 0% interest 1 249 1 028
Balances owing (to)/by related parties
HCI - working capital loan (8 602) (8 602)
HCI Managerial Services Proprietary Limited (1 555) (1 450)
Venfin - loan relating to the acquisition of Longkloof Limited (156 605) (156 605)
Cape Town Film Studios - associate loan 101 858 95 442
Dreamworld Management Company - associate loan 11 666 11 182
Employees of the Group - loans relating to company shares held by
employees 14 593 19 205
AUDITOR'S REVIEW
These condensed consolidated financial statements for the year ended 31 March 2017 have
been reviewed by Grant Thornton Johannesburg Partnership, who expressed an unmodified
review conclusion. The Auditor's Report does not necessarily report on 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.
DIVIDEND TO SHAREHOLDERS
The directors have resolved not to declare a dividend for the year ended 31 March 2017
(2016: Nil).
COMMENTARY
The year under review resulted in the Group ending the period showing a profit from
continuing operations of R128.1 million compared to a profit of R57.2 million, in the prior
year. Included in the profit, are the losses attributable to the continued investment into
the multi-channel business (OpenView HD and e.tv multichannel) of R307.1 million compared
to R261.9 million in the prior year. Set-top box activations have however increased
significantly and at 31 March 2017, 778 160 set-top boxes had been activated, compared to
388 812 at the beginning of the financial year.
The Group recorded revenue of R2.6 billion up by 7% year-on-year. This was primarily driven
by a 9% increase in advertising revenue ending the year on R1.5 billion. EBITDA for the
Group ended the year on R488.3 million compared to R521.0 million for the prior year.
Included in EBITDA for the prior year, is a once off gain of R88.5 million as a result of
the de-recognition of the share based payment liability arising from forfeited options.
If one excludes this 'once-off' profit the year-on-year increase would be 12.9%.
Headline earnings for the Group ended the year on R98.0 million compared to
R32.2 million in the prior year, an increase of 204.35%.
The Group's only asset is a 67.7% stake in eMedia Investments Proprietary Limited
('eMedia Investments').
eMedia Investments
The financial year ended 31 March 2017 has seen the market share of e.tv remain constant
and has shown an improvement in the key revenue drivers of LSM 5 to 7 and LSM 8 to 10 on
the flagship channel, e.tv. This has seen e.tv's advertising revenue increase by 6%
(R74 million) year-on-year. A shift to include 'high-end' international series and movies
and recent deals concluded with Warner, Disney, Sony and CBS have assisted in clawing
back and maintaining the market share that had been lost previously. This has however,
seen an 8% increase in programming costs ending the year on R603.5 million. Operating
expenses are being well maintained in the business and e.tv has shown a good recovery
from its previous position, showing a 5% increase in profit after tax and a 13% increase
in EBITDA ending the year on R343.7 million. e.tv approached ICASA for an amendment to
its licence conditions in which it has requested that the eNews Direct bulletin be moved
out of prime time. ICASA refused the license amendment and e.tv has requested reasons
for the decision and will look to take the matter on review if there are reasonable
prospects of success. As previously reported, litigation was instituted against The
Minister of Communications and Others regarding the Broadcasting Digital Migration policy
which will have an impact on Digital Terrestrial Television ('DTT'). Although e.tv
lost the application, leave to appeal was granted and e.tv won the appeal at the
Supreme Court of Appeal. The losing respondents have referred the matter to the
Constitutional Court for a final determination and the matter was heard on
21 February 2017. We await judgement in the matter.
eSat.tv (eNCA) continues to perform well and is the most watched 24-hour news channel on
DStv with over 50% market share. The current agreement with MultiChoice (DStv) terminated
on 31 January 2017 with a short-form agreement being signed during December 2016 with
an effective date of 1 February 2017. The new agreement was signed for a five-year term and
allows us to have our e.tv multi-channel channels on the DStv bouquets. eSat.tv
ended the year on a profit after tax of R228.9 million, an increase of 6% year-on-year.
As mentioned, included in the results are losses of R307.1 million from the continued
investment into the multi-channel businesses (Platco and e.tv multi-channel) from which
very little revenue is currently being derived. The OpenView HD platform continues to
grow its viewership footprint and increased the number of set-top boxes activated by
100.14% during the financial year. This has come at a cost with an amount of R99 million
being paid out for subsidies over the period. With this ever-improving rollout, being
able to access the DStv bouquets with our channels and when DTT starts, the Group will
be in a good position to increase its advertising revenue base.
Certain of the Group's other subsidiaries have performed satisfactorily for the year.
These include Sasani Africa, Silverline 360 and Strika Entertainment. Management continues
to review the non-core and peripheral businesses and will exit these businesses when
opportunities present themselves. Included in these results are further impairments of
the Ghana business, Global Media Alliance Broadcasting Company Limited ('GMABC'), of
R22.2 million and the write off of a loan of R20.3 million to a Los Angeles-based
distribution company 13 Films. During the current financial year, the sale of Power
Entertainment Limited ('Power'), TVPC Media Proprietary Limited ('TVPC Media') and
Shibula Lodge and Spa Proprietary Limited ('Shibula Lodge') was completed and negotiations
are underway for the sale of e.Botswana. Also sold was one of the properties in the Group,
9 Summit Road, Dunkeld West as it became surplus to requirements. An indicative offer for
the sale of the Durban property has also been signed. Despite the challenging economic
environment, management looks forward to a fruitful six months going forward in the new
financial year.
Signed for and on behalf of the board on 24 May 2017
TG Govender AS Lee
Acting Chief Executive Officer Financial Director
Cape Town
24 May 2017
Registered office:
5 Summit Road, Dunkeld West, Johannesburg, 2196
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, Rosebank Towers,
15 Biermann Avenue, Rosebank, 2196 (PO Box 61051, Marshalltown. 2107)
Auditors:
Grant Thornton Johannesburg Partnership
Sponsors:
Investec Bank Limited
www.emediaholdings.co.za
Date: 24/05/2017 12:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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