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eMEDIA HOLDINGS LIMITED - Unaudited Consolidated Condensed Interim Results for the six months ended 30 September 2017

Release Date: 22/11/2017 10:10
Code(s): EMN EMH     PDF:  
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Unaudited Consolidated Condensed Interim Results 
for the six months ended 30 September 2017

eMEDIA HOLDINGS LIMITED

The company's shares are listed under the Media Sector of the JSE.

Registration number: 1968/011249/06

(Incorporated in the Republic of South Africa)

JSE Share Codes

Ordinary Shares: EMH IZIN: ZAE000208898

N ordinary Shares: EMN IZIN: ZAE000209524





Unaudited Consolidated Condensed Interim Results 

for the six months ended 30 September 2017





COMMENTARY

The period under review resulted in the Group ending the period showing a profit from

continuing operations of R1.9 million compared to a profit of R103.5 million, in

the prior period. The decrease is attributable to the re-negotiated DStv contract

which showed a significant decline in the licence fee revenue the Group receives from

Multichoice for the supply of eNCA and five other channels. Cost of sales for the

Group however increased by 9% this resulted in the Gross Profit for the Group ending

the period on R598.1 million compared to R707.1 million in the prior year, a decrease

of 15%. Also included in the profit are the losses attributable to the continued

investment into the multi-channel business, (OpenView and e.tv multichannel) of

R117.3 million compared to R136.9 million in the prior year. EBITDA for the Group

ended the period on R116.9 million compared to R277.3 million for the prior period, a

decrease of 57.8% year-on-year.



Programming rights for the Group increased by 34.4% from R929.9 million compared

to R691.9 million in the prior year. This is due to a new three-year deal signed

with Sony Pictures and includes the purchase of Days of Our Lives and other premium

content. This has also seen an increase in Trade Payables of 16.8%. Borrowings for

the Group, which mainly consists of mortgage bond financing, has decreased to 

R675.9 million and this has seen a decrease in finance costs of 21.2%.



The Group's only asset is a 67.7% stake in eMedia Investments Proprietary Limited

("eMedia Investments").



EMEDIA INVESTMENTS



e.tv terrestrial

The six-month period ended 30 September 2017 has seen the market share of e.tv remain

relatively constant, but has seen a decline in the key revenue drivers of LSM 5 to

7. e.tv's advertising revenue increased from R664.9 million to R688.9 million, an

increase of 4% year-on-year. Programming and other cost of sales increased by 7% from

R336.5 million to R359.3 million. Management is reviewing the schedule in order to

change slots that are currently unprofitable. Operating expenses increased from 

R242.5 million to R250.9 million, an increase of 3% year-on-year. e.tv approached

ICASA for an amendment to its licence conditions in which it requested that the

30 minute news bulletin be allowed to be scheduled outside of Prime Time. The

application was rejected by ICASA and management is reviewing its Prime Time News

strategy. 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 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 referred the matter to the Constitutional Court for a final determination.

It was heard in February and e.tv lost.



e.tv Multichannel and Platco

Included in the results are losses of R117,3 million from the continued investment

into the multi-channel businesses. Advertising revenue has increased from 

R6.5 million in the previous year to R22.2 million. The OpenView platform has

increased its viewership capacity with 1 008 114 boxes activated at the end of the

period. The millionth box was activated during the month of September and monthly

activations continue to be in the region of 35 000 boxes. Platco Digital also entered

into a settlement agreement with the SES Satellite signal provider to terminate the

15 year contract on 31 December 2017. The settlement of R100 million included arrear

and service payments to 31 December 2017 of R78 million and a termination amount of

R22 million. All payments were made in October.  The annualised saving in satellite

signal fees will amount to R40 million.



eSat.tv (eNCA)

eNCA continues to perform well and is the most-watched 24-hour news channel on DStv

with approximately 50% market share. The DStv agreement for the supply of eNCA and

five other channels for five years was signed in May with an effective date of 

1 February 2017. Licence fee revenue has reduced from R266.6 million to

R140.8 million and structural changes were made to reduce costs. Advertising revenue

in eNCA still shows good growth, ending the period on R52.0 million, a 16% increase

from R44.9 million in the previous year.



Management continues to review the non-core and peripheral businesses and will exit

these businesses when opportunities present themselves. During the current period,

the sale of eBotswana and the intangible assets in Lalela (Pty) Ltd and Lalela LLC 

were completed.





STATEMENT OF FINANCIAL POSITION

                                               Unaudited     Unaudited       Audited

                                            30 September  30 September      31 March

                                                    2017          2016          2017

                                                  R000's        R000's        R000's

ASSETS     

Non-current assets                             7 589 977     7 703 468     7 622 858

Property, plant and equipment                    903 699       993 942       941 584

 Plant and equipment                             294 839       343 286       323 028

 Owner occupied property                         608 860       650 656       618 556

Intangible assets                              2 590 434     2 628 304     2 596 701

Goodwill                                       3 778 264     3 776 769     3 778 264

Equity-accounted investees                       209 498       231 637       203 038

Long-term receivables                             17 108        17 214        16 456

Deferred tax assets                               90 974        55 602        86 814

Current assets                                 1 605 602     1 492 379     1 529 469

Inventories                                       18 119        18 477        20 946

Programming rights                               929 956       691 906       866 244

Trade and other receivables                      462 421       577 187       439 962

Current tax assets                                15 154        17 689        16 113

Cash and cash equivalents                        179 952       187 120       186 204

Assets of disposal groups                         22 985        11 763        53 618

Total assets                                   9 218 564     9 207 610     9 205 945



EQUITY AND LIABILITIES

Total equity                                   7 186 738     7 170 029     7 181 685

Stated capital                                 6 762 797     6 762 797     6 762 797

Treasury shares                                   (7 913)       (3 230)       (7 221)

Reserves                                        (605 365)     (611 538)     (600 432)

Equity attributable to owners of the Company   6 149 519     6 148 029     6 155 144

Non-controlling interest                       1 037 219     1 022 000     1 026 541

Non-current liabilities                          782 917       992 164       877 871

Deferred tax liabilities                         537 075       535 152       540 747

Borrowings                                       241 338       457 012       332 627

Operating lease accruals                           4 504             -         4 497

Current liabilities                            1 248 909     1 044 701     1 144 768

Current tax liabilities                            7 752        12 000         6 664

Current portion of borrowings                    434 533       342 613       342 537

Trade and other payables                         805 235       689 173       793 757

Bank overdrafts                                    1 389           915         1 810

Liabilities of disposal groups                         -           716         1 621

Total liabilities                              2 031 826     2 037 581     2 024 260

Total equity and liabilities                   9 218 564     9 207 610     9 205 945

Net asset value                                6 149 518     6 148 030     6 155 144

Net asset value per share

after treasury shares (cents)                      1 383         1 381         1 384





STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

                                   6 Months        6 Months*                 Audited

                               30 September    30 September                 31 March

                                       2017            2016                     2017

                                     R000's          R000's   % change        R000's

Continuing operations

Revenue                           1 203 634       1 262 542      -4,7%     2 582 733

Cost of sales                      (605 515)       (555 411)     -9,0%    (1 176 867)

Gross profit                        598 119         707 131     -15,4%     1 405 866

Other income                          6 108          27 459     -77,8%        54 945

Administrative and 

other expenses                     (487 231)       (457 320)     -6,5%     (972 546)

Earnings before interest,

taxation, depreciation 

and amortisation                    116 996         277 270     -57,8%       488 264

Depreciation, amortisation 

and impairments                     (77 645)        (95 837)     19,0%      (216 817)

Operating profit                     39 351         181 433     -78,3%       271 448

Finance income                        4 885           5 270      -7,3%        10 916

Finance expenses                    (22 306)        (28 298)     21,2%       (64 548)

Share of (loss)/profit of 

equity-accounted investees,

net of taxation                        (279)          1 799    -115,5%        (2 241)

Profit before taxation               21 651         160 204     -86,5%       215 575

Taxation                            (19 666)        (56 753)                 (87 522)

Profit for the period from 

continuing operations                 1 985         103 451     -98,1%       128 053

Discontinued operations

(Loss)/profit for the period

from discontinued operations,

net of taxation                      (2 714)         28 025                   32 561

(Loss)/profit for the period           (729)        131 476    -100,6%       160 614

Other comprehensive income,

net of related taxation

Items that are or may be

reclassified to profit or loss

Foreign operations - foreign 

currency translation differences      5 549           5 231                   (2 198)

Reclassification of foreign currency

differences on disposal                (724)        (65 049)                 (65 049)

Other comprehensive income/(loss),

net of taxation                       4 825         (59 818)                 (67 247)

Total comprehensive income

for the period                        4 096          71 658                   93 367

(Loss)/profit attributable to:

Owners of the Company                (2 494)         88 626                  104 760

Non-controlling interest              1 765          42 850                   55 854

                                       (729)        131 476                  160 614

Total comprehensive income

attributable to:

Owners of the Company                   772          48 136                   59 242

Non-controlling interest              3 324          23 521                   34 125

                                      4 096          71 658                   93 367



*6 Months ended 30 September 2016 restated for discontinued operations



STATEMENT OF CHANGES IN EQUITY

                                                               Foreign

                                                              Currency

                                     Stated      Treasury  Translation      Retained

                                    Capital        Shares     Reserves        Income

                                     R000's        R000's       R000's        R000's

Balance 31 March 2016             6 762 797             -       38 030      (697 704)

Profit                                    -             -            -       104 760

Foreign currency 

translation reserve                       -             -      (45 518)            -

Share buy-back                            -        (7 221)           -             -

Disposal of share interest                -             -            -             -

Dividends paid                            -             -            -             -

Balance 31 March 2017             6 762 797        (7 221)      (7 488)     (592 944)

Loss                                      -             -            -        (2 494)

Foreign currency

translation reserve                       -             -         3 266            -

Share buy-back                            -          (692)           -             -

Change in ownershop                       -             -            -         (5705)

Disposal of share interest                -             -            -             -

Balance 30 September 2017         6 762 797         (7 913)     (4 222)     (601 143)



                                              Equity   Non-controlling         Total

                                              Owners          Interest        Equity

                                              R000's            R000's        R000's

Balance 31 March 2016                      6 103 123           988 220     7 091 343

Profit                                       104 760            55 854       160 614

Foreign currency translation reserve         (45 518)          (21 729)      (67 247)

Share buy-back                                (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     7 181 686

(Loss)/profit                                 (2 494)            1 765          (730)

Foreign currency translation reserve           3 266             1 559         4 826

Share buy-back                                  (692)                -          (692)

Change in ownership                           (5 705)            5 705             -

Disposal of share interest                         -             1 648         1 648

Balance 30 September 2017                  6 149 519         1 037 219     7 186 738



STATEMENT OF CASH FLOWS

                                           Unaudited         Unaudited*      Audited

                                        30 September      30 September      31 March

                                                2017              2016          2017

                                              R000's            R000's        R000's

Cash from operating activities

Cash flows from operating activities          56 393           161 204       444 427

Net finance costs                            (18 815)          (23 028)      (49 004)

Taxes paid                                   (27 344)          (63 894)     (126 327)

Net cash inflow from operating activities     10 234            74 282       269 096

Cash used in investing activities

Acquisition of property,

plant and equipment                          (26 650)          (37 181)      (78 103)

 Acquisition of plant and equipment          (26 650)          (37 181)      (69 922)

 Acquisition of owner-occupied properties          -                 -        (8 181)

Proceeds from sale of property,

plant and equipment                            3 323            35 237         7 393

 Book value of assets disposed                 1 864            35 237         4 472

 Surplus on disposal                           1 459                 -         2 921

Movement in financial assets                   2 584             1 426         2 271

Acquisition of subsidiary,

net of cash acquired                               -            (3 749)       (3 749)

Net cash flows of discontinued operations     13 900             1 378        36 928

Additions to intangible assets               (18 503)           (9 322)      (10 073)

Loans advanced to equity

accounting investees                          (5 055)           (5 910)       (6 900)

Dividends received from equity

accounting investees                               -             1 375         1 375

Net cash used in investing activities        (30 401)          (16 746)      (50 858) 

Cash from (used in) financing activities

Repayment of borrowings                      (82 264)          (95 171)     (170 875)

Borrowings raised                             85 726            68 799         2 877

Share buy-back                                  (692)                -        (7 221)

Change in non-controlling interest             2 570               (63)            -

Dividends paid to non-controlling interest         -                 -        (5 252)

Net cash from (used in) financing activities   5 340           (26 435)     (180 471)

Net change in cash and cash equivalents      (14 827)           31 101        37 767

Cash and cash equivalents at beginning

of the year                                  192 510           159 528       159 528

Effect of movements in exchange 

rates on cash held                               880              (269)       (4 785)

Cash and cash equivalents at

end of the year                              178 563            190 360      192 510

Cash and cash equivalents comprise

the following    

Cash and cash equivalents                    179 952            191 275      194 320

 Bank balances                               179 952            187 120      186 204

 Cash in disposal group assets 

 held for sale                                     -              4 155        8 116

Bank overdrafts                               (1 389)              (915)      (1 810) 

                                             178 563            190 360      192 510



EARNINGS, DILUTED AND HEADLINE EARNINGS PER SHARE

                                                             Unaudited     Unaudited

                                                                 Gross           Net

                                                                R000's        R000's

For the period ended 30 September 2017

Loss attributable to equity owners of

the parent                                                                    (2 494)

IAS 16 gains on disposal of plant and equipment                   (988)         (710)

IAS 16 impairment of plant and equipment                             7             5

IAS 21 foreign currency translation reserve

reclassified to profit or loss                                     489           489

IFRS 10 gain on the loss of control

of a subsidiary                                                   (634)          271

Headline loss                                                                 (2 439)

For the period ended 30 September 2016*

Earnings attributable to equity owners of

the parent                                                                    88 626

IAS 16 gains on disposal of plant and equipment                 (1 201)         (865)

IAS 21 foreign currency translation reserve

reclassified to profit or loss                                 (44 030)      (44 030)

IFRS 10 loss on the loss of control 

of a subsidiary                                                 20 727        20 727

Headline earnings                                                             64 458



                                                             Unaudited     Unaudited*

                                                          30 September  30 September

                                                                  2017          2016

Basic earnings (R'000)

(Loss)/earnings                                                 (2 494)       88 626

Continuing operations                                            1 336        69 520

Discontinued operations                                         (3 830)       19 106

Headline (loss)/earnings                                        (2 439)       64 458

Continuing operations                                              625        68 655

Discontinued operations                                         (3 065)       (4 197)

Basic earnings per share (cents)

(Loss)/earnings                                                  (0,56)        19,91

Continuing operations                                             0,30         15,61

Discontinued operations                                          (0,86)         4,30

Headline (loss)/earnings                                         (0,55)        14,48

Continuing operations                                             0,14         15,42

Discontinued operations                                          (0,69)        (0,94)

Weighted average number of shares in issue

- 30 September ('000)                                          444 597       445 233

Issued shares as at 30 September ('000)                        445 738       445 738

Effect of own shares held ('000)                                (1 140)         (504)

Net number of shares in issue - 30 September ('000)            444 489       444 597

Number of shares in issue - 30 September ('000)                445 738       445 738

Number of treasury shares in issue - 30 September ('000)        (1 248)       (1 140)



*6 Months ended 30 September 2016 restated for discontinued operations.





BASIS OF PREPARATION

The unaudited consolidated condensed results for the six months to 

30 September 2017 have been prepared in accordance with International Financial

Reporting Standards (IFRS), the disclosure requirements of IAS 34: Interim Financial

Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices

Committee, the requirements of the South African Companies Act, 2008 and the 

Listings Requirements of the JSE Limited. These results do not include all the 

information required for a complete set of IFRS financial statements. However,

selected explanatory notes are included to explain events and transactions that are

significant to an understanding of the changes in the Group's financial position and

performance since the last annual consolidated financial statements as at and for the

year ended 31 March 2017.



These results have been prepared under the supervision of the Financial Director,

A S Lee (CA) SA, and have not been audited or reviewed by the Group's auditors, 

Grant Thornton Johannesburg Partnership.



SIGNIFICANT ACCOUNTING POLICIES

The unaudited consolidated condensed results have been prepared under the historical

cost convention, except for the revaluation of financial instruments. The accounting

policies adopted are consistent with those followed in the preparation of the Group's

annual financial statements for the year ended 31 March 2017.



STATED CAPITAL

As at 30 September 2017, the Company repurchased 1 248 259 N ordinary shares

which are being treated as treasury shares.



DISPOSAL GROUP ASSETS/LIABILITIES HELD FOR SALE

The sale of operations reported as disposal group assets/liabilities held for sale

at 31 March 2017 that include Lalela Music SA (Pty) Ltd (a 75% subsidiary),

Lalela Music LLC (an 85% subsidiary of Longkloof Limited Group), e.Botswana 

Proprietary Limited (a 49% subsidiary) and e.tv Botswana Proprietary Limited

(an 80% subsidiary) have been finalised effective 30 June 2017 for the Lalela

entities and 30 September 2017 for the Botswana entities.



The commercial building at 73 Richfond Circle, Ridgeside, Umhlanga, KwaZulu-Natal

owned by Sabido Properties Proprietary Limited remains classified as an asset held

for sale.



Discontinued operations as disclosed in the statement of comprehensive income

consist of the following:



                                                             Unaudited     Unaudited

                                                          30 September  30 September

                                                                  2017          2016

                                                                R000's        R000's

Revenue

Longkloof Limited Group                                              -         3 303

e.Botswana Proprietary Limited and

e.tv Botswana Proprietary Limited                                1 557         1 596

TVPC Media Proprietary Limited                                       -           749

Shibula Lodge and Spa Proprietary Limited                            -           363

Lalela Music Proprietary Limited and Lalela Music LLC                -         3 736

Total revenue                                                    1 557         9 747

(Loss)/profit from discontinued operations

Longkloof Limited Group                                           (865)       29 383

e.Botswana Proprietary Limited and e.tv Botswana

Proprietary Limited                                             (8 060)         (544)

TVPC Media Proprietary Limited                                       -           340

Shibula Lodge and Spa Proprietary Limited                                       (952)

Lalela Music Proprietary Limited and Lalela Music LLC            6 211          (202)

Total (loss)/profit                                             (2 714)       28 025



Disposal groups held for sale as disclosed in the statement of financial position

comprise the following:



                                         Property, Plant         Other         Total

                                               Equipment        Assets        Assets

                                                  R000's        R000's        R000's

Assets

30 September 2017

Sabido Properties Proprietary Limited             22 985             -        22 985

Total assets                                      22 985             -        22 985

30 September 2016

Longkloof Limited Group                                -         6 465         6 465

e.Botswana Proprietary Limited                       784         2 629         3 413

e.tv Botswana Proprietary Limited                  1 865            20         1 885

Total assets                                       2 649         9 114        11 763



                                                             Unaudited     Unaudited

                                                          30 September  30 September

                                                                  2017          2016

                                                                R000's        R000's

Liabilities

Longkloof Limited Group subsidiaries and associates                  -          (702)

e.Botswana and e.tv Botswana                                         -           (14)

Total liabilities                                                    -          (716)



CHANGE IN COMPARATIVES

The results of discontinued operations have been separately disclosed on the face of

the statement of comprehensive income.



CHANGES IN DIRECTORATE AND COMPANY SECRETARIAL

Chief executive officer, A van der Veen, was appointed to the board on 

14 November 2017.



DIVIDEND TO SHAREHOLDERS

The directors have resolved not to declare an interim dividend for the period ended

30 September 2017.



On behalf of the board

A van der Veen             A S Lee

Chief Executive Officer    Financial Director



Cape Town

22 November 2017





CORPORATE INFORMATION

eMEDIA HOLDINGS LIMITED

The company's shares are under the Media Sector of the JSE.



COMPANY REGISTRATION NUMBER

1968/011249/06 (Incorporated in the Republic of South Africa)



JSE SHARE CODES

Ordinary Shares: EMH IZIN: ZAE000208898

N ordinary Shares: EMH IZIN ZAE000209524



REGISTERED OFFICE

5 Summit Road

Dunkeld West

Hyde Park

Johannesburg, 2196



Private Bag X9944

Sandton, 2146



DIRECTORS

J A Copelyn* (Chairperson)

A van der Veen (Chief executive officer)

A S Lee (Financial director)

T G Govender*

V E Mphande*^ 

L Govender*^ 

R D Watson*^ 

(* Non-executive ^ Independent)



COMPANY SECRETARY

Junadi van der Merwe



AUDITORS

Grant Thornton Johannesburg Partnership

Practice Number 903485



@Grant Thornton

Wanderers Office Park

52 Corlett Drive 

Illovo, 2196



Private Bag X10046

Sandton, 2146



BANKERS

Standard Bank of South Africa



SPONSOR

Investec Bank Limited

100 Grayston Drive, Sandown, Sandton, 2196



TRANSFER SECRETARIES

Computershare Investor Services Proprietary Limited

Rosebank Towers, 15 Biermann Avenue,

Rosebank, 2196



PO Box 61051 

Marshalltown, 2107



WEBSITE 

www.emediaholdings.co.za




Date: 22/11/2017 10:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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