AFRICAN MEDIA ENTERTAINMENT LIMITED - Interim Results for the Six Months ended 30 September 2017

Release Date: 27/11/2017 14:43
Code(s): AME
 
Wrap Text
Interim Results for the Six Months ended 30 September 2017

AFRICAN MEDIA ENTERTAINMENT LIMITED
Incorporated in the Republic of South Africa
Registration number 1926/008797/06
JSE code: AME
ISIN: ZAE000055802
("AME", "the company" or "the group")

INTERIM RESULTS
For the six months ended 30 September 2017

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

                                                                                              Unaudited       Unaudited          Audited
                                                                                          six months to   six months to       year ended
                                                                                           30 September    30 September         31 March
                                                                                      %            2017            2016             2017
                                                                                 change           R'000           R'000            R'000
Revenue                                                                            (2%)         117 048         119 421          238 593
Cost of sales                                                                      (9%)        (29 720)        (32 573)         (59 680)
Gross profit                                                                                     87 328          86 848          178 913
Operating expenses                                                                             (65 098)        (62 970)        (114 796)
Operating profit                                                                   (7%)          22 230          23 878           64 117
Investment income                                                                                 1 480           2 000            4 250
Finance income                                                                                    3 816           3 848            7 856
Finance cost                                                                                          -               -              (6)
Profits attributable to associates                                                                   98             148              631
Net profit before taxation                                                         (8%)          27 624          29 874           76 848
Taxation                                                                                        (7 385)         (8 034)         (20 791)
SA normal taxation                                                                              (8 834)         (9 190)         (19 606)
Deferred taxation                                                                                 1 449           1 156          (1 185)
Total comprehensive income for the period                                          (7%)          20 239          21 840           56 057
Total comprehensive income attributable to:
Non-controlling interest holders                                                                  3 501           3 407            7 413
Equity holders of the parent                                                       (9%)          16 738          18 433           48 644
Earnings per share (cents)                                                         (9%)           208.7           229.8            609.2
Headline earnings per share (cents)                                                (8%)           208.7           226.7            606.9
Dividends per share (cents)                                                                         100             100              350
Weighted average number of shares in issue                                       ('000)           8 022           8 022            7 985
Headline earnings reconciliation
Profit attributable to equity holders                                                            16 738          18 433           48 644
Profit on disposal of fixed assets                                                                    3           (249)            (257)
Tax on disposal of assets                                                                           (1)               -               72
Headline earnings                                                                                16 740          18 184           48 459

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                                                                               Unaudited       Unaudited         Audited
                                                                                           six months to   six months to      year ended
                                                                                            30 September    30 September        31 March
                                                                                                    2017            2016            2017
                                                                                                   R'000           R'000           R'000
Cash generated by operating activities                                                            25 443          27 200          70 534
Net interest received                                                                              3 816           3 848           7 850
Taxation paid                                                                                   (10 686)         (9 259)        (17 766)
Decrease in working capital                                                                          429           5 780         (9 563)
Cash flows from operating activities                                                              19 002          27 569          51 055
Cash flows from investing activities                                                               1 476         (2 361)         (2 303)
-Cash flow from investing activities other                                                       (2 280)         (2 361)         (2 303)
-Cash flow from business acquisition                                                               3 756               -               -
Cash flows from financing activities*                                                           (28 842)        (30 997)        (43 637)
Net decrease in cash and cash equivalents                                                        (8 364)         (5 789)           5 115
Cash and cash equivalents at beginning of period                                                 119 167         114 052         114 052
Cash and cash equivalents at end of period                                                       110 803         108 263         119 167

* Dividends paid and shares repurchased

CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION

                                                                                              Unaudited       Unaudited          Audited
                                                                                           30 September    30 September         31 March
                                                                                                   2017            2016             2017
                                                                                                  R'000           R'000            R'000
ASSETS
Non-current assets                                                                              154 119         141 386          138 630
Property, plant and equipment                                                                    72 789          74 206           73 822
Goodwill                                                                                         51 940          39 426           39 426
Trademark                                                                                         2 000               -                -
Investments                                                                                      14 977          14 781           14 749
Deferred taxation                                                                                12 413          12 973           10 633
Current assets                                                                                  163 951         153 331          167 648
Trade receivables                                                                                47 292          40 419           44 841
Other receivables                                                                                 5 297           3 972            3 532
Tax paid in advance                                                                                 559             677              108
Cash and cash equivalents                                                                       110 803         108 263          119 167
Total assets                                                                                    318 070         294 717          306 278
EQUITY AND LIABILITIES
Total equity                                                                                    237 242         209 338          230 865
Current liabilities                                                                              80 828          85 379           75 413
Trade payables                                                                                   10 785          14 796           14 361
Other payables                                                                                   67 531          68 136           57 215
Dividend payable                                                                                  1 708           1 592            1 642
Taxation                                                                                            804             855            2 195
Total equity and liabilities                                                                    318 070         294 717          306 278

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

                                                                                                Unaudited       Unaudited        Audited
                                                                                            six months to   six months to     year ended
                                                                                             30 September    30 September       31 March
                                                                                                     2017            2016           2017
                                                                                                    R'000           R'000          R'000
Issued capital
Balance at beginning of period                                                                      7 965           8 120          8 120
New shares issued                                                                                     277               -              -
Shares repurchased and cancelled                                                                     (85)           (155)          (155)
Balance at end of period                                                                            8 157           7 965          7 965
Share premium
Balance at beginning of period                                                                          -           9 097          9 097
New shares issued                                                                                  14 736               -              -
Shares repurchased and cancelled                                                                  (4 304)         (9 097)        (9 097)
Balance at end of the period                                                                       10 432               -              -
Retained profit
Balance at beginning of period                                                                    218 678         199 342        199 342
Total comprehensive income for the period                                                          16 738          18 433         48 644
Shares repurchased and cancelled                                                                    (707)               -        (1 919)
Dividend                                                                                         (20 106)        (21 865)       (27 389)
Balance at end of period                                                                          214 603         195 910        218 678
Non-controlling interests
Balance at beginning of period                                                                      4 222           2 056          2 056
Share of total comprehensive income for the period                                                  3 501           3 407          7 413
Share of dividend                                                                                 (3 673)               -        (5 247)
Balance at end of period                                                                            4 050           5 463          4 222
Total capital and reserves                                                                        237 242         209 338        230 865

SEGMENTAL REPORTING

                                                                                              Unaudited       Unaudited          Audited
                                                                                          six months to   six months to       year ended
                                                                                           30 September    30 September         31 March
                                                                                                   2017            2016             2017
                                                                                                  R'000           R'000            R'000
Revenue
Radio broadcasting                                                                              104 865         100 102          198 802
Radio services                                                                                   11 964          19 083           39 283
Corporate                                                                                           219             236              508
Total                                                                                           117 048         119 421          238 593
Profitability
Radio broadcasting                                                                               28 567          27 938           60 333
Radio services                                                                                  (3 149)         (1 308)            2 184
Corporate                                                                                       (3 188)         (2 752)            1 600
Total operating profit                                                                           22 230          23 878           64 117
Unallocated/eliminated corporate net expense and intercompany consolidation                          98             148              631
Investment income                                                                                 1 480           2 000            4 250
Interest received                                                                                 3 816           3 848            7 856
Interest paid                                                                                         -               -              (6)
Taxation                                                                                        (7 385)         (8 035)         (20 791)
Total comprehensive income for the period                                                        20 239          21 839           56 057
Assets
Radio broadcasting                                                                               66 301          66 020           64 714
Radio services                                                                                   21 992          35 114           31 640
Corporate                                                                                       118 974          85 320           90 757
Total                                                                                           207 267         186 454          187 111
Liabilities
Radio broadcasting                                                                               46 167          53 727           49 863
Radio services                                                                                   25 911          22 795           19 535
Corporate                                                                                         8 750           8 857            6 015
Total                                                                                            80 828          85 379           75 413
Capital expenditure
Radio broadcasting                                                                                1 495           2 620            4 632
Radio services                                                                                       77             141              250
Corporate                                                                                           137             769            1 546
Total                                                                                             1 709           3 530            6 428
Depreciation
Radio broadcasting                                                                                2 832           2 784            5 510
Radio services                                                                                      222             333              615
Corporate                                                                                           156             158              313
Total                                                                                             3 210           3 275            6 438

CORPORATE INFORMATION
REGISTERED OFFICE
Block A, Oxford Office Park, No 5, 8th Street,
Houghton Estate, Johannesburg, 2198
PO Box 3014, Houghton, 2041
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
Registration number 2004/003647/07
Rosebank Towers, 15 Biermann Avenue, Rosebank
PO Box 61051, Marshalltown, 2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5238

SPONSOR
Arbor Capital Sponsors (Pty) Ltd
Registration number 2006/0033725/07
20 Stirrup Lane
Woodmead Office Park
Corner Woodmead Drive and Van Reenens Avenue
Woodmead, 2191
Suite#439, Private Bag X29
Gallo Manor, 2052
DIRECTORS
ACG Molusi (Independent non-executive Chairman)
Kl Tlhabane (Independent non-executive)
MJ Prinsloo (Independent non-executive)
N Sooka (Independent non-executive)
M Mynhardt (Executive Financial)
AJ Isbister (Executive)
COMPANY SECRETARY
C Roberts

CHAIRMAN'S REVIEW

Trading conditions for the period under review remained tough. Revenue decreased by 2% to R117 million (2016: R119,4
million) and comprehensive income decreased by 7% to R20,2 million (2016: R21,8 million). Comprehensive income
attributable to shareholders amounted to R16,7 million (2016:R18,4 million), with earnings per share of 208,7 cents
(2016:229,8 cents). Headline earnings per share were 208,7 cents (2016: 226,7 cents).

After paying tax of R10,7 million (2016: R9,3 million), the group generated R19 million (2016: R27,6 million) in cash
from its operating activities during the period. The group spent R1,7 million (2016:R3,5 million) on capital expenditure
and paid R5,1 million (2016: R11 million) to repurchase 85 470 (2016: 155 144) of its own shares. During August 2017,
the company acquired Moneyweb for R9,4 million cash and the issue of 277 210 shares. During the year, the company paid
out dividends of R20,1 million (2016: 20,2 million) to shareholders and ended the year with cash resources of R110,8
million (2016: R108,3 million). 

OPERATIONS

Low business confidence resulted in demanding trading conditions. Innovation and tight cost control remain imperatives. 

Algoa FM delivered a solid performance with year-on-year revenue marginally up. Advertising revenue remains under
pressure due to the tough trading conditions. Profitability is slightly lower than the prior period and cost containment
remains a key focus area of the management team. 

Central Media Group faced tough trading conditions and revenue is marginally down. Through tight cost control
profitability is only marginally lower than the corresponding period. OFM continues to experience pressure on its
ability to generate advertising revenue, especially from traditional radio advertisers as part of a general decline
across the radio industry. Local advertising sales revenue grew marginally. Digital Platforms has taken on significant
new business, and it's contribution to revenue and profitability -to the Group - has grown against the same period last
year. Central Media's broad range of products allows it to be well-positioned to take advantage of any improvement in
trading conditions.

Radioheads has advanced its position in the Industry, by becoming Content Marketing Agency of choice for several media
agencies. Revenue and profitability is up from last year,but several new campaigns are in the pipeline for the end of
the financial year. 

While remaining focussed on its core radio platforms, the team at United Stations has made significant progress in
positioning the company to compete in a fast changing media environment. During the half year, United Stations concluded
new sales agreements with CliffCentral, Mail and Guardian and Jozi FM, while its technology platform Tysflo built
streaming TV channels on behalf of Kaya TV and Moneyweb. Revenues and profitability are however still under pressure. 

BUSINESS COMBINATION

On 21 August 2017, AME acquired 100% of Moneyweb. The purchase price was settled by the issue of 277 210 new AME shares
and a cash consideration of R9,4 million.

The acquired business contributed incremental revenues of R1,6 million and a loss after tax of R718  000 to the group
for the period from date of acquisition to 30 September 2017. Had the acquisition occurred on 1 April 2017 group revenue
would have been R11,3 million higher and net profit after tax would have been R5,2 million lower. The assets and
liabilities acquired, for which final fair values have been determined, are as follows:

Business combination
Property, plant and equipment                                                                                   485
Trademark                                                                                                     2 000
Other financial instruments                                                                                      28
Deferred taxation                                                                                               332
Other current assets including bank and cash resources                                                       15 425
Current liabilities                                                                                         (4 458)
Net assets acquired                                                                                          13 812
Goodwill                                                                                                     12 514
Purchase consideration shares and cash                                                                       26 326
Issue of shares                                                                                                 277
Share premium                                                                                                16 619
Cash paid                                                                                                     9 430
                                                                                                             26 326
Cash paid on business acquisition                                                                           (9 430)
Cash purchased                                                                                               13 186
Net cash inflow                                                                                               3 756

DIVIDENDS

The final dividend (dividend number 11) of 250 cents per ordinary share (gross) was declared for the year ended 31 March
2017. (2016: 250 cents gross) and paid on 10 July 2017. The interim dividend (dividend number 12) for the period ended
30 September 2017 of 100 cents per ordinary share (gross) (2016: 100 cents per share gross) is proposed.

DECLARATION OF INTERIM DIVIDEND NUMBER 12

The board declared an interim dividend (dividend number 12) of 100.00 cents per ordinary share (gross) for the period
ended 30 September 2017. The dividend is subject to the Dividends Withholding Tax ("DWT") that was introduced with
effect from 1 April 2012. In accordance with the provisions of the JSE Listings Requirements, the following additional
information is disclosed:

     - The dividend has been declared out of current profits available for distribution
     - The local Dividend Tax rate is 20%
     - The gross dividend amount is 100,00 cents per ordinary share for shareholders exempt from DWT
     - The net dividend amount is 80.00 cents per ordinary share for shareholders liable for DWT
     - The company has 8 246 164 ordinary shares in issue
     - The company's income tax reference number is 9100/169/71/4

The following dates are applicable to the dividend:

The last day to trade in order to be eligible for the dividend will be Tuesday, 23 January 2018

Shares will trade ex-dividend from Wednesday, 24 January 2018

The record date will be Friday, 26 January 2018 and payment will be made on Monday, 29 January 2018

Share certificates may not be dematerialised/rematerialised between Wednesday, 24 January 2018 and Friday, 26 January
2018, both days inclusive. 

PROSPECTS

The board expects the trading conditions for the remaining six months of the year to remain challenging.

ACG Molusi 

Independent non-executive Chairman

27 November 2017

These condensed results have been prepared by the financial director in accordance with International Financial
Reporting Standards ("IFRS"), the Companies Act, No 71 of 2008, as amended, IAS 34: Interim Financial Reporting, the
Listings Requirements of the Johannesburg Stock Exchange and the SAICA Financial Reporting Guidelines as issued by the
Accounting Practices Committee on a basis consistent with the policies and methods of computation as used in the annual
financial statements for the year ended 31 March 2017.

These results are unaudited.

Michelle Mynhardt CA(SA)

Financial director 

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