AFRICAN MEDIA ENTERTAINMENT LIMITED - Reviewed Results for the year ended 31 March 2018

Release Date: 08/06/2018 10:47
Code(s): AME
 
Wrap Text
Reviewed Results for the year ended 31 March 2018

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")

REVIEW 
For the year ended 31 March 2018

CHAIRMAN'S REVIEW
Trading conditions for the period under review remained tough. Revenue increased by 10% to R262,5 million (2017: R238,6
million) and total comprehensive income attributable to equity holders decreased by 2% to R47,7 million (2017: R48,6
million) mainly as a result of Classic1027 and Moneyweb losses and acquisition transaction costs. Earnings per share
were 541,4 cents (2017:609,2 cents) and headline earnings per share were 541,5 cents (2017:606,9 cents).

The group generated R30,8 million (2017: R51,1 million) in cash from its operating activities during the year, after
paying tax of R20,2 million (2017: R17,8 million).The group spent R3,7 million (2017: R6,4 million) on capital
expenditure and paid R11,8 million (2017: R11,2 million) to repurchase 230 700 (2017:155 144) of its own shares. During
August 2017 the company acquired Moneyweb for R9,4 million cash and the issue of 277 210 shares. In December 2017 AME
acquired a stake in Classic1027 for R7 million. During the year the company paid out dividends of R28 million (2017:
27,2 million) to shareholders of the company and ended the year with cash resources of R94,5 million (2017: R119,2
million).

Operations
Low business confidence and the restructuring process of our acquisitions resulted in demanding trading conditions
placing further strain on our resources. Innovation and tight cost control remain imperatives.

Algoa FM had another successful year. National and direct revenue showed marginal growth year on year. The Big Walk for
CANSA was a great commercial success and Algoa FM was honoured by the industry by winning two Liberty Radio Awards for
Best Community Project and Best Promotion/Stunt. At the awards, Algoa FM also won the Best Daytime Show. Dave Tiltmann,
Algoa FM's Managing Director was inducted into the Radio Hall of Fame. Finally, Algoa FM won the ultimate accolade and
grand prix award of Commercial Radio Station of the Year.

Central Media Group ("CMG") encountered challenging trading conditions during the year, with mixed results from the
various business units. OFM delivered a decline in profitability due to costs rising above a flat revenue performance.
Digital Platforms grew Revenue 17.6% as it continues to build its development client portfolio, contributing positively
to profitability of the group. Redstar Agency grew revenue by 57% through the introduction of new products and services,
which translated into an increase of profitability year on year. Mahareng Publishing experienced the ongoing contraction
in print advertising with a slight increase in revenue but a decline in profitability because of increased costs in the
printing and distribution of the newspapers. CMG remains well positioned to offer a range of media and marketing
solutions to businesses looking to target Central South Africa.

RadioHeads' profitability improved from the previous year. It has re-focused on its core business, with special
attention paid to generating maximum revenue yield from campaigns. The renewed focus has resulted in repeat business
from several clients, while establishing itself as a preferred supplier within the agency space.

In order to grow its business and ensure its relevance into the future, United Stations has expanded its portfolio of
radio stations to eight and strengthened its offering across digital, events, video, online audio and content creation.
These mostly once-off costly initiatives resulted in the company not being profitable for this year. Going into
2018/2019, the United Stations proposition is more compelling, as it will continue to focus on growing its platforms,
while presenting itself as a multi media solution in which radio is the core of a wider offering.

The group acquired an interest in Classic1027, and is in the process of  turning the loss-making station around, partly
by re-establishing the collaboration between Classic1027 and Moneyweb.

Restructuring of the Moneyweb group resulted in a more cost-efficient business model. The sales and publishing division
was also moved into the group sales house, United Stations. Moneyweb Radio has expanded into an extra 30 minute timeslot
between 18h00 and 19h00 (Monday - Thursday) on SAFM and also continues to produce a daily one hour show on RSG Geldsake,
which is the largest listened to business show on radio in South Africa. Moneyweb launched the first business breakfast
show on radio in Gauteng on Classic1027 between 07h00 and 08h00 on weekdays. Revenues for the financial period since
acquisition largely comprised of digital sales on Moneyweb.co.za. Our radio expertise should enhance Moneyweb's business
shows on the SABC stations. 

Dividends
An Interim dividend (dividend no 12) of 100 cents per ordinary share (gross) was declared for the period ended 
30 September 2017 (2017:100 cents gross) and paid on 29 January 2018. A final dividend (dividend no 13) for the year ended
31 March 2018 of 200 cents per ordinary share (gross) (2017: 250 cents per share gross) is declared.

Declaration of final dividend no 13
The board declared a final dividend (dividend no 13) of 200,00 cents per ordinary share (gross) for the year ended 
31 March 2018. 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 Dividend Witholding Tax rate is 20%
  - the gross dividend amount is 200.00 cents per ordinary share for shareholders exempt from DWT
  - the net dividend amount is 160,00 cents per ordinary share for shareholders liable for DWT
  - the company has 8 100 934 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, 10 July 2018
Shares will trade ex-dividend from Wednesday, 11 July 2018
The record date will be Friday, 13 July 2018 and payment will be made on Monday,16 July 2018
Share certificates may not be dematerialised/rematerialised between Wednesday, 11 July 2018 and Friday, 13 July 2018,
both days inclusive.

Prospects
The board expects the trading conditions for the 2019 financial year to remain challenging while turning our two
acquisitions around. 

ACG MOLUSI
Independent Non-executive Chairman

8 June 2018

The board of directors are responsible for the preparation of the provisional consolidated financial statements in
accordance with the requirements of the JSE Listings Requirements for preliminary reports and the requirements of the
Companies Act of South Africa as applicable to summarised financial statements, and for such internal controls as the
directors deem necessary to ensure that the provisional consolidated financial statements are free from material
misstatement due to fraud or error.

Michelle Mynhardt (CA/SA)
Financial director

These results have been reviewed by Grant Thornton and their unqualified review report is available for inspection at
the company's registered office.

The auditor's reviewed report does not necessarily report on all of the information contained in this
announcement/financial results. Shareholders are therefore advised that in order to obtain a full understanding of the
nature of the auditor's engagement they should obtain a copy of the auditor's review report with the accompanying
financial information from the issuers' registered office.

Summarised notes to the provisional financial statements 

1.Basis of preparation
These provisional 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 Guides 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.

2. Business combinations
Moneyweb Group ("Moneyweb")
AME acquired 100% of Moneyweb on 21 August 2017. The purchase price was settled by the issue of 277 210 new AME shares
and a cash consideration of R9,4 million. The goodwill paid relates to group synergies that will be achieved.

The acquired business contributed incremental revenues of R12,7 million and a loss before tax of R3.2 million to the
group for the period from date of acquisition to 31 March 2018. Had the acquisition occurred on 1 April 2017 group
revenue would have been R24,6 million higher and the comprehensive income attributable to equity holders before taxation
would have been R8,6 million lower. The assets and liabilities acquired, for which final fair values have been
determined, are listed in the table below.

Classic1027 
On 15 December 2017 AME acquired a direct shareholding of 7.85% in Classic1027. In addition AME acquired minority
shareholdings in shareholders holding a 77,06% shareholding in Classic1027, bringing our effective shareholding in
Classic1027 to 45.9%. Classic1027 was consolidated in line with the requirements of IFRS 10. The purchase price was R7
million. The goodwill paid relates to the economies of scale that can be achieved and group synergies.

The acquired business contributed incremental revenues of R5,6 million and a loss before tax of R1,3 million to the
group for the period from date of acquisition to 31 March 2018. Had the acquisition occurred on 1 April 2017 group
revenue would have been R13,4 million higher and the comprehensive income attributable to equity holders would have been
R7,1 million lower. The assets and liabilities acquired, for which final fair values have been determined, are listed in
the table below.

Business combinations                                                               Moneyweb     Classic        Total
Property plant and equipment                                                             485       1 000        1 485
Trademarks                                                                             2 000      25 000       27 000
Other financial instruments                                                               28           -           28
Deferred taxation on trademarks                                                        (447)     (5 600)      (6 047)
Deferred tax raised on assessed losses at acquisition                                  4 248       5 600        9 848
Other current assets excluding bank and cash resources                                 2 239       1 145        3 384
Cash and cash equivalents                                                             13 186        (29)       13 157
Non-current liabilities                                                                    -    (22 591)     (22 591)
Current liabilities                                                                  (4 458)    (10 610)     (15 068)
Fair value of identifiable net assets acquired                                        17 281     (6 085)       11 196
Non-controlling interests measured at their share of the fair value of net assets          -       3 294        3 294
Amount capitalised                                                                    17 281     (2 791)       14 490
Total purchase consideration                                                          26 326       7 000       33 326
Issue of shares                                                                          277           -          277
Share premium                                                                         16 619           -       16 619
Cash paid                                                                              9 430       5 000       14 430
Contingent consideration                                                                   -       2 000        2 000
      
Goodwill arising on acquisition                                                        9 045       9 791       18 836
Cash consideration                                                                     9 430       5 000       14 430
Less: Cash and cash equivalents in subsidiary acquired                                13 186        (29)       13 157
Net cash inflow/(outflow) on acquisition                                               3 756     (5 029)      (1 273)

3. Related party transactions
There has been no significant changes in related party relationships since the previous year.

Other than in the normal course of business, there have been no other transactions during the year with related parties.

4. Other financial Instruments

                                                                                                           GROUP
      
                                                                                                     2018        2017
                                                                                                    R'000       R'000
Level 1                                                                                                29           -
Level 2                                                                                               725           -
Level 3                                                                                            20 327      10 240
                                                                                                   21 081      10 240

Level 3 fair value determined by valuation that uses inputs that are not based on observable market data.

Investments are valued based on discounted cash flow models. Should the variables differ by 1% the value of the
investments will decrease between 8% and 10%. The discount rates used vary between 13,02% and 18,02%.

5. Events after the reporting period
To the best of the directors' knowledge, there have been no material events after the reporting period up to the date of
signature of this report that will materially affect the ability of the user to make proper financial investment decisions.

CONSOLIDATED PROVISIONAL STATEMENTS OF COMPREHENSIVE INCOME 

                                                                                             Reviewed         Audited
                                                                                           Year ended      year ended
                                                                                             31 March        31 March
                                                                                       %         2018            2017
                                                                                  change        R'000           R'000
Revenue                                                                              10%      262 534         238 593
Cost of Sales                                                                        32%     (78 986)        (59 680)
Gross profit                                                                                  183 548         178 913
Operating expenses                                                                          (124 077)       (114 796)
Operating profit                                                                    (7%)       59 471          64 117
Investment income                                                                               2 480           4 250
Finance income                                                                                  7 763           7 856
Finance cost                                                                                     (81)             (6)
Profits attributable to associates                                                                448             631
Net profit before taxation                                                          (9%)       70 081          76 848
Taxation                                                                                     (19 354)        (20 791)
 SA normal taxation                                                                          (19 060)        (19 606)
 Deferred taxation                                                                              (294)         (1 185)

Profit for the year                                                                (10%)       50 727          56 057
Other comprehensive income:
Items that will be reclassified subsequently to profit and loss
Available-for-sale financial assets                                                             3 958               -
Fair value adjustment                                                                           5 100               -
Deferred tax relating to fair value adjustment                                                (1 142)               -

Total comprehensive income for the year                                             (2%)       54 685          56 057
Profit attributable to:
Non-controlling interest holders                                                    (6%)        7 005           7 413
Equity holders of the parent                                                     (10.1%)       43 722          48 644
                                                                                               50 727          56 057
Total comprehensive income attributable to:
Non-controlling interest holders                                                                7 005           7 413
Total comprehensive income attributable to holders of the parent                               47 680          48 644
                                                                                               54 685          56 057
Earnings per share (cents)                                                       (11.1%)        541.4           609.2
Headline earnings per share (cents)                                              (10.8%)        541.5           606.9
Dividends per share (cents) (interim and final)                                                   300             350
Weighted average number of shares in issue (000's)                                              8 076           7 985
Headline earnings reconciliation
Profit attributable to equity holders                                                          43 722          48 644
Profit on disposal of investment/fixed assets                                                      11           (257)
Tax on disposal of assets                                                                         (3)              72
Headline earnings                                                                              43 730          48 459

CONSOLIDATED PROVISIONAL STATEMENTS OF FINANCIAL POSITION

                                                                                             Reviewed         Audited
                                                                                             31 March        31 March
                                                                                                 2018            2017
                                                                                                R'000           R'000
Assets                  
Non-current assets                                                                            196 836         138 630
 Property, plant and equipment                                                                 72 371          73 822
 Goodwill                                                                                      58 262          39 426
 Trademarks                                                                                    27 000               -
 Investments in associated companies                                                            4 582           4 509
 Other financial instruments                                                                   21 081          10 240
 Deferred taxation                                                                             13 540          10 633

Current assets                                                                                151 713         167 648
 Trade receivables                                                                             48 275          44 841
 Other receivables                                                                              8 848           3 532
 Tax paid in advance                                                                               45             108
 Cash and cash equivalents                                                                     94 545         119 167
                  
Total assets                                                                                  348 549         306 278
Equity and liabilities                  
Total equity                                                                                  261 882         230 865
Non-current liabilities                                                                           544               -
 Deferred tax liability                                                                           544               -
Current liabilities                                                                            86 123          75 413
 Trade payables                                                                                14 684          14 361
 Other payables                                                                                68 742          57 215
 Dividend payable                                                                               1 736           1 642
 Taxation                                                                                         961           2 195
                  
Total equity and liabilities                                                                  348 549         306 278

CONSOLIDATED PROVISIONAL STATEMENTS OF CHANGES IN EQUITY

                                                                                             Reviewed         Audited
                                                                                           Year ended      year ended
                                                                                             31 March        31 March
                                                                                                 2018            2017
                                                                                                R'000           R'000
Issued capital
Balance at beginning of year                                                                    7 965           8 120
New shares issued                                                                                 277               -
Shares repurchased and cancelled                                                                (230)           (155)
Balance at end of year                                                                          8 012           7 965
Share premium
Balance at beginning of year                                                                        -           9 097
New shares issued                                                                              14 736               -
Shares repurchased and cancelled                                                             (10 890)         (9 097)
Balance at end of the year                                                                      3 846               -
Retained profit
Balance at beginning of year                                                                  218 678         199 342
Total profit for the year                                                                      43 722          48 644
Change in shareholding                                                                        (4 130)               -
Dividend                                                                                     (28 097)        (27 389)
Shares repurchased and cancelled                                                                (708)         (1 919)
Balance at end of year                                                                        229 465         218 678
Non-distributable reserve
Balance at beginning of the year                                                                    -               -
Other comprehensive income                                                                      3 958               -
Balance at end of year                                                                          3 958               -
Non-controlling interests                                               
Balance at beginning of year                                                                    4 222           2 056
Preference shares held by non-controlling interest holder                                      10 178               -
Change in shareholding                                                                          4 130               -
Acquisition of NCI due to business combination                                                (3 294)               -
Share of total comprehensive income for the year                                                7 005           7 413
Share of dividend                                                                             (5 640)         (5 247)
Balance at end of year                                                                         16 601           4 222
Total capital and reserves                                                                    261 882         230 865

CONSOLIDATED PROVISIONAL STATEMENTS OF CASH FLOWS

                                                                                             Reviewed         Audited
                                                                                           Year ended      year ended
                                                                                             31 March        31 March
                                                                                                 2018            2017
                                                                                                R'000           R'000
Cash generated by operating activities                                                         63 391          70 534
Net interest received                                                                           7 682           7 850
Taxation paid                                                                                (20 240)        (17 766)
Increase in working capital                                                                  (19 986)         (9 563)
- Increase in trade and other receivables                                                     (2 367)         (2 421)
- (Decrease) in trade and other payables                                                     (17 619)         (7 142)
                              
Cash flows from operating activities                                                           30 847          51 055
Cash flows from investing activities                                                          (8 116)         (2 303)
- increase in investments and loans                                                           (5 637)           (795)
- acquisition of business combination                                                         (1 273)               -
- purchase of property, plant and equipment                                                   (3 712)         (6 428)
- other                                                                                            26             670
- dividends received                                                                            2 480           4 250

Cash flows from financing activities                                                         (47 353)        (43 637)
- dividends paid to equity holders                                                           (28 003)        (27 219)
- share issue cost                                                                            (1 882)               -
- dividends paid to non-controlling interest holder                                           (5 640)         (5 247)
- repurchase of shares                                                                       (11 828)        (11 171)

Net decrease in cash and cash equivalents                                                    (24 622)           5 115
Cash and cash equivalents at beginning of year                                                119 167         114 052
Cash and cash equivalents at end of year                                                       94 545         119 167
     
SEGMENTAL REPORTING  
  
                                                                                             Reviewed        Audited
                                                                                           Year ended     year ended
                                                                                             31 March       31 March
                                                                                                 2018           2017
                                                                                                R'000          R'000
Revenue                                                                   
Radio Broadcasting                                                                            210 831        198 802
Media services                                                                                 51 472         39 283
Corporate                                                                                         231            508
Total                                                                                         262 534        238 593
Profitability                                                                   
Radio Broadcasting                                                                             60 471         60 333
Media services                                                                                (3 412)          2 184
Corporate                                                                                       2 412          1 600
Total operating profit                                                                         59 471         64 117
Profit from associates                                                                            448            631
Investment income                                                                               2 480          4 250
Interest received                                                                               7 763          7 856
Interest paid                                                                                    (81)            (6)
Taxation                                                                                     (19 354)       (20 791)
Total profit for the year                                                                      50 727         56 057
Assets                                                                   
Radio Broadcasting                                                                            108 408         76 571
Media services                                                                                 67 220         46 450
Corporate                                                                                      78 376         64 090
Total                                                                                         254 004        187 111
Liabilities                                                                   
Radio Broadcasting                                                                             53 469         49 863
Media services                                                                                 23 689         19 535
Corporate                                                                                       9 509          6 015
Total                                                                                          86 667         75 413
Capital expenditure                                                                   
Radio Broadcasting                                                                              3 210          4 632
Media services                                                                                    197            250
Corporate                                                                                         305          1 546
Total                                                                                           3 712          6 428
Depreciation                                                                   
Radio Broadcasting                                                                              5 842          5 510
Media services                                                                                    465            615
Corporate                                                                                         303            313
Total                                                                                           6 610          6 438
  
Due to the acquisitions we decided to rename one of our segments to media services as it is no longer just radio
services.

CORPORATE INFORMATION
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")

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)
MJ Prinsloo (Independent Non-executive)
N Sooka (Independent Non-executive)
M Mynhardt (Executive Financial)
AJ Isbister (Executive)

COMPANY SECRETARY
C Roberts


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