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AFRICAN MEDIA ENTERTAINMENT LIMITED - Interim Results for the half year ended 30 September 2018

Release Date: 27/11/2018 12:16
Code(s): AME     PDF:  
Wrap Text
Interim Results for the half year ended 30 September 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")

INTERIM RESULTS
For the half year ended 30 September 2018

CHAIRMAN'S REVIEW

Trading conditions for the period under review remained tough. Revenue increased by 20% to
R140 million (2017: R117 million) mainly as a result of the acquisition of Moneyweb and a shareholding
in Classic1027. Total comprehensive income attributable to equity holders decreased by 19% to
R13,4 million (2017:R16,7 million) mainly due to the losses still being incurred by Classic1027 and
Moneyweb. Earnings per share were 168,4 cents (2017: 208,7 cents) and headline earnings per share
were 168,5 cents (2017:208,7 cents).

The group generated R12,5 million (2017: R19 million) in cash from its operating activities during
the period after paying tax of R9,2 million (2017: R10,7 million). The group spent R10 million (2017:
R1,7 million) on capital expenditure including R5,5 million on a new home for Algoa FM. During the
period, the company paid dividends of R16 million (2017: 20,1 million) to shareholders of the company
and ended with cash resources of R83,8 million (2017: R110,8 million).

OPERATIONS

Low business confidence resulted in demanding trading conditions. The restructuring and turnaround
of Moneyweb and Classic1027 placed further strain on our resources. Innovation and tight cost control
remain imperatives.

Algoa FM delivered a solid performance year to date with both national and direct sales marginally
up on last year. Cost containment remains a priority whilst the station's listenership remained stable.
Algoa FM's flagship event, the Big Walk for Cancer, was a huge success with a record number of
participants taking part in the 5km event. The Big Walk is now the Eastern Cape's largest family
participation event. Algoa FM has recently announced that it will during October 2019 be moving to
state- of-the-art new premises in the Baakens Valley, Port Elizabeth. The building is owned and being
developed by the group's property company.

The sharp decline in Central Media Group's revenue from national advertisers resulted in a decline
in net advertising revenue of 17% when compared to the same period of last year. Cost containment
has been effective, and operating expenditure only increased by 3,5% against the previous period.
New initiatives are being launched to offset the decline, caused principally by digital media owners.
Mahareng performed extremely well, increasing EBITDA 98% year-on-year. A raft of new products,
and closure of loss-making newspapers were the key drivers for this growth. Redstar Agency has seen
a significant cutback in effective rates for promotions from national agencies, which coupled with the
loss of two major projects, resulted in a 51% decrease in EBITDA. Measures are being put in place to
create new event management opportunities. Digital Platforms continued to grow with larger digital
development projects, and this resulted in an EBITDA growth of 27% against last year.

RadioHeads continued its good growth, despite the tough trading conditions.

The decline in United Stations' revenues resulted in a loss for the period. This was due mainly to
the cost associated with managing the evolution of the business model across the digital divide and
revenue from new partners not coming on line as quickly as forecasted. This loss in revenue is unlikely
to be recovered in the remaining six months. While retaining focus on its core radio platforms, United
Stations has made significant progress in building bespoke solutions and creating new opportunities
for its customers, which is evidenced by a number of new products spanning programmatic buying,
online audio, activations, events and content creation.

During the period Classic1027 repositioned the programming, sales and staffing structure of the
business. A key driver for the business is the increase in audience by attracting a younger, more diverse
listener with the aim of increasing revenue. It has taken longer than expected to turn this business
around, but we are confident that it will become a profitable venture.

Moneyweb continued to streamline its business operations with the key focus being on both digital
and radio content provision. Management succeeded in reducing costs across the board at the
company. Digital sales on Moneyweb.co.za has been above expectation, with the sales team now
forming part of United Stations. The radio team continues to provide excellent content across three
stations, namely Classic1027, SAFM and RSG. Moneyweb is currently in negotiations with the SABC
regarding a new advertising sales agreement.

LICENCE RENEWALS

All three radio stations have submitted their licence applications and are awaiting ICASA's decision.

DIVIDENDS

The final dividend (Dividend No 13) of 200 cents per ordinary share (gross) was declared for the year
ended 31 March 2018 (2017: 250 cents gross) and paid on 16 July 2018. An interim dividend (Dividend
No. 14) for the period ended 30 September 2018 of 80 cents per ordinary share (gross) (2017: 100 cents
per ordinary share (gross) is proposed.

DECLARATION OF INTERIM DIVIDEND NO 14

The board declared an interim dividend (Dividend No.14) of 80,00 cents per ordinary share (gross)
for the period ended 30 September 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 local Dividend withholding Tax rate is 20%
- the gross dividend amount is 80.00 cents per ordinary share for shareholders exempt from DWT
- the net dividend amount is 64,00 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, 8 January 2019.

Shares will trade ex-dividend from Wednesday, 9 January 2019.

The record date will be Friday, 11 January 2019 and payment will be made on Monday, 14 January 2019.

Share certificates may not be dematerialised/rematerialised between Wednesday, 9 January 2019 and
Friday, 11 January 2019, both days inclusive.

PROSPECTS

The board expects the trading conditions for the remaining six months to remain challenging while
turning our two acquisitions around is taking longer than expected.

ACG MOLUSI

Independent Non-executive Chairman

27 November 2018
 
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 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 2018.The adoption of IFRS 9 and IFRS 15 have no material impact on these condensed results.

These results are unaudited.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

                                                       Unaudited      Unaudited         Audited
                                                   six months to  six months to      year ended
                                                    30 September   30 September        31 March
                                                 %          2018           2017            2018
                                            change         R'000          R'000           R'000
Revenue                                        20%       140 003        117 048         262 534
Cost of sales                                  32%      (39 646)       (29 720)        (78 986)
Gross profit                                             100 357         87 328         183 548
Operating expenses                                      (84 385)       (65 098)       (124 077)
Operating profit                             (26%)        15 972         22 230          59 471
Investment income                                          1 500          1 480           2 480
Finance income                                             2 601          3 816           7 763
Finance cost                                                 (8)              -            (81)
Equity accounted earnings
from associates                                              170             98             448
Net profit before taxation                   (25%)        20 235         27 624          70 081
Taxation                                                 (5 201)        (7 385)        (19 354)
SA normal taxation                                       (8 599)        (8 834)        (19 060)
Deferred taxation                                          3 398          1 449           (294)
Profit for the period                        (24%)        15 034         20 239          50 727
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 period                                                15 034         20 239          54 685
Profit attributable to:                                                                        
Non-controlling interest holders                           1 543          3 501           7 005
Equity holders of the parent                              13 491         16 738          43 722
                                                          15 034         20 239          50 727
Total comprehensive income
attributable to:                                                                               
Non-controlling interest holders                           1 543          3 501           7 005
Equity holders of the parent                              13 491         16 738          47 680
                                                          15 034         20 239          54 685
Earnings per share (cents)                 (19.3%)         168.4          208.7           541.4
Headline earnings per share (cents)        (19.3%)         168.5          208.7           541.5
Dividends per share (cents)                                   80            100             300
Weighted average number of shares in
issue (000's)                                              8 012          8 022           8 076
Headline earnings reconciliation                                                               
Profit attributable to equity holders                     13 491         16 738          43 722
Profit on disposal of fixed assets                             8              3              11
Tax on disposal of fixed assets                              (2)            (1)             (3)
Headline earnings                                         13 497         16 740          43 730

CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION

                                                           Unaudited       Unaudited    Audited
                                                        30 September    30 September   31 March
                                                                2018            2017       2018
                                                               R'000           R'000      R'000
ASSETS                                                                                         
Non-current assets                                           205 446         154 119    196 836
Property, plant and equipment                                 78 888          72 789     72 371
Goodwill                                                      58 262          51 940     58 262
Other intangible assets                                       27 000           2 000     27 000
Investments in associated companies                            4 401           4 600      4 582
Other financial instruments                                   20 355          10 377     21 081
Deferred taxation                                             16 540          12 413     13 540
Current assets                                               140 790         163 951    151 713
Trade receivables                                             53 844          47 292     48 275
Other receivables                                              3 130           5 297      8 848
Tax paid in advance                                               45             559         45
Cash and cash equivalents                                     83 771         110 803     94 545
Total assets                                                 346 236         318 070    348 549
EQUITY AND LIABILITIES                                                                         
Total equity                                                 260 857         237 242    261 882
Non-current liabilities                                          146               -        544
Deferred tax liability                                           146               -        544
Current liabilities                                           85 233          80 828     86 123
Trade payables                                                25 683          10 785     14 684
Other payables                                                57 451          67 531     68 742
Dividend payable                                               1 736           1 708      1 736
Taxation                                                         363             804        961
Total equity and liabilities                                 346 236         318 070    348 549

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY

                                                      Unaudited        Unaudited        Audited
                                                  six months to    six months to     year ended
                                                   30 September     30 September       31 March
                                                           2018             2017           2018
                                                          R'000            R'000          R'000
Issued capital                                                                                 
Balance at beginning of period                            8 012            7 965          7 965
New shares issued                                             -              277            277
Shares repurchased and cancelled                              -             (85)          (230)
Balance at end of period                                  8 012            8 157          8 012
Share premium                                                                                  
Balance at beginning of period                            3 846                -              -
New shares issued                                             -           14 736         14 736
Shares repurchased and cancelled                              -          (4 304)       (10 890)
Balance at end of the period                              3 846           10 432          3 846
Retained earnings                                                                              
Balance at beginning of period                          229 465          218 678        218 678
Total earnings for the period                            13 491           16 738         43 722
Change in shareholding                                        -                -        (4 130)
Dividend declared                                      (16 059)         (20 106)       (28 097)
Shares repurchased and cancelled                              -            (707)          (708)
Balance at end of period                                226 897          214 603        229 465
Non-Distributable Reserve                                                                      
Balance at beginning of period                            3 958                -              -
Other comprehensive income                                    -                -          3 958
Balance at end of period                                  3 958                -          3 958
Non-controlling interests                                                                      
Balance at beginning of period                           16 601            4 222          4 222
Preference shares held by non-controlling
interest holder                                               -                -         10 178
Change in shareholding                                        -                -          4 130
Acquisition NCI due to business combination                   -                -        (3 294)
Comprehensive income for the period                       1 543            3 501          7 005
Share of dividend                                             -          (3 673)        (5 640)
Balance at end of period                                 18 144            4 050         16 601
Total capital and reserves                              260 857          237 242        261 882

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                                                        Unaudited      Unaudited        Audited
                                                    six months to  six months to     year ended
                                                     30 September   30 September       31 March
                                                             2018           2017           2018
                                                            R'000          R'000          R'000
Cash generated by operating activities                     19 215         25 443         63 391
Net interest received                                       2 593          3 816          7 682
Taxation paid                                             (9 196)       (10 686)       (20 240)
Decrease in working capital                                 (142)            429       (19 986)
 - decrease/(increase) in trade and
   other receivables                                          149        (1 899)        (2 367)
 - (decrease)/increase in trade and
   other payables                                           (291)          2 328       (17 619)
Cash flows from operating activities                       12 470         19 002         30 847
Cash flows from investing activities                      (7 185)          3 358        (8 116)
 - decrease/(increase) in investments and loans             1 076          (182)        (5 637)
 - acquisition of business combination                          -          3 756        (1 273)
 - purchase of property plant and equipment               (9 951)        (1 708)        (3 712)
 - other                                                      190             12             26
 - dividends received                                       1 500          1 480          2 480
Cash flows from financing activities                     (16 059)       (30 724)       (47 353)
 - dividends paid to equity holders                      (16 059)       (20 073)       (28 003)
 - dividends paid to non-controlling
   interest holder                                              -        (3 673)        (5 640)
 - share issue cost                                             -        (1 882)        (1 882)
 - repurchase of shares                                         -        (5 096)       (11 828)
Net decrease in cash and cash equivalents                (10 774)        (8 364)       (24 622)
Cash and cash equivalents at beginning of period           94 545        119 167        119 167
Cash and cash equivalents at end of period                 83 771        110 803         94 545

SEGMENTAL REPORTING

                                                      Unaudited        Unaudited        Audited
                                                  six months to    six months to     year ended
                                                   30 September     30 September       31 March
                                                           2018             2017           2018
                                                          R'000            R'000          R'000
Revenue                                                                                        
Radio broadcasting                                      108 089          104 865        210 831
Media services                                           31 914           11 964         51 472
Corporate                                                     -              219            231
Total                                                   140 003          117 048        262 534
Profitability                                                                                  
Radio broadcasting                                       21 539           28 567         60 471
Media services                                          (5 210)          (3 149)        (3 412)
Corporate                                                 (357)          (3 188)          2 412
Total operating profit                                   15 972           22 230         59 471
Profits from associates                                     170               98            448
Investment income                                         1 500            1 480          2 480
Interest received                                         2 601            3 816          7 763
Interest paid                                               (8)                -           (81)
Taxation                                                (5 201)          (7 385)       (19 354)
Total comprehensive income for the year                  15 034           20 239         50 727
Assets                                                                                         
Radio broadcasting                                      114 927           66 301        108 408
Media services                                           68 521           21 992         67 220
Corporate                                                79 017          118 974         78 376
Total                                                   262 465          207 267        254 004
Liabilities                                                                                    
Radio broadcasting                                       49 453           46 167         53 469
Media services                                           28 356           25 911         23 689
Corporate                                                 7 570            8 750          9 509
Total                                                    85 379           80 828         86 667
Capital expenditure                                                                            
Radio broadcasting                                        3 742            1 495          3 210
Media services                                              612               77            197
Corporate                                                 5 598              137            305
Total                                                     9 952            1 709          3 712
Depreciation                                                                                   
Radio broadcasting                                        2 851            2 832          5 842
Media services                                              251              222            465
Corporate                                                   133              156            303
Total                                                     3 235            3 210          6 610

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 (Proprietary) Limited
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 (Proprietary) Limited
Registration number 2006/033725/07
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)
J Edwards (Independent Non-executive)
MJ Prinsloo (Independent Non-executive)
N Sooka (Independent Non-executive)
K Williams-Thipe (Independent Non-executive)
AJ Isbister (Executive)
M Mynhardt (Executive Financial)

COMPANY SECRETARY
C Roberts



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