Wrap Text
Reviewed Consolidated Condensed Annual Results
For The Year Ended 31 March 2018
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: EMN IZIN: ZAE000209524
("eMedia Holdings" or "the Group")
REVIEWED CONSOLIDATED CONDENSED ANNUAL RESULTS
FOR THE YEAR ENDED 31 MARCH 2018
REVIEWED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31 March 31 March
2018 2017
R000's R000's
ASSETS
Non-current assets 5 726 730 7 622 858
Property, plant and equipment 784 492 941 584
Plant and equipment 188 095 323 028
Owner occupied property 596 397 618 556
Intangible assets 2 537 697 2 596 701
Goodwill 2 153 800 3 778 264
Equity-accounted investees 143 495 203 038
Long-term receivables 14 398 16 457
Deferred tax assets 92 848 86 814
Current assets 1 368 035 1 529 469
Inventories 9 714 20 946
Programming rights 870 674 866 244
Trade and other receivables 384 408 439 962
Current tax assets 16 950 16 113
Cash and cash equivalents 86 289 186 204
Assets of disposal groups 262 792 53 618
Total assets 7 357 557 9 205 945
EQUITY AND LIABILITIES
Total equity 5 558 961 7 181 685
Stated capital 6 762 797 6 762 797
Treasury shares (10 870) (7 221)
Reserves (2 189 959) (600 432)
Equity attributable to owners of the Company 4 561 968 6 155 144
Non-controlling interest 996 993 1 026 541
Non-current liabilities 684 252 877 871
Deferred tax liabilities 533 342 540 747
Borrowings 150 910 332 627
Operating lease accruals - 4 497
Current liabilities 1 009 169 1 144 768
Current tax liabilities 11 512 6 664
Current portion of borrowings 409 452 342 537
Trade and other payables 587 176 793 757
Bank overdraft 1 029 1 810
Liabilities of disposal groups 105 175 1 621
Total liabilities 1 798 596 2 024 260
Total equity and liabilities 7 357 557 9 205 945
Net asset value 4 561 968 6 155 144
Net asset value per share after
treasury shares (cents) 1 027 1 384
REVIEWED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
Reviewed Restated
31 March 31 March
2018 2017*
R000's R000's
Continuing operations
Revenue 2 196 250 2 303 112
Cost of sales (1 213 056) (1 096 441)
Gross profit 983 194 1 206 671
Other income 14 361 17 230
Administrative and other expenses ( 819 396) ( 819 025)
Earnings before interest, taxation,
depreciation and amortisation 178 159 404 876
Depreciation, amortisation and
other impairments (119 729) (136 906)
Impairments of goodwill and investments (1 597 041) (25 739)
Operating (loss)/profit (1 538 611) 242 231
Finance income 8 199 9 333
Finance expenses (41 437) (57 408)
Share of profit/(loss) of equity-accounted
investees, net of taxation 1 289 (2 241)
(Loss)/profit before taxation (1 570 560) 191 915
Taxation (28 866) (79 652)
(Loss)/profit for the year from
continuing operations (1 599 426) 112 263
Discontinued operations
(Loss)/profit for the period from
discontinued operations, net of taxation (13 494) 48 351
(Loss)/profit for the period (1 612 920) 160 614
Other comprehensive loss, net of related taxation
Items that are or may be reclassified to profit or loss
Foreign operations - foreign currency
translation differences (6 735) (2 198)
Reclassification of foreign currency
differences on disposal (723) (65 049)
Other comprehensive loss, net of taxation (7 458) (67 247)
Total comprehensive (loss)/
income for the period (1 620 378) 93 367
(Loss)/profit attributable to:
Owners of the Company (1 578 773) 104 760
Non-controlling interest (34 147) 55 854
(1 612 920) 160 614
Total comprehensive (loss)/income attributable to:
Owners of the Company (1 583 821) 59 242
Non-controlling interest (36 557) 34 125
(1 620 378) 93 367
*Prior year restated for discontinued operations
REVIEWED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Restated
31 March 31 March
2018 2017*
R000's R000's
Cash from operating activitie
Cash flows from operating activities 109 286 444 427
Net finance costs (38 777) (49 004)
Taxes paid (49 543) (126 327)
Net cash inflow from operating activities 20 966 269 096
Cash used in investing activities
Acquisition of property, plant and equipment (56 962) (78 103)
Acquisition of plant and equipment (54 449) (69 922)
Acquisition of owner-occupied properties (2 513) (8 181)
Proceeds from sale of property, plant and equipment 27 670 7 393
Book value of assets disposed 2 298 4 472
Surplus on disposal 25 372 2 921
Movement in financial assets 2 153 2 271
Acquisition of subsidiary, net of cash acquired - (3 749)
Net cash flows of discontinued operations 16 928 36 928
Additions to intangible assets (22 376) (10 073)
Loans advanced to equity accounting investees (9 964) (6 900)
Dividends received from equity accounting investees - 1 375
Net cash used in investing activities (42 551) (50 858)
Cash from (used in) financing activities
Repayment of borrowings (188 424) (170 875)
Settlement of forward exchange contracts (11 743) -
Borrowings raised 150 188 2 877
Share buy back (3 649) (7 221)
Proceeds from disposal of shares
to non-controlling interest 2 570 -
Dividends paid to non controlling interest (345) (5 252)
Net cash from (used in) financing activities (51 403) (180 471)
Net change in cash and cash equivalents (72 988) 37 767
Cash and cash equivalents at
beginning of the year 192 510 159 528
Effect of movements in exchange
rates on cash held (2 866) (4 785)
Cash and cash equivalents at end of the year 116 656 192 510
Cash and cash equivalents comprise the following:
Cash and cash equivalents 117 685 194 320
Bank balances 86 289 186 204
Cash in disposal group assets held for sale 31 396 8 116
Bank overdrafts (1 029) (1 810)
116 656 192 510
*Prior year restated for discontinued operations
REVIEWED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Treasury Other Retained
Capital Shares Reserves Income
R'000 R'000 R'000 R'000
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 - - - (1 578 773)
Other comprehensive income
- FCTR - - (5 049) -
Share buy-back - (3 649) - -
Change in ownership - - - (5 705)
Disposal of share interest - - - -
Dividends paid - - - -
Balance 31 March 2018 6 762 797 (10 870) (12 537) (2 177 422)
Non-
Equity controlling Total
Owners Interest Equity
R'000 R'000 R'000
Balance 31 March 2016 6 103 123 988 219 7 091 342
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 1 026 541 7 181 685
Loss (1 578 773) (34 147) (1 612 920)
Other comprehensive
income - FCTR (5 049) (2 409) (7 458)
Share buy-back (3 649) - (3 649)
Change in ownership (5 705) 5 705 -
Disposal of share interest - 1 648 1 648
Dividends paid - (345) (345)
Balance 31 March 2018 4 561 968 996 993 5 558 961
HEADLINE EARNINGS
Reviewed Restated
Gross Net
R000's R000's
For the year ended 31 March 2018
Loss attributable to equity owners of the parent (1 578 773)
IAS 16 gains on disposal of plant and equipment (2 754) (1 342)
IAS 16 impairment of plant and equipment 159 77
IAS 21 foreign currency translation
reserve reclassified to profit or loss (723) (489)
IAS 28 impairment of associates
and joint ventures 64 359 43 563
IAS 38 impairment of intangible assets 8 307 4 048
IFRS 3 impairment of goodwill 1 532 682 1 522 677
IFRS 10 gain on the loss of
control of a subsidiary (4 750) (2 238)
Headline earnings (12 477)
For the year ended 31 March 2017*
Earnings attributable to equity owners of the parent 104 760
IAS 16 gains on disposal of plant and equipment (2 995) (2 156)
IAS 21 foreign currency translation
reserve reclassified to profit or loss (44 030) (44 030)
IAS 36 impairment of other assets 15 674 15 674
IAS 38 impairment of intangible assets 5 002 3 602
IFRS 10 loss on the loss of control
of a subsidiary 20 189 20 189
Headline earnings 98 039
* Prior year restated for discontinued operations
STATISTICS PER SHARE
Reviewed Restated*
31 March 31 March
2018 2017
Basic earnings (R'000)
(Loss)/earnings (1 578 773) 104 760
Continuing operations (1 568 878) 64 601
Discontinued operations (9 895) 40 159
Headline (loss)/earnings (12 477) 98 039
Continuing operations 139 81 721
Discontinued operations (12 616) 16 318
Basic earnings per share (cents)
(Loss)/earnings (355,20) 23,53
Continuing operations (352,97) 14,51
Discontinued operations (2,23) 9,02
Headline earnings per share (cents)
(Loss)/earnings (2,81) 22,01
Continuing operations 0,03 18,35
Discontinued operations (2,84) 3,66
Weighted average number of shares
in issue - 31 March ('000) 444 481 445 359
Issued shares as at 1 April ('000) 444 597 445 737
Effect of own shares held ('000) (116) (378)
Net number of shares in issue - 31 March ('000) 444 152 444 597
Number of shares in issue - 31 March ('000) 445 737 445 737
Number of treasury shares
in issue - 31 March ('000) (1 585) (1 140)
* Prior year restated for discontinued operations
NOTES TO THE REVIEWED CONSOLIDATED CONDENSED RESULTS
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The results for the year ended 31 March 2018 have been prepared in
accordance with International Financial Reporting Standards ("IFRS"),
the disclosure requirements of IAS 34, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee, the requirements
of the South African Companies Act, 2008, and the Listing Requirements
of the JSE Limited. The accounting policies applied by the group in the
preparation of these reviewed condensed consolidated financial information
are consistent with those applied by the group in its consolidated
financial statements as at, and for, the year ended 31 March 2018.
There was no material impact on the financial results identified based on
management's assessment of the new standards adopted. As required by the
JSE Limited Listings Requirements, the group reports headline earnings
in accordance with Circular 2/2015: Headline Earnings as issued by the
South African Institute of Chartered Accountants. These financial
statements were prepared under the supervision of the financial director,
AS Lee (CA)SA.
DISCONTINUED OPERATIONS
During the current year ended 31 March 2018 a decision was made to
dispose of the Silverline Three Sixty Proprietary Limited Group,
the results of the operations was reclassified to discontinued operations
in the statement of comprehensive income and in assets and liabilities
to disposal groups held for sale in the statement of financial position.
Operations reported as disposal group assets/liabilities held for sale
at 31 March 2017 that includes Lalela Music SA Proprietary Limited
(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
finalized 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 was sold
for R25 million on 20 December 2017.
Reviewed Restated*
31 March 31 March
2018 2017
R'000 R'000
Revenue
Longkloof Limited Group - 3 304
e.Botswana Proprietary Limited and e.tv
Botswana Proprietary Limited 1 557 4 409
TVPC Media Proprietary Limited - 749
Shibula Lodge and Spa Proprietary Limited - 363
Lalela Music Proprietary Limited and Lalela
Music LLC - 13 082
Silverline Three Sixty Proprietary Limited 244 779 279 621
Total revenue 246 336 301 528
(Loss)/profit from discontinued operations
Longkloof Limited Group - 33 652
e.Botswana Proprietary Limited and
e.tv Botswana Proprietary Limited (8 060) (12)
TVPC Media Proprietary Limited - (952)
Shibula Lodge and Spa Proprietary Limited - (3 124)
Lalela Music Proprietary Limited and
Lalela Music LLC 5 394 2 997
Silverline Three Sixty Proprietary Limited (10 828) 15 790
Total (loss)/profit (13 494) 48 351
* Prior year restated for discontinued operations
Disposal group held for sale as disclosed in the statement of financial
position consists of the following:
Property, Intangible Other Total
plant assets assets assets
equipment and
Goodwill
R'000 R'000 R'000 R'000
Assets
31 March 2018, Reviewed
Silverline Three
Sixty Proprietary Limited 85 643 91 782 85 367 262 792
31 March 2017, Audited
Longkloof Limited Group - - 5 590 5 590
e.Botswana Proprietary
Limited and e.tv Botswana
Proprietary Limited 2 801 - 2 813 5 614
Lalela Music Proprietary
Limited and Lalela Music LLC 295 12 001 7 133 19 429
Sabido Properties
Proprietary Limited 22 985 - - 22 985
Total assets 26 081 12 001 15 536 53 618
Financial Other Total
liabilities liabilities liabilities
R'000 R'000 R'000
31 March 2018, Reviewed
Silverline Three Sixty
Proprietary Limited 57 378 47 797 105 175
Audited
31 March
2017
R000's
Liabilities
e.Botswana and e.tv Botswana 174
Lalela Music SA and Lalela Music LLC 1 447
Total liabilities 1 621
CHANGES IN COMPARATIVES
The results of discontinued operations have been separately disclosed on
the face of the statement of comprehensive income.
RELATED PARTY TRANSACTIONS
During the year, in the ordinary course of business, certain companies
within the group entered into transactions with one another. These
intra-group transactions have been eliminated on consolidation.
Transactions with Hosken Consolidated Investments Limited ("HCI")
(ultimate holding company), entities in which HCI has an interest,
Remgro Limited ("Remgro") (shareholder in eMedia Investments
Proprietary Limited), and Venfin Media Investments Proprietary Limited
("Venfin") (a wholly-owned subsidiary of Remgro) are included in the
following table:
Reviewed Restated
31 March 31 March
2018 2017
(R'000) (R'000)
Income / (expense) transaction
values with related parties
HCI - management fees paid (16 759) (15 810)
HCI - internal audit service fee - (136)
Venfin - management fees paid (1 888) (1 781)
Interest income - interest bearing
loans to employees 107 128
Interest income - unwinding of employee
loans at 0% interest 1 041 1 249
Balances owing (to) / by related parties
HCI - working capital loan (8 602) (8 602)
HCI Managerial Services Proprietary Limited (1 700) (1 555)
Venfin - loan relating to the acquisition
of Longkloof Limited (156 605) (156 605)
Cape Town Film Studios - associate loan 111 459 101 858
Dreamworld Management Company - associate loan 12 029 11 666
Employees of the Group - loans relating to
company shares held by employees 11 763 14 593
AUDITOR'S REVIEW
These condensed consolidated financial information for the year ended
31 March 2018 have been reviewed by Grant Thornton Johannesburg Partnership,
who expressed an unmodified review conclusion. The Auditor's Report does
not necessarily report on all of the information contained in this
announcement of the financial results. Shareholders are therefore advised
that in order to obtain a full understanding of the engagement they
should obtain a copy of the Auditor's Report together with the accompanying
financial information from the issuer's registered office and website.
A copy of the Auditor's Review report is available for inspection at the
company's registered office together with the financial information identified
in the Auditor's Report.
CHANGES IN DIRECTORATE AND COMPANY SECRETARIAL
Chief executive officer, A van der Veen, was appointed to the board on
14 November 2017.
Ms Junadi van der Merwe resigned as company secretary and
HCI Managerial Services (Pty) Ltd has been appointed with effect
from
31 March 2018.
DIVIDEND TO SHAREHOLDERS
The directors have resolved not to declare a dividend for the year ended
31 March 2018 (2017: Nil).
Signed for and on behalf of the board on 23 May 2018.
A van der Veen AS Lee
Chief Executive Officer Financial Director
COMMENTARY
The Group ended the period with a loss for the year from continued
operations of R1 599 million compared to a profit in the prior year of
R112 million. Included in the loss for the current year is the impairment
of goodwill of R1 501 million relating to the goodwill recognised upon the
acquisition of eMedia Investments Proprietary Limited. Also included in
the loss is the impairment of goodwill of subsidiary Coleske Artists of
R31 million and an impairment of the investment in an associate company
Da Vinci Media, of R64 million. EBITDA for the Group ended on R178 million
compared to R405 million in the prior year, a 56% decrease year-on-year.
Headline earnings for the Group amounted to a loss of R12.5 million
compared to a profit of R98 million in the prior year.
The only asset of the Group is a 67.69% interest in eMedia Investments,
the company that owns e.tv, eNCA and Openview.
Tough trading conditions continued for the free-to-air broadcasting
industry with advertising revenue remaining flat. Despite this, the Group
showed an increase of 5% in advertising revenue from R1 505 million to
R1 573 million. The results were also impacted by the new Multichoice
agreement with eMedia Investments. In this regard, license fee revenue
was cut substantially in the current year. In addition, the Group
continued to invest in the Openview platform which remains loss making.
e.tv's share of broadcast audience remains under pressure, mostly due
to the popularity of local dramas commissioned by the SABC. The group
has implemented various schedule changes, including the launch of an
additional local drama in April 2018. While the SABC commissions a
substantial amount of local programming, at much higher cost than
equivalent international content, our ability to commission additional
local drama is limited by our production budget and profitability.
Our schedule will remain under pressure while the SABC continues to
operate under a subsidized regime, however we are confident that our
current schedule should arrest any significant decline.
The reduction in the movie slots, and a detailed analysis of the movie
inventory, necessitated a once-off write-down of the movie inventory
of R68.8 million. This is included in programming costs and other cost
of sales which has shown an 11% increase year-on-year. A new revenue and
content acquisition system was implemented to ensure better content
acquisition in future.
Openview (inclusive of the e.tv multi-channel business) earned advertising
revenue of R60 million and incurred content costs of R173 million.
Operating costs, including retail subsidies of R74 million amounted to
R255 million. The net operating loss of Openview amounted to
R366.6 million (R394.5 million in 2017). Openview set-top box activations
continue to grow at an average of 35 000 per month. At the end of the period,
a total of 1 149 217 (778 493 in 2017) boxes have been activated and a
total of R74 million (R99 million in 2017) has been spent on retail subsidies.
The SES-5 satellite contract was terminated in December; settlement
and usage costs of R100 million were paid in this financial year of which
R55.4 million was expensed in this financial year and will not be recurring.
The group will increase its content investment in the Openview platform
during 2019 and recently announced that it will launch a news channel
on Openview during the last quarter of 2018. In addition an Afrikaans
block of programming, including news and current affairs, will also be
launched during this time. While these programmes and channels will be
loss making in the beginning, they are part of the content that is required
to promote set-top box uptake and viewership. Openview currently attracts
about 3,5% of the television audience in South Africa and breakeven is
estimated to be in the region of 6%.
eNCA continues to be the most watched 24-hour news channel in the country
with over 50% of the market share. As mentioned, the amount received from
Multichoice has reduced from this year, however costs are being well
controlled in this entity.
Certain of the Group's other subsidiaries have performed satisfactorily
for the year. These include Sasani Africa and Strika Entertainment, while
other assets have underperformed but shown improvement towards the latter
part of the financial year. Management continues to review non-core and
peripheral business and will exit these businesses when opportunities present
themselves.
The television market is facing numerous technology and viewership challenges which will require the Group to continually assess its strategic alternatives.
Our investment in Openview provides the group with strategic flexibility and
is part of our plan to address the challenges of the impending digital
migration transition. We continue to engage government on their DTT and DTH
plans and we are pleased that the new minister of communications has
adopted an open mind and pragmatic approach to the conversion to digital
broadcasting. We are optimistic that the department, under her leadership,
will manage this transition effectively and choose plans that will enable
the transition to happen as expeditiously as possible while limiting the
cost thereof to the fiscus and industry participants.
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: EMN IZIN: ZAE000209524
REGISTERED OFFICE
5 Summit Road, Dunkeld West, Hyde Park, Johannesburg, 2196
Private Bag X9944, Sandton 2146
DIRECTORS:
J A Copelyn* (Chairman), 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
HCI Managerial Services Proprietary Limited
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
Sandton, Sandown, 2196
TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
PO Box 61051 Marshalltown, 2107
WEBSITE
http://www.emediaholdings.co.za
Date: 23/05/2018 11:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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