| Thu 15 Mar 2001, 0:00 | | Kagiso Media - Interim Results |
|
KAGISO MEDIA LIMITED
(Registration number 1957/000036/06)
("Kagiso Media" or "the company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2000
- Revenue increased by 32%
- Headline earnings per share up 42%
- Capital of R85 million returned to shareholders
CONSOLIDATED INCOME STATEMENT
6 months ended 12 months ended
31 December 31 December 30 June
2000 1999 2000
(Unaudited) (Unaudited) Change (Audited)
R'000 R'000 % R'000
Revenue 112 196 85 240 32 145 253
Operating profit before
interest and taxation 29 325 21 618 36 30 015
Interest received 4 975 1 877 9 004
Profit before tax 34 300 23 495 39 019
Taxation 11 740 8 552 13 234
Net profit after taxation 22 560 14 943 25 785
Share of associated companies'
earnings 8 456 6 373 17 192
Attributable to outside
shareholders (715) (39) 728
Non-operating items - 2 436 (684)
Earnings attributable to
shareholders 30 301 23 713 28 43 021
RECONCILIATION OF HEADLINE EARNINGS
Earnings attributable to
shareholders 30 301 23 713 43 021
Profit on sale of Caxton shares - (2 446) (2 446)
Write off of title - - 3 130
Discontinued publishing operations - 10 -
Headline earnings 30 301 21 277 42 43 705
EARNINGS PER SHARE
Headline earnings per
share (cents) 23,7 16,7 42 34,2
Earnings per share (cents) 23,7 18,6 28 33,7
Number of shares in
issue ('000s) 127 692 127 692 127 692
Weighted average number of
shares in issue ('000s) 127 692 127 692 127 692
CONSOLIDATED BALANCE SHEET
31 December 31 December 30 June
2000 1999 2000
(Unaudited) (Unaudited) (Audited)
R'000 R'000 R'000
EMPLOYMENT OF CAPITAL
Non current assets 78 878 68 429 72 179
- Fixed assets 11 343 13 790 10 428
- Copyright 1 041 - -
- Investments 34 656 19 585 28 152
- Loan receivable 5 696 5 212 5 758
- Deferred tax 26 142 29 842 27 841
Current assets 98 706 127 254 171 354
- Inventory 5 504 4 450 4 001
- Accounts receivable 49 663 41 090 43 958
- Loan receivable 1 229 12 446 10 316
- Deferred expenses 3 334 3 294 6 774
Taxation 400 - 156
Bank balances 38 576 65 974 106 149
Total assets 177 584 195 683 243 533
CAPITAL EMPLOYED
Shareholders' funds 130 640 161 667 185 380
Interest of outside shareholders 1 000 247 286
Total shareholders' funds 131 640 161 914 185 666
Long term liabilities 7 318 6 878 7 195
Current liabilities 38 626 26 891 50 672
- Accounts payable 22 789 19 521 16 561
- Deferred revenue 2 203 2 729 21 485
- Bank overdraft 887 427 206
- Taxation 12 747 4 214 12 420
Total shareholders funds and
liabilities 177 584 195 683 243 533
Net tangible asset value per
share (cents) 102,3 126,6 145,2
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
12 months
6 months ended ended
31 December 31 December 30 June
2000 1999 2000
(Unaudited) (Unaudited) (Audited)
R'000 R'000 R'000
Cash flow from operations 6 760 10 438 44 829
Cash generated by operations 10 838 13 339 39 023
Interest received 5 880 3 765 12 124
Dividend received - - 1 582
Taxation paid (9 958) (6 666) (7 901)
Cash flow from investment activities (1 129) 35 964 41 041
Disposal of Caxton shares - 44 809 44 809
Investment to maintain/expand
operations (1 129) (8 845) (3 768)
Cash effect of financing activities (73 886) (2 260) -
Share premium returned to
shareholders (85 042) - -
Net movement on loans 185 (2 260) -
Loans repaid by/(advanced to)
associates 10 971 - -
Net increase in cash and cash
equivalents (68 255) 44 142 85 870
Cash and cash equivalents at
beginning of year 105 944 21 405 20 074
Cash and cash equivalents at end
of year 37 689 65 547 105 944
STATEMENT OF CHANGES IN EQUITY
6 months to
31 December 2000
(Unaudited)
R'000
Balance at 1 July 2000 185 380
Share premium returned to shareholders (85 042)
Retained income for the period 30 301
Balance at 31 December 2000 130 640
SEGMENTAL ANALYSIS FOR THE SIX MONTHS TO 31 DECEMBER
(Unaudited) Revenue PBIT Headline earnings
R'000 2000 1999 2000 1999 2000 1999
Head-office - - (1 478) (2 046) 1 221 (671)
Broadcasting 40 399 30 590 18 900 13 201 20 689 14 876
Specialist Publishing 34 493 32 932 8 517 6 744 6 265 5 117
Exhibitions 37 304 21 718 7 037 3 719 5 767 1 955
Interactive - - (3 650) - (3 641) -
Total 112 196 85 240 29 325 21 618 30 301 21 277
NOTES
Kagiso Media is delighted to announce another strong performance for the first
six months of its financial year. Revenues at the group's radio stations were
up by an average of 30%, against the comparative six month period in 1999. As a
result, the group reports an increase in revenue of 32% and profit before
interest and tax (PBIT) of 36%, at a very healthy operating margin of 26,1%
(1999 - 25,4%). Headline earnings and headline earnings per share are up 42%.
These results are even more significant considering that they reflect the R3,6m
in start-up losses of the group's Internet venture.
The results should be contextualised against:
- the fact that Auto Africa, a bi-ennial show and Kagiso Exhibitions' second
largest show, took place for the first time since it was acquired in 1999,
- the acquisition of the business of International Trade Projects was concluded
in the period under review, and
- the group had the benefit of substantial cash surpluses, which earned
interest in excess of what was recorded in the comparative period.
If the effect of the above factors was excluded, revenue would have been up 15%
and headline earnings per share 22% over the comparative six month period in
1999.
During November 2000 the company returned R85m, of its total cash holdings of
R106m at 30 June 2000, to shareholders. Cash resources have again swelled to
R37,7m by 31 December 2000. The group, with the exception of Systems
Publishers, remains debt free.
OPERATIONAL REVIEW
Radio Interests
Radio has experienced a very strong sales environment over the past few months,
due to a cyclical upswing in advertising spend and a correction of the
over-adjustment in the prior year, where radio's share of total adspend fell to
almost 10%. RadMark has also intensified its generic campaigns promoting radio
as a medium. Its investment in a series of media planning workshops with media
buyers and clients is undoubtedly starting to bear fruit.
East Coast Radio
East Coast continues to perform excellently, defying predictions that it was
reaching a growth plateau. Revenue for the six months to 31 December 2000
showed an increase of 31% and PBIT was up 45% over the comparative period. The
operating profit margin has moved healthily to 48% for this period.
Jacaranda 94.2 FM
This station continues to perform strongly, harvesting the financial benefits
of its audience growth. Revenue is up 30% and PBIT 45% over the comparative
period. The policy to contain the extent of discounting over the past 18 months
has resulted in a rate card that is credible, which should see a sustained
growth in revenue over the medium term.
Ofm (Radio Oranje)
The move from RadMark, as sales house, to United Stations, injected new energy
into the station and its sales force. Revenue is up 29% on the comparative
period and PBIT 42% on the back of stringent cost control.
RadMark
RadMark has been through significant change, after the loss of the Algoa and
Ofm accounts and the recruitment of Kfm and Kaya. The sales infrastructure has
been largely redesigned to improve customer service. Revenue is up 38% on 1999,
in line with the general improvement in trading conditions for radio operators.
However, PBIT is only up by 17% on the comparative six months in 1999,
reflecting the restructured cost base and the investment in technology and the
company's research capability.
Specialist publishing
Butterworths
The subscription revenue earned in the professional markets is far more stable
than advertising spend and was not affected by the cyclical down-turn and
recent up-turn experienced in the group's other operations.
Against the background of a relatively quiet period in terms of parliamentary
activity, resulting in fewer laws and amendments to laws being passed,
Butterworths has nonetheless managed to increase revenue by 15% and PAT 22%
over 1999.
This was achieved by improving the quality of subscriber bases and consequently
marketing initiatives, and the conversion of more of the printed product to an
electronic format, at substantially improved margins.
Systems Publishers
After suffering a loss of R3,6m in the year to 30 June 2000, Systems posted a
further loss of R1m after tax and interest in the six months under review. It
is particularly disappointing that advertising spend in IT markets has not
recovered after Y2K, as was anticipated. However, early signs in 2001 are that
business levels are picking up in line with heightened interest in e-commerce
and improved trading conditions in the IT distribution channels.
Kagiso Media is still committed to divest from Systems Publishers, but the
group's maneuverability is seriously hampered by the long term loan of R5,8m in
Systems Publishers, for which Kagiso Media (or Publico as it was known at the
time) issued a warranty. Further announcements will be made in due course.
Exhibitions
Kagiso Exhibitions posted very satisfactory results for the six months to 31
December 2000. Revenue is up 72% and PBIT 87% on 1999. The growth reported in
revenue should be viewed in light of the R12m due to Auto Africa, which was
staged for the first time since it was acquired in 1999, coupled with the
acquisition of the business of International Trade Projects, which contributed
a further R2,2m to revenue. As reported previously, the NASREC show grounds
continue to be plagued by problems. The Witwatersrand Agricultural Society, the
owner of the facility, has been provisionally liquidated. The liquidator and a
number of stakeholders from the exhibition industry, including Kagiso
Exhibitions, will manage the NASREC facility over the next few months. It has
therefore been confirmed that the Rand Easter Show will again take place at
NASREC in April/May this year.
Internet venture
The group has, in the period under review, embarked on an initiative to launch
Broadcast Interactive, an Internet publishing and content management business.
The business aims to render a service to media owners (and other institutions)
that are increasingly outsourcing their content and site management functions.
Kagiso Media has invested R5,6m to date, of which R3,6m was to cover start-up
losses. A further R2m has been invested since 31 December 2000. After a review
of the internet environment we have, however, decided to discontinue the
operation. Going forward, the company will pursue an internet strategy directly
through our operations and through partnerships and joint ventures.
COMPARATIVE FIGURES
The comparative figures in the income statement for the six months to 31
December 1999 and in the balance sheet on 31 December 1999, represent the
group's figures, as previously reported, adjusted for ease of comparison to
reflect the proportional consolidation of Butterworth Publishers and the
adjustments to taxation, deferred tax and intangible assets required by AC102.
ACCOUNTING POLICIES
The interim report was prepared in accordance with statement AC127. The
accounting policies applied in the interim report are in all material respects
in accordance with those adopted in the annual financial statements for the
year ended 30 June 2000.
CAPITAL REDUCTION
On 15 November 2000 Kagiso Media returned R85m, or 66,6 cents per share, in
surplus capital as a cash payment to shareholders, in terms of an approval by
shareholders in a general meeting on 8 November 2000.
SEASONALITY
The peak trading period for radio broadcasting, the group's major business
division, is over the first six months of the financial year. This, together
with the interest earned on the R85m, up to the day on which it was returned to
shareholders, and the results of Auto Africa, which was held in October, will
result in a pronounced seasonality in the group's results over the first six
month trading period (60%) relative to the second six month period (40%).
PROSPECTS
Kagiso Media is on track to meet its targets, considered to be quite
aggressive, given the performance of a broad range of media companies. Once
again, the quality of our assets and the strength of the markets in which they
operate, will stand the group in good stead as the general advertising
environment enters a cyclical upswing. In addition, our disciplined approach to
setting advertising rates leaves further upside on the revenue line.
It is widely acknowledged that consolidation in the media industry is
necessary. Kagiso Media remains committed to being an active participant in the
process of consolidation.
On behalf of the Board
E Molobi W R Jardine
Chairman Chief Executive
15 March 2001
Registered Office Transfer Secretaries
2nd Floor Kagiso House Mercantile Registrars
1/3 Mellis Road 11 Diagonal Street
Rivonia, 2128 Johannesburg, 2001
(PO Box 1053, Johannesburg, 2000)
