| Thu 27 Sep 2001, 0:00 | | Kagiso Media Limited - Audited Results For The Yea |
|
KAGISO MEDIA LIMITED
(Registration number 1957/000036/06)
("Kagiso Media" or "the Company")
Share code: KGM
ISIN code: ZAE 000014007
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2001
* Turnover up 31%
* Profit from radio operations up 30%
* Cash of R85m returned to shareholders
* Transaction with NAIL progressing well
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED
30 June 2001 30 June 2000
(Audited) (Restated)
(Unaudited)
Change
%
(R'000) (R'000)
Revenue 215 070 164 589 30,7
Profit before interest, taxation, 40 479 38 958
depreciation and amortisation
Depreciation and amortisation (5 647) (3 474)
Interest received 7 694 8 626
Profit before tax 42 526 44 110
Taxation (18 384) (14 235)
Net profit after taxation 24 142 29 875
Share of associated companies' 13 570 10 091
earnings
Attributable to outside (1 692) 727
shareholders
Earnings attributable to 36 020 40 693
shareholders
Reconciliation of headline earnings
Earnings attributable to 36 020 40 693
shareholders
Profit on sale of Caxton shares - (2 446)
Impairment of title - 3 130
Amortisation of goodwill 1 456 936
Loss on closure of discontinuing 4 762 -
operation
Costs incurred in negotiating the
disposal of the group's assets 1 963 -
Other 352 -
Headline earnings 44 553 42 313 5,3
Earnings per share
Headline earnings per share (cents) 34,9 33,1 5,3
Earnings per share (cents) 28,2 31,9 (11,5)
Fully diluted earnings per share 28,2 31,8 (11,3)
(cents)
Number of shares in issue (`000s) 127 692 127 692
Weighted average number of 127 692 127 692
shares in issue (`000s)
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED
30 June 2001 30 June 2000
(Audited) (Audited)
(R'000) (R'000)
Cash retained from operations
Cash generated by operating activities 42 049 32 460
Decrease in working capital 10 139 7 291
Cash generated by operations 52 189 39 750
Interest received 8 929 12 124
Taxation paid (16 158) (7 901)
Dividend received 949 1 582
Net cash inflow from operating activities 45 909 45 555
Cash generated by investment activities (341) 40 313
Investment to maintain operations 12 153 58 518
Investment to expand operations (12 494) (18 205)
Cash effect of financing activities (83 357) -
Increase in borrowings 1 129 -
Share premium reduction (85 043) -
Other 557
Net increase/(decrease) in cash and cash (37 788) 85 868
equivalents
Cash and cash equivalents at beginning of 105 942 20 074
year
Cash and cash equivalents at end of year 68 154 105 942
CONSOLIDATED BALANCE SHEET AS AT
30 June 2001 30 June 2000
(Audited) (Audited)
(R'000) (R'000)
Assets
Non-current assets 65 603 69 869
- Property and equipment 7 630 9 006
- Intangible assets 7 672 1 422
- Investments in associates 21 922 25 150
- Loan receivable 4 629 5 758
- Deferred tax 23 750 28 533
Current assets 130 160 171 354
- Inventory 4 702 4 001
- Accounts receivable 50 976 43 958
- Loan receivable - 10 316
- Deferred expenses 5 548 6 774
- Taxation 75 156
- Cash and cash equivalents 68 859 106 149
195 763 241 223
Equity and liabilities
Shareholders' equity 127 754 179 643
Interest of outside shareholders 3 834 1 727
Total shareholders' funds 131 588 181 370
Long term liabilities - 5 754
Current liabilities 64 175 54 099
- Accounts payable 25 486 15 867
- Provision for closure cost 1 612 -
- Taxation 9 783 12 420
- Current portion of borrowings 5 895 -
- Deferred revenue 19 381 25 606
- Amounts due to vendors 1 313 -
- Bank overdraft 705 206
195 763 241 223
Net asset value per share (cents) 100 141
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED
30 June 2001 30 June 2000
(Audited) (Audited)
(R'000) (R'000)
Equity at the beginning of the year 179 643 248 868
- As previously reported 85 380 252 278
- Change in accounting policy (5 738) (3 410)
Changes in share capital (87 910) (109 919)
- Vendor shares (2 867) 1 309
- Intangible assets written off - (111 228)
- Share premium reduction (85 042) -
Changes in retained earnings 36 021 40 693
- Net profit for the year - as previously 43 021
reported
- Change in accounting policy (2 327)
Equity at the end of the year 127 754 179 643
SEGMENTAL ANALYSIS FOR THE YEAR ENDED
Turnover Operating Headline
Profit earnings
(R'000) (%) (R'000) (%) (R'000) (%)
Head office
(including interest - - (6 262) (18) 483 1
received)
Broadcasting 72 672 34 30 608 88 33 940 76
Specialist Publishing 70 633 33 15 033 43 9 947 23
Exhibitions 71 765 33 5 851 17 5 806 13
Interactive - - (10 397) (30) (5 623) (13)
Total 215 070 100 34 833 100 44 553 100
1. COMMENTS ON RESULTS
During the year under review Kagiso Media returned R85m, or 66,6 cents per
share, in surplus capital as a cash payment to shareholders. The group also
incurred a trading loss of R5,6m and cost on closure of R4,8m on its
internet business, which was closed down with effect from 15 March 2001, as
announced in the interim profit announcement. Had the interest that would
have been earned on the R85m returned to shareholders been included, and the
trading loss and closure costs of the internet business been excluded from
the results for the year to 30 June 2001, headline earnings and headline
earnings per share would have been up 21,5% on the comparative period.
1.1 Ongoing operations
The ongoing operations of the group therefore performed exceptionally well,
as is borne out by the 31% increase in turnover and 26% increase in
operating profit (if the results of discontinuing operation is excluded).
The radio operations contributed 30% more profit to the group than in the
corresponding period.
East Coast Radio had a record year. Turnover at the station increased by 31%
to R76,7m and PBIT by 29% to R32,8m, reflecting an operating margin of
45,1%, the highest ever achieved by the station. This result is even more
remarkable considering that the station gave away R1m of its own cash in an
on-air competition during the year. Jacaranda and OFM increased turnover by
21% and 24% respectively, and PBIT by 33% and 37% respectively. Radmark
improved turnover by 36% and PBIT by 28%.
Systems Publishers recorded a loss of R2,5m in the year under review.
Turnover was down 14% on 2000, but the loss before interest and tax was only
R1,7m, against a loss of R2,8m in the prior year. Butterworth Publishers
increased turnover by 12% and PBIT by 15% over the comparative period.
Turnover increased by 64% and PBIT by 15% at Kagiso Exhibitions. This is
after the company made provision for a R2m after tax loss incurred on a
convention, which took place after year-end.
Earnings remain of an exceptionally high quality. The company generated
R45,6m in cash flow (after capital expenditure), of which R1m was by way of
a dividend and R14,6m in repayments of shareholder loans to associates
during the year. The associates of Kagiso Media, being Jacaranda, OFM and
RadMark, therefore again contributed strongly to the cash flow of the group,
despite the fact that Kagiso Media only has equity stakes in these
companies.
The balance sheet is still very healthy. The group's only debt is a term
loan in Systems Publishers, secured by a put on Kagiso Media.
1.2 Discontinuing operation
The group, in the period under review, launched Broadcast Interactive Group
(Pty) Limited, an internet publishing and content management business. The
business incurred a trading loss of R5,6m in the year under review. After a
review of the business' potential in light of a severely deteriorated
internet environment, it was decided on 13 March 2001 to discontinue the
operation. The total cost on closure of the business amounted to a further
R4,8m. In the future, the company will pursue an internet strategy directly
through its operations and through partnerships and joint ventures.
2. ACCOUNTING POLICIES
The summarised audited results for the year to 30 June 2001 have been prepared
using accounting policies which are in accordance with the historical cost
basis, in conformity with South African Statements of GAAP and consistent with
those adopted in the prior year, with the exception that the group changed its
accounting policy with respect to the treatment of intangible assets pursuant
to AC 129 "Intangible assets" and AC 131 "Business Combinations", which became
effective 1 January 2000. Intangible assets arising on or after 1 June 2000
and goodwill in associates are stated at cost and amortised over its estimated
useful life. The change in accounting policy was applied retrospectively to
the latter and comparatives appropriately restated. Intangible assets arising
before 30 June 2000 and affected by the capital reduction were not restated.
Comparatives were further restated for the recognition of annual subscription
revenue and related costs over the period of the subscription and the
recognition of payments made in terms of a share incentive scheme, in a joint
venture, as an expense.
3.COMPARATIVE FIGURES
The investment in Butterworth Publishers has been proportionally
consolidated since joint control was acquired in Butterworths on 1 January
2000, before which the investment was equity accounted. The comparative
unaudited figures in the income statement for the year ended 30 June 2000,
represent the group's figures, as previously reported, adjusted for ease of
comparison to reflect the proportional consolidation of Butterworths for the
full year to 30 June. The comparative figures have also been restated to
reflect the change in accounting policy referred to in note 2 alongside.
4.FURTHER CAPITAL REDUCTION
The shareholders of Kagiso Media, in general meeting on 13 September 2001,
approved a further reduction of the company's share capital by way of a cash
payment of share premium to shareholders in the amount of R28,1m (equivalent
to 22 cents per share). This payment will be made on 1 October 2001 and is
not dependent on the implementation of the transaction with New Africa
Investment Limited ("NAIL").
5.NAIL TRANSACTION
Shareholders furthermore, in the general meeting held on 13 September 2001,
unanimously voted in favour of the sale of the company's assets to NAIL, as
was announced in the press and in a circular to shareholders, dated 21
August 2001. The transaction remains conditional to the approval by the
Competitions Commission of South Africa and the Independent Communications
Authority of South Africa and the approval by NAIL of the effective date
accounts of Kagiso Media for the year to 30 June 2001 ("the material
conditions precedent").
6.PROSPECTS
The group is fortunate to have had a very strong performance from its core
radio broadcasting and sales businesses in the year under review. This
enabled it to absorb and fund the once-off losses and closing costs from its
failed internet business. Looking ahead, the current economic conditions are
expected to have a negative effect on adspend. However, the radio assets
within the group are outstanding and are expected to again perform above the
industry average.
As stated previously, Kagiso Media is an active participant in the
consolidation of the media industry. In this regard the company's assets
have been sold to NAIL, as referred to in note 5 above. The transaction is
conditional to the fulfilment of the material conditions precedent.
7.ANNUAL FINANCIAL STATEMENTS
The annual financial statements for the year to 30 June 2001, including a
notice to the annual general meeting, will be posted to shareholders by no
later than 5 November 2001.
On behalf of the Board
E Molobi W R Jardine
Chairman Chief Executive
27 September 2001
Registered Office: 2nd Floor, Kagiso House, 1/3 Mellis Road, Rivonia 2128
Transfer Secretaries: Mercantile Registrars, 11 Diagonal Street,
Johannesburg 2001, (PO Box 1053, Johannesburg 2000)
