| Thu 19 Feb 2004, 15:58 | | UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECE |
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KAGISO MEDIA - UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003,
INTERIM DIVIDEND DECLARATION AND FURTHER CAUTIONARY ANNOUNCEMENT
KAGISO MEDIA LIMITED
(Registration number 1957/000036/06)
("Kagiso Media" or "the Company")
Share code: KGM
ISIN: ZAE000014007
Unaudited results for the six months ended 31 December 2003, interim dividend
declaration and further cautionary announcement
Condensed Consolidated Balance Sheet
31 December 31 December 30 June
2003 2002 2003
(R"000) (Unaudited) (Unaudited) (Audited)
ASSETS
Non-current assets 67 742 56 031 53 648
- Property, plant and equipment 15 231 15 612 12 940
- Intangible assets 3 400 2 996 6 009
- Investments in associates 35 152 17 330 19 273
- Non-current receivables - 4 395 -
- Deferred tax 13 959 15 698 15 426
Current assets 159 147 175 340 150 154
- Inventory 6 002 5 122 6 578
- Deferred expenditure 10 802 2 137 5 445
- Accounts receivable 65 210 56 283 64 487
- Cash and cash equivalents 77 133 111 798 73 644
Total assets 226 889 231 371 203 802
EQUITY AND LIABILITIES
Shareholders" interest 156 323 181 120 120 668
Minority interest 4 067 4 395 4 671
Total shareholders" funds 160 390 185 515 125 339
Current liabilities 66 499 45 856 78 463
- Deferred revenue 3 908 3 883 28 834
- Accounts payable 48 955 30 893 35 212
- Taxation 12 174 10 966 7 311
- Other current payables - - 5 453
- Provisions for liabilities and 1 224 - 1 483
charges
- Amounts due to shareholders 238 114 170
Total equity and liabilities 226 889 231 371 203 802
Tangible net asset value per share 118 139 89
(cents)
Condensed Consolidated Income Statement
6 months ended 12 months
ended
30 June
Change 2003
(R"000) % (Audited)
31 December 31 December
2003 2002
(Unaudited) (Unaudited)
Revenue 148 155 141 067 5,0 261 879
Profit before 59 313 55 531 6,8 90 275
interest, taxation,
depreciation and
amortisation
Depreciation and (2 426) (2 403) - (4 725)
amortisation
Interest received 3 171 5 212 (39,2) 10 851
Profit before tax 60 058 58 340 2,9 96 401
Taxation (19 391) (17 113) (13,3) (37 265)
Net profit after 40 667 41 227 (1,4) 59 136
taxation
Share of associated 15 002 9 505 57,8 17 304
companies" earnings
Attributable to (272) (1 758) 84,5 (2 572)
outside shareholders
Earnings attributable 55 397 48 974 13,1 73 868
to shareholders
RECONCILIATION OF
HEADLINE EARNINGS
Earnings attributable 55 397 48 974 13,1 73 868
to shareholders
Amortisation of 484 484 - 969
goodwill
Headline earnings 55 881 49 458 13,0 74 837
EARNINGS PER SHARE
Headline earnings per 43,2 38,5 12,4 58,1
share (cents)
Earnings per share 42,9 38,1 12,5 57,4
- basic (cents)
- diluted (cents) 42,1 37,7 11,6 56,9
Number of shares in 129 244 128 556 0,5 129 244
issue (`000s)
Weighted average 129 244 128 556 0,5 128 752
number of shares in
issue (`000s)
SEE-THROUGH EBITDA
Profit before 59 313 55 531 6,8 90 275
interest, taxation,
depreciation and
amortisation
See-through EBITDA in 21 942 16 734 31,1 28 982
Broadcasting
Associates:
- Jacaranda 94.2 16 347 13 107 24,7 22 432
- OFM 1 437 1 209 18,9 2 409
- RadMark 4 158 2 418 72,0 4 141
Total see-through 81 255 72 265 12,4 119 257
EBITDA
Segmental Analysis for the six months ended 31 December
Revenue EBITDA Headline earnings
(R"000) 2003 2002 2003 2002 2003 2002*
Head office - - (1 922) (1 985) (2 735) (1 802)
Broadcasting 72 856 53 281 38 410 28 986 42 221 30 187
Specialist 44 211 35 360 15 870 12 461 10 436 8 569
publishing
Exhibitions 28 522 49 860 5 140 13 900 4 092 10 154
Strategic 2 566 2 566 1 815 2 169 1 867 2 350
marketing
Total 148 155 141 067 59 313 55 531 55 881 49 458
*Allocation between business segments has been restated (refer 5.
below)Condensed Consolidated Statement of Changes in Shareholders" Interest
6 months ended 12 months ended
30 June
2003
(R"000) (Audited)
31 December 31 December
2003 2002
(Unaudited) (Unaudited)
Shareholders" interest
at the beginning
of the period 120 668 132 147 132 147
Issue of new shares - - 1 427
Retained income for 55 397 48 974 73 868
the year
Dividend paid (25 849) - (77 547)
Credit/(charge) in 6 107 - (9 226)
respect of treasury
shares in East Coast
Radio
Shareholders" interest 156 323 181 120 120 668
at the end of the
period
Condensed Consolidated Cash Flow Statement
6 months ended 12 months ended
30 June
2003
(R"000) (Audited)
31 December 31 December
2003 2002
(Unaudited) (Unaudited)
Cash retained from
operations
Cash generated by 57 707 55 519 90 179
operating activities
(Increase)/decrease in (15 514) (16 176) 7 318
working capital
Cash generated by 42 193 39 343 97 497
operations
Interest received 3 171 5 212 10 851
Taxation paid (12 802) (11 378) (35 169)
Dividend received from - 12 098 16 231
associates
Dividend paid to group (25 849) - (77 502)
shareholders
Dividend paid to (877) (490) (1 028)
minorities
Net cash inflow from 5 836 44 785 10 880
operating activities
Cash utilised by (3 002) (1 738) (11 809)
investment activities
Investment to maintain (878) (1 738) (7 270)
operations
Investment to expand (2 124) - (4 539)
operations
Cash effect of financing 655 (4 312) 1 510
activities
Increase/(decrease) in 655 (1 789) 2 606
loan receivable
Decrease in bank - (2 523) (2 523)
overdrafts
Proceeds from issue of new - - 1 427
shares
Net increase in cash and 3 489 38 735 581
cash equivalents
Cash and cash equivalents 73 644 73 063 73 063
at beginning of the period
Cash and cash equivalents 77 133 111 798 73 644
at end of the period
1. Comments on resultsKagiso Media is delighted to announce its results for the
six months to 31 December 2003. Headline earnings per share, at 43,2 cents,
increased by 12,4% over that recorded in the comparative period. This result is
especially pleasing considering that it represents a material improvement on the
record results of the comparative period, which included the results of Auto
Africa, Africa Aerospace and Defence and the services rendered to the World
Summit on Sustainable Development (together referred to as "the infrequent
events"), undertaken by Kagiso Exhibitions.
If the results of the infrequent events are excluded from the comparative result
in order to gauge the organic performance of the group, revenue for the six
months to 31 December 2003 would have shown an increase of 24,5%, EBITDA would
have been up by 21,9% and headline earnings by 25,1%. This result reflects the
buoyant trading environment currently experienced by retail operations and
financial institutions, two of the major segments of industry that support the
group"s radio operations through advertising.
RevenueRevenue for the period under review increased by 5% in absolute terms
over that of the comparative period, but by 24,5% on a directly comparable basis
if the revenue of R22,1m attributable to the infrequent events is eliminated.
This performance is as a result of revenue growth of 36,7% at East Coast Radio,
25% at Butterworths and 2,8% at Kagiso Exhibitions.
EBITDAEarnings before interest, tax, depreciation and amortisation ("EBITDA")
increased by 6,8% over the comparative period, but by 21,9% excluding the R6,8m
EBITDA from the infrequent events. The overall EBITDA margin improved slightly
from 39,4% in 2002 to 40% for the six months to 31 December 2003. The EBITDA
margin at East Coast Radio decreased slightly from 54%, in the comparative
period, to 53% and at Butterworths the margin improved slightly from 35% to 36%.
The EBITDA margin at Kagiso Exhibitions deteriorated from 25,3% to 18% in the
period under review on an organically comparable basis, mainly as a result of
pressure on the margin of SAITEX, the company"s third largest exhibition, which
suffered a cancellation from a substantial exhibitor shortly before the
exhibition commenced.
InterestThe group earned only R3,2m in interest to 31 December 2003, against the
R5,2m in the comparative period. The average surplus cash balance was higher in
the comparative period as no final dividend was paid in respect of the year to
30 June 2002. Interest rates have also come down substantially since then.
TaxationThe effective tax rate increased from 29,3% in the comparative period to
33,2%, due to a charge of R1,9m for Secondary Tax on Companies ("STC") on the
final dividend in respect of the year to 30 June 2003. No final dividend was
declared in respect of the year to 30 June 2002. For the full year the effective
tax rate should approach the marginal rate of 30%, plus STC on a relatively high
distribution of the Company"s reserves as a dividend to shareholders.
AssociatesIncome from associates (Jacaranda 94.2, OFM and RadMark) increased by
57,8% on the back of the strong revenue performances and operational leverage at
these companies. Jacaranda increased revenue by 18%, OFM by 15% and RadMark by
24%. EBITDA margins at Jacaranda increased from 46% to 50%, at OFM from 27% to
29% and at RadMark from 32% to 45% against the comparative six months. In the
six months under review RadMark recognised additional commission earned from its
client stations for exceeding these clients" budget expectations for the 12
months to 31 December 2003.
Minorities" share of profitsThe substantial reduction in the minority
shareholders" share of attributable profit is as a result of the acquisition of
the remaining shares in East Coast Radio held by the East Coast Radio Share
Trust. East Coast Radio is now wholly-owned by Kagiso Media (2002 - 91%). The
East Coast Radio share incentive scheme has reached maturity and has been
replaced with a profit sharing scheme
2. FINANCIAL POSITIONThe balance sheet remains debt free and the group has
access to cash in excess of R77m at 31 December 2003.
The net working capital position is in line with expectations and with past
experience. Trade receivables are traditionally high at 31 December, due to the
seasonality inherent in the sales cycle of the radio operations and Butterworth
Publishers.
3. REGULATORY MATTERSKagiso Media welcomes the recently published and long-
awaited position paper by the Independent Communications Authority of South
Africa ("ICASA") on the review of ownership and control of commercial radio
broadcasting licences. This paper was very well received by the industry,
commentators and investors alike. Once promulgated into legislation, we believe
it will reshape the face of the local private sound broadcasting industry and
enable media companies like Kagiso Media to attain critical mass.
ICASA heard the licence renewal application of Jacaranda 94.2 on 6 February 2004
and will publish its findings in due course. Kagiso Media is confident that the
station"s broadcasting license will be renewed for a further six years.
4. ACCOUNTING POLICIESThe summarised unaudited results for the six months ended
31 December 2003 have been prepared using accounting policies which are in
accordance with South African Statements of Generally Accepted Accounting
Practice and Schedule 4 of the Companies Act and are consistent with those
adopted in the annual financial statements for the year ended 30 June 2003 and
the summarised unaudited results for the six months ended 31 December 2002.
5. COMPARATIVE FIGURESThe unaudited figures in the headline earnings column of
the segmental analysis for the six months ended 31 December 2002 have been
restated to reflect STC as a cost associated with the head-office, in line with
the presentation in the year to 30 June 2003 and the six months under review.
This restatement has no effect on the overall earnings as previously reported.
6. SEASONALITYThe first six months of the financial year normally represents the
peak trading period for radio broadcasting, the group"s major business division.
Consequently the group expects a marked seasonality in the relative earnings of
the two six month trading periods in the 2004 financial year, in line with the
trend experienced over the past two to three years.
7. INTERIM DIVIDEND DECLARATIONIt is the Company"s stated policy to distribute
at least 50% of available profits to shareholders in the absence of investment
opportunities. Although the imminent relaxation of the ownership restrictions of
private sound broadcasting licences may present attractive investment
opportunities in the medium- term, the Board felt that the Company could
capitalise on these opportunities even after paying an interim dividend to
shareholders. The Group enjoys strong cash flows, does not expect major capital
expenditure in the coming six months and has an ungeared balance sheet.
The Board therefore resolved, and notice is hereby given, that a dividend of 38
cents per share has been declared payable to shareholders of ordinary shares
recorded in the register of the company on Friday, 12 March 2004, the record
date. The last date to trade cum-dividend will therefore be Friday, 5 March 2004
and Kagiso Media shares will trade ex-dividend from Monday, 8 March 2004.
Payment of the dividend will be made on Monday, 15 March 2004. Share
certificates may not be dematerialised or rematerialised between Monday, 8 March
2004 and Friday, 12 March 2004, both days inclusive.
In terms of the Companies Act, the directors confirm that, after the payment of
the above dividend, the Company will be able to meet its commitments and settle
its liabilities as these fall due in the ordinary course of business, and that
its consolidated assets, fairly valued, exceed its consolidated liabilities.
8. PROSPECTSIt appears as if reasonable stability in the interest rate and
foreign exchange environments will prevail for the remainder of the financial
year and that business and consumer confidence should, as a result, improve even
further. These positive factors, along with innovative programming and selling,
will enable the group"s broadcasting assets to continue their strong
performance. In addition, Butterworths is entering new markets and developing
new product offerings and Kagiso Exhibitions will stage the Rand Show in the
coming six months, all of which auger well for a strong finish to the financial
year.
9. CAUTIONARY ANNOUNCEMENT9.1 Further to the cautionary announcement published
on 18 November 2003, shareholders are advised that the Company is still engaged
in negotiations to secure certain of the assets of New Africa Investments
Limited. The outcome of these negotiations may have a material effect on the
share price of Kagiso Media. Accordingly, shareholders are advised to exercise
caution in their dealings in Kagiso Media shares until a further announcement is
made, which is expected to occur imminently.
9.2 Shareholders are advised that the cautionary announcement relating to the
release of the trading update on 2 February 2004 has now been lifted.
10.CHANGES TO THE DIRECTORATEShareholders are advised that Mr Omar Essack joined
the board on 1 January 2004 as executive director responsible for the group"s
broadcasting assets. He was the CEO of East Coast Radio over the past six years
and brings a wealth of hands-on broadcasting experience to the head-office team.
Furthermore Mr Billy Last has resigned from the board of Kagiso Media with
immediate effect. Mr Last has had to rationalise his involvement with Kagiso
Media in order to concentrate on his role as CEO of the rapidly expanding
Butterworths.
On behalf of the BoardE Molobi
W R JardineChairman Chief
Executive
19 February 2004 Registered Office: 1st Floor Kagiso House, 16 Fricker Road,
Illovo, 2196. Transfer Secretaries: Computershare Limited, Investor Services
Division, 70 Marshall Street, Johannesburg, 2001, (PO Box 61051, Marshalltown,
2107)
Directorate: E Molobi (Chairman), MJN Njeke, WR Jardine* (Chief Executive), PHP
Jacobs*, OC Essack*, HI Appelbaum, RL Hiemstra#, WJ Last , YI Mahomed, S
Pragjee, A Singh. *Executive #Independent
Date: 19/02/2004 03:54:14 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
