| Mon 13 Jun 2005, 9:48 | | AMEÆs share price leaps on solid earnings |
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AMEÆs share price leaps on solid earnings
Ron Derby
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Media Correspondent
THE share price of radio station group African Media Enterprises (AME) climbed 13% on Friday after it reported that it increased headline earnings a share to 72,3c for the year to end-April, from 25c, despite static sales revenue.
AME has three operating subsidiaries ù radio stations OFM and Algoa FM, and advertising sales service United Stations.
Explaining the static sales growth, the group said its Free State radio station OFM was running behind its budget for the year, while the companyÆs Cape based station Algoa FM was running ahead of its budget.
On the performance of both FM operations, the group said: ôCosts have been well controlled and both radio stations expect to achieve their budgeted results by the end of the year.ö
The groupÆs revenue declined slightly to R46,5m from R47,6m previously, while profit attributable to shareholders increased to R6,176m from R4,088m.
The group said that cost cuts made last year at United Stations were beginning to produce the required results.
ôThe company is well ahead of its budgeted profit for the year to date,ö it said.
The group generated R9,2m from its operations in the period, most of which it said would be used to pay off the last of its legacy debt.
Liabilities declined from R28,818m by October last year to R19,447m by April 30 this year.
In the groupÆs annual report for last year, AME nonexecutive chairman and Johnnic communications CEO Connie Molusi said: ôThe historical legacy debt that previously caused a drain on the groupÆs resources has been brought well under control and should be eliminated entirely during the coming year.ö
AME, once the owner of the Dome in JohannesburgÆs northern suburbs, has a history of an over-zealous acquisition strategy.
In May last year, with the companyÆs share price languishing at about 5c a share, radio doyen Stan Katz resigned as an executive director, but continued to act as CE of the operating subsidiaries of the company.
In June last year, AME decided to consolidate authorised and issued share capital on a one-for-100 basis, on the grounds that it needed to reduce the number of its shareholders, which it felt was disproportionate to the size and capitalisation of the company.
The net result of this was to cut the shareholder list to a ômore manageableö 1100.
Since June last year, the share has been on an upward trajectory, closing at R10,90 on Friday.
Turning to prospects, the group said that sales revenue was not expected to increase significantly during the remainder of the year, and that the second interim results would be expected to be similar to the first.
