To view the PDF file, sign up for a MySharenet subscription.

AFRICAN MEDIA ENTERTAINMENT LIMITED - Reviewed results for the year ended 31 March 2019

Release Date: 29/05/2019 15:54
Code(s): AME     PDF:  
Wrap Text
Reviewed results for the year ended 31 March 2019

AFRICAN MEDIA ENTERTAINMENT LIMITED
Incorporated in the Republic of South Africa
Registration number 1926/008797/06
JSE code: AME ISIN: ZAE000055802
("AME", "the company" or "the group")


REVIEW
For the year ended 31 March 2019


CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                                                       Reviewed        Audited
                                                                                                                     year ended     year ended
                                                                                                                       31 March       31 March
                                                                                                               %           2019           2018
                                                                                                          change          R'000          R'000
Revenue                                                                                                       4%        273 610        262 534
Cost of sales                                                                                              (27%)       (57 400)       (78 986)
Gross profit                                                                                                            216 210        183 548
Operating expenses                                                                                                    (155 237)      (124 077)
Operating profit                                                                                                         60 973         59 471
Investment income                                                                                                         3 519          2 480
Finance income                                                                                                            5 409          7 763
Finance cost                                                                                                               (70)           (81)
Equity accounted earnings from associates                                                                                   833            448
Net profit before capital items                                                                                          70 664         70 081
Impairment of goodwill and trademark                                                                                   (34 790)              -
Net profit before taxation                                                                                 (49%)         35 874         70 081
Taxation                                                                                                               (24 326)       (19 354)
   SA normal taxation                                                                                                  (20 523)       (19 060)
   Deferred taxation                                                                                                    (3 803)          (294)
Profit for the year                                                                                        (77%)         11 548         50 727
Other comprehensive income:                                                                                                                  
Items that will be reclassified subsequently to profit
and loss                                                                                                                                      
Financial asset measured at fair value through other
comprehensive income                                                                                                      4 656          3 958
Fair value adjustment                                                                                                     6 000          5 100
Deferred tax relating to fair value adjustment                                                                          (1 344)        (1 142)
Total comprehensive income for the year                                                                                  16 204         54 685
Profit attributable to:                                                                                                                     
Non-controlling interest holders                                                                                       (10 907)          7 005
Equity holders of the parent                                                                                             22 455         43 722
Total profit for the year                                                                                                11 548         50 727
Total comprehensive income attributable to:                                                                                                 
Non-controlling interest holders                                                                                       (10 907)          7 005
Equity holders of the parent                                                                                             27 111         47 680
Total comprehensive income for the year                                                                                  16 204         54 685
Earnings per share (cents)                                                                               (48.1%)          280.8          541.4
Headline earnings per share (cents)                                                                         0.5%          544.1          541.5
Dividends per share (cents)                                                                                                 230            300
Weighted average number of shares in issue (000's)                                                                        7 996          8 076
Headline earnings reconciliation                                                                                                             
Profit attributable to equity holders                                                                                    22 455         43 722
                                                                                                                         21 052              8
Impairment of Classic trademark                                                                                          11 465              -
Impairment of Classic goodwill                                                                                            9 790              -
Profit on disposal of fixed assets                                                                                        (282)             11
Tax on disposal of assets                                                                                                    79            (3)
Headline earnings                                                                                                        43 507         43 730


CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
                                                                                                                       Reviewed        Audited
                                                                                                                       31 March       31 March
                                                                                                                           2019           2018
                                                                                                                          R'000          R'000
Assets                                                         
Non-current assets                                                                                                      179 126        196 836
  Property, plant and equipment                                                                                          87 762         72 371
  Goodwill                                                                                                               48 471         58 262
  Other intangible assets                                                                                                 2 000         27 000
  Investments in associated companies                                                                                     4 804          4 582
  Other financial instruments                                                                                            26 327         21 081
  Deferred taxation                                                                                                       9 762         13 540
Current assets                                                                                                          137 087        151 713
  Trade receivables                                                                                                      50 361         48 275
  Other receivables                                                                                                       5 190          8 848
  Tax paid in advance                                                                                                     1 155             45
  Cash and cash equivalents                                                                                              80 381         94 545
Total assets                                                                                                            316 213        348 549
Equity and liabilities                                                                                                                        
Total equity                                                                                                            246 201        261 882
Non-current liabilities                                                                                                   1 915            544
  Deferred tax liability                                                                                                  1 915            544
Current liabilities                                                                                                      68 097         86 123
  Trade payables                                                                                                         18 068         14 684
  Other payables                                                                                                         48 024         68 742
  Dividend payable                                                                                                        1 891          1 736
  Taxation                                                                                                                  114            961
Total equity and liabilities                                                                                            316 213        348 549


CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                                                                                                       Reviewed        Audited
                                                                                                                     year ended     year ended
                                                                                                                       31 March       31 March
                                                                                                                           2019           2018
                                                                                                                          R'000          R'000
Cash generated by operating activities                                                                                   70 826         63 391
Net interest received                                                                                                     5 339          7 682
Taxation paid                                                                                                          (22 480)       (20 240)
Increase in working capital                                                                                            (13 769)       (19 986)
   - Increase/(decrease) in trade and other receivables                                                                   1 573        (2 367)
   - (Decrease)/increase in trade and other payables                                                                   (15 342)       (17 619)
Cash flows from operating activities                                                                                     39 916         30 847
Cash flows from investing activities                                                                                   (22 350)        (8 116)
  - increase in investments and loans                                                                                   (4 630)        (5 637)
  - acquisition of business combination                                                                                       -        (1 273)
  - purchase of property, plant and equipment                                                                          (21 768)        (3 712)
  - other                                                                                                                   529             26
  - dividends received                                                                                                    3 519          2 480
Cash flows from financing activities                                                                                   (31 730)       (47 353)
  - dividends paid to equity holders                                                                                   (22 780)       (28 003)
  - dividends paid to non-controlling interest holder                                                                   (5 903)        (5 640)
  - share issue cost                                                                                                          -        (1 882)
  - repurchase of shares                                                                                                (3 047)       (11 828)
Net decrease in cash and cash equivalents                                                                              (14 164)       (24 622)
Cash and cash equivalents at beginning of year                                                                           94 545        119 167
Cash and cash equivalents at end of year                                                                                 80 381         94 545


CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY
                                                                                                                       Reviewed        Audited
                                                                                                                     year ended     year ended
                                                                                                                       31 March       31 March
                                                                                                                           2019           2018
                                                                                                                          R'000          R'000
Issued capital                                                                    
Balance at beginning of year                                                                                              8 012          7 965
New shares issued                                                                                                             -            277
Shares repurchased and cancelled                                                                                           (79)          (230)
Balance at end of year                                                                                                    7 933          8 012
Share premium                                                                                                                                 
Balance at beginning of year                                                                                              3 846              -
New shares issued                                                                                                             -         14 736
Shares repurchased and cancelled                                                                                              -       (10 890)
Balance at end of year                                                                                                    3 846          3 846
Retained profit                                                                                                                               
Balance at beginning of year                                                                                            229 465        218 678
Total profit for the year                                                                                                22 455         43 722
Change in shareholding                                                                                                        -        (4 130)
Dividend declared                                                                                                      (22 483)       (28 097)
Shares repurchased and cancelled                                                                                        (2 968)          (708)
Balance at end of year                                                                                                  226 469        229 465
Non-distributable reserve                                                                                                                     
Balance at beginning of year                                                                                              3 958              -
Other comprehensive income                                                                                                4 656          3 958
Balance at end of year                                                                                                    8 614          3 958
Non-controlling interests                                                                                                                     
Balance at beginning of year                                                                                             16 601          4 222
Preference shares held by non-controlling interest holder                                                                     -         10 178
Change in shareholding                                                                                                        -          4 130
Acquisition of NCI due to business combination                                                                                -        (3 294)
Share of total comprehensive income for the year                                                                       (10 907)          7 005
Share of dividend                                                                                                       (6 355)        (5 640)
Balance at end of year                                                                                                    (661)         16 601
Total capital and reserves                                                                                              246 201        261 882


SEGMENTAL REPORTING
                                                                                                                       Reviewed        Audited
                                                                                                                     year ended     year ended
                                                                                                                       31 March       31 March
                                                                                                                           2019           2018
                                                                                                                          R'000          R'000
Revenue                                                                   
Radio Broadcasting                                                                                                      213 702        210 831
Media services                                                                                                           59 908         51 472
Corporate                                                                                                                     -            231
Total                                                                                                                   273 610        262 534
Profitability                                                                                                                                   
Radio Broadcasting                                                                                                       68 537         60 471
Media services                                                                                                          (6 914)        (3 412)
Corporate                                                                                                                 (650)          2 412
Total operating profit                                                                                                   60 973         59 471
Profit from associates                                                                                                      833            448
Investment income                                                                                                         3 519          2 480
Interest received                                                                                                         5 409          7 763
Interest paid                                                                                                              (70)           (81)
Impairment of goodwill and trademark                                                                                   (34 790)              -
Taxation                                                                                                               (24 326)       (19 354)
Total profit for the year                                                                                                11 548         50 727
Assets (excluding cash)                                                                                                                         
Radio Broadcasting                                                                                                       48 705        108 408
Media services                                                                                                           65 255         67 220
Corporate                                                                                                               121 872         78 376
Total                                                                                                                   235 832        254 004
Liabilities                                                                                                                                     
Radio Broadcasting                                                                                                       26 812         53 469
Media services                                                                                                           32 960         23 689
Corporate                                                                                                                10 240          9 509
Total                                                                                                                    70 012         86 667
Capital expenditure                                                                                                                             
Radio Broadcasting                                                                                                        5 807          3 210
Media services                                                                                                              924            197
Corporate                                                                                                                15 037            305
Total                                                                                                                    21 768          3 712
Depreciation                                                                                                                                    
Radio Broadcasting                                                                                                        5 332          5 842
Media services                                                                                                              524            465
Corporate                                                                                                                   274            303
Total                                                                                                                     6 130          6 610



CHAIRMAN'S REVIEW
Group revenue was up by 4% to R273.6 million (2018: R262.5 million) which reflects the tough trading
conditions prevailing during the year. The 49% decline in profit attributable to equity holders of the parent
from R43.7 million to R22.5 million and 48% decline in earnings per share from 541.4 cents to 280.8 cents are
mainly as a result of:

- the losses of Classic 1027 and Moneyweb for the first time being recognised for a full year and those losses
    not being offset against taxable income, resulting in a much higher tax rate for the group; and
- the impairment of the Classic 1027 goodwill and trademark.

The decline in profit was mitigated by the reduction in cost of sales due to the reversal of prior year liabilities
resulting from the final settlement of certain industry specific levies in respect of the Algoa FM and OFM
radio licences.

The 0.5% decline in headline earnings from R43.7 million to R43.5 million and 0.5% increase in headline
earnings per share from 541.5 cents to 544.1 cents ignores the impairment of the Classic 1027 goodwill and
trademark. If cost of sales was not reduced by the reversal of prior year liabilities resulting from the final
settlement of the industry specific liabilities, headline earnings and headline earnings per share would have
declined by 28% from R43.7 million to R31.6 million and by 27% from 541.5 cents to 395.1 cents respectively.
The group generated R39,9 million (2018: R30,8 million) in cash from its operating activities during the year
after paying tax of R22,5 million (2018: R20,2 million). The group spent R21,8 million (2018: R3,7 million) on
capital expenditure and paid R3 million (2018: R11,8 million) to repurchase 78 900 (2018: 230 700) of its own
shares. During the year the company paid out dividends of R22,8 million (2018: R28 million) to shareholders of
the company and ended the year with cash resources of R80,4 million (2018: R94,5 million).  

OPERATIONS
Low business confidence and continuing losses of Classic 1027 and Moneyweb resulted in another demanding
year that placed further strain on our resources. Innovation and tight cost control remain imperatives.
The appointment of a Group CEO in December 2018 will prioritise a focus on group synergies. 
Algoa FM  had another great year despite market conditions. Revenues showed reasonable year-on-year
growth and cost-saving resulted  in increased profitability. The Big Walk for CANSA attracted record
sponsorship and entries. In addition, the 2018 Radio Station of the year award also enabled the growth of digital
revenues. Dave Tiltmann was appointed Group CEO of AME and Algoa FM's operations director, Alfred Jay, has
taken over as managing director of Algoa FM, effective 1 April 2019. The station's commercial broadcasting
license was renewed for another 10 years.

Central Media Group ("CMG") had a challenging year with varied results across the four business units.
The OFM direct radio sales team delivered revenues above the previous year under challenging conditions, with
national radio sales performing below expectation. Digital Platforms performed well and continues to deliver
value to CMG. Mahareng had a difficult start to the year, but the second half of the year saw revenues and
profits above expectation. CMG invested in online streamed video services that will add value to client needs
and deliver revenues to the group. CMG is the leading multi-platform advertising solutions company in Central
South Africa and is positioned as the first choice media sales organisation. A further highlight was the renewal
of OFM's broadcasting licence for another 10 years.

Radioheads relaunched their corporate identity as Media Heads 360 in February this year. The rejuvenation
of the brand into a specialised media agency, allowed for the introduction of new revenue streams for the
business. Business was stable over the year although profitability declined. Attaining Level 1 BEE status has
increased opportunities in the market. Moving into the new year, Media Heads 360's holistic solution-focused
proposition is expected to be more attractive to clients. A substantial marketing campaign has backed the
relaunch of the business and firmly entrenched them as a player in the non-traditional media space.

In an environment of increased competition and growth in new advertising opportunities, United Stations
delivered a gratifying performance across its much enhanced portfolio of radio, digital, events, video and
online audio. Tight trading conditions which persisted throughout the year resulted in a high level of innovation
in seeking revenue and closer collaboration with its platforms. This has placed United Stations in a strong
position to provide advertisers with additional innovative ways to access their audiences.

The restructuring of Classic 1027 has resulted in a more cost-efficient operation, with strong focus being
placed on the programming and marketing of the radio station. This repositioning into a premium, targeted,
uncluttered and engaged brand is expected to create the springboard for growth.  Classic 1027 suffered
substantial losses during the year, but we remain confident that we shall be able to turn it around in the medium
to long term. The Classic 1027 licence is in the process of renewal.

Moneyweb experienced a challenging year. However, towards the end of the year Moneyweb concluded a
new mutually beneficial arrangement, which now enables the selling of advertising on two business shows
across national radio stations. Moneyweb's digital platforms performed excellently and continued to build on
its large audience base. Several new services aimed at financial advisors were rolled out and the response
has been promising.

DIVIDENDS
An interim dividend (dividend no. 14) of 80 cents per ordinary share (gross) was declared for the period ended
30 September 2018 (September 2017: 100 cents gross) and paid on 14 January 2019. A final dividend (dividend
no. 15) for the year ended 31 March 2019 of 150 cents per ordinary share (gross) (2018: 200 cents per share
gross) is proposed.

DECLARATION OF FINAL DIVIDEND NO. 15
The board declared a final dividend (dividend no. 15) of 150.00 cents per ordinary share (gross) for the year
ended 31 March 2019. The dividend is subject to the Dividends Withholding Tax ("DWT") that was introduced
with effect from 1 April 2012. In accordance with the provisions of the JSE Listings Requirements, the following
additional information is disclosed:

- the dividend has been declared out of current profits available for distribution;
- the Dividend Withholding Tax rate is 20%;
- the gross dividend amount is 150.00 cents per ordinary share for shareholders exempt from DWT;
- the net dividend amount is 120.00 cents per ordinary share for shareholders liable for DWT;
- the company has 8 022 034 ordinary shares in issue; and
- the company's income tax reference number is 9100/169/71/4.

The following dates are applicable to the dividend:
The last day to trade in order to be eligible for the dividend will be Tuesday, 9 July 2019.
Shares will trade ex-dividend from Wednesday, 10 July 2019. 
The record date will be Friday, 12 July 2019 and payment will be made on Monday, 15 July 2019.
Share certificates may not be dematerialised/rematerialised between Wednesday, 10 July 2019 and Friday,
12 July 2019, both days inclusive.

PROSPECTS
The board expects the trading conditions for the 2020 financial year to remain challenging while focusing on the
turnaround of Classic 1027 and Moneyweb.

ACG Molusi
Independent Non-executive Chairman
29 May 2019

The board of directors is responsible for the preparation of the provisional consolidated financial statements
in accordance with the requirements of the JSE Listings Requirements for preliminary reports and the
requirements of the Companies Act of South Africa as applicable to summarised financial statements, and for
such internal controls as the directors deem necessary to ensure that the provisional consolidated financial
statements are free from material misstatement due to fraud or error.

Angela Isbister CA(SA)
Financial director (acting) 
These results have been reviewed by BDO South Africa Inc and their unmodified review report is available for
inspection at the company's registered office.

The auditor's reviewed report does not necessarily report on all of the information contained in these financial
results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the
auditor's engagement they should obtain a copy of the auditor's review report with the accompanying financial
information from the issuers' registered office. 


SUMMARISED NOTES TO THE PROVISIONAL FINANCIAL STATEMENTS 

1.   BASIS OF PREPARATION
     These provisional results have been prepared by the financial director in accordance with International
     Financial Reporting Standards ("IFRS"), the Companies Act, No. 71 of 2008, as amended, IAS 34: Interim
     Financial Reporting, the Listings Requirements of the Johannesburg Stock Exchange and the SAICA
     Financial Reporting Guides as issued by the Accounting Practices Committee on a basis consistent with
     the policies and methods of computation as used in the annual financial statements for the year ended
     31 March 2018 except for the adoption of IFRS 15 and IFRS 9 in the current year. The adoption was made
     in accordance with the transitional provisions of IFRS 9 and IFRS 15 in terms of which comparative results
     do not need to be restated. The adoption had no material impact on the results.

2.   RELATED PARTY TRANSACTIONS
     There have been no significant changes in related party relationships since the previous year.
     Other than in the normal course of business, there have been no other transactions during the year with
     related parties. 

3.   OTHER FINANCIAL INSTRUMENTS
                                                                                                   GROUP
                                                                                          2019                2018
                                                                                         R'000               R'000
     Level 1                                                                                 -                  29
     Level 2                                                                                 -                 725
     Level 3                                                                            26 327              20 327
                                                                                        26 327              21 081

     Level 3 fair value determined by valuation that uses inputs that are not based on observable market data. 
     Investments are valued based on discounted cash flow models. Should the variables differ by 1% the
     value of the investments will decrease between 6% and 16%. The discount rates used vary between
     17.62% and 19.68%.

4.   SIGNIFICANT TRANSACTIONS AND EVENTS DURING THE PERIOD
     The Group is required to test, on an annual basis, whether the indefinite useful life intangible assets have
     suffered any impairment. The recoverable amount is determined based on a discounted cash flow model.
     In the current financial year, the Classic 1027 goodwill was impaired by R9.8 million and the trademark
     was impaired by R25 million as a result of revised revenue and growth rate assumptions. The reason for
     this being the turnaround of Classic 1027 taking longer than anticipated and losses being incurred in
     the current year which were not expected when initial forecasts were made at the end of the prior year.
     The present value of the expected cash flows was determined by applying an appropriate discount rate
     based on the current market assessments of the time value of money and risks specific to Classic 1027.
     This has declined in the current year mainly due to the downward revision of revenue forecasts.

5.   EVENTS AFTER THE REPORTING PERIOD
     To the best of the directors' knowledge, there have been no material events after the reporting period
     up to the date of signature of this report that will materially affect the ability of the user to make proper
     financial investment decisions.  


CORPORATE INFORMATION

SPONSOR 
Arbor Capital Sponsors (Pty) Ltd
Registration number 2006/0033725/07
20 Stirrup Lane
Woodmead Office Park
Corner Woodmead Drive and
Van Reenens Avenue
Woodmead, 2191
Suite #439, Private Bag X29
Gallo Manor, 2052

REGISTERED OFFICE
Block A, Oxford Office Park
No 5. 8th Street, Houghton Estate, Johannesburg, 2198
PO Box 3014, Houghton, 2041

TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
Registration number 2004/003647/07
Rosebank Towers, 15 Biermann Avenue, Rosebank
PO Box 61051 Marshalltown, 2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5238

DIRECTORS
ACG Molusi (Independent Non-executive Chairman)
J Edwards (Independent Non-executive)
MJ Prinsloo (Independent Non-executive)
N Sooka (Independent Non-executive)
KW Thipe (Independent Non-executive)
AJ Isbister (Finance Executive)
DM Tiltmann (Chief executive)

COMPANY SECRETARY
C Roberts CA(SA)

AUDITORS
BDO South Africa Incorporated 


www.ame.co.za
Date: 29/05/2019 03:54:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story