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Chairman's Review

CHAIRMAN'S REVIEW

REVIEW OF THE YEAR

Trading conditions for the period under review remained tough.  Revenue of R238,6 million ( 2016: R238,3 million) was virtually the same as the previous year and comprehensive income increased by 5% to R56,1 million ( 2016:R53,6 million).

The comprehensive income attributable to equity holders of the parent amounted to R48,6 million (2016: R48 million) with earnings per share of 609,2 cents (2016: 591,2 cents). Headline earnings per share were 603,8 cents (2016: 587,6 cents).

After paying tax of R17,8 million (2016: R21,5 million), the group generated R51,1 million (2016: R60,5 million) in cash from its operating activities during the year. The group invested an additional R1,4 million (2016: R5,5 million) on the development of the new home of Central Media Group in Bloemfontein and spent R5 million (2016: R14,1 million) on capital expenditure. We paid R11,2 million (2016: R3,8 million) to repurchase 155 144 (2016:39 200) of our own shares. During the year the group paid out dividends to the value of R27,2 million (2016: 28,2 million) to the equity holders of the company and ended the year with cash resources of R119 million (2016: R114 million).

OPERATIONS

Low business confidence resulted in demanding trading conditions. Innovation and tight cost control remain an imperative.

Algoa FM delivered a good performance with revenue up by 5% resulting in an increase in profitability. The station delivered improved revenues with both national and direct activations exceeding the previous year. Algoa FM’s current audience figures are marginally up year on year. A new Greenfields licence, Rhythm FM, plans to go to air by the end of June 2017. This new commercial station’s broadcast footprint will cover both Mthatha and Butterworth in the Eastern Cape which falls outside the footprint of Algoa FM. Algoa FM was nominated in 10 categories for the Liberty Radio Awards 2017 and won the best Multi-Media Campaign as well as the Best Promotion, Stunt or Event awards.

Despite difficult trading conditions, Central Media Group managed to grow revenue by 4.5%, resulting in an increase in profitability. OFM felt the effects of the national slow-down in advertising expenditure. A new audience measurement platform (BRC-RAM) was released in this year and this new research has produced a significantly different radio listening landscape. Despite a lower cumulative audience, OFM has the highest Time Spent Listening (TSL) in  South Africa’s commercial radio sector. Digital Platforms increased profitability on the back of a greater focus on service revenues. Redstar Agency also increased profitability, albeit off a low base. Mahareng Publishing continued to grow by launching a new local newspaper called Bloemfontein Courant Voice, resulting in revenues increasing as the title gained momentum. The late break in the drought has given many businesses hope for the winter season. Central Media has a number of lucrative prospects in the project pipeline as a potential offset of the continued advertising recession. While trading conditions remain tough, Central Media is still ideally positioned as the premier media company in its broadcasting footprint.

RadioHeads has established itself as a leading player in the Content Marketing space for South African Radio with increased revenue and a profitable bottom line. RadioHeads, with its leveraging of content across multiple platforms, is now a preferred supplier for some of the major Agencies in the country. Its maiden sojourn into the space of TV Production over the past year, together with the effective use of "first in the country" mobile broadcast technology, positions RadioHeads as innovative and ahead of the curve. In the year ahead RadioHeads will continue to create and own new Radio properties to ensure its future sustainability. 

United Stations is a specialist media sales company, representing the on-air and digital assets of a network of radio stations. It is equipped to maximise the revenue of its various platforms by providing marketing solutions to advertisers and agencies. Revenue and profitability was down year on year as the company focused on the execution of fundamental steps to restructure its fixed costs and diversify its mix of media platforms. This process is now complete and the consequent platform mix offers good potential for growth.

EVENT SUBSEQUENT TO THE REPORTING PERIOD

On 5 May 2017 AME made an offer to the board of Moneyweb Holdings Limited ("Moneyweb") to acquire all the issued share capital of the company, other than treasury shares and shares already held by AME. The transaction will be implemented by way of a scheme of arrangement with a cash offer of 26 cents per Moneyweb share or a share offer of one AME share for every 250 Moneyweb shares at a value of 28 cents per Moneyweb share. AME estimates that the transaction will be completed by 31 August 2017.

Full details are available on the AME web site www.ame.co.za and on SENS.

 

PROSPECTS

The board expects the trading conditions for the 2018 year to remain challenging.

 

ACG MOLUSI

Independent Non-executive Chairman

20 June 2017

 

 

 

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