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Chairman's Review





For the half year ended 30 September 2018

Trading conditions for the period under review remained tough.  Revenue increased by 20% to R140 million (2017: R117 million) mainly as a result of the acquisition of Moneyweb and a shareholding in Classic1027. Total comprehensive income attributable to equity holders decreased by 19% to R13,4 million (2017: R16,7 million) mainly due to the losses still being incurred by Classic1027 and Moneyweb. Earnings per share were 168,4 cents (2017: 208,7 cents) and headline earnings per share were 168,5 cents (2017:208,7 cents).

The group generated R12,5 million (2017: R19 million) in cash from its operating activities during the period after paying tax of R9,2 million (2017: R10,7.million). The group spent R10 million (2017: R1,7 million) on capital expenditure including R5,5 million on a new home for Algoa FM. During the period, the company paid dividends of R16 million (2017: 20,1 million) to shareholders of the company and ended with cash resources of R83,8 million (2017: R110,8 million).


Low business confidence resulted in demanding trading conditions. The restructuring and turnaround of Moneyweb and Classic1027 placed further strain on our resources. Innovation and tight cost control remain imperatives.

Algoa FM delivered a solid performance year to date with both national and direct sales marginally up on last year. Cost containment remains a priority whilst the stations listenership remained stable. Algoa FM’s flagship event, the Big Walk for Cancer, was a huge success with a record number of participants taking part in the 5km event. The Big Walk is now the Eastern Cape’s largest family participation event.  Algoa FM has recently announced that it will during October 2019 be moving to state-of-the-art new premises in the Baakens Valley, Port Elizabeth. The building is owned and being developed by the group’s property company.


The sharp decline in Central Media Group’s revenue from national advertisers resulted in a decline in net advertising revenue of 17% when compared to the same period of last year. Cost containment has been effective, and operating expenditure only increased by 3,5% against the previous period. New initiatives are being launched to offset the decline, caused principally by digital media owners. Mahareng performed extremely well, increasing EBITDA 98% year on year. A raft of new products, and closure of loss-making newspapers were the key drivers for this growth. Redstar Agency has seen a significant cutback in effective rates for promotions from national agencies, which coupled with the loss of two major projects, resulted in a 51% decrease in EBITDA. Measures are being put in place to create new event management opportunities. Digital Platforms continued to grow with larger digital development projects, and this resulted in an EBITDA growth of 27% against last year.


RadioHeads continued its good growth, despite the tough trading conditions.


The decline in United Stations’ revenues resulted in a loss for the period. This was due mainly to the costs associated with managing the evolution of the business model across the digital divide and revenue from new partners not coming on line as quickly as forecasted. This loss in revenue is unlikely to be recovered in the remaining six months. While retaining focus on its core radio platforms, United Stations has made significant progress in building bespoke solutions and creating new opportunities for its customers, which is evidenced by a number of new products spanning programmatic buying, online audio, activations, events and content creation.


During the period Classic1027 repositioned the programming, sales and staffing structure of the business. A key driver for the business is the increase in audience by attracting a younger, more diverse listener with the aim of increasing revenue. It has taken longer than expected to turn this business around, but we are confident that it will become a profitable venture.


Moneyweb continued to streamline its business operations with the key focus being on both digital and radio content provision. Management succeeded in reducing costs across the board at the company. Digital sales on have been above expectation, with the sales team now forming part of United Stations. The radio team continues to provide excellent content across three stations, namely Classic 1027, SAFM and RSG. Moneyweb is currently in negotiations with the SABC regarding a new advertising sales agreement.


Licence renewals

All three radio stations have submitted their licence applications and are awaiting ICASA’s decision.


A final dividend (dividend no 13) of 200 cents per ordinary share (gross) was declared for the year ended 31 March 2018 (2017:250 cents gross) and paid on 16 July 2018. An interim dividend (dividend no 14) for the period ended 30 September 2018 of 80 cents per ordinary share (gross) (2017: 100 cents per ordinary share (gross) is proposed.


The board expects the trading conditions for the remaining six months to remain challenging while turning our two acquisitions around is taking longer than expected.



Independent Non-executive Chairman

27 November 2018


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