Oxford Office Park, No 5 8th Street, Houghton Estate, 2198
010 590 4554

Chairman's Review

AME > Chairman’s Review

For the year ended 31 March 2020

by ACG MOLUSI - Independent Non-executive Chairman | AJ Isbister CA(SA) - Financial director (acting), 11 June 2020

Group revenue from continuing operations is consistent with the prior year at R 262,7 million (2019: R263,5 million), which reflects the difficult trading conditions in the current year. The 2019 results contained a material and non-recurring gain as a result of the reversal of many years of industry specific levies of the radio stations. In order to compare the results more meaningfully with the prior year, the reversal of levies during the 2019 financial year has been eliminated:

AME-financial1

The group generated R47 million (2019: R64,8 million) in cash from its operating activities during the year. It paid tax of R14,2 million (2019: R22,5 million), spent R42,5 million (2019: R21,8 million) on capital expenditure relating to the construction of new premises and state of the art studios for Algoa FM, paid dividends of R16 million (2019: R28,7 million) and ended the period with cash resources of R47,7 million (2019: R80,4 million).

Operations

Low business confidence and challenging trading conditions placed further strain on our resources. Innovation, group synergies and tight cost control remain imperative focus areas for the group.

Algoa FM took occupation of its new premises in the Baakens Valley of Port Elizabeth on 1 January 2020. Capital expenditure of R 19,8m was invested into a future proof and eco-friendly premises for the radio station. Poor trading conditions since May 2019 combined with the cancellation of advertising from March 2020, due to the COVID19 virus, resulted in lower than anticipated profitability for the year. The Algoa FM Big Walk for Cancer set a new record with 13,230 registered participants as well as new record for revenue. Listenership for the period April 2019 to March 2020 increased by 18% to 505,000.

Central Media Group (“CMG”) had a year with mixed results across the four business units. The OFM direct radio sales team provided revenues above the previous year under challenging economic conditions, with national radio sales performing below budget. OFM audience figures for the period April 2019 to March 2020 increased to 315,000 listeners which is a year on year increase of 22% in audience. Digital Platforms performed well and continues to deliver value to CMG in the digital marketing and development space. Mahareng Publishing had a very successful 2019 / 2020 year, performing above expectation. Redstar Agency continued to perform below budget.

MediaHeads 360 has firmly entrenched their new name and media offerings in the marketplace. Our committed and passionate focus as a specialised media agency on innovations, tech driven solutions and a 360-degree integrated approach, has been well received by the marketing industry and established our business and services as a vital asset for client’s campaigns. MediaHeads 360 exceeded its budgeted profits.

Moneyweb achieved a significant increase in radio sales and continues to broadcast and provide quality business shows across its radio platforms. Moneyweb has secured a three-year arrangement for these platforms. One of its business shows was nominated for best business show at the Radio awards which is testament to the premium quality of Moneyweb’s content. Moneyweb.co.za has experienced a remarkable increase in audience of 97% since February 2020 as well as an increase in subscriptions, especially since the COVID 19 lock down. Moneyweb also recently launched a new Breakfast business live streaming show.

The past financial year was a challenging one for United Stations in terms of profitability, as it continued to build a more resilient media ecosystem with a stable and sustainable future. To move ahead of its competition, the company has been broadening its skillsets and ability to create value for advertisers within a portfolio of Radio, Digital, Events, Business Content, Video and Online Audio. Tight trading conditions are expected to persist and this presents an opportunity for United Stations to intensify its efforts to acquire new clients and enter strategic alliances that will complement its current portfolio.

Discontinued Operations

Classic FM SA was placed under voluntary business rescue on 30 September 2019 as a result of market conditions that prevented the tightly niched radio station from attracting revenue at levels required to make it sustainable. This has resulted in a loss from discontinued operations of R20,4 million which relates to the following:

  • R15,2 million relates to the loss on deemed disposal of Classic FM SA; and
  • R5,2 million relates to the losses incurred by Classic FM SA for the period ended 30 September 2019.

The loss on the deemed disposal of Classic FM SA was determined as follows:

AME-financial2

Dividends

No interim dividend was declared for the period ended 30 September 2019 (September 2018: 80 cents per share gross). Due to the tough business conditions that we are currently experiencing, no final dividend has been declared for the year ended 31 March 2020. (2019: 150 cents per ordinary share gross)

Prospects

The board expects the trading conditions for the 2021 financial year to be more challenging due to the depressed economy and the COVID 19 pandemic.