The media owner announced a strong increase in revenue of 26% to R512.8 million (2007: R406.6 million) and operating profit up by 12% to R168.9 million (2007: R150.4 million). Headline earnings increased by 20% to R106.3 million (2007: R88.2 million) and headline earnings per share rose by 20% to 79.5 cents (2007: 66.1 cents). Net cash generated from operating activities reflected an increase of 68.8% to R50.1 million (2007: R29.7 million), supported by the performance of the group's strong suite of broadcasting and information services.
CEO Murphy Morobe said he was pleased that despite tough trading conditions, the broadcasting and information services and solution divisions showed good resilience “despite the increasingly adverse economic environment, delivering revenue growth of 6.9% and 11.9% respectively.”
Broadcast revenue increased by 6.9% to R260.1 million with a 2.0% decline in operating profit to R130 million. Once again, East Coast Radio and Jacaranda 94.2 performed well as national advertising sales were less impacted by the state of the economy than local sales.
“The appeal of our newer radio stations continues to grow,” said Morobe. “iGagasi 99.5 showed a 36.% growth in total weekly listenership, which supported a 41.2% increase in revenue. OFM also increased its share of the market, but was unable to translate these benefits onto its bottom line. Heart 104.9 benefited from its direct sales force with revenue rising by 6.1%.”
LexisNexis continued to grow from strength to strength, with a 22.1% increase in operating profit to R43.0 million off a base of 11.9% revenue growth. Demand for printed products remains strong, while business from the rest of the continent now represents 9.2% of revenue (2007: 6.3%).
Kagiso Exhibitions and Events (“KEE”) showed revenue growth of 76.3% to R66.2 million while the loss was limited to R920 000 from a loss-making position of 8.1 million in the comparable period.
“We continued to stage our flagship events during the period and made good progress in resuming profitability due to rigorous management action. However, the strategic review of the business informed our decision to wind down the operations of the division by disposing of assets, the first of which was the Rand Show brand. We expect the process to be completed by the end of the financial year,” said Morobe.
The acquisition of a controlling interest in local broadcasting production house, Urban Brew Studios was completed in November 2008. This business has produced a number of popular television shows including Three Talk With Noleen; YO TV and the Live Lotto Draw. It delivered revenue of R51.7 million, accounting for the period 1 November 2008 to 31 December 2008.
Morobe said that “We maintain that this business will deliver revenue diversification benefits to the group, which will ensure that our business model has strong defensive capability during economic downturns. It is also an essential building block in our long-term strategy to extend our business into new media channels.”
Although the outlook for the markets in general remains uncertain, Morobe concluded that: “as the global events play themselves out, we remain confident that our strong portfolio of broadcasting assets is positioned for continued growth. However, like everyone out there, we too are not immune to the tougher market conditions, and while we will continue to focus our efforts on delivering double-digit growth, we expect this to be at lower levels than in the past.”
