Increase in earnings for Kagiso

Murphy Morobe, CEO of Kagiso Media, comments, “All business entities within the group contributed revenue growth of more than 15% on an individual basis”.

Radio

One month into the reporting period, Kagiso Media increased its stake in its highly cash generative broadcasting asset, Jacaranda 94.2, effectively bringing the group’s stake in the Gauteng radio station to 80%, enabling it to reap further benefits from Jacaranda’s operating profit margin of 46.7%. Jacaranda has yet again increased its core LSM 6 - 10, 25 - 49 listeners in Gauteng, this time on a year-on-year basis by 18%.

The operating profit margin for East Coast Radio was maintained at a healthy 58%, and the 10-year old station gained extensive national publicity in its huge ‘East Coast Radio’s Get-a-Life 2’ competition through DStv.

“With ten years in this business, the group feels proud of the depth of management and experience we have, as illustrated by the recent appointment of Alan Khan as CEO of Jacaranda 94.2, and Mike Siluma’s, the previous CEO, move to head office to head up corporate and regulatory affairs. Alan was the deputy MD at East Coast Radio for two years and Mike headed up Jacaranda 94.2 for close on five years.

“Ofm, Heart 104.9 and iGagasi 99.5 have all performed well in growing listenership and significantly improving revenue. We congratulate management on the successful implementation of their stations’ growth strategies” says Morobe.

RadMark, Kagiso Media’s radio advertising sales arm, also continued to play its role in boosting the contribution to overall broadcasting revenue.

Exhibitions

Kagiso Exhibitions and Events staged its biennial exhibitions, namely the Auto Africa and Aerospace and Defence shows, in this reporting period. The Auto Africa show exceeded all expectations, with 40% more visitors attending the exhibition. Kagiso Exhibitions also hosted a successful Saitex (Johannesburg) and House and Garden Show (Durban) during this period.

Compared to the six months ending December 2004, the last period in which Kagiso Exhibitions hosted the two biennial shows, revenue for this period was up 53.6% from R45.4 million (December 2004) to R69.8 million (December 2006). During this period, Kagiso also increased its stake in Eyethu Exhibitions to 100%, allowing the group to take full advantage of the growth in all facets of the exhibitions and events supply chain.

LexisNexis Butterworths continued to give a strong 24% contribution to the group’s profits, and increasing its operating profit margin from 31.9% (December 2005) to 33.6% for this period.

New media

“What we find exciting about this business is that it has taken on the opportunities of new media, such as online products, without sacrificing its well established print subscriptions, as well as seeking new markets north of our borders. This puts us in an excellent position to consider new avenues that will add value to this successful model,” comments Morobe.

These six months represent Kagiso Media’s seasonal peak for its revenue. With continued good economic conditions, the group expects the second half of the year to remain positive.

“Kagiso Media has established itself as a leading BEE media company that consistently delivers value to its shareholders through consistently returning much of its cash generated earnings, in the absence of investments, to them. While this overall policy remains in place, the company expects to pursue strategic growth opportunities in the forthcoming year.

“The Board and management team, believe Kagiso Media is up to these challenges,” concludes Morobe.

At the board meeting on 12 February 2007, WC Ross was appointed as a non-executive director and RL (Tak) Hiemstra resigned as an independent board member. The board thanked Hiemstra for the value he has added over the past ten years to the Kagiso Media group.