The group also declared a final dividend of 33c per share, bringing the total dividend to 73c per share for the year.
Says Roger Jardine, CEO of Kagiso Media, "These results reflect pure organic growth in our companies. Despite the fact that this is a cyclical down year for the group due to biennial exhibitions, we have still increased both our revenue and profit.
"These results are also better than expected due to the outperformance of our companies in the second half of the year. This tends to be slower than the first six months of the year."
The group ended the year in a strong cash position with R85.3 million in cash, with the operations generating cash of R236.8 million, up 24% on the previous comparable period (2005: R190.3 million). Jardine says, "Our businesses are highly cash generative, and the group's EBITDA margin is solid at 39.2%, making our company a very attractive investment proposition."
The dividend of 73 cents per share represents 88% of the earnings per share for the year (83.2 cps), a dividend cover of 0.9, reflecting Kagiso Media's policy of returning surplus cash to shareholders in the absence of investment opportunities. Jardine explains that the dividend is lower than last year's payment of 86 cents per share due to increased financing costs from the debt taken on by the group to finance acquisition opportunities in the last couple of years. He pointed out that the dividend yield on the share remains high at an attractive 6%.
Broadcasting continues to deliver the lion's share of operating profit at R174 million which is up 21% on last year's figure of R144 million. This represents 84% of the total operating profit of R206.3 million. East Coast Radio and Jacaranda FM delivered revenue growth of 14% and 13% respectively and both brands continue to be market leaders both in terms of revenue share and brand recognition.
Jardine says that he was delighted to see East Coast Radio and Jacaranda feature in the top 10 radio brands in South Africa, the only private radio brands to do so. Kagiso Media has varying interests in four other radio stations, namely OFM, Kaya FM, Radio Heart 104.9 (formerly P4 Cape Town) and Radio iGagasi 99.5 (formerly P4 Durban).
"We are pleased with the performances from these stations and Radmark, our advertising sales arm, which represents all these stations as well as Classic FM," comments Jardine.
With the continued and growing migration of Lexis Nexis's customers from print to online information solutions, the division has repositioned itself as an information services and solutions company. The company produced its 12th consecutive year of double-digit growth increasing operating profit by 38% to R39 million (2005: R28,3 million) off a revenue increase of 18%.
"It is very encouraging when a company can both respond to changes in its market and improve its operating margin at the same time," says Jardine.
Kagiso Media's exhibition business increased its revenue by 15% to R113.2 million (2005: R98.2 million) despite this being a year where it does not host its two biennial exhibitions, namely the Auto Africa and Aerospace shows. Stripping out the revenue contributed by its new subsidiary, and comparing with 2004, the last year without these two shows, Exhibitions increased revenue by 37.6%.
Jardine explains that revenue from the Rand Show grew handsomely due to strategic partnerships. In addition, this division has renewed a three-year contract with South African Tourism, won a number of new mandates and expanded its services to providing infrastructure, such as building stands, to exhibitions and events. "This will broaden our offering, especially in Gauteng," says Jardine.
Kagiso Media's core operations in radio are consistently in the top three revenue earners in the industry. Jacaranda's market share growth in the key Gauteng market strengthens this position. In addition, with effect from 1 July 2006, Kagiso Media has increased its stake in Jacaranda FM to 80%. The group is confident that the stations in its portfolio will continue to deliver competitive results in the radio market.
Further to an announcement in September 2006, Murphy Morobe will be taking over as CEO of Kagiso Media from 1 November 2006 and the current CEO, Roger Jardine, will take up the position of non-executive chairman. Jardine says, "Kagiso is a natural home for Murphy and he knows the group well. I am looking forward to working with him as he takes the company forward.
"Our companies continue to have determination to grow our revenues and profits, and demonstrate innovation and creativity in the face of changing markets. It is for this reason that we have delivered a compounded annual growth rate in profits of 25% over the past five years. With this culture in place, and through the efforts of our people, Kagiso Media will continue to deliver good growth in the coming year," concludes Jardine.
