Local radio coins it for AME

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Broadcasting company African Media Entertainment (AME) that owns Algoa FM and OFM radio stations “has reported operating profit of R60.6 million for the full year to 31 March 2014, up from R53.4 million last year”.

It says headline earnings per share were 13.0% higher at 524.3 cents per share.

The company generated a positive cash flow of R27.5 million, lifting its cash resources at the end of the period to R106.3 million. AME invested R1.2 million in developing new offices for Central Media in Bloemfontein, and an additional R3.2 million went into capital expenditure.

Algoa FM and OFM broadcast from Port Elizabeth and Bloemfontein respectively. Algoa FM’s reach extends through most of the Eastern Cape, while OFM covers the Free State and large parts of the Northern Cape and North West.

AME also owns radio sales house United Stations and radio advertising agency RadioHeads. The former sells advertising space on both AME’s radio stations and those of other clients, while the latter develops and creates content for advertisers.

The company’s radio stations are however its primary generators of revenues and profits. The radio broadcasting division reported profits of R53.6 million for the year, up from R43.8 million last year.

The sales houses grew revenues from R29.1 million to R33.3 million, but profits declined from R15.8 million to R11.3 million.

AME noted that new commercial broadcast licenses had been awarded to a consortium led by MSG Afrika to operate new stations in both the Eastern Cape and the Free State. MSG Afrika already owns Johannesburg’s Power FM, and Limpopo’s Capricorn FM.

While AME conceded that some level of competition will be inevitable, it believes that these new entrants will not cause major disruptions to its operations. In the Eastern Cape the license has been granted for a broadcast area that falls outside of Algoa FM’s coverage, and in the Free State the license is for a different format.

In a statement, the company said “the board is cautiously optimistic that the revenue for the 2015 year will compare favourably with that of the prior year”.

AME declared a final dividend of 200 cents per share, which is unchanged from last year. An interim dividend of 100 cents per share was paid in December. The share offers a dividend yield of around 3.75%.

The company’s share price is up around 20% over the last year, after gaining more than 50% during the course of 2013. It is trading on a price-to-earnings ratio of around 16 times.

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