JSE-listed Kagiso Media's new media unit saw net profit decline in the year to June as it repositioned one of its entities.
The company released its annual results on Friday and said revenue from continuing operations gained 21.3%, to R956.9 million, while profit for the year leapt 182.4%, to R661.5 million. However, the company's share price lost 2.93% ‑ or 60c - to close at R19.90.
In commentary provided with the release of its results, it said it had benefited from a continuation of improved market conditions, particularly in the broadcasting segment. This largely aided pre-tax gains, which moved up 11.2%, to R301 million.
Kagiso Media owns assets such as Jacaranda FM, East Coast Radio, Knowledge Factory, Mobil Alliance and Gloo. In the past year, Kagiso sold its 50% stake in LexisNexis and acquired Juta and Company.
Earnings per share in the prior period include R45.3 million of LexisNexis earnings. In the current period, the consolidated results included earnings of the Juta Group from 1 June 2012, amounting to R13.3 million.
Win some, lose some
Kagiso says its new media segment required that Gloo be repositioned, which negatively affected results. New media reported revenue slightly higher, at R87 million, from R84 million, but its net profit fell from R7 million to R10.6 million.
The group says new media exited a major account, which accounted for 50% of its revenue. This was offset by winning two major new customers: one in the financial sector and the other in electronics.
“Costs, particularly in human resources, have been incurred in 2012 to ensure that we are resourced with the necessary skills to meet the needs of customers in 2013. This negatively impacted on Gloo's profitability in 2012,” Kagiso says.
In addition, the MSN business had to recalibrate itself after the loss of online gambling advertising spend, and is now well positioned to grow in 2013, it adds.
Last September, a Supreme Court of Appeal ruling upheld a decision declaring online gambling and advertising of the service illegal. Kagiso Media CEO Murphy Morobe said at half year that new media lost between R7 million and R9 million because of the ban.
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