Recent investments strengthen Kagiso's results

This is despite losing the Cell C account to Trigger. "Some great brands to work on so," Pete Case, creative director of Gloo, told Bizcommunity.com this morning, Friday, 19 February 2010.

Commenting on the group's interim results,CEO Murphy Morobe said, “Kagiso Media continues to demonstrate its ability to withstand difficult markets conditions, achieving a stable set of results for the six months to December 2009. We remain committed to implementing our strategy of diversifying revenue streams by investing in a mix of traditional and new media.

"However, in line with the uncertain economic climate, we have adopted a more measured and conservative stance to the strategic rollout of our acquisition plans,”

“Some of the investments we have made over the last two years including Urban Brew Studios, Gloo Digital and Acceleration Media have delivered positive results. Looking forward, they remain well placed to deliver even better returns.”

The digital media division, included in broadcasting, saw revenue grow from R1.5 million in 2009 to R12 million. Gloo's results exceeded its revenue and EBITDA targets by 40% and 73% respectively and it is proving to be a strategic addition to the business. It has won numerous awards during this period, confirming its status as the top digital creative agency in South Africa.

Acceleration Media's turnaround strategy started paying off with revenue growth of 34% supporting its return to profitability. The company has signed a number of large new accounts and continues to build its expertise to further increase margins.

Operational review

• Broadcasting's margins remained constant at 50% due to excellent cost control and despite a 2% drop in revenue resulting from lower advertising spend;
  
• Jacaranda grew its LSM 8-10 audience and achieved noteworthy industry accolades;
  
• LexisNexis delivered a good performance in its core business and produced strong cash flows, although its overall results were affected by setbacks in the African business;
  
• Exhibition and Events continued to rationalise its operations;
  
• Mobil Alliance showed a 442% improvement in profit;
  
• Although Urban Brew Studios operated amid tight market conditions resulting from ongoing challenges at the SABC, it is making progress with its objective of diversifying and growing its revenues.

Financial review

• Group revenue increased 4% to R458.4m
  
• Operating margin showed a marginal decline to 33.9%;
  
• Cash generated from operating activities rose 4% to R48.3m;
  
• Headline earnings per share declined 3% to 75.7 cents;
  
• Dividend maintained at 35 cents per share.

“There are indications that the advertising market is improving, off the back of an anticipated economic recovery as well as the 2010 FIFA World Cup tournament which is also expected to benefit radio and the internet segments of the market,” concludes Morobe.

^*Mini and BMW: This was a nationwide pitch via Yardstick. Four agencies made it through to the final round, Hello Computer, Quirk, Aqua (the previous agency) and Gloo. Red Bull: was a three-way pitch between Stonewall (the previous agency), Gloo and Worldwide Creative.

Updated Monday, 22 February 2010, at 5.45pm