Although the economic landscape has changed markedly in the past year, Kagiso Media Limited’s performance for the year ended 30 June 2009 demonstrates the resilience of its business model, with total revenue increasing by 19% to R854,8m (2008: R715,9m). Operating profit improved by 9% to R294,3m (2008: R269,3m) as the group heightened its focus on cost management to defend margins across all of its asset classes.

Headline earnings per share rose by 6% to 126,7 cents (2008: 119,6 cents). Dividends of 59 cents per share (2008: 53 cents) were paid during the year.

When I assumed the role of non-executive chairperson in November 2008, there were already clear indications that the markets would tighten with advertisers cutting back on spending and reviewing their priorities. The second half of the financial year proved to be particularly challenging for the broadcast sector. However, Kagiso Media had already concluded that its future lies beyond radio. Two years ago, the group started leveraging its leadership in radio by pursuing investments to generate new revenue streams, both by providing content and creating new delivery platforms. Several niche acquisitions were concluded in the online environment, while our acquisition of Urban Brew Studios extended our strengths from radio broadcast into the television environment. The positive results from these recent acquisitions bear testimony to the validity of this strategy, which will unlock the group’s long-term growth potential.

We have continued to meet the challenges in the regulatory and legislative environments head on in order to mitigate any associated risks for the broadcast sector. To this end, we are strengthening our relationships with regulators and other industry participants. The environment remains fluid, especially against the backdrop of impending digitisation and the advent of SeaCom, with its anticipated exponential increase in broadband capacity.

Looking forward, Kagiso Media’s attention will be focused on those opportunities with the highest return potential. In order to secure its long-term growth, the group remains committed to its objective to pursue diversification. While it remains focused on being a high-quality earnings and cash-generating business, the board is also prepared to access Kagiso Media’s strong balance sheet to deliver growth opportunities in the new media and content delivery environments. Sustainable value creation for all stakeholders will underpin all investment decisions.

Ms Sandra Pienaar resigned as financial director and company secretary of Kagiso Media with effect from 31 May 2009 to pursue an opportunity offshore. While a replacement is still being sought, Mr Patrick Kane has been temporarily appointed chief financial officer and company secretary of the group from 5 June 2009.

Acknowledgements

I extend my heartfelt gratitude to the board of directors for their openness and candour in dealing with the many challenges presented during 2009. With their wealth of experience, they have continued to support the group as it delivers on its mandate without compromising the long-term value proposition.

To Kagiso Media’s executive team, my thanks for your unwavering commitment during the year and for the progress made in executing our strategy in this fast-changing environment.

I also extend my heartfelt gratitude to the employees of Kagiso Media for their loyalty during this challenging year.

While the year ahead is set to remain challenging, I have every confidence in our team’s ability to overcome the hurdles presented to Kagiso Media, so that it emerges strong and more resilient for the long term.

MAUD MOTANYANE
NON-EXECUTIVE CHAIRPERSON