Standard Group pegs growth on business automation

Standard Centre Mombasa Road

A near month-long television blackout early in the year has significantly impacted on the earnings of the Standard Group, its half-year results released yesterday show.

Broadcasting on KTN, the group’s flagship TV channel, was interrupted for over three weeks in February and March following a dispute on migration to a digital platform, which resulted in foregone advertising revenues.

Company Secretary Lawrence Kibet said in the commentary while announcing the six-month operating results that the period was difficult and TV advertising revenues had shrank by more than a quarter owing to the standoff.

“The year started on a rather difficult note with a drop in TV revenues due to the digital migration dispute,” Mr Kibet said adding that the group revenue had declined by 7 per cent as a result. Pre-tax profit fell to Sh21 million, held down by a drop in advertising revenues on TV and a marginal decline in print.

Total revenues stood at Sh2.2 billion in the period to June, compared to Sh2.37 billion in the corresponding half of 2014.

But the impact of the decline in advertising revenue was compounded by the impairment of transmission equipment used in the analogue platform that had become obsolete in the switch to digital broadcast.

“Overheads increased by 13 per cent in the period under review from Sh1.12 billion to Sh1.26 billion largely driven by the need to accelerate impairment of analogue equipment rendered obsolete on migration to digital TV transmission and old machinery as a result of investment in business automation, which saw the Group implementing SAP ERP and Media solutions,” the company said.

Full impact

However, revenues from radio are up more than double over last year, at 116 per cent, while earnings from the digital platform rose by 57 per cent.

Investment in a new resource planning software is expected to enhance visibility of the business and efficiency in the company’s operations going forward.

“The Board is optimistic barring unforeseen factors that the Group shall record better performance in the second half of the year once the benefits of the reorganisation and automation exercises start trickling in.”

Full impact of these initiatives will however crystalise from next year.