Vision Group weathers COVID-19, to issue dividend and diversify

Vision Group has weathered the COVID-19 storm and is set to diversify into e-commerce and outdoor advertising, senior management has revealed.

The company's board has recommended a final dividend of sh18 per ordinary share subject to shareholder's approval at the November 26 virtual Annual General Meeting (AGM).

Robert Kabushenga, the Vision Group managing director, lauded the company's financial performance and noted that cost cutting measures, expansion of digital platforms and diversification of revenue streams had been fruitful.

Vision Group registered a 2% growth in revenue to sh92b in the financial year 2019/20.

Profit grew from sh4.9b to sh5.2b with earnings per share improving to sh34.8 per share from sh27.8 against strong headwinds due to measures to curb the COVID-19 pandemic that plunged the economy into contraction.

"In this difficult COVID period, we have been able to make a profit and pay back shareholders. We took drastic cost-cutting measures from May to September, to avoid a downturn. We have accelerated our investment in digital platforms and have leveraged our brand equity," Kabushenga said.

"Our team is prepared for future challenges and we will remain Uganda's top media house," he said.

Kabushenga was speaking at a "facts behind the figures" meeting hosted by the Uganda Securities Exchange (USE). He revealed that the New Vision app has 60,000 downloads, and that the New Vision has 17,000 subscribers as the company deepens its digital footprint. He noted that the company is looking at acquisitions in the outdoor advertising and e-commerce spaces, so as to widen revenue streams. Kabushenga also said the company is negotiating with government to settle debts due to advertising by its agencies.

The managing director revealed that the distribution of learning material on behalf of government during the lockdown had provided a boon to company revenues.

"During the lockdown, we were the only open printer and this sustained us. We now see some recovery, but it is not yet where we want it to be. We hope to see full recovery next year," he said.

Patrick Ayota, the Vision Group board chairperson, noted that despite a 59% drop in newspaper circulation in the lockdown months, door-to-door distribution and digital channels had provided respite and had improved company fortunes. He also argued that increased subscription sales, strategic cost choices, enhanced digital presence to serve audiences, and increased diversification had been pivotal to growth in company revenues.

"Uganda's literacy rates are at 77%, a big improvement over the years. This means that more Ugandans are reading.

We need to find out why they are not reading us," Ayota said.

"Even though the media world is facing diverse challenges, we believe that the new strategic direction that is focused on our customers, efficient processes and staff wellbeing will lead us to sustainable and healthy profit bottom-line for the Group," he added. Ayota laid out four pillars that will guide the company over the next five years. These include providing customers with engaging, accessible, affordable and reliable content and services.

Focus on the process that enables frictionless delivery of the content and services to customers in the most affordable way.

Focus on staff with a value proposition of ensuring staff welfare, incentives and motivation that enables them to be engaged and productive.

Focus on bottom line that is driven by diverse revenue and rationalised cost base so as to bring greater value to shareholders.

Augustine Tamale, the Vision Group Chief Finance Officer, said company return on Capital Employed has shot up to 6.7% from 5.4%, with the return on Assets reaching 4.8% from 4.3%, due to better utilisation of raw material.

USE outlines bold growth plans

During the meeting, Paul Bwiso, the managing director of the Uganda Securities Exchange, noted that the volume of shares traded dropped by 64% year-on-year to 14 million in October, 2020 and the turnover had collapsed by 94% to sh482m as uncertainty due to the COVID-19 pandemic kept offshore investors away.

"We have seen some growth in activity in November as some investors move to take advantage of depressed prices.

There has been a slowdown in stock markets around the world. We should see a rebound in the first or second quarter of 2021 in the aftermath of the elections overseas and in Uganda," he said.

Bwiso said the bourse is looking to invest in technology to improve its efficiency and to diversify its offering to investors and issuers.

He pointed out that the USE is consulting the Uganda Manufacturers Association and players in the oil and gas and agriculture sectors, to come up with a torrent of financial products that match their financing needs and investors risk appetite.

"With bank lending rates unlikely to reduce from where they are, we have been approached by several firms for solutions. The products can be in the form of equity, preference shares or corporate bonds. We are also looking into crowd-funding for small and medium enterprises," Bwiso said.