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JCM
JCM
JCM - Johncom- Audited condensed group financial results: year ended 31
March 2007
JOHNNIC COMMUNICATIONS LIMITED
(Johncom)
Incorporated in the Republic of South Africa
Registration number: 1889/000352/06
Share code: JCM
ISIN Code: ZAE000024584
American Depositary Receipt (ADR) programme CUSIP No: 47805P102
ADR to ordinary share: 1:1
Address: Johncom House, 4 Biermann Avenue,
Rosebank, 2196, Johannesburg
PO Box 1746, Saxonwold, 2132, Gauteng
HIGHLIGHTS
* Revenue +17%
* Profit from operations before exceptional items +45%
* Headline earnings per share +36%
* Net cash from operating activities +45%
Prakash Desai, Group CEO commented: "We delivered excellent results for the
sixth consecutive year. Africa has moved from the developmental stage to
an operational focus. All in all, the operational heart of the business is
well positioned for further growth and value creation as an integrated
media and entertainment group with an exciting platform from which to
pursue both organic and acquisitive growth opportunities. As such, and
given the prevailing economy, we expect the current growth momentum to
continue in the new financial year."
Enquiries
Johncom 011 280 5003
Prakash Desai, Group CEO 083 380 1528
Howard Benatar, CFO 083 302 3704
College Hill 011 447 3030
Johannes van Niekerk 082 921 9110
Audited condensed group financial results for the year ended 31 March 2007
Income statement % 31 March 31 March
for the year ended change 2007 2006
Rm Rm
Revenue 17 5 359 4 595
Cost of sales (3 074) (2 763)
Gross profit 25 2 285 1 832
Operating expenses (1 641) (1 389)
Operating costs (1 370) (1 148)
Depreciation and amortisation (109) (103)
Goodwill impairment (5) (2)
Share-based payments (157) (136)
Profit from operations before 45 644 443
exceptional items
Exceptional items (18) 49
Profit from operations 27 626 492
Net finance income 45 27
Finance income 72 52
Finance costs (27) (25)
Share of profits of associates 209 184
Profit before taxation 25 880 703
Taxation (257) (177)
Profit for the year 18 623 526
Attributable to: 20 613 512
Shareholders of Johncom
Minority interest 10 14
623 526
Attributable earnings per ordinary share
(cents)
Basic 20 590 492
Diluted 20 589 492
Number of ordinary shares in issue
(`000)
At beginning of period 103 821 104 189
At end of period 103 821 103 821
Weighted average for period 103 821 104 015
Weighted average for period (diluted) 104 004 104 015
Segmental % 31 March 31 March
for the year ended change 2007 2006
Rm Rm
Revenue
Continuing operations
Media 20 1 884 1 565
Retail 17 897 768
Books and Maps 26 394 312
Home Entertainment 15 353 308
Africa 151 118 47
Music (44) 121 218
Distribution, Manufacturing and Support 1 210 208
Services
Pay Television 18 1 382 1 169
17 5 359 4 595
Profit from operations before
exceptional items
Continuing operations
Media 23 299 244
Retail 58 60 38
Books and Maps 116 54 25
Home Entertainment 24 41 33
Africa (46) (70) (48)
Music (90) 2 20
Distribution, Manufacturing and Support 15 45 39
Services
Pay Television 51 424 281
35 855 632
Corporate (50) (50)
Disposed operations (4) (3)
38 801 579
Share-based payments (157) (136)
Profit from operations before 45 644 443
exceptional items
Balance sheet 31 March 31 March
as at 2007 2006
Rm Rm
ASSETS
Non-current assets 2 133 1 964
Tangible and intangible assets 850 738
Investments and loans 1 094 1 058
Deferred taxation assets 188 147
Embedded derivatives 1 21
Current assets 2 921 2 295
Inventories, receivables and other current assets 1 801 1 533
Listed equities 150 109
Bank balances, deposits and cash 970 653
Total assets 5 054 4 259
EQUITY AND LIABILITIES
Capital and reserves
Interest of Johncom shareholders 2 823 2 340
Minority interest 39 53
Total equity 2 862 2 393
Non-current liabilities 506 405
Long-term borrowings 36 19
Post-retirement benefits liabilities 161 134
Operating leases equalisation liabilities 96 105
Share-based payments liabilities 190 122
Deferred taxation liabilities 23 25
Current liabilities 1 686 1 461
Payables and other current liabilities 1 523 1 357
Short-term borrowings 74 73
Bank overdrafts 89 31
Total equity and liabilities 5 054 4 259
Net asset value per ordinary share (cents) 2 757 2 305
Cash flow statement 31 March 31 March
for the year ended 2007 2006
Rm Rm
Net cash from operating activities 535 368
Net cash used in investing activities (176) (8)
Net cash used in financing activities (104) (72)
Net increase in cash and cash equivalents 255 288
Cash and cash equivalents at beginning of year 622 335
Foreign operations translation adjustment 4 (1)
Cash and cash equivalents at end of year 881 622
Statement of changes in equity
Share Share Other Accu- Share- Minority Total
capital premium reserves mulated holder interest equity
Rm Rm Rm profits interest Rm Rm
Rm Rm
Balance at 10 814 8 1 118 1 950 42 1 992
31 March 2005
Total income 9 477 486 11 497
and expense
recognised
Income and 9 (35) (26) (3) (29)
expense
recognised
directly in
equity
Attributable 512 512 14 526
earnings
Implementatio (18) (18) (18)
n of odd-lot
offer
Dividends on (78) (78) (78)
ordinary
shares
Balance at 10 796 17 1 517 2 340 53 2 393
31 March 2006
Total income 50 537 587 10 597
and expense
recognised
Income and 50 (76) (26) (26)
expense
recognised
directly in
equity
Attributable 613 613 10 623
earnings
Effect of (24) (24)
acquisitions
and disposals
Dividends on (104) (104) (104)
ordinary
shares
Balance at 10 796 67 1 950 2 823 39 2 862
31 March 2007
Notes
1. Basis of accounting
These condensed group annual financial statements have been prepared
using accounting policies compliant with International Financial
Reporting Standards (IFRS), and are in compliance with IAS 34: Interim
Financial Reporting, the JSE Limited`s Listings Requirements and the
South African Companies Act.
The accounting policies and methods of computation used are consistent
with those applied in the preparation of the annual financial
statements for the year ended 31 March 2006 except that, in conformity
with the amended IAS 21: The Effects of Changes in Foreign Exchange
Rates, exchange differences arising on monetary items that form part of
net investments in foreign operations are no longer recognised in
profit or loss, but are reclassified to the group`s foreign currency
translation reserve. Johncom`s early adoption in the year under review
of IFRIC 11: Group and Treasury Share Transactions has no financial or
disclosure effects on the group`s results.
for the year ended 31 March 31 March
2007 2006
Rm Rm
2. Exceptional items
Fair value adjustment of listed equities 43 36
Reversal of loan impairments 5 -
Impairment of non-current assets in Africa (68) -
business
Property, plant and equipment (53) -
Goodwill (15) -
Profit on disposal of operations - 14
Other 2 (1)
(18) 49
3. Reconciliation between attributable and
headline earnings
Attributable earnings 613 512
Reconciling items (after taxation and minority
interests,where applicable)
Impairment of non-current assets in Africa 68 -
business
Goodwill impairment 5 2
Loss on disposal of tangible and intangible 2 1
assets
Profit on disposal of operations - (13)
Impairment of property, plant and equipment - 3
Other (4) 1
Headline earnings 684 506
Headline earnings per ordinary share (cents)
Basic 659 486
Diluted 658 486
4. Earnings per ordinary share
The calculation of basic attributable and headline earnings per
ordinary share is based on attributable earnings of R613 million (2006:
R512 million) and headline earnings of R684 million (2006: R506
million) respectively, and a weighted average of 103 821 159 (2006: 104
014 819) ordinary shares in issue.
The calculation of diluted attributable and headline earnings per
ordinary share is based on attributable earnings of R613 million (2006:
R512 million) and headline earnings of R684 million (2006: R506
million) respectively, and a weighted average of 104 004 056 (2006: 104
014 819) ordinary shares in issue.
as at 31 March 31 March
2007 2006
Rm Rm
5. Contingent liabilities and commitments
Contingent liabilities 24 16
Unconditional programme and film rights 687 585
purchase obligations
Operating leases 715 683
- due within one year 128 110
- due after one year 587 573
6. Capital expenditure commitments
Contracted but not provided for 7 12
Approved but not yet contracted for 66 53
73 65
The capital expenditure will be financed from cash resources.
M-Net/ OpCo Balance of As reported
SuperSport Rm Johncom Rm
Rm Rm
7. Further segmental
analysis
The following significant
income statement line
items can be analysed as
set out below:
2007
Revenue 1 382 3 977 - 5 359
Profit from operations 424 377 - 801
before share-based
payments and exceptional
items
Share of profits of 2 6 201 209
associates
2006
Revenue 1 169 3 426 - 4 595
Profit from operations 281 298 - 579
before share-based
payments and exceptional
items
Share of profits of 2 4 178 184
associates
8. Audited results
The auditors, Deloitte & Touche, have issued an unmodified audit
opinion on the group`s annual financial statements for the year ended
31 March 2007. A copy of their audit report is available for inspection
at the company`s registered office. These condensed group annual
financial statements have been derived from the group annual financial
statements and are consistent in all material respects with the group
annual financial statements.
COMMENTARY
OVERVIEW
Johncom recorded a sixth successive year of excellent results reflecting
its continued investment in technology platforms, skilled and productive
people and the growth of world-class assets.
FINANCIAL RESULTS AND POSITION
Revenue grew 17% from R4,595 billion last year to R5,359 billion for the
current year. The gross profit margin improved from 40% to 43%. Profit from
operations before exceptional items increased by 45% from R443 million to
R644 million. Headline earnings per ordinary share increased by 36% to 659
cents.
The balance sheet remains strong and practically ungeared.
The Africa business`s non-current assets were impaired by R68 million.
OPERATIONAL REVIEW
MEDIA
The Sunday Times, supported by constant innovation and a buoyant economy,
enhanced its position in the market and grew advertising revenues ahead of
those of its competitors.
The Sowetan and SundayWorld continued to enjoy robust circulation and
advertising growth as they reaped the benefits of ongoing investment in
these titles.
Our Port Elizabeth operation produced outstanding results, benefiting from
the commissioning in October 2006 of a new press. The Dispatch, operating
out of East London, again delivered solid results.
The magazine stable delivered its best performance ever, and our education
assets continued to trade profitably.
Career Junction, our online recruitment business, produced impressive
profit growth. I-Net Bridge enjoyed another successful year.
The Financial Mail recorded improved profitability following its redesign
earlier in the year. The acquisition in October 2006 of a controlling stake
in the monthly small business tabloid, Big News, has given BDFM Publishers
a presence in the SMME market.
RETAIL
Exclusive Books experienced another good year, capitalising fully on the
favourable retail environment. A new store was opened in Cape Town, and
three stores were refurbished.
Nu Metro Theatres had a profitable year accompanied by operational and
strategic initiatives. Higher attendances and average ticket prices boosted
box-office revenues. New sites were opened in Pretoria and Worcester. Site
rationalisation continued, with two non-performing sites closed.
The strong presence of Nu Metro Theatres in the Bollywood market continued.
Nu Metro`s targeted marketing promotions included the first South African
link-up between cinemas and computer games with an Xbox gaming competition
on cinema screens. Nu Metro ran the successful Gay and Lesbian and
Encounters film festivals. The theatre chain`s first Hollywood-compliant
digital projector was installed at the Montecasino site.
Popcorn Cinema Advertising, Nu Metro`s start-up cinema advertising sales
division, had a healthy first year, and has been recognised by the
advertising industry as an innovative player in the market.
BOOKS AND MAPS
All entities, local and international, improved on their prior-year
performances. The South African operations again formed the backbone of the
business`s performance, contributing most of the profit from operations,
with excellent performances achieved by Struik Publishers, Struik Christian
Books, Map Studio, MAPIT and Booksite Afrika. Struik Publishers harnessed a
strong South African retail book market, and published a number of best-
selling titles. Sales of satellite navigation devices by MAPIT increased
steeply. Booksite Afrika relocated its warehouse of over three million
units to a custom-built facility without disrupting distribution. The
turnaround of the offshore operations in the period was underpinned by
strong publishing programmes and North American co-edition sales.
HOME ENTERTAINMENT
Home Entertainment`s excellent results were fuelled by initiatives in the
emerging market, expansion into new distribution channels, excellent
content and good growth in catalogue sales driven by the Red Star sale
brand.
In addition to representing 20th Century Fox, Disney, Warner and the BBC,
Home Entertainment acquired the Universal licence effective 1 April 2007.
In November 2006, Nu Metro Interactive, a new initiative, began
distributing interactive games into the South African market.
AFRICA
Combination media stores and cineplexes were opened in Abuja and Lagos.
Also, during the year, the 50% share of the Kenyan business held by a local
partner was acquired with the resultant full control of the operation.
Transfer of management control to the local operations in Kenya and Nigeria
is almost complete, and the South African head office for the African
project is currently being wound down.
In addition to the costs of late trading starts at the retail businesses in
Nigeria, compounded by numerous operational and regulatory obstacles, the
business`s results have also been impacted by significant write-offs of pre-
operational expenses as well as by a R68 million impairment of non-current
assets. This impairment is included in exceptional items.
The sale or closure of non-performing smaller entities, the elimination of
overhead structures and the driving of greater efficiencies in the major
operating entities in the new financial year, are expected to yield
improved results as the Africa business moves from its developmental stage
to an operational focus. Losses, however, are still expected in the short
to medium term.
MUSIC
The Warner Music licence, in terms of an agreement with Warner Music
International, is now housed in a newly incorporated associate, Warner
Music Gallo Africa. Consequently, the Music division`s segmental results
for the review period do not include the Warner Music licence. Warner Music
Gallo Africa`s results are equity accounted, and contribute to Johncom`s
share of profits of associates.
Good December holiday product supported the music business`s recovery from
a poor first half. Successes among Gallo`s artists included a further
Grammy nomination for Ladysmith Black Mambazo and Simphiwe Dana winning
four South African Music Awards.
Gallo has made excellent progress with its digital strategy. Its current
and back catalogues are now digitised, and top products have been launched
on iTunes and Microsoft`s Zune.
DISTRIBUTION, MANUFACTURING AND SUPPORT SERVICES
Compact Disc Technologies (CDT) implemented a new software system with some
initial operational difficulties which are now resolved. Production
capacity has increased, and CDT continues to service the industry as the
leading DVD and CD facility in Africa. On 31 July 2006, Johncom increased
its stake in CDT from 60% to 100%.
Nu Metro Distribution benefited from the acquisition and distribution of
good quality product. Increased volumes and strict cost control at
Entertainment Logistic Services, the country`s foremost DVD and CD
distributor, boosted profitability.
PAY TELEVISION
M-Net and SuperSport again produced exceptional results. Following the 31
March 2007 termination of M-Net`s open-time window, programming
initiatives, combined with investment in content, have been put in place to
minimise advertising loss and maximise subscriber growth.
ASSOCIATE
Caxton and CTP Publishers and Printers Limited (Caxton) reported good
results on the back of excellent performances by its newspaper publishing
and printing division.
POST BALANCE SHEET EVENTS
On 2 April 2007, Johncom acquired a further 25% of Career Junction, South
Africa`s largest online recruitment company, increasing its holding to 85%.
As announced on 11 April 2007 on the JSE Limited`s SENS, Johncom intends to
separate into two listed entities by forming a new wholly owned subsidiary
(temporarily referred to as OpCo) that will acquire Johncom`s directly-held
operating media and entertainment assets. The intention is for OpCo to then
be unbundled to Johncom`s shareholders and simultaneously listed on the JSE
Limited.
On 20 April 2007 Johncom announced the acquisition by Exclusive Books of
Van Schaik Bookstores, subject to certain conditions precedent including
competition authorities` approval.
In May 2007 the Competition Commission recommended to the Competition
Tribunal that the sale to Naspers of Johncom`s stakes in M-Net and
SuperSport be approved without any conditions. Accordingly, the remaining
conditions precedent to the M-Net and SuperSport sale are the approval by
the Competition Tribunal, and the JSE Limited unconditionally approving the
listing of the Naspers N shares to be received as part consideration for
the sale.
DIVIDEND
Notice is hereby given that a dividend (number 192) of 120 cents per
ordinary share (191: 100 cents) has been declared by the directors for the
year ended 31 March 2007 and is payable to shareholders recorded in the
register of members of the company at the close of business on Friday, 27
July 2007.
In compliance with the requirements of Strate, the electronic settlement
and custody system used by the JSE Limited, the company has determined the
following salient dates for the payment of the dividend:
Last day to trade cum dividend Friday, 20 July 2007
Shares commence trading ex dividend Monday, 23 July 2007
Record date Friday, 27 July 2007
Payment date Monday, 30 July 2007
Share certificates may not be dematerialised or rematerialised between
Monday, 23 July 2007 and Friday, 27 July 2007, both days inclusive.
PROSPECTS
The year under review was a milestone period for Johncom in which we
sharpened the focus on our operating assets by undertaking to dispose of
our interests in M-Net and SuperSport and announcing our intention to
separate Johncom into two listed entities by forming a new company which
will acquire Johncom`s operating media and entertainment assets and then be
unbundled to shareholders. Although these transactions are subject to
regulatory approval, we have put in place a springboard to grow our media
and entertainment assets. The group is well placed to deliver improved
financial results provided the economy maintains its current momentum.
Mashudu E Ramano Prakash C Desai
Chairperson Group Chief Executive Officer
Howard Benatar
Chief Financial Officer
On behalf of the board
Rosebank
20 June 2007
Directors: M E Ramano (Chairperson), P C Desai* (Group Chief Executive
Officer), H Benatar* (Chief Financial Officer), M D Brand, C B Brayshaw, P
M Jenkins, L M Machaba - Abiodun, D M Mashabela, W S Moutloatse, T R A
Oliphant, F J van der Merwe, T A Wixley
*Executive director
Company secretary: J R Matisonn E-mail: matisonnj@johncom.co.za
These results may be viewed on the internet at http://www.johncom.co.za
Date: 21/06/2007 07:40:39 Produced by the JSE SENS Department.
