| Thu 24 Nov 2005, 17:00 | | Johncom - Reviewed financial results 6 months ende |
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Johncom - Reviewed financial results 6 months ended 30 Sept 2005
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
www.johncom.co.za
COMMENTARY
Overview
The directors are pleased to present the results for the half-year ended 30
September 2005 which reflect good performances from our Media and Pay Television
units, as well as our associates.
FINANCIAL Results
Revenue for the six months increased by 14% to R2,2 billion, while profit from
operations before exceptional items rose 24% to R160 million. Headline earnings
per share grew by 156% to 179 cents.
Johncom"s financial results are reported for the first time in accordance with
International Financial Reporting Standards (IFRS). Shareholders are referred to
the notes which outline the changes we have made to our accounting policies.
OPERATIONAL REVIEW
MEDIA
The Media division delivered another exceptional performance powered by robust
growth in advertising revenues and market shares as well as cost efficiencies
extracted from a larger pool of newspapers.
The Sunday Times reaped the benefits of its leading position in a buoyant
market. In September the paper produced the biggest edition in its 99-year
history. The Sunday Times plans a heritage project and will publish four
supplements as part of its centenary celebrations in February 2006.
The Sowetan contributed to earnings and continued its circulation recovery to
levels last seen in 2002. The results of SundayWorld were also significantly
enhanced in line with an increased circulation. The launch of new supplements in
both titles contributed to improved circulation and revenues.
The Eastern Cape newspapers, Daily Dispatch, The Herald and Weekend Post,
produced solid results under new editorial leadership in a busy marketplace.
Johncom"s community newspaper division extended its reach and scale in the
Eastern Cape with the acquisition of additional titles.
The magazine division delivered a greatly improved performance after disposing
of certain titles and restructuring its custom publishing operation.
The digital businesses, driven by I-Net Bridge and CareerJunction, enjoyed an
excellent six months.
BDFM benefited from increased advertising and the continued strengthening of
BusinessDay and Financial Mail as a result of key appointments and the re-
alignment of the company"s internal structures.
RETAIL
The group"s Retail operations yielded mixed performances with excellent results
from Exclusive Books largely offset by the effects of cinema ticket price
discounting at Nu Metro Theatres. The ticket price discounting was introduced at
Nu Metro cinemas to match competitor strategy to increase attendances by lower
ticket prices. This response, whilst addressing market share, has significantly
eroded earnings at Nu Metro Theatres without a significant impact on
attendances.
Nu Metro Theatres increased its market share to 40%, up from 37% at March 2005,
and has a strong line-up of content for the remainder of the financial year.
Exclusive Books delivered same-store revenue growth of 14% on last year. The
innovative and exciting Harry Potter launch contributed to achieving sales of 22
000 copies of the sixth book in the series, Harry Potter and the Half-Blood
Prince. At the recent Loerie Advertising Awards, Exclusive Books won four gold,
seven silver and six bronze awards. Exclusive Books has identified new site
opportunities and will open three new stores in the second half of the financial
year.
BOOKS AND MAPS
Books and Maps performed well, principally as a result of its South African
operations. Highlights included the strong showings by Map Studio, MAPIT, Struik
Christian Books and Booksite Afrika. The UK and Australasian book sectors
experienced difficult trading conditions.
HOME ENTERTAINMENT
Nu Metro Home Entertainment continues to be the leading home entertainment
business in Africa, representing prestigious film studios locally.
The division had a difficult start to the year due to content shifts and loss of
gaming revenues. The second quarter saw a stronger delivery with major releases
including Phantom of the Opera, Shall We Dance, Robots and The Pacifier, with
excellent results achieved on catalogue sales. Significant inroads into the
emerging market were made by introducing product-specific ranges and by building
resources to effectively service this sector. Improved key account strategies
and a strong content line-up are planned for the festive season.
Following a South African Revenue Service review, the division recognised a
charge of R6 million in respect of additional customs duties relating to the
2002 and 2003 financial years.
MUSIC
Gallo Music delivered exceptional results from popular local and international
product featuring Thandiswa, David Gray, Craig David, Bump 16 and James Blunt. A
strong second half is planned, backed by holiday-season releases from Madonna,
Enya, Soul Brothers and Bongo Maffin.
As part of the ongoing drive to promote South African talent, Thandiswa will be
profiled to an international audience at Womex in Newcastle, England. Lucky Dube
and Ladysmith Black Mambazo are currently recording in our Downtown Studios,
with albums due for release in early calendar 2006.
AFRICA
The Africa business unit continued to make progress in its roll out in Nigeria
and Kenya. A flagship Nu Metro Mediastore and a four-screen cineplex were opened
in Nairobi in August, and a cineplex was opened this month in the western Kenyan
town of Kisumu. Nu Metro now has approximately 60% of the Kenyan cinema market.
Launches are planned for a mediastore and cineplex in Abuja, the Nigerian
capital, as well as a cineplex in Lagos.
Construction of the DVD, VCD and CD replication plant in Lagos is underway. It
will serve the domestic Nigerian market and will also target export
opportunities. The plant already has a confirmed order from an association of
marketers in Lagos for 1,5 million discs.
A mapping business has been incorporated in Nigeria and has published to much
acclaim the first road atlas of that country in many years.
BusinessDay Nigeria continues to trade to target and has strengthened both
advertising sales and circulation. Other media opportunities in Africa are being
explored.
DISTRIBUTION, MANUFACTURING AND SUPPORT SERVICES
Nu Metro Distribution continued to release good product during the review
period. Notable releases included Wedding Crashers, Star Wars III and Mr & Mrs
Smith.
Compact Disc Technologies enjoyed an exceptional six-month trading period. The
commissioning of new production lines increased capacity and facilitated
improved yields.
The Entertainment Logistics Services warehouse and distribution facility
increased its throughput volumes as a result of increased demand.
PAY TELEVISION
With continued growth in subscription and advertising time sales, M-Net and
SuperSport posted excellent performances. Powerful programming line-ups, with
Desperate Housewives and Idols, contributed significantly to earnings.
ASSOCIATED COMPANY
On the back of buoyant conditions in the economy in general, and in the retail
sector in particular, Caxton and CTP Publishers and Printers Limited again
traded well, contributing R71 million to attributable earnings (2004: R51
million).
DIVIDEND
We reported in our March 2005 results announcement that the decision not to
declare a dividend at that time was an issue primarily of timing and would be
reviewed at the half-year.
Following the successful conclusion of the odd-lot offer on 10 October 2005,
notice is hereby given that a dividend (number 190) of 75 cents per ordinary
share has now been declared and is payable to shareholders recorded in the
register of members of the company at the close of business on Thursday, 15
December 2005.
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 Thursday, 8 December 2005
Shares commence trading ex dividend Friday, 9 December 2005
Record date Thursday, 15 December 2005
Payment of dividend Monday, 19 December 2005
PROSPECTS
Johncom has enjoyed a robust first half, and looks forward to successful trading
in the festive period and the remainder of the financial year when traditionally
the bulk of our profits are generated.
Mashudu Ramano
Chairman
Connie Molusi
Group Chief Executive Officer
Prakash Desai
Deputy Group Chief Executive Officer
24 November 2005
Income Statement
Note Reviewed Restated % Restated
6 months reviewed change reviewed
ended 6 months 12
30 Sept ended months
2005 30 Sept ended
Rm 2004 31 March
Rm 2005
Rm
Revenue 2 235 1 953 14 4 113
Cost of sales (1 366) (1 227) (2 510)
Gross profit 869 726 20 1 603
Operating expenses (659) (551) (1 139)
Depreciation and amortisation (50) (46) (101)
Profit from operations before 160 129 24 363
exceptional items
Exceptional items 4 47 (9) 28
Profit from operations 207 120 73 391
Net finance income (costs) 9 (14) (7)
Finance income 21 13 30
Finance costs (12) (27) (37)
Share of profits of associates 73 31 123
(after taxation and minority
interests)
Profit before taxation 289 137 111 507
Taxation (76) (58) (120)
Profit after taxation 213 79 170 387
Attributable to:
Equity holders 207 76 172 382
Minority interests 6 3 5
213 79 387
Basic attributable earnings per 199 73 172 367
ordinary share (cents)
Number of ordinary shares in
issue
At beginning and end of period 104 189 104 189 104 189
("000)
Rm Rm Rm
Reconciliation between
attributable and headline
earnings
Attributable to equity holders 207 76 172 382
Reconciling items (after taxation
and minority interests, where
applicable)
Profit on disposal of operations (22) - (6)
Goodwill impairment 2 - 4
Profit on disposal of tangible - - (1)
assets
Other - (3) -
Headline 187 73 156 379
Basic headline earnings per 179 70 156 364
ordinary share (cents)
Statement of Changes in Equity
Note Reviewed Restated Restated
6 months reviewed reviewed
ended 6 months 12
30 Sept ended months
2005 30 Sept ended
Rm 2004 31 March
Rm 2005
Rm
Balance at 1 April 2 000 1 654 1 654
IFRS restatements 1 - 6 6
Other restatements 1 - (3) (3)
Restated balance at 1 April 2 000 1 657 1 657
Attributable earnings 207 76 382
Earnings attributable to minority interests 6 3 5
Change in minority interests (3) 4 5
Dividend paid - (42) (42)
Hedging gains (losses) 11 - (3)
Movement in revaluation reserve arising on 6 (19) (4)
revaluation of listed equities
Total equity 2 227 1 679 2 000
Cash Flow Statement
Reviewed Reviewed Reviewed
6 months 6 months 12
ended ended months
30 Sept 30 Sept ended
2005 2004 31 March
Rm Rm 2005
Rm
Net cash from operating activities 79 117 305
Net cash from (used in) investing activities 42 (277) (292)
Net cash from (used in) financing activities 21 (21) (28)
Net increase (decrease) in cash and cash 142 (181) (15)
equivalents
Cash and cash equivalents at beginning of 317 332 332
period
Cash and cash equivalents at end of period 459 151 317
Segmental
Reviewed Restated % Restated
6 months reviewed change reviewed
ended 6 months 12
30 Sept ended months
2005 30 Sept ended
Rm 2004 31 March
Rm 2005
Rm
Revenue
Continuing operations
Media 776 645 20 1 376
Retail 360 336 7 716
Books and Maps 150 138 9 286
Home Entertainment 154 158 (3) 319
Music 104 74 41 196
Africa 19 5 280 15
Distribution, Manufacturing and 99 85 16 160
Support Services
Pay Television 573 512 12 1 044
2 235 1 953 14 4 112
Disposed operations - - 1
2 235 1 953 14 4 113
Profit (loss) from operations
before exceptional items
Continuing operations
Media 123 70 76 161
Retail (2) 8 (125) 43
Books and Maps 11 7 57 21
Home Entertainment 5 17 (71) 33
Music 6 - 15
Africa (17) (8) (113) (19)
Distribution,Manufacturing and 13 12 8 38
Support Services
Pay Television 127 79 61 192
266 185 44 484
Corporate (33) (22) (50) (34)
Share incentive costs (69) (25) (176) (75)
Disposed operations (4) (9) (12)
160 129 24 363
Balance Sheet
as at Reviewed Restated Restated
30 Sept reviewed reviewed
2005 30 Sept 31 March
Rm 2004 2005
Rm Rm
ASSETS
Non-current assets
Tangible and intangible assets 735 703 732
Investments and loans 1 013 937 973
Deferred taxation assets 146 146 144
Embedded derivatives 18 22 20
Total non-current assets 1 912 1 808 1 869
Current assets 2 187 1 838 2 020
Inventories, receivables and other current 1 600 1 434 1 461
assets
Listed equities 95 77 105
Bank balances, deposits and cash 492 327 454
Total assets 4 099 3 646 3 889
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders" interest 2 179 1 637 1 955
Minority interests 48 42 45
Total equity 2 227 1 679 2 000
Non-current liabilities 409 364 389
Long-term borrowings 64 50 37
Provision for post-retirement benefits 126 128 123
Operating leases equalisation liability 110 117 114
Share incentive liabilities 70 32 58
Deferred taxation liabilities 39 37 57
Current liabilities 1 463 1 603 1 500
Payables and other current liabilities 1 399 1 410 1 333
Bank overdrafts and other short-term 64 193 167
borrowings
Total equity and liabilities 4 099 3 646 3 889
Net asset value per ordinary share
Book value (rand) 21 16 19
Notes
1. Basis of accounting
These summarised consolidated interim financial statements have been
prepared using accounting policies compliant with International Financial
Reporting Standards (IFRS), and in accordance with IAS 34: Interim
Financial Reporting and the South African Companies Act. The date of the
group"s transition to IFRS is 1 April 2004, and the interim and year-end
2005 financial statements have been restated accordingly. Johncom"s major
associate, Caxton and CTP Publishers and Printers Limited, has a 30 June
year-end, and is therefore only required to report under IFRS in respect of
the six months ending 31 December 2005. Any resultant restatements will be
reported in Johncom"s year-end results.
As these financial statements are the group"s first IFRS financial
statements, IFRS 1 was applied in their preparation. The following are the
significant IFRS 1 exemptions which Johncom elected to utilise:
* Cumulative transition differences arising on the translation of
foreign operations were deemed to be zero at the date of transition to
IFRS.
* Financial instruments previously designated as available-for-sale were
redesignated as financial assets or financial liabilities at fair
value through profit or loss.
* The requirements of IFRS 3: Business Combinations were not applied
retrospectively for business combinations which occurred prior to
Johncom"s transition to IFRS.
The following new accounting policies were applied:
* Share incentive costs: Outstanding cash-settled options are valued at
each reporting date with the fair value being provided for, while the
fair value of equity-settled instruments granted is recognised in
income on a straight-line basis over the vesting period of the
instruments.
* Tangible and intangible assets: Depreciation is based on historical
cost, by component, with reference to estimated useful life.
The reconciliation of attributable earnings as previously reported to
attributable earnings as restated in this report is set out below:
Cumulative 6 months 12 months
to ended ended
31 March 30 Sept 31 March
2004 2004 2005
Rm Rm Rm
Attributable earnings previously 180 461
reported
IFRS restatements 6 (83) (82)
* Share incentive costs (42) (21) (33)
* Adjustments to provisions 1 3 3
* Tangible and intangible assets 50 1 (3)
* Redesignation of financial - (71) (57)
instruments
* Tax (3) 5 8
Other restatements (3) (21) 3
* M-Net/SuperSport AC 133 impact - (21) -
recognised in income
* Reversal of amortisation of - 1 3
intangible assets with indefinite
useful lives
* Operating leases accounted for on (4) (1) -
straight-line basis
* Tax 1 - -
Restated attributable earnings 76 382
Total equity previously reported 1 654 1 768 2 019
* Operating leases accounted for on - (80) -
straight-line basis
* IFRS restatements 6 (77) (76)
* Other restatements (3) (24) -
1 657 1 587 1 943
Add back items which do not impact
total equity
* Redesignation of financial - 71 57
instruments
* M-Net/SuperSport AC 133 impact - 21 -
recognised in income
Restated total equity 1 657 1 679 2 000
2. Reviewed results
These interim financial statements have been reviewed by our auditors,
Deloitte & Touche. A copy of their unqualified review report is available
for inspection at the company"s registered office. Without qualifying the
opinion, the review report contains an emphasis of matter paragraph drawing
users" attention to the possible IFRS restatements in respect of Johncom"s
major associate, Caxton and CTP Publishers and Printers Limited, as
disclosed in note 1 above.
3. Earnings per ordinary share
The calculation of basic attributable and headline earnings per ordinary
share is based on attributable earnings of R207 million (2004: R76 million)
and headline earnings of R187 million (2004: R73 million) respectively,
and 104 189 314 (2004: 104 189 314) ordinary shares in issue.
Reviewed Restated Restated
6 months reviewed reviewed
ended 6 months 12 months
30 Sept ended ended
2005 30 Sept 31 March
Rm 2004 2005
Rm Rm
4. Exceptional items
Profit on disposal of operations 25 - 6
Adjustment in respect of leases - - 10
previously impaired
Adjustment to fair value of 22 (12) 16
investments
Other - 3 (4)
47 (9) 28
5. Capital expenditure incurred 56 61 126
6. Capital expenditure commitments
Contracted but not provided for 24 - 3
Approved but not contracted for 6 42 6
30 42 9
The capital expenditure will be funded
from future cash flows and borrowings.
7. Contingent liabilities and
commitments
Guarantees 31 3 29
Unconditional purchase obligations
- program and film rights 682 465 675
Contingent liabilities 18 12 24
Operating leases 690 714 782
- due within one year 118 81 114
- due after one year 572 633 668
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
Johncom House, 4 Biermann Avenue, Rosebank, 2196, Johannesburg
PO Box 1746, Saxonwold, 2132, Gauteng
Directors: M E Ramano (Chairman), A C G Molusi# (Group Chief Executive Officer),
P C Desai# (Deputy Group Chief Executive Officer),
H Benatar#, C B Brayshaw, P M Jenkins, D M Mashabela,
W S Moutloatse, T R A Oliphant, K C Ramon, T A Wixley
#Executive director
Company secretary: J R Matisonn
These results may be viewed on the internet at http://www.johncom.co.za
E-mail: matisonnj@johncom.co.za
Date: 24/11/2005 05:01:32 PM Produced by the JSE SENS Department
