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JCM
JCM
Johncom - Audited summarised results for the year ended 31 March 2006
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
Audited summarised results for the year ended 31 March 2006
Revenue +14%
Dividend +33%
Headline EPS +35%
Attributable EPS +35%
Commentary
OVERVIEW
Johncom"s excellent results for the year ended 31 March 2006 reflect the trend
of steadily improving efficiencies, with particularly noteworthy performances
from the Media, Music and Pay Television divisions.
FINANCIAL RESULTS
Revenue for the year increased by 14% to R4,7 billion, while profit from
operations rose 26% to R492 million. Attributable earnings per share grew by 35%
to 492 cents.
Johncom"s full-year financial results are reported in accordance with
International Financial Reporting Standards (IFRS). Readers are referred to the
notes which outline the changes made to the company"s accounting policies.
OPERATIONAL REVIEW
MEDIA
Johncom"s Media division enjoyed another outstanding year in which our
newspapers were joined by our magazine and digital operations in producing
record profit contributions.
The division has made investments in operations, circulation, insertions,
advertising and sales processes that are innovative and which have delivered a
substantial contribution to the improved results.
Whilst all our newspaper and magazine titles benefited from a buoyant
advertising market, the Sunday Times exceeded industry averages to reinforce its
share of the Sunday market.
The Sowetan and SundayWorld, which now share the same operational platforms as
the Sunday Times, also reaped the benefits of our investment in innovations and
the resultant robust circulation and advertising growth.
The Eastern Cape titles, particularly Daily Dispatch which was redesigned during
the year, enjoyed strong trading. We launched and acquired several community
titles to consolidate our position as the leading publisher in this region.
BDFM benefited from its process of diversifying earnings by broadening its
revenue streams from supplements and projects. BusinessDay and Financial Mail
continue to strengthen despite new entrants into the business and financial
publishing market.
Our magazine division and its custom publishing operation maintained their
improved performances during the second half of the year.
I-Net Bridge and CareerJunction were star performers in our digital operations,
both recording impressive profit growth. The division sold its stake in E-Degree
at the end of the financial year.
RETAIL
Exclusive Books had a very successful year in a bullish retail environment.
Three new stores were opened during the period: in Cape Town (Cape Gate and
Piazza St Johns) and Worcester (Mountain Mill). The Fanatics loyalty programme
continues to be an important part of branding and marketing. Exclusive Books did
particularly well from sales of Harry Potter and the Half-Blood Prince, despite
significant discounting by competitors. Exclusive Books continued to develop its
brand, winning numerous marketing and advertising awards during the year.
Nu Metro Theatres experienced a difficult year with substantial losses in box
office revenues with the introduction in March 2005 of a discounted ticket
pricing strategy by the dominant competitor.
The month on month losses prevailed until November 2005. Average ticket prices
at Nu Metro have now stabilised at levels which prevailed before the start of
ticket discounting in March 2005.
Management has continued its operational focus, closing two underperforming
sites and revamping the Hyde Park, Killarney Mall and Victoria and Alfred
Waterfront sites. The installation of a sophisticated electronic point-of-sale
system increased revenue from confectionery sales. A successful initiative from
Nu Metro Theatres has been the launch of our own cinema advertising sales
company, Popcorn Cinema Advertising. Popcorn represents 6 of the 10 top cinema
complexes nationwide and has received support from the blue chip advertisers.
The Fanatics Movie Card, a tie-up with the Exclusive Books loyalty programme was
introduced in October 2005.
BOOKS AND MAPS
The financial year proved to be the best year of trading experienced by the
South African operations in recent history. The offshore operations in the
United Kingdom, however, delivered negative results in a softer market. This
market suffered from negative sentiments following the London bombing and was
accompanied by a period of deep discounting. The cartographic business in the UK
returned to profitability to offset partially the overall negative offshore
results.
HOME ENTERTAINMENT
Nu Metro Home Entertainment delivered solid trading results for the full year
and maintained its leading market position in the home entertainment industry.
All key licensors have renewed their distribution agreements for extended
periods. The division recognised a finalised charge of R5 million in respect of
customs duties relating to the 2002 and 2003 financial years.
MUSIC
Popular international and domestic product, particularly holiday-season releases
in the second half of the financial year, enabled Gallo Music to deliver
excellent results.
Subsequent to year-end, agreement was reached effective 1 April 2006 with Warner
Music International under which the Warner Music licence is permanently housed
in a newly incorporated company, Warner Music Gallo Africa. Gallo Music has a
40% stake in this new company.
DISTRIBUTION, MANUFACTURING AND SUPPORT SERVICES
The new DVD and CD production lines introduced at Compact Disc Technologies
(CDT) in March 2005 increased production capacity and ensured that increased
customer demand was met. CDT"s IRMA anti-piracy and ISO 9001:2000 accreditations
were re-affirmed during the year.
Nu Metro Distribution met the challenges of ticket price discounting during the
year, and continued to release good content into the market.
Entertainment Logistic Services, the country"s leading DVD and CD distribution
platform, benefited from increased volumes.
AFRICA
CDT Nigeria commissioned its state-of-the-art DVD, VCD and CD replication plant
in Lagos in December 2005 and its presently operating at 96% capacity.
Working closely with the Office of the Federal Surveyor General in Abuja, MapIT
Nigeria is completing the digital mapping of Lagos streets.
BusinessDay Nigeria traded to expectations, with copy sales trebling since the
company"s acquisition in the 2004 financial year.
In a ground-breaking move, Nu Metro Home Entertainment West Africa and Nu Metro
Distribution Kenya obtained the African rights to Amazing Grace, Nigeria"s first
35mm movie, which is being premiered throughout Africa.
The African project has encountered significant roll-out challenges including
late delivery of trading sites, port congestion and regulatory changes affecting
the importation of capital items and stock. This has inevitably taken its toll
on projected cash flows. Losses should be expected to continue in this division
in the short to medium term.
PAY TELEVISION
The continued growth of the digital subscriber base was supported by increased
advertising revenues.
A strong M-Net programme line-up through the delivery of strong content acquired
by continued investment in both local productions and quality global products
was supported by SuperSport"s coverage of the major sporting events of the year.
ASSOCIATED COMPANY
The continuation of buoyant trading conditions led to further good results being
achieved by Caxton and CTP Publishers and Printers during the period under
review.
CORPORATE
Increased corporate costs for the review period include fees related to the
company"s black economic empowerment transaction, expenses from the odd-lot
offer, and the impact of Johncom"s increased shareholder base from its
unbundling in March 2005 until the implementation of the odd-lot offer in
October 2005.
FINANCIAL POSITION
Good cash flows during the year have resulted in a net cash position of R622
million. The balance sheet is strong and is practically ungeared.
DIVIDEND
Notice is hereby given that a dividend (number 191) of 100 cents per ordinary
share has been declared for the year ended 31 March 2006 and is payable to
shareholders recorded in the register of members of the company at the close of
business on Friday, 14 July 2006.
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 divided:
Last date to trade cum dividend
Friday, 7 July 2006
Shares commence trading ex dividend
Monday, 10 July 2006
Record date
Friday, 14 July 2006
Payment of dividend
Monday, 17 July 2006
Share certificates may not be dematerialized or rematerialized between Monday,
10 July 2006 and Friday, 14 July 2006, both days inclusive.
PROSPECTS
Johncom has capitalised on buoyant markets by entrenching its leading positions
in key sectors. Building on this strong base, and given the prevailing economy,
the directors are confident that the group"s current performance is sustainable
in the year ahead.
Mashudu Ramano
Chairman
Connie Molusi
Group Chief Executive Officer
Prakash Desai
Deputy Group Chief Executive Officer
22 June 2006
Income Statement
for the year ended 31 March 31 March
2006 2005
% Restated
change Rm Rm
Revenue 14 4 651 4 080
Cost of sales (2 819) (2 490)
Gross profit 15 1 832 1 590
Other expenses (1 389) (1 230)
Depreciation and amortisation (103) (100)
Goodwill impairment (2) (4)
Share-based payments (136) (75)
Other (1 148) (1 051)
Profit from operations before
exceptional items 23 443 360
Exceptional items 49 29
Profit from operations 26 492 389
Net finance income (costs) 27 (7)
Finance income 52 30
Finance costs (25) (37)
Share of profits of associates 184 127
Profit before taxation 38 703 509
Taxation (177) (125)
Profit for the year 37 526 384
Attributable to:
Shareholders 35 512 379
Minority interest 14 5
526 384
Basic attributable earnings per
ordinary share (cents) 35 492 364
Dividend per ordinary share (cents) 75 40
Number of ordinary shares in
issue ("000)
At beginning of period 104 189 104 189
At end of period 103 821 104 189
Weighted average for period 104 015 104 189
Segmental
for the year ended 31 March 31 March
2006 2005
% Restated
change Rm Rm
Revenue
Continuing operations
Media 15 1 565 1 366
Retail 8 768 710
Books and Maps 9 312 286
Home Entertainment - 308 309
Music 13 218 193
Distribution, Manufacturing
and Support Services 30 208 160
Africa 213 47 15
Pay Television 18 1 225 1 040
14 4 651 4 079
Disposed operations - 1
14 4 651 4 080
Profit (loss) from operations
before share-based payments
and exceptional items
Continuing operations
Media 53 244 160
Retail (12) 38 43
Books and Maps 19 25 21
Home Entertainment - 33 33
Music 33 20 15
Distribution, Manufacturing
and Support Services (5) 39 41
Africa (153) (48) (19)
Pay Television 49 281 188
31 632 482
Corporate (50) (35)
Disposed operations (3) (12)
33 579 435
Balance Sheet
as at 31 March 31 March
2006 2005
Restated
Rm Rm
ASSETS
Non-current assets 1 964 1 867
Tangible and intangible assets 738 727
Investments and loans 1 058 976
Deferred taxation assets 147 144
Embedded derivatives 21 20
Current assets 2 295 2 012
Inventories, receivables and
other current assets 1 533 1 453
Listed equities 109 105
Bank balances, deposits and cash 653 454
Total assets 4 259 3 879
EQUITY AND LIABILITIES
Capital and reserves
Shareholder interest 2 340 1 950
Minority interest 53 42
Total equity 2 393 1 992
Non-current liabilities 405 373
Long-term borrowings 19 15
Post-retirement benefits liabilities 134 123
Operating leases equalisation liabilities 105 113
Share-based payments liabilities 122 59
Deferred taxation liabilities 25 63
Current liabilities 1 461 1 514
Payables and other current liabilities 1 357 1 330
Bank overdrafts 31 119
Short-term borrowings 73 65
Total equity and liabilities 4 259 3 879
Directors" valuation of investments and loans 2 325 1 794
Net asset value per ordinary share
book value (rand) 23 19
Cash Flow Statement
for the year ended 31 March 31 March
2006 2005
Rm Rm
Net cash from operating activities 368 305
Net cash used in investing activities (8) (292)
Net cash used in financing activities (72) (23)
Net increase (decrease) in cash
and cash equivalents 288 (10)
Cash and cash equivalents at
beginning of period 335 345
Foreign entities translation adjustment (1) -
Cash and cash equivalents at
end of period 622 335
Statement of Changes in Equity
Share Share Other Accumu- Share- Mino- Total
Capi- Pre- Reser- lated holder rity equity
tal mium ves profits Inte- Inte- Rm
Rm Rm Rm Rm rest rest
Rm Rm
Balance at 10 814 678 124 1 626 28 1 654
31 March
2004
IFRS and (667) 661 (6) 4 (2)
other
restatements
Balance at 10 814 11 785 1 620 32 1 652
31 March
2004
restated
Total (3) 375 372 10 382
recognised
income and
expense for
the year
Income and (3) (4) (7) 5 (2)
expense
recognised
directly in
equity
Attributable 379 379 5 384
earnings for
the year
Dividends on (42) (42) (42)
ordinary
shares
Balance at 10 814 8 1 118 1 950 42 1 992
31 March
2005
Total 9 477 486 11 497
recognised
income and
expense for
the year
Income and 9 (35) (26) (3) (29)
expense
recognised
directly in
equity
Attributable 512 512 14 526
earnings for
the year
Dividends on (78) (78) (78)
ordinary
shares
Shares (18) (18) (18)
cancelled on
implementati
on of odd-
lot offer
Balance at 10 796 17 1 517 2 340 53 2 393
31 March
2006
Notes
1. Basis of accounting
These summarised consolidated 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
and the South African Companies Act. The date of the group"s transition to IFRS
is 1 April 2004, and the 2005 financial statements have been restated
accordingly.
As these financial statements are Johncom"s first IFRS annual financial
statements, IFRS 1: First-time Adoption of IFRS was applied in their
preparation. The following are the significant IFRS 1 exemptions which the
group has 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-based payments: Outstanding cash-settled share-based payments are
valued at each reporting date with the fair value being provided for, while the
fair value of equity-settled instruments is recognised in income on a straight-
line basis over the vesting period of the instruments.
* Tangible and intangible assets: Depreciation and amortisation is based on
historical cost, by component, with reference to estimated useful lives.
The reconciliation of profit after taxation and total equity as previously
reported to profit after taxation and total equity as restated in this report is
set out in note 6 below.
for the year ended 31 March 31 March
2006 2005
Restated
Rm Rm
2. Exceptional items
Profit on disposal of operations 14 6
Adjustment in respect of leases previously impaired - 10
Adjustment to fair value of investments 36 16
Other (1) (3)
49 29
for the year ended % 31 March 31 March
change 2006 2005
Restated
Rm Rm
3. Reconciliation between attributable and 35 512 379
headline earnings Attributable earnings
Reconciling items (after taxation and
minority interests, where applicable)
Profit on disposal of operations (13) (6)
Goodwill impairment 2 4
Property, plant and equipment impairment 3 -
Loss (profit) on disposal of intangible 1 (1)
assets
Other 1 -
Headline earnings 35 506 376
Basic headline earnings per ordinary share 35 486 361
(cents)
4. Earnings per ordinary share
The calculation of basic attributable and headline earnings per ordinary share
is based on attributable earnings of R512 million (2005: R379 million) and
headline earnings of R506 million (2005: R376 million) respectively, and a
weighted average of 104 014 819 (2005: 104 189 314) ordinary shares in issue.
as at 31 March 31 March
2006 2005
Rm Rm
5. Contingent liabilities and commitments
Guarantees 1 1
Contingent liabilities 16 25
Unconditional purchase obligations
- programme and film rights 585 675
Operating leases 683 782
- due within one year 110 114
- due after one year 573 668
Cumulative 12 months
to ended
31 March 31 March
2004 2005
Rm Rm
6. Profit after taxation previously reported 466
IFRS restatements - (78)
* Share-based payments (30) (24)
* Adjustments to provisions 1 4
* Depreciation and amortization 29 (4)
* Redesignation of financial instrument - (57)
* Adjustment in respect of associate - 3
Other restatements (2) (4)
* Reversal of amortisation of intangible assets - 3
with indefinite useful lives
* Operating leases accounted for on straight-line 1 (1)
basis
* Revenue recognition (3) -
* Adjustment in respect of taxation - (6)
Profit after taxation restated 384
Total equity previously reported 1 654 2 019
* IFRS restatements - (78)
* Other restatements (2) (6)
1 652 1 935
Add back items which do not impact total equity
*paul Redesignation of financial instrument - 57
Total equity restated 1 652 1 992
As at 31 March 31 March
2006 2005
Rm Rm
7. Capital expenditure commitments
Contracted but not provided for 12 3
Approved but not contracted for 53 6
65 9
The capital expenditure will be funded from cash resources.
8. Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the group"s
financial statements for the year ended 31 March 2006. They have issued an
unqualified audit opinion. A copy of their audit report is available for
inspection at the company"s registered office. These summarised financial
statements have been derived from the group financial statements and are
consistent in all material respects with the group financial statements.
JOHNNIC COMMUNICATIONS LIMITED (Johncom)
Incorporated in the Republic of South Africa
Registration number: 1889/000352/06
Share code: JCM ISIN Code: ZAE 000024584
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# (Chief Financial
Officer), 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 E-mail:
matisonnj@johncom.co.za These results may be viewed on the internet at
http://www.johncom.co.za
Date: 22/06/2006 10:00:31 AM Produced by the JSE SENS Department
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