Media and entertainment holding group Johnnic Holdings on Tuesday reported a 124% leap in pro forma headline earnings from R55-million to R123-million for the year ended March.
It attributed the increase to improved earnings from the entertainment and media businesses, as well as an improved performance from its casino operation and increased financed income at head-office level.
Attributable earnings for the 12-month period were up 68% on a pro forma basis from R171-million to R287-million.
Headline earnings per share from core operations increased 36% from 35 cents to 69 cents, while those from non-core operations were 160 cents compared with a loss of two cents per share last time around. The result was total headline earnings per share of 229 cents, which was a whopping 603% improvement on the previous year’s earnings of 35 cents per share.
However, the group pointed out that as a result of the unbundling of the MTN shares and accounting for the full share of Durban Add-Ventures prior years’ losses in the current year, the results are not really comparable with those of the previous year.
The MTN unbundling was the group’s most significant transaction in the past year, yielding an exceptional profit of R3,7-billion — contributing to a 336% increase in attributable earnings from R962-million to R4,196-billion for the year.
Revenue from ongoing operations increased by 6% to R2,682-billion from R2,541-billion while profit from operations before exceptional items for the same businesses rose by 53% from R75-million to R115-million.
“The results reflect the cyclical upswing in trading volumes at group companies in the latter half of the financial year. In addition to increased trading levels over the year-end holidays, consumer confidence levels have been boosted by lower interest rates and declining inflation levels in the second six months of the year under review, yielding increased consumer spending.
“Finance income less finance costs totalled R26-million (2003: net finance costs of R71-million) reflecting the positive impact of the repayment of head-office debt mainly achieved by the sale of MTN and Naspers shares during the year.
“Income from associated companies declined by 10% to R172-million from R191-million last year. The decrease is mainly as a result of reduced earnings from Electronic Media Network Limited (M-Net) and Supersport International Holdings Limited (Supersport) arising from the negative impact of the stronger rand on foreign based earnings and the effect of complying with AC133.
“Caxton and CTP Publishers and Printers Limited continued to achieve commendable growth and operating efficiencies,” the group said.
Looking ahead, Johnnic said it continues to consider various strategic options relating to the future of the group with a view to enhancing further shareholder value.
“These strategic options will be underpinned by the enhancement of Johnnic’s empowerment credentials and will use the substantial goodwill associated with the Johnnic name as well as its strong balance sheet,” it said.
It added: “The favourable retail conditions experienced over the last six months appear likely to continue for the foreseeable future, heralding stronger trading for Johnnic’s major subsidiary Johncom as well as non-core businesses Gallagher and Suncoast Casino.
“Johncom is particularly well positioned to continue its positive growth trend going forward. Not only are all core businesses within that group contributing strongly, but also improved results are expected from Nu Metro Theatres and Johncom Africa, where investments in East and West Africa are expected to bear fruit. A global revival in advertising and stable newsprint prices is also expected to benefit the media sector.
“Piracy continues to be a serious threat to the entertainment industry and Johncom will increase its role in combating this criminal activity in every way possible. The continuing digitisation of content poses both threats and opportunities, and management is proactively addressing these.
“The upturn at Suncoast Casino since September 2003 is reversing the fortunes of this start-up enterprise, heralding great promise for the future. Ongoing improvement in the conference and exhibition industry holds similar promise for Gallagher in the year ahead.”
Referring to its pyramid structure that it will have to dismantle to satisfy the JSE Securities Exchange (JSE), the group said it has been in discussions with the JSE regarding the extension of time to June 23 2004 granted to the company to address its pyramid structure with Johncom.
“Johnnic has shared with the JSE its effort at finalising its strategic options, including the implementation of additional empowerment in its shareholding. Johnnic recognises that empowerment and creating value for its shareholders are of the utmost importance. Accordingly the company is in continued discussions with the JSE in finalising this matter. A further announcement to shareholders will be made in due course,” it stated.
The group said that in light of the unbundling by the company to its shareholders of substantially all of its shareholding in MTN by way of a distribution in specie amounting to approximately R8,2-billion in June 2003 and the major restructuring that might take place within the group, it has resolved not to declare a dividend for the year. — I-Net Bridge