Johncom reports 36% growth

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. A dividend of 120 cents per ordinary share (2006: 100 cents) has been declared. The balance sheet remains strong and practically ungeared.

Prakash Desai, group CEO, commented: “This fine set of results reflects our continued investment in skilled people, new technology platforms and the growth of world-class assets.”

The Sunday Times, supported by innovation and a buoyant economy, enhanced its leading 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.

“Best performance ever”

Desai continued: “The magazine stable delivered its best performance ever, and our education assets continue to trade profitably. Career Junction, our online recruitment business, produced impressive profit growth. And I-Net Bridge enjoyed another successful year.”

The Financial Mail recorded improved profitability following its redesign earlier in the year.

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.

Desai continued: “Nu Metro Theatres had a profitable year, benefiting from our operational and strategic initiatives. Average ticket prices contributed to increased box-office revenues. New sites were opened in Pretoria and Worcester, though site rationalisation continued, with two non-performing sites closed.”

The strong presence of Nu Metro Theatres in the Bollywood market continues. 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 allegedly been recognised by the advertising industry as an innovative player in the market.

Turnaround

Struik Publishers benefited from a strong SA retail book market, and published a number of best-selling titles. The turnaround of the offshore operations in the period was underpinned by strong publishing programmes and North American co-edition sales.

The Home Entertainment division acquired the Universal licence effective 1 April 2007 in addition to representing 20th Century Fox, Disney, Warner and the BBC. “Initiatives in the emerging market, expansion into new distribution channels, excellent content and good growth in catalogue sales contributed to the division's excellent results”, Desai said.

Johncom opened a number of media-and-cineplex combination stores in Abuja and Lagos during the year and acquired the remaining 50% share of the Kenyan business held by a local partner with resultant full control of the operation.

Desai commented: “The Africa business has moved from the developmental stage to an operational focus with the transfer of management control to the local operations in Kenya and Nigeria. The sale or closure of non-performing smaller entities, the elimination of overhead structures and initiatives to drive greater efficiencies in the major operating entities are expected to yield improved results.”

Good December holiday product supported Johncom's music business's recovery. 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. Major current and back catalogue hits are now digitised, and top products have been launched on UK and US platforms” Desai said.

Compact Disc Technologies (CDT), regarded as the leading DVD and CD facility in Africa, implemented a new software system and increased production capacity. On 31 July 2006, Johncom increased its stake in CDT from 60% to 100%.

Separate into two

Johncom announced on 11 April 2007 that it 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.

Desai concluded: “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, the board expects the current growth momentum to continue in the new financial year.”

For the audited condensed group financial results, go to www.johncom.co.za/JohncomYEannouncement310307FINAL.pdf.