Mergers, Acquisitions and Financial Results

South African investment holding company Johnnic Holdings said this week it could branch out into new sectors after it distributed shares in its main asset, mobile phone firm MTN, earlier this month. Reporting a 69 percent jump in core earnings for the year to the end of March, chief operating officer Jacob Modise said Johnnic, which has interests in entertainment, media and property, was still considering its strategy for the future.

"There are a number of options open to us," he said in an interview. "We could go for a narrow strategy, focusing on media and entertainment or we could decide to broaden it a little bit. "We haven’t excluded entering into other sectors of the economy," he added, noting that any acquisitions were likely to be in areas pushing to improve levels of black participation. Nine years after the end of apartheid, the mainstream economy is still largely controlled by whites and the government is pushing through legislation compelling firms to do more to attract black shareholders and staff.

Johnnic, 28-percent owned by the National Empowerment Consortium, has six months under bourse regulations to address the structure through which it holds 62.5 percent of media and entertainment firm Johnnic Communications (Johncom).

Deciding what to do with Johncom would be part of the group’s overall planning, Modise said. Johnnic said in March it would not sell its Johncom stake and would look at other ways to unlock shareholder value. Modise said the firm did not receive satisfactory offers. Johnnic said headline earnings almost doubled in the year to March 31, largely thanks to its investment in mobile phone operator MTN Group. Johnnic distributed a 31.9 percent stake in MTN worth seven billion rand (US$869 million) to shareholders this month in an effort to address the discount at which Johnnic shares traded to underlying net asset value.

It retained some 4.6 percent of MTN. MTN said earlier this month its annual earnings grew 97 percent, boosted by its international operations. Johnnic’s annual revenues grew 44 percent to 12.1 billion rand and earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 69 percent to 2.9 billion rand. Headline earnings, which strip out exceptional items and their tax effects, grew 90 percent to 603 cents a share.

Reuters via Liquid Africa