RJR records growth in core profits; bottom line depleted by merger costs
The RJR Communications Group yesterday published its audited financial results for the year ended March 31, 2016.
A release from directors disclosed a loss of $225 million, compared to a profit of $113 million earned in the previous financial year. The statement, however, attributed the loss position to the one-off impact of the recently concluded amalgamation transaction which saw media operations of The Gleaner Company Limited (now 1834 Investments Limited) acquired and merged into the RJR Communications Group at the end of the period. Without this, the group would have posted a year-on-year 16 per cent growth in pre-tax profit, the statement said.
Radio Jamaica Limited, on March 24, 2016, acquired subsidiary company The Gleaner Company (Media) Limited (GCML), with operations spanning print and digital media, as well as radio broadcasting; completing the landmark transaction for Jamaican media announced in August 2015. The acquisition, brings into the group brands such as The Gleaner, The Sunday Gleaner, The Star, Gleaner Online, Power 106 FM and Music 99 FM. The company heralded the acquisition as ensuring sustainability of the two longest-standing, Jamaican-owned media institutions."
Revenues of $2.3 billion, which excluded the operations of GCML, given the closing of the transaction at the end of RJR's financial year, exceeded prior year by $258 million or 13 per cent. Other income of $103 million was below prior year by $11 million because of lower foreign exchange gains.
In commenting on the company's results, Gary Allen, managing director of Radio Jamaica and chief executive officer for the expanded media group, said, "The company worked hard as always to exceed expectations, and we did just that. Revenues saw a boost from conversion of non-traditional advertisers, as well as an encouraging level of paid subscriptions to 1spot Media - the company's latest venture into the digital space. We continue to invest in, and produce, content which the market demands and which the advertisers reward."
Speaking on operations, Allen continued, "We have managed our costs really well and extracted maximum efficiency from our processes, which also helped to drive operational profit." Direct expenses of $1.02 billion increased by $153 million or 18 per cent, reflecting the group's investment in new content, while selling expenses of $385 million reflected increased commissions on higher sales, as well as marketing costs. Lower operating expenses of $320 million, according to Allen, showed discipline in cost control and operating efficiencies, while lower finance costs showed keen management of cash resources and capital deployment.
Positioning for future investments
Significant to the accounts ended March 31, 2016, was the addition of GCML's balance sheet, which expanded the group's cash resources by $665 million, positioning the group well for future investments and expansion. Interestingly, overlaying revenue performance of GCML for the same period, though not included in this period, would see a greater than doubling of the top line to just over $5 billion per year.
When asked about the prospects for the amalgamated group, the CEO had a forecast of exciting times ahead for the group. "We will be a much stronger company financially, offering top-class products and services locally and, significantly, to the diaspora, as the company continues on its mission to 'Go Global For Growth'," said Allen. He thanked employees of both companies, customers and shareholders, whose support was critical while the transaction was in progress.
The directors' statement concluded that "with the amalgamation complete and integration under way, the business is well positioned to leverage its expanded multiplatform offerings, its industry-leading journalistic and creative talents, to propel your company to higher levels of innovation and profitability".
RJR's shares last traded on the JSE at $1.47 per share. Television Jamaica and GCML were on Tuesday jointly awarded Media of The Year by the Advertising Agencies Association Jamaica (AAAJ).